Indonesia Update: July 11, 2019

Indonesia Update | July 11, 2019
Authors: Kim Yaeger, Landry Subianto, Michaela Wong, Chase Blazek
 
LOOKING AHEAD
 
 
  • Roundtable with Incoming Senior Commercial Officer, July 24, Jakarta: The US-ASEAN Business Council will host a roundtable with Incoming Senior Commercial Officer Mark Lewis at the US Embassy in Jakarta on July 24, 2019.  Click here to register. Please contact Kim Yaeger (kyaeger@usasean.org) with any questions.
  • Save the Date - Indonesia Innovation Series and SME Workshop, August 26-27, Bali: The Council is planning an Indonesia Innovation Series and SME Workshop on August 26-27 in Bali to encourage public innovation in the digital economy. More details will be forthcoming.  Please contact Landry Subianto (lsubianto@usasean.org) or Angga Antagia (aantagia@usasean.org) with any questions.

 
THE COUNCIL'S TAKE
 
 

Government Encourages Domestic Exports with National Export Financing

On June 25, Government Regulation on the National Export Financing (NEF) Basic Policy, officially titled PP No. 43/2019, came into effect. The regulation is part of the Government’s broader national export development program, designed to increase Indonesian exports and remediate Indonesia’s record high trade deficit of US$8.57 billion in 2018. Focused specifically on the development of Indonesia’s export-oriented micro, small-, and medium-sized enterprises (MSMEs), export financing may come in the form of insurance, guarantees, financing, or any other form of assistance applicable by law. The body responsible for administering this financial assistance, the Indonesian Export Financing Institution (LPEI), can also provide MSMEs with reinsurance or venture capital, consulting services, and assistance restructuring existing NEF obligations.

Any Indonesian MSMEs involved directly or indirectly with exporting, as well as those which support exporters, may be eligible for LPEI services. LPEI, in turn, can cooperate with domestic and foreign financial services institutions to provide these financial services to promising exporters. In the same spirit of supporting exporters, President Jokowi recently encouraged his cabinet ministers to provide export-oriented industries with faster business licensing, citing issues with land allocations and red tape as barriers to domestic business development. The President further stated that “export-oriented investments related to import substitution must be given permits as soon as possible,” making explicit the link between these export efforts and the Government’s broader goal of lowering Indonesia’s trade deficit.

Overall, Government efforts to support Indonesia’s MSMEs by improving bureaucratic efficiency and the availability of financial services are good for economic growth, in Indonesia and across the globe. Moreover, the Government’s continued efforts to foster an open business environment which welcomes global players will only bolster this growth trajectory. Regarding business between the US and Indonesia, most trade takes place across different market segments, so companies involved in such trade should be unaffected by this regulation. And as long as Indonesia’s export development plans continue to prioritize open market strategies over preferential policies, like domestic subsidies, American firms which do engage in intra-industry trade should remain similarly unaffected. Furthermore, LPEI’s responsibility to provide export financing to Indonesian MSMEs may present American firms with ongoing opportunities to meet Indonesia’s growing demand for financial services.

Constitutional Court Confirms Jokowi’s Victory in April Elections

On June 27, the Constitutional Court rejected Prabowo Subianto’s challenge of the April election results, confirming President Joko “Jokowi” Widodo’s victory for a second term in office. For more details on the election, please see our May 29 Analytical Update. All nine judges in the court rejected the plaintiff’s case, citing a lack of evidence to indicate cheating or misuse of state funds on the part of Jokowi. Justice Aswanto specifically noted that “The allegations of structured, systematic, and massive fraud could not be proven and therefore the argument is legally baseless.”

Prabowo, leader of the opposition Gerindra party, admitted his disappointment in the ruling but stated that he would accept the Constitutional Court’s results and called for continued calm among his supporters. Following the Court’s decision, there is no possibility for any future appeals. President Jokowi’s second term platform will focus on economic reform and improvement of national infrastructures, both of which will support Indonesia’s continued economic growth.

Finance Minister Proposes a New Digital Stamp Tax

The Government of Indonesia is considering a new stamp duty bill to replace the decades old version, Law No. 3/1985, which has been unable to adjust sufficiently for inflation and the digital evolution in document transmission. Between 2001 and 2017, Indonesia’s GDP experienced an eight-fold increase, while revenues from the stamp tax within that time period only increased by 3.6 times, in part due to the law’s maximum stamp duty of six times the original rate. At the same time, companies are increasingly conducting business with clients and partners via digital documents, not physical mail, but there is no standard digital stamp available to coincide with this process shift. Hence, Finance Minister Sri Mulyani is intent on using the revisions to boost lost government revenues by collecting taxes on digital documents which, as of now, fall through the cracks of Indonesia’s tax collection authorities.

The House Commission XI, which oversees finance and banking, plans to ratify this new bill by the end of the current House term in September. The present stamp tax bill requires a RP 3,000 tax to be paid for any documents carrying a worth of between RP 250,000 and Rp 1 million, while documents worth greater than Rp 1 million obligate a business to pay a Rp 6,000 tax. Minister Sri has suggested that the new scheme should replace this two-track system with a flat rate tax of Rp 10,000 (approximately US$0.70) on any documents worth greater than Rp 5 million (around US$350). In this model, the party issuing a document would be obligated to pay the digital stamp tax.

Such an approach could, of course, run into the same old problems in a matter of years as inflation and the value of digital transactions continue to rise. And though the amount of this tax is quite small, any additional taxation on document transfers in a rapidly growing digital economy could impede industry growth across the board, from financial services and telecommunications to transportation and manufacturing. For businesses, the amount of the stamp tax may be less important than the regulatory framework through which the tax is administered and the standards that determine which documents hold worth. Strict standards might imply that only documents containing direct sales contracts are taxable, while looser standards could apply to any document contributing to revenue generation above the minimal amount. Should it be ratified, the dictates and implementation details of this new stamp duty bill will be important to watch as the markets effected include the entirety of Indonesia’s and America’s digitally connected economies.

 
ADVOCACY UPDATE
 
 

List of Positions for Foreign Workers in the Manpower Ministerial Decree 

In response to the Ministry of Manpower's latest draft of the Decree on Job Positions Available to Foreign Workers, the Council has developed a list of job positions that have yet to be addressed. Please find below some key highlights from our July 10th meeting with the Ministry of Manpower:

  • The Ministry mentioned that they will need to finalize and issue the Ministerial Decree by August 2019
  • Business players are advised to enlist the description of each suggested position. These should be based on the information covered in the Indonesian Classification of Positions (Klasifikasi Baku Jabatan Indonesia or KBJI) and also align with the ISCO (International Standard Classification of Occupations) number.
  • MOM confirmed in the meeting that foreign workers are allowed to be recruited as Directors and Commissioners in all industries. However, the decision regarding whether this will be included in the Ministerial Decree will be discussed further.
  • Moreover, they confirmed that job positions that do not have ISCO codes will still be considered (although it is not listed in the Decree’s attachment). However, the technicalities about the process will be discussed in later stage, once the list of positions is finalized.

As mentioned above, the Council is resubmitting a list of job positions previously shared with the Ministry of Manpower that are not yet addressed in the lastest draft.  Please contact Angga Antagia (aantagia@usasean.org) or Ayu Nadia (anadia@usasean.org) for more information.​ 

 
IN THIS UPDATE
 
 
National Affairs
DPR approves Destry Damayanti as Senior BI Deputy Governor
Manpower policy should be aligned with Industry 4.0: ministry
'Reconciliation Meeting' Between Prabowo and Jokowi Likely to Take Place Later This Month
Jokowi government's second term to prioritize development programs
Jokowi's Re-Election Now Official as Constitutional Court Rejects Prabowo's Challenge
World Bank approves US$300 million for poverty reduction in Indonesia

Market Development
Jokowi issues rule on tax deductions of up to 300% of R&D cost

Brunei
Brunei, Indonesia sign ‘Plan of Action’ on health

Customs
Textile industry prefers safeguard policy to fiscal incentives
Tanjung Priok to start 24/7 operations to boost exports
Jokowi signs Government Regulation on National Export Financing
Jokowi Pushes for Speedy Export-oriented Business Licensing
Finance Ministry proposes stamp duty tariff change
Bekraf pushes for more trade deals to boost creative exports
Indonesia to return 49 containers of waste to Europe, US

Defense & Security
A resurgent Jemaah Islamiah in Indonesia: bad news for Malaysia and Singapore
Air Force Exercise Highlights US-Indonesia Military Cooperation

Economics
20 Percent Corporate Income Tax Unlikely This Year
Sri Mulyani: Data Beneficial Ownership Eases Tax Collection

Energy
Indonesia, China discuss transfer of energy technology at 6th ICEF
Indonesia targets US$5 billion oil and gas investment from UAE
Indonesia’s coal price reference drops 11.73 percent
Only 10 percent of 35-GW power projects in operation, PLN data show
Pertamina domestic crude intake jumps 800 percent
Indonesian utility PLN to resume adjustable electricity tariffs in 2020
Solar panels too pricey? Consider leasing rooftop instead
PLN opts for rate adjustment rather than compensation

Financial Services
BI to optimize electronic transactions in transportation
Indonesia to emulate China’s e-commerce boom
Five MoUs signed at PHL-Indonesia investment summit
Digitisation and regulatory support drive growth of Islamic finance in M'sia, Indonesia
Weak private sector appetite hampers Indonesia’s Islamic finance growth

Food & Agriculture
Drought and Massive Crop Failure May Lead to Trillions in Losses
FAO disburses aid to farming, fishing households in Central Sulawesi
Dried unhulled, medium rice prices climb in June: statistics bureau
Sabah to rely on Filipinos, Indonesians
Indonesia's palm oil exports to India losing out to Malaysia

Health & Life Sciences
Jakarta Requests Artificial Rain to Tackle Pollution: BPPT
National Health Insurance covers over 222.5 million Indonesians

ICT
Tax office’s new directorates to boost revenue from digital economy
Govt ponders stamp duty bill, plans to introduce digital stamp
Kominfo Needs Special Institutions for Personal Data Protection
Kominfo Ensures that the IMEI Rules Do Not Violate User Data Privacy
Indonesia explores digital cooperation with Saudi Arabia
SAFEnet Blasts Government for Limiting Internet Access
Online marketplaces test delivery drones across rural Indonesia
Indonesia's G20 abstention result of data protection concerns
Indonesia selects France-based Thales to build 150 Gbps satellite
Prevent Illegal Cellphone Trading, Communication and Information: IMEI Rules Applies August
Gov't in No Haste to Develop 5G Network
Jokowi signs regulation on Satu Data Indonesia
NTT Com develops the largest data center in Indonesia

Infrastructure
Gov't to Build Longest Bridge Linking Batam, Bintan Islands
Need Infrastructure Financing IDR 20 T, Bappenas Push Alternative Funds
Indonesia proposes special fund for investments under BRI
Indonesia to host second Asia International Water Week
AIIB ready to provide funds for infrastructure projects
Indonesia construction firm to sell five toll roads
Indonesia Plans 4-Mile Sea Bridge Near Singapore
AIIB holds summit, commits to funding Indonesian infrastructure projects
Where Is Indonesia on China’s Belt and Road Initiative?

Manufacturing
Indonesia to boost petrochemical development in Bintuni, W Papua
Manufacturing sector sees slowdown in June
Japan Agrees to Spend $2b to Develop Electric Cars in Indonesia

Travel & Tourism
Jokowi approves incentives for airlines
Ministry of Tourism prepares plan on special economic zone in Mandeh
North Sulawesi's tourist facilities to be renovated by 2020
LRT Jakarta extends trial run indefinitely as result of public enthusiasm
LCC to cut airfares by 50 percent starting on July 4
Aceh promotes culinary sector as tourism attraction
Indonesian tourism targets Philippine market
BBTF on par with prominent global tourist fairs, attracting 49 countries
 
ARTICLE CLIPS
 
 
National Affairs

DPR approves Destry Damayanti as Senior BI Deputy Governor Katadata 11th Jul 2019
The House Commission XI decided that Destry Damayanti was elected as the new Senior Deputy Governor of Bank Indonesia (DGS BI), replacing Mirza Adityaswara. "In terms of the law, Commission XI on behalf of the House has agreed to Mrs. Destry as a candidate for DGS BI," said Member of the House of Representatives Commission XI Amir Uskara at the Parliament Building, Jakarta, Thursday (11/7).

Manpower policy should be aligned with Industry 4.0: ministry Antara News 9th Jul 2019
The Manpower Ministry highlighted the importance of aligning labor policies with the development of the 4.0 industrial revolution in order to create a skilled workforce capable of competing with its counterparts from other nations. Ministry of Manpower's Director General for Training and Productivity, Bambang Satrio, stated that currently, the future government policy prioritizes the development of human resources.

'Reconciliation Meeting' Between Prabowo and Jokowi Likely to Take Place Later This Month Jakarta Globe 8th Jul 2019
Prabowo Subianto and President Joko "Jokowi" Widodo are set to have their long-awaited "reconciliation meeting" later this month to heal the wounds from a particularly divisive presidential election. On Sunday, Jokowi and his running mate Ma'ruf Amin were declared the official winners of the election after the Constitutional Court threw out Prabowo's challenge. But Prabowo and his running mate Sandiga Uno failed to attend the announcement ceremony at the General Elections Commission headquarters, leading to speculation that a reconciliation between the two fierce rivals is still off the agenda.

Jokowi government's second term to prioritize development programs Antara News 29th Jun 2019
By May-end of 2019, Indonesia received upbeat news that the Standard and Poor's (S&P) rating agency had increased its investment grade status rating, so its future prospects for global investors will also be more positive. A study conducted by the S&P showed that the increase in investment grade status rating was partly due to the support of government debt ratios that were viewed as being under control coupled with good fiscal budget management.

Jokowi's Re-Election Now Official as Constitutional Court Rejects Prabowo's Challenge Jakarta Globe 28th Jun 2019
All nine judges at the Constitutional Court on Thursday rejected Prabowo Subianto's demand to annul the result of the 2019 presidential election as announced in April by the General Elections Commission, or KPU, due to lack of evidence. According to the KPU's final vote count, incumbent Joko "Jokowi" Widodo and his running mate Ma’ruf Amin had won the election with 55.5 percent of the vote.

World Bank approves US$300 million for poverty reduction in Indonesia Antara News 28th Jun 2019
The World Bank Executive Board of Directors approved a loan of US$300 million to accelerate poverty reduction and improve services in more than 66,000 villages in 380 districts across Indonesia. "This project will support villages to overcome differences in rural infrastructure and human capital. These two things will contribute to efforts to reduce poverty and (boost) economic growth in the future," World Bank Country Director for Indonesia and Timor-Leste, Rodrigo Chaves, noted in a statement on Thursday.

Market Development

Jokowi issues rule on tax deductions of up to 300% of R&D cost The Jakarta Post 9th Jul 2019
President Joko “Jokowi” Widodo has issued a regulation on major tax deductions aimed at boosting investment, research and development (R&D) as well as the participation of businesses in improving Indonesia’s human resources. Under Government Regulation (PP) No. 45/2019 on the calculation of taxed income and expansion of income tax in the current year, which was issued on June 25 and is an amendment of Government Regulation No. 94/2010, taxpayers can enjoy a tax deduction of up to 300 percent.

Brunei

Brunei, Indonesia sign ‘Plan of Action’ on health Borneo Bulletin Online 10th Jul 2019
The 1st Joint Working Group (JWG) on Health Cooperation Meeting between Brunei Darussalam and the Republic of Indonesia concluded on a high note, with the signing of ‘Plan of Action’ on health focussing on seven main agendas for areas of cooperation in the field of health between both countries. The areas of cooperation are exchange of information on public health (disease control, environment health, occupational health and food safety); exchange of information on health promotion; exchange of information on traditional medicines; medicine products and health technology regulations; exchange of information on traditional and complementary medicines; identifying mutually agreed areas in the exchange of health and medical experts; developing exchange and internship programmes for health professionals in specific specialties; and joint research and development in the area of non-communicable diseases (NCDs). The signing of the Plan of Action (PoA) on health is part of the implementation of the Memorandum of Understanding (MoU) on health cooperation between Brunei Darussalam and the Republic of Indonesia.

Customs

Textile industry prefers safeguard policy to fiscal incentives The Jakarta Post 11th Jul 2019
The subdued textile and textile products industry is not impressed by the government policy to offer “jumbo” tax deductions as the industry considers that the safeguard policy will be more helpful to protect the industry from the storm of imported products. Indonesian Association of Synthetic Fiber Producers (APSYFI) secretary-general Redma Gita Wirawasta said on Wednesday that what was needed by the textile industry was for the domestic market to absorb the products it had manufactured.

Tanjung Priok to start 24/7 operations to boost exports The Jakarta Post 8th Jul 2019
Transportation Minister Budi Karya Sumadi has said that the government plans to operate Tanjung Priok Seaport in North Jakarta, the country’s largest port, for 24 hours seven days a week in trying to boost exports. He said all sections at the port – the port office, customs and excise office, immigration, port operator, banks and other stakeholders – would also be required to adjust their working hours to follow the policy.

Jokowi signs Government Regulation on National Export Financing Antara News 8th Jul 2019
President Joko Widodo (Jokowi) signed a Government Regulation (PP) on the National Export Financing (PEN) Basic Policy, effective June 25, 2019. The regulation, PP No. 43 of 2019, was signed on June 18, 2019, the cabinet secretariat noted on its official website on Monday. The government perceives the urgency to have in place a policy to support the national export development program that can boost the national economy.

Jokowi Pushes for Speedy Export-oriented Business Licensing Tempo 8th Jul 2019
President Joko “Jokowi” Widodo pushed his cabinet ministers to accelerate licensing for export-oriented industries. “In terms of investments, maybe I have mentioned it numerous times, export-related investments, that are related to import substitution must be given permits as soon as possible. But the reality in the field isn’t like that,” said Jokowi in a plenary cabinet meeting held at the Bogor Palace on Monday.

Finance Ministry proposes stamp duty tariff change Antara News 3rd Jul 2019
The Ministry of Finance has proposed a change in stamp duty tariffs to maintain the continuity of adequate revenue from stamp duty. "The law on stamp duty of 1985 regulated the increase in stamp duty rates to a maximum of only six times the original tariff," Finance Minister Sri Mulyani said at a working meeting with the House of Representatives' Commission XI here Wednesday.

Bekraf pushes for more trade deals to boost creative exports The Jakarta Post 1st Jul 2019
The Creative Economy Agency (Bekraf) has called on the government to intensify its efforts to establish more trade deals with foreign countries to boost exports of creative products, as the country was not reaping the full potential of the creative economy. Bekraf head Triawan Munaf said the agency had set an export target for creative goods this year that was 8 percent higher, from $20 billion in 2018 to US$21.8 billion in 2019.

Indonesia to return 49 containers of waste to Europe, US France 24 2nd Jul 2019
Dozens of shipping containers full of waste will be returned to France and other developed countries, Indonesia said Tuesday, as Southeast Asian nations increasingly reject serving as dumping grounds for international trash. The 49 containers were loaded with a combination of garbage, plastic waste and hazardous materials in violation of import rules, according to customs officials on Batam island. "We are coordinating the with the importer to immediately process their return," customs office spokesman Sumarna, who goes by one name, told AFP. The waste came from the United States, Australia, France, Germany and Hong Kong, he added.

Defense & Security

A resurgent Jemaah Islamiah in Indonesia: bad news for Malaysia and Singapore South China Morning Post 7th Jul 2019
For the past five years, little was heard of Jemaah Islamiah (JI), the Southeast Asian offshoot of the international terror network al-Qaeda. While JI was responsible for some of Indonesia’s deadliest terror attacks, including the devastating 2002 Bali bombings, the group kept a low profile as counterterrorism police focused on countering threats from militants linked to Islamic State (Isis). That was until last weekend. On Monday, Indonesian police announced the capture of JI’s leader Para Wijayanto, 54, who had been on the run since 2003. His wife and three of his associates were also detained.

Air Force Exercise Highlights US-Indonesia Military Cooperation The Diplomat 9th Jul 2019
Last month, the United States and Indonesia held the latest iteration of their bilateral air force exercise. Though the interaction was just one of several within the U.S.-Indonesia defense relationship, it nonetheless highlighted ongoing efforts by both sides to continue to advance ties into 2019.

Economics

20 Percent Corporate Income Tax Unlikely This Year Jakarta Globe 4th Jul 2019
The Tax Office has said it does not have enough time to execute a plan to cut the corporate income tax from 25 percent to 20 percent by the end of this year, delaying a key promise from President Joko "Jokowi" Widodo who has been fighting for the tax cut to boost investment. Robert Pakpahan, the tax director general at the Finance Ministry, said the plan would necessitate the revision of a 2007 law, which needs deliberation and approval at the House of Representatives. 

Sri Mulyani: Data Beneficial Ownership Eases Tax Collection Tempo 3rd Jul 2019
Finance Ministry Sri Mulyani Indrawati said that the MoU signing on data beneficial ownership could help Tax Directorate General in calculating tax. “With this agreement, we will get regular information on who is the ultimate beneficial ownership because thus far, we face difficulties in calculating the tax due to transfer practices for tax avoidance and evasion,” said the Minister in Sultan Hotel, South Jakarta, Wednesday, July 3.

Energy

Indonesia, China discuss transfer of energy technology at 6th ICEF Antara News 10th Jul 2019
The governments of Indonesia and China held discussions on matters ranging from the transfer of technology to energy development at the 6th Indonesia-China Energy (ICEF) Forum in Beijing on July 8-10, 2019. "Some topics that we discussed covered coal technology for electricity generation, renewable energy in the future, how about it. They are also keen to explore geothermal cooperation," Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan told ANTARA in Beijing on Tuesday (July 9) night.

Indonesia targets US$5 billion oil and gas investment from UAE Antara News 6th Jul 2019
Energy and Mineral Resources Minister Ignasius Jonan is targeting investment worth US$5 billion from a cooperation between Indonesia and the United Arab Emirates (UAE). UAE's Energy and Industry Minister Mohamed Faraj Al Mazrouei paid a visit to Jonan in his office in Jakarta. "In line with President (Joko Widodo's) directive, (to attract) investment from the UAE and Middle East, there is large investment not only from the oil and gas sector but also from other sectors..." Jonan noted in a statement, Saturday.

Indonesia’s coal price reference drops 11.73 percent The Jakarta Post 5th Jul 2019
Indonesia’s coal price reference (HBA) dropped by 11.73 percent to US$71.92 per metric ton in July from $81.48 per metric ton in the previous month.Energy and Mineral Resources Ministry spokesman Agung Pribadi said on Thursday that the decline was due to external factors, particularly a production increase in China, import cuts by India and the trade war between China and the United States.

Only 10 percent of 35-GW power projects in operation, PLN data show The Jakarta Post 2nd Jul 2019
More than three years after the government launched a program to add 35 gigawatts of power generation capacity to national supply, only 3.6 GW have been realized, data from state-owned electricity firm PLN show. The initial target was to wrap up the entire 35 GW program in 2019, the final year of President Joko “Jokowi” Widodo’s first presidential term. That deadline has since been moved back to 2024 or 2025, because of slower than expected growth in electricity demand.

Pertamina domestic crude intake jumps 800 percent The Jakarta Post 2nd Jul 2019
Up to June, state energy holding company Pertamina has purchased 116.9 thousand barrels of oil per calendar day (MBCD) from local private contractors, an 800 percent jump from  2018’s full-year realization, which stood at 12.8 MBCD. The jump in the crude intake, which was then distributed to Pertamina's refineries, was supported by the government's policy that required Pertamina and other oil companies to prioritize domestic supply to help reduce oil imports.

Indonesian utility PLN to resume adjustable electricity tariffs in 2020 Reuters 8th Jul 2019
State electricity utility PT Perusahaan Listrik Negara (PLN) will return to using adjustable electricity tariffs for non-subsidised customers in 2020 after two years of flat rates, an energy ministry official said on Tuesday. Starting next year, PLN can adjust their electricity prices every three months for customers, such as industrial users, based on the price of oil and the rupiah exchange rate.

Solar panels too pricey? Consider leasing rooftop instead The Jakarta Post 4th Jul 2019
Building solar energy generators remains unappealing for entrepreneurs and the public alike because of the high upfront investment. Some businesses are making a breakthrough, leasing their rooftops for solar panels. In its Indonesia Energy Outlook 2018 report, the Agency for Assessment and Application of Technology (BPPT) had a chilling word or warning: Unless the country reduces its dependence on nonrenewable energy, it will face a power crisis in as little as a decade.

PLN opts for rate adjustment rather than compensation The Jakarta Post 1st Jul 2019
State-electricity firm PLN hopes the government will allow it to make a price adjustment or continue its compensation scheme next year to offset financial losses. PLN finance director Sarwono Sudarto said after a hearing with the House of Representatives in Jakarta on Thursday last week the compensation scheme would be needed if the government did not allow the company to raise electricity prices next year.

Financial Services

BI to optimize electronic transactions in transportation Antara News 8th Jul 2019
Bank Indonesia (BI) along with related agencies decided to optimize the use of electronic transactions in the two sectors of transportation and social assistance. "After the government agreed on 12 synergy programs to encourage innovation and increase electronic transactions, BI has focused on the two sectors to boost electronic transactions," Assistant Manager of Regional Payment Electronification Function in BI's South Sulawesi Payment System Operation, Maudy Halim, remarked in Makassar on Monday.

Indonesia to emulate China’s e-commerce boom Global Times 9th Jul 2019
Indonesia, which shares multiple similarities with China in e-commerce, is still lagging behind by roughly five years, but it has the potential to become the next giant market in the e-commerce world. Aspiring to learn from China's stellar success in the online marketplace while striving to carve out its own path, the Southeast Asian economy has high hopes for its fast-growing e-commerce market. In less than a decade, China has established itself as the world leader in e-commerce. And Chinese e-commerce giants such as Alibaba and JD.com have extended their reach far beyond internet retailing. 

Five MoUs signed at PHL-Indonesia investment summit Business World 9th Jul 2019
The Philippines-Indonesia Economic and Investment Summit saw the signing of five agreements in the tourism, agriculture and e-commerce industries, Philippine officials at the Jakarta embassy said. “Most of the business agreements are in MoU (memorandum of understanding) format and basically connecting companies/associations to further their partnership,” economic attaché Alexander J. Araque said in an e-mail in response to queries from BusinessWorld Friday. The Summit, organized by the Philippine Chamber of Commerce and Industry (PCCI) and the Indonesian Chamber of Commerce and Industry, marks the 70th anniversary of the two countries’ bilateral and diplomatic relations. It was attended by some 300 businessmen, government officials and diplomats.

Digitisation and regulatory support drive growth of Islamic finance in M'sia, Indonesia Bernama.com 9th Jul 2019
Digitisation, along with continued government commitment to develop Islamic banking, will support the growth of the sector in both Malaysia and Indonesia, according to Moody's Investors Service. "Backed by strong profitability, Islamic banks in both Malaysia and Indonesia are stepping up their investments in digitisation, which should help the industry expand at lower costs," said Moody's vice president and senior analyst Simon Chen, in a statement here. Digitisation generally helps banks reduce operating expenses by enabling them to streamline and automate internal processes and lowering costs to acquire and serve customers, according to the rating agency.

Weak private sector appetite hampers Indonesia’s Islamic finance growth The National 3rd Jul 2019
Indonesia, a top issuer of Islamic bonds this year, is struggling to convince its private sector to follow its lead and raise debt through sukuk, making it difficult for the country to achieve its target of being the biggest global Islamic finance hub in the next five years, a senior finance ministry official said.The country has issued sukuk worth $18.2 billion (Dh66.8bn) as of June this year. However, sovereign issuance accounted for about 97 per cent of the total amount raised while the rest was raised by private sector bonds, said Luky Alfirman, director general of budget financing and risk management at the country finance ministry. Although the country is "optimistic" it can still achieve its goal of becoming the top Islamic finance destination by 2024, the lack of appetite on part of the private sector to raise debt through sukuk market is too stark to ignore, he said at the 2019 London Sukuk and FinTech Summit on Wednesday.

Food & Agriculture

Drought and Massive Crop Failure May Lead to Trillions in Losses Tempo 10th Jul 2019
Chief of the Assessment and Application of Technology Agency (BPPT) Hammam Riza announced that his office is calculating the country’s financial losses from enduring crop failures caused by drought. “It’s still in the form of a proposal. It will predictably reach Rp3 trillion,” said Hammam today, July 10, in Bogor, West Java. He was hard-pressed on finding a solution and mentioned that weather modification technology comes to mind, which is a technology that creates artificial rain. According to the BPPT data, Java, Bali, and West Nusa Tenggara are home to a large number of productive fields compared to other regions across the country – with some already facing the downside of the drought.

FAO disburses aid to farming, fishing households in Central Sulawesi Antara News 2nd Jul 2019
The Food and Agricultural Organization of the United Nations (FAO) collaborated with the Central Sulawesi Governor’s Office and the Provincial Office of Agriculture to dispense aid to farming and fishing households in Palu, Sigi, and Donggala. The aid was offered to over eight thousand farming households in 132 villages across 21 sub-districts in Central Sulawesi that were afflicted by the earthquake and tsunami that hit in September last year, according to a written statement issued by the FAO and received here on Tuesday. The agricultural assistance being distributed comprised 430 tons of fertilizer; over seven tons of seeds of maize, tomato, and cayenne pepper; and over 500 thousand meters of plastic mulch. In June 2019, the FAO also handed out cash aid to some four thousand households in 175 villages having pregnant or lactating mothers and children below five years of age. In July, the FAO will offer fishing equipment, including nets and cool boxes, to some three thousand households in the affected area.

Dried unhulled, medium rice prices climb in June: statistics bureau Antara News 1st Jul 2019
The Central Bureau of Statistics has reported a hike in the prices of dried unhulled rice and medium-quality rice in the mill in June 2019 as compared to those in the previous month. "The price of dried unhulled rice at the farm level rose 4.50 percent, while the cost of medium rice in the mill rose 0.26 percent," the bureau's head Suharyanto informed the press here on Monday. Suharyanto elaborated that in June 2019, the average price of unhulled rice during the harvest period at the farm level was recorded at Rp4,552.00 per kilogram (kg), up 4.50 percent, while at the grinding level, it reached Rp4,656 per kg, or increasing 4.72 percent, as compared to that of unhulled rice of the same quality in the previous month. In the meantime, the average price of grinding unhulled rice at the farm level reached Rp5,246 per kg, a 1.43 percent increase, while at the milling level, the price was recorded at Rp5,361 per kg, or up 1.18 percent.

Sabah to rely on Filipinos, Indonesians The Star Online 1st Jul 2019
Sabah has no plans to change its policy on Indonesian and Filipino workers for its plantation and agriculture sectors and there is no necessity to look elsewhere, says state Agricul­ture and Food Industries Minister Datuk Junz Wong. He said that despite the labour shortage, the state would not be taking workers from other countries but to legalise Indonesian and Filipino workers to meet the needs of the plantation sector.He said he was unaware of any plans to bring in African workers to overcome the nation’s worker shortage in the plantation and agriculture sectors.

Indonesia's palm oil exports to India losing out to Malaysia The Jakarta Post 1st Jul 2019
Indonesia’s palm oil export volume has increased in the past two years, but exports to its biggest market, India, has been decreasing as it loses out to competition from Malaysia. Association of Palm Oil Producers (GAPKI) chairman Joko Supriyono said Indonesia needed to protect its market in India as it imports 20 percent of Indonesia’s palm oil. Indonesia is losing out to Malaysia because Malaysia enjoys lower tariffs. “As the issue is to do with tariffs, the industry cannot do anything. The government has to wake up and do something both for the short- and long-term. India is an important market and we have to protect our interests there,” Joko told The Jakarta Post on Sunday.

Health & Life Sciences

Jakarta Requests Artificial Rain to Tackle Pollution: BPPT Tempo 5th Jul 2019
The Jakarta provincial administration has asked the Assessment and Application of Technology Agency (BPPT) to start implementing a weather modification project between July 10-15 in a bid to reduce air pollution. The agency’s Weather Modification Technology Center (BBTMC) head, Tri Handoko Seto, said that the two parties had agreed on the implementation of the project.

National Health Insurance covers over 222.5 million Indonesians Antara News 4th Jul 2019
As of June 21, 2019, the exact number of Indonesians covered by the National Health Insurance-Healthy Indonesia Cards was 222,547,316. Manado, North Sulawesi (ANTARA) - Some 222.5 million Indonesians are covered by National Health Insurance-Healthy Indonesia Cards, according to Dr. Anurman Huda, Deputy Director of the Health-Social Insurance Office (BJS) for North Sulawesi, Central Sulawesi, Gorontanto and North Maluku (Sulutenggomalut). As of June 21, 2019, the exact number of Indonesians covered by the National Health Insurance-Healthy Indonesia Cards was 222,547,316. At the beginning of the program in 2014, 121.6 million people or 49 percent of the population, were members of the national health insurance program, Dr. Huda said here Thursday, while speaking at a workshop on the National Social Insurance System-Bappenas (National Development Planning Agency). The members' satisfaction index is 75 percent, while the satisfaction index for the medical facility is 65 percent, he added. The Indonesian National Health Care Insurance (BPJS Health) has been managed transparently, efficiently, and all have been accounted for, he noted.

ICT

Tax office’s new directorates to boost revenue from digital economy The Jakarta Post 9th Jul 2019
Finance Minister Sri Mulyani Indrawati on Monday announced the establishment of two directorates under the ministry’s Taxation Directorate General in trying to boost revenue from the digital economy. “We have learned from a number of countries. Therefore, we decided to establish a team dedicated to develop the information system,” she said after launching the operations of the information data directorate and information and communications technology directorate.

Govt ponders stamp duty bill, plans to introduce digital stamp The Jakarta Post 8th Jul 2019
The government is proposing a new stamp duty bill to the House of Representatives to replace the current Law No. 3/1985, which is considered outdated and is unable to cope with information technology developments. The new stamp duty bill is expected to enable the government to tax digital business documents and boost state revenue collection.

Kominfo Needs Special Institutions for Personal Data Protection Katadata 5th Jul 2019
The protection of personal data is of concern to many countries in the midst of today's technological developments. So even with Indonesia. The Ministry of Communication and Information ( Kominfo ) said that it needed a special institution to handle the exchange of personal data. Information and Information Technology Application Director of Information and Communication Technology, Riki Arif Gunawan, said that the institution could oversee the exchange of community data in Indonesia.

Kominfo Ensures that the IMEI Rules Do Not Violate User Data Privacy Katadata 4th Jul 2019
The Ministry of Communications and Information Technology (Communications) to make sure the rules i nternational mobile equipment identity ( IMEI ) does not violate the privacy of user data. The Director General of Post Resources and Equipment and Informatics of the Ministry of Communication and Information Ismail explained that mobile user data through the IMEI number on the operator cannot be tapped by anyone including the operator company.

Indonesia explores digital cooperation with Saudi Arabia Antara News 4th Jul 2019
Communication and Information Minister Rudiantara departed for Riyadh, Saudi Arabia, to ink a memorandum of understanding on cooperation in the field of digital economy between both nations. "This collaboration will contribute to Indonesia's vision to become Asia's Digital Hub next year and also strengthen Indonesia's support for the realization of the Saudi Vision 2030 to continue to develop the non-oil industry sector," Rudiantara remarked in an official statement received here on Wednesday.

SAFEnet Blasts Government for Limiting Internet Access Tempo 28th Jun 2019
In commemorating its sixth anniversary, the Southeast Freedom of Expression Network (SAFEnet) once again highlighted the Indonesian government’s move of curbing people’s access to internet information. In its writen statement dated Friday, June 28, SAFEnet stated the government's decision was a basic form of internet shutdown that “clearly violates [people’s] digital rights.”

Online marketplaces test delivery drones across rural Indonesia Phnom Penh Post 28th Jun 2019
As logistics remains a big issue in e-commerce expansion in Indonesia, online marketplaces are showing an interest in investing in unmanned aerial vehicles, also known as drones, to help reach rural areas across the country. Under its global smart supply chain network, China’s second largest online retailer JD.com has tested drones in Indonesia following the government’s approval earlier this year as it wants to expand to overseas markets.

Indonesia's G20 abstention result of data protection concerns The Jakarta Post 4th Jul 2019
Indonesia does not oppose a recent Group of 20 ( G20 ) outcome on the digital economy but expects that it will accommodate more of an element of data privacy, a senior government official has said. Jakarta recently chose to abstain from the Osaka Declaration on the Digital Economy, launched during the G20 Summit last week, despite its spirit of pushing forward with the development of the internet-based economy. The Foreign Ministry's development, economy and environment director Agustaviano Sofjan explained that the position was taken to secure Indonesia’s national interests amid possible digital data exploitation.

Indonesia selects France-based Thales to build 150 Gbps satellite The Jakarta Post 2nd Jul 2019
Thales Alenia Space, a Franco-Italian aerospace manufacturer, announced on Monday that it had been selected to build “Satria”, a 150 Gigabits per second (Gbps) satellite. The project was targeted to be completed in 2022, when satellite operator Pasifik Satelit Nusantara (PSN) – which runs the Satria project on behalf of the Communications and Information Ministry – is slated to launch it  into space.

Prevent Illegal Cellphone Trading, Communication and Information: IMEI Rules Applies August Katadata 1st Jul 2019
The Ministry of Communication and Information (Kominfo) plans to impose rules on International Mobile Equipment Identity ( IMEI ) in August 2019. This Indonesian IMEI rule is to prevent trafficking of stolen or illegal cellphones. "Our target for August is the signing of a regulation by three ministries, namely Ministry of Communication and Information, Ministry of Trade, and Ministry of Industry," said the Director General of Post Resources and Information and Information Technology Ministry of Communication and Information Ismail in Tangerang, Banten, Monday (1/7).

Gov't in No Haste to Develop 5G Network Tempo 1st Jul 2019
The government stated it would take its time to provide the fifth generation of internet network frequency or 5G network in Indonesia. “We will [provide] it at the right time,” said the Director-General of Resources and Equipment of Post and Information Technology (SDPPI), Ismail, after the opening event of the 25th meeting of Asia-Pacific Telecommunity (APT) Wireless Group, in Tangerang, Banten, Monday, July 1.

Jokowi signs regulation on Satu Data Indonesia The Jakarta Post 28th Jun 2019
President Joko “Jokowi” Widodo has signed a regulation on Satu Data Indonesia an integrated data-management service, in accordance with a recent presidential regulation (Perpres). As stipulated in Article 1, paragraph 1 of Perpres No 39/2019, Satu Data Indonesia will be a government agency to produce accurate, updated, integrated and accountable data...

NTT Com develops the largest data center in Indonesia Antara News 28th Jun 2019
NTT Communications Corporation (NTT Com), the ICT solutions and international communications business within the NTT Group (TOKYO: 9432), announced today it would develop a new data center campus at Bekasi, Indonesia. The new campus will be known as “Indonesia Jakarta 3 Data Center” (JKT3) and is capable of up to 18,000 sqm (7,800 racks) IT space and 45MW IT load once fully developed.

Infrastructure

Gov't to Build Longest Bridge Linking Batam, Bintan Islands Tempo 11th Jul 2019
Indonesian plans to build a 7 km (4.35 mile) bridge to connect Batam and Bintan islands in the Malacca Strait, close to Singapore, as part of efforts to develop industry and tourism in the area, the government said on Thursday, July 11. "The bridge connecting the two islands will cost an estimated 4 trillion rupiah ($284.35 million)," the office of the cabinet secretary said in a statement on Thursday, July 11, and will be the longest in the Southeast Asian country.

Need Infrastructure Financing IDR 20 T, Bappenas Push Alternative Funds Katadata 5th Jul 2019
The need for infrastructure investment in Asia continues to increase. However, the Asian Development Bank (ADB) estimates there are difference in infrastructure investment ( infrastructure gap ) Indonesia 2005-2015 to reach US $ 1.5 trillion, or about Rp20,25 trillion. Therefore, the National Development Planning Agency (PPN / Bappenas) encourages the growth of infrastructure investment through a number of alternative funding schemes.

Indonesia proposes special fund for investments under BRI Antara News 2nd Jul 2019
Indonesia has proposed the establishment of special low-interest funds to facilitate Chinese investment in Indonesia for four investment corridors within the framework of the Belt and Road Initiative (BRI). The proposal was conveyed by President Joko Widodo during a bilateral meeting with Chinese President Xi Jinping at the G20 Summit in Osaka last weekend, Coordinating Maritime Affairs Minister Luhut Binsar Pandjaitan told reporters during a coffee morning in Jakarta, Tuesday.

Indonesia to host second Asia International Water Week Antara News 28th Jun 2019
Indonesia is scheduled to host the 2nd Asia International Water Week which will be held in Bali from November 3 to 7, 2020. Indonesia will also hold a Stakeholders Consultation Meeting in Jakarta on November 11 and 12, 2019 in an attempt to prepare the 2nd Asia International Water Week, the Public Works and Public Housing Minister, Basuki Hadimuljono, said in a statement in Jakarta, Friday.

AIIB ready to provide funds for infrastructure projects The Jakarta Post 11th Jul 2019
The Asian infrastructure investment bank (AIIB) is ready to help Indonesia develop its infrastructure in President Joko “Jokowi” Widodo’s second term in office.President Jokowi previously said he would focus on human capital development in his second term, but infrastructure developments would remain a priority as well.AIIB chief investment officer DJ Pandian said the agency was prepared to help finance infrastructure development in Southeast Asia’s largest economy.

Indonesia construction firm to sell five toll roads The Star Online 11th Jul 2019
State-owned construction company PT Waskita Karya is in the process of selling five toll roads this year and says it already has buyers for two of them.“We just closed deals for the (Surakarta-Ngawi) and Ngawi-Kertosono toll roads,” Waskita president director I Gusti Ngurah Putra was quoted as saying on Tuesday by kontan.co.id. He was referring to toll roads in Central Java and East Java.

Indonesia Plans 4-Mile Sea Bridge Near Singapore Bloomberg.com 11th Jul 2019
Indonesia plans to start building its longest sea bridge next year to connect two islands near Singapore and boost growth and trade with the neighboring hub. The seven-kilometer (4.3-mile) bridge connecting Batam and Bintan will cost as much as 4 trillion rupiah ($284 million) and construction is set to take three to four years, the country’s cabinet secretariat said in a statement on Thursday. President Joko Widodo, who has secured his second term in office, is embarking on a more than $400 billion infrastructure push. The government wants to re-position Batam as an alternative shipping and manufacturing hub to Singapore with a potential to draw $60 billion in new investment.

AIIB holds summit, commits to funding Indonesian infrastructure projects The Jakarta Post 10th Jul 2019
The Asian Infrastructure Investment Bank (AIIB) is ready to help Indonesia develop its infrastructure in President Joko “Jokowi” Widodo’s second term in office. President Jokowi previously said he would focus on human capital development in his second term, but infrastructure developments would remain a priority as well. AIIB chief investment officer DJ Pandian said the agency was prepared to help finance infrastructure development in Southeast Asia’s largest economy.

Where Is Indonesia on China’s Belt and Road Initiative? The Diplomat 9th Jul 2019
Last week, reports surfaced of discussions between Indonesia and China to set up a new special fund under Beijing’s Belt and Road Initiative (BRI). The reports reflect a broader reality where Jakarta, while wary of the challenges inherent in engaging BRI, still remains open to realizing the opportunities within it as well as the initiative continues to evolve.

Manufacturing

Indonesia to boost petrochemical development in Bintuni, W Papua Antara News 11th Jul 2019
The Indonesian government will continue to boost the development of the petrochemical industry complex in Teluk Bintuni District, West Papua. Director of Regional Industry from the Ministry of Industry, Igantius Warsito, said in Manokwari, West Papua, on Thursday, that the government is fostering industrial growth outside of Java. These target areas include the central and eastern parts of Indonesia, as part of efforts to achieve equal industrial development.

Manufacturing sector sees slowdown in June The Jakarta Post 3rd Jul 2019
The country’s manufacturing sector grew slower in June as indicated by a decline in the purchase manager index (PMI) to 50.6 from 51.06 in the previous month. An index rate above 50 indicates growth in the manufacturing sector. Securities firm Samuel Sekuritas economist Ahmad Mikail said the drop was in line with the World Bank revising down its growth domestic product projection (GDP) for Indonesia from 5.2 percent to 5.1 percent this year.

Japan Agrees to Spend $2b to Develop Electric Cars in Indonesia Jakarta Globe 28th Jun 2019
Japan has agreed set aside Rp 28 trillion, or around $2 billion, to develop electric cars in Indonesia, Industry Minister Airlangga Hartarto said in a statement on Thursday.  The agreement was part of a wider cooperation in manufacturing between the two countries under the Indonesia-Japan Economic Partnership Agreement. Airlangga and his Japanese counterpart, Economy, Trade, and Industry Minister Hiroshige Seko, signed the agreement in Osaka on Thursday.

Travel & Tourism

Jokowi approves incentives for airlines The Jakarta Post 11th Jul 2019
President Joko “Jokowi” Widodo has signed a government regulation that will give fiscal incentives to airlines after all relevant stakeholders in the aviation industry agreed to cost sharing to push airfares down. Secretary to the Coordinating Economic Minister Susiwijono Moegiarso said the new regulation was an amendment to Government Regulation No. 69/2015 on value-added tax (VAT) exemption related to import and delivery of certain transportation tools and the delivery of services.

Ministry of Tourism prepares plan on special economic zone in Mandeh Antara News 7th Jul 2019
The Ministry of Tourism will soon prepare a master plan for the development of the Ameh Hill Special Economic Zone (SEZ) in the Integrated Marine Tourism Area of Mandeh in Pesisir Selatan District, West Sumatra. "Monday (July 8) the meeting on the opening of the event will be held in Jakarta," Head of the Pesisir Selatan Tourism, Youth and Sports office, Hadi Susilo, said in Painan, Sunday.

North Sulawesi's tourist facilities to be renovated by 2020 Antara News 5th Jul 2019
President Joko Widodo (Jokowi) has outlined a target to complete the project to renovate public facilities in North Sulawesi's tourist destination areas in 2020. "The target is next year. (Renovation of) all airports, (Special Economic Zone of) Likupang, Bitung, and Lembeh Island, will be completed by next year. We are upbeat about also completing the project for bridges and some other facilities near the beach," Jokowi stated at the Bunaken National Park jetty here on Friday.

LRT Jakarta extends trial run indefinitely as result of public enthusiasm The Jakarta Post 4th Jul 2019
The number of passengers in the free public trial run of the Light Rapid Transit (LRT) has increased tenfold in comparison to 2018’s test, an executive has said.  “In last year’s trial run the number of passengers was not so high. Last year it was 11,070 passengers, but it has now reached more than 146,000 passengers,” said PT LRT Jakarta spokesperson Santy Pradayini as quoted by Antara news agency on Wednesday.

LCC to cut airfares by 50 percent starting on July 4 The Jakarta Post 2nd Jul 2019
Low-cost carriers (LCC) have agreed to cut airfares to 50 percent of the price ceiling (to be announced, starting on Thursday for domestic flights in response to the government’s effort to push down the price of plane tickets.“We are committed to providing affordable flights. The flight schedules and cost sharing [plan] will be discussed in the next coordination meeting,” Secretary to the Coordinating Economic Minister Susiwijono Moegiarso said in Jakarta on Monday.

Aceh promotes culinary sector as tourism attraction Antara News 8th Jul 2019
The numerous culinary dishes in Aceh are promoted as a tourist attraction, aside from its natural landscapes and cultural wealth, which are owned by the province. The province of Aceh possesses an extraordinary potential in the culinary sector and there is a strong background to it, Head of the Ministry of Tourism's Calendar of Event Management, Esthy Reko Astuti said in Jakarta, Monday.

Indonesian tourism targets Philippine market Sunstar 4th Jul 2019
Indonesia's Ministry of Tourism has started a promotional campaign that features the country's popular tourist spots, tradition and culture. Through its tourism team, "Wonderful Indonesia," the campaign made its second stop at SM City Clark on July 3 and 4. The campaign's first stop was at Glorietta 2 in Makati City on March 8-9. The last stop will be held on July 12-14 at SM Lanang Premier in Davao City, where the activity collaborates with the Indonesian Consulate General in Davao City. Promotional activities included showcasing of traditional dance and costume with dancers coming all the way from Indonesia, free tasting of Indonesian traditional snacks, and free tasting of Indonesian coffee from Mandaling-North Sumatra, Flores-East Nusa Tenggara, Toraja-South Sulawesi and Bali.

BBTF on par with prominent global tourist fairs, attracting 49 countries The Jakarta Post 3rd Jul 2019
The Bali and Beyond Travel Fair (BBTF) returned for its sixth year with more participants from overseas. More than 300 buyers from 46 countries participated in the exhibition, held on June 25 to 29 at the Bali Nusa Dua Convention Center, a high-end tourist enclave. These buyers will meet 232 sellers, coming from three countries and 17 Indonesian provinces. Tourism Minister Arief Yahya said at the welcome dinner and the opening ceremony of BBTF at Garuda Wisnu Kencana (GWK) Cultural Park, Bali on June 25, that we may consider the event as the leading tourism exhibition in Indonesia. Arief expressed appreciation to the organizing committee’s dedication for the past six years, saying that the BBTF could be on par with a number of major international travel fairs.