| Regional Affairs
BNN Chief Wants Greater Asean Cooperation Against Drugs The Jakarta Globe 3rd Dec 2014
Greater cooperation within the Association of Southeast Asian Nations should make it possible to stop drug shipments even before they reach shore, Indonesia’s National Narcotics Agency (BNN) said on Wednesday. Speaking at the Third Ministerial Meeting on Drug Matters in Jakarta, BNN chief Comr. Gen. Anang Iskandar said law enforcement agencies have already been collaborating with their counterparts in the region to tackle the trafficking of illegal drugs, but said more should be done. “Most of the drug dealers enter Indonesia through our borders with Malaysia, East Timor and Papua New Guinea,” said Anang.
Jakarta to Host Conference on Southeast Asia Drug Trafficking The Jakarta Globe 2nd Dec 2014
Eradicating drug trafficking and abuse in Southeast Asia will take center stage at a conference in Jakarta on Wednesday. Ministers and law enforcement leaders from across the region will meet at the Pullman Hotel for the Association of Southeast Asian Nations (Asean) Ministerial Meeting on Drug Matters. Sen. Cmr. Sumirat Dwiyanto, a spokesman for Indonesia’s National Narcotics Board (BNN), said the main purpose of the gathering was to cut down distribution in the 10-nation bloc. “All the Asean countries can exchange information about drug-related cases or the method of operations used by the people dealing drugs,” Sumirat said.
National Affairs
‘We’ll Abide by the Rules’ — KMP Accepts Djarot as Jakarta No. 2 The Jakarta Globe 4th Dec 2014
The dispute about who has the right to nominate a candidate for the post of Jakarta deputy governor has ended with the Great Indonesia Movement (Gerindra) Party accepting Governor Basuki Tjahaja Purnama’s selection — but only because it is legally obliged to do so. The Indonesian Democratic Party of Struggle (PDI-P) and Gerindra, the two parties that supported Joko Widodo and Basuki in the 2012 gubernatorial election but who now represent opposing political camps both in the Jakarta legislative council and the national-level legislature, say they’ll accept Djarot Syaiful Hidayat. Djarot is the former mayor Blitar in East Java. The PDI-P announced its support for him by way of a letter from its executive board and chairwoman Megawati Soekarnoputri on Wednesday, after Basuki had discussed the matter with her.
Lapindo urged to settle payment by year end The Jakarta Post 4th Dec 2014
Cabinet secretary Andi Widjajanto has called on PT Minarak Lapindo Jaya to immediately pay the Rp 781 billion (US$63.55 million) compensation arrears to the Sidoarjo mud victims. Lapindo was given next year as a deadline. The statement was the result of a meeting between Andi and the Sidoarjo Mudflow Mitigation Agency (BPLS) chief Sunarso in Jakarta on Thursday. Andi acknowledged that the government also had the obligation to pay the mudflow victims Rp 300 billion. However, he added, the payment would be made possible once Lapindo had settled its payment.
Spending to be sped up for growth The Jakarta Post 4th Dec 2014
The government plans to amend several regulations that have been widely blamed for slowing attempts to expedite state-budget spending, particularly for infrastructure development. During a Cabinet meeting on Wednesday, President Joko “Jokowi” Widodo instructed related ministers to reform the current system, which had created bottlenecks for both central and local governments when trying to spend their budgets. Coordinating Economic Minister Sofyan Djalil said that the current state budget procurement system was deemed too complicated and had caused many officials to end up in prison for violating procurement regulations.
Prabowo Congratulates Bakrie at Bali Congress The Jakarta Globe 4th Dec 2014
Prabowo Subianto, the chairman of the Great Indonesia Movement (Gerindra) Party, made an appearance at the Golkar Party congress in Bali on Thursday, to congratulate chairman Aburizal Bakrie on his re-election. Aburizal, who on Wednesday evening was declared to have obtained 100 percent of votes after all of his challengers dropped out of the running, used the national congress to underscore his intention of binding Indonesia’s oldest party to the opposition Red-White coalition, or KMP, which was established by Prabowo. “Looking ahead, our nation faces critical challenges,” Prabowo said at the closing ceremony of the congress, stressing that a successful Golkar meant a successful KMP. “We’re facing a crossroads — can we rise, compete, or merely become a market for other people’s goods?”
Indonesia Girds for Millions Demonstrating for Higher Wage Gains The Jakarta Globe 4th Dec 2014
Indonesia’s capital girded for a potential turnout of millions of protesters asking for a bigger increase in minimum wages in the world’s fourth most-populous nation, a test of President Joko Widodo’s pro-business image. The two-day national protest, starting Dec. 10, will involve four trade union groups, Muhammad Rusdi, a secretary general at the Indonesian Trade Union Confederation, or KSPI, said by phone in Jakarta on Wednesday. Workers have seven demands including renegotiating last month’s minimum-wage deal and scrapping outsourcing in state-owned companies, he said. Jokowi, as the president who took office in October is known, has pursued a two-pronged economic strategy of addressing income inequality and boosting Indonesia’s appeal for investment. Faster wage gains would erode a competitive advantage against China as manufacturers look for alternative production locations and contribute to inflation as Jokowi boosts fuel costs.
Govt faces bumpy road ahead, says Yasona The Jakarta Post 3rd Dec 2014
Law and Human Rights Minister Yasona Laolly acknowledged there would be a bumpy road ahead for the administration in carrying out its duties following the re-election of Aburizal Bakrie as chairman of the Golkar Party at the party’s recent national congress. “It won’t be easy for us. But I firmly believe that the people will support us if they see that our work is solely dedicated for their good,” Yasona said as quoted by kompas.com. He said the administration would boost and improve relationships with all stakeholders, especially with political parties that had vowed to monitor the government’s performance.
Hamdan says yes to second term as MK justice The Jakarta Post 3rd Dec 2014
Constitutional Court (MK) chief justice Hamdan Zoelva, whose tenure ends early next year, said on Wednesday that he was ready to be re-appointed as a justice at the powerful court that has the role as the final adjudicator of disputes on the interpretation of national laws and election results. "Should [Jokowi] entrust me [to sit as a justice for a second term], God willing," Hamdan said on Wednesday. Hamdan made the remark after a meeting at the Presidential Office where President Joko "Jokowi" Widodo summoned the nine justices to discuss several issues, including an upcoming international constitutional forum.
Agung outlines support for Jan congress The Jakarta Post 3rd Dec 2014
Agung Laksono, the leader of the Golkar Party's splinter faction who has been supposedly dismissed by incumbent chairman Aburizal Bakrie, has spoken of the support he has within the party, as he continues with his plan to hold his version of the party’s National Congress in Jakarta in January next year. On Wednesday, Aburizal enjoyed large support from the participants in the ongoing congress in Nusa Dua, Bali, and was declared Golkar chairman for another five years. But Agung's camp maintained its rejection, claiming that the tycoon had been elected in an undemocratic process and unconstitutional congress.
MK justice selection process will be transparent: Govt The Jakarta Post 3rd Dec 2014
The government has confirmed that the process to select a Constitutional Court (MK) justice to replace chief justice Hamdan Zoelva, whose tenure ends in January, will be done transparently amid calls from legal activists who were concerned that last year’s selection was done behind closed doors by former president Susilo Bambang Yudhoyono. Although the President has yet to start mulling who will replace Hamdan, Law and Human Rights Minister Yasonna Laoly assured the selection process would be transparent. “It will be done transparently,” said Yasonna who refused to elaborate about the mechanism on Wednesday in the Palace compound.
Johannes Nugroho: Education Reforms Not Making the Grade The Jakarta Globe 3rd Dec 2014
When the then-presidential candidate Joko Widodo claimed that a mental revolution was needed in the country, presumably he planned to use the education system to spearhead the process. The urgency was palpable this week when the education minister, Anies Baswedan, found the system to be in “dire straits.” The minister highlighted a number of indicators, among which the fact Indonesia was placed last of the 40 countries surveyed by the Learning Curve in terms of the quality of their education system. That Joko chose to send his own sons to Singapore to study is, albeit an embarrassing point for the new government, another clear-cut indicator of the faith many Indonesians have in our local education system.
Bakrie Hangs On: Tycoon Named Chairman of Golkar Party for Second Term The Jakarta Globe 3rd Dec 2014
Aburizal Bakrie will continue as the chairman of the Golkar Party for another five years after the tycoon outmaneuvered his political opponents at the party’s congress in Bali. “Aburizal Bakrie has received 100 percent of the votes,” Nurdin Halid, the leader of the congress said in Nusa Dua, Bali, on Wednesday. Akbar Tandjung will also continue as the chairman of the party’s advisory board. Shortly after the announcement, Bakrie ruled out another presidential run in 2019. “I am already old,” Bakrie said following the decision, adding that he and Akbar would seek to preside over a transition period before the party selected a new presidential candidate prior to the 2019 presidential election.
Indonesia’s Corruption Ranking Improves but ‘Radical’ Steps Needed The Jakarta Globe 3rd Dec 2014
Countries like Indonesia “need to adopt radical anti-corruption measures in favor of their people,” Transparency International warned in the latest edition of its Corruption Perceptions Index, which was released on Wednesday. On a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean), Indonesia scores 34, which is slightly better than last year’s 32. The country is ranked 107th out of 175. In the 2013 version of the index, Indonesia ranked 114th. However, the poor scores of countries like Indonesia “indicate a general weak or ineffective leadership to counter corruption, posing threats for both sustainability of their economies and somewhat fragile democracies [in the Asia-Pacific region],” Transparency International said in a statement on its website.
Basuki Chooses Former Blitar Mayor as Deputy The Jakarta Globe 2nd Dec 2014
Jakarta Governor Basuki Tjahaja Purnama has nominated Djarot Syaiful Hidayat, the former mayor of the East Java town of Blitar, as his deputy. Basuki announced his decision in Jakarta on Tuesday, defying predictions he would select Sarwo Handayani, a 30-year veteran of the city administration. Basuki said he put forward only Djarot’s name to Megawati Soekarnoputri, the chairwoman of the Indonesian Democratic Party of Struggle, or PDI-P, who had given her approval. Basuki had long expressed his desire to have Sarwo appointed his deputy, but the PDI-P insisted that the deputy governor should be from the party, following President Joko Widido’s departure as governor in October.
Agung to report Aburizal over ‘secret’ meeting The Jakarta Post 2nd Dec 2014
Lawmaker Agun Gunandjar Sudarsa, a member of the so-called "Team for Golkar Party's Saviors", says he will file a complaint over a tape that reportedly contained a recording of a "secret" meeting organized by incumbent chairman Aburizal Bakrie. "The recording is just more proof that there has been a systematic attempt to allow Aburizal to lead Golkar again," Agun said. "We will file a formal report with the Law and Human Rights Ministry. There has been illegalities that have robbed Golkar members of their democratic rights, which completely violates our party's statute," he added.
KPK decisions remain valid despite incomplete leadership: Chairman The Jakarta Post 2nd Dec 2014
Corruption Eradication Commission (KPK) chairman Abraham Samad says decisions made by the anti-graft body will remain valid although it has less than five members in its leadership team. “What I need to assert is that there is no article mentioning that if KPK leadership consists of only four people, then all of its decisions will become invalid,” he said as quoted by Antara news agency on the sidelines of the National Conference on Corruption Eradication in Jakarta on Tuesday. Abraham was speaking in response to concerns about the commission’s incomplete leadership, which triggered worries about it performing ineffectively.
More Banyumas officials named as suspects in bribery case The Jakarta Post 2nd Dec 2014
The Purwokerto Prosecutor’s Office has named two more Banyumas officials, namely Banyumas Environmental Agency head Dwi Pindarto and Banyumas Trade Agency head Djumeno as suspects over allegations of accepting Rp 180 million in bribes from Indomaret convenience stores. “We have named them suspects and right now they are being questioned. The investigation is still ongoing and there is the possibility of more suspects coming up,” Purwokerto Prosecutor’s Office intelligence section head Abdul Rasyid said on Tuesday. Previously, prosecutors named Banyumas Public Order Agency head Rusmiyati and Indomaret employee Asep Gunawan as suspects in the case. According to preliminary questioning, Asep was the staff member who was ordered to hand over the Rp 180 million, which was aimed at paving the way for the issuance of building permits.
Govt to find solutions for Merpati The Jakarta Post 2nd Dec 2014
State-Owned Enterprises Minister Rini Soemarno said her ministry plans to find a solution for the debt-ridden carrier PT Merpati Nusantara Airlines (Merpati) in the next three weeks. “[Finding solutions for] Merpati is hard. But from the very first day that I started leading this ministry, I've been thinking about the airline. We plan to hold a meeting with [Finance Minister] Bambang Bojonegoro and [Transportation Minister] Ignasius Jonan and people from the Economic Coordinating Ministry to find solutions,” Rini said in Jakarta on Tuesday as quoted by tribunnews.com. She admitted that it was hard for the airline to compete with other airlines operating in the archipelago given the fact that the competition was tight and Merpati has temporarily halted its operations since February of this year.
32 Indonesians Missing After S. Korean Fishing Vessel Sinks The Jakarta Globe 2nd Dec 2014
Three Indonesian nationals have been rescued but 32 are still missing after a South Korean fishing vessel sank off Russia’s far east coast on Monday. The 1,753-ton Oryong 501, operated by South Korea’s Sajo Industries, went down in the western Bering Sea. The trawler was carrying 60 people, including one Russian inspector, 11 South Koreans, 35 Indonesians and 13 Philippine crew members. Indonesia’s Foreign Ministry said that as of Monday evening eight crew members had been rescued, including three Indonesians. The condition of the three, however, is still unknown.
Basuki to Propose Prospective Deputies to President The Jakarta Globe 1st Dec 2014
Jakarta residents will know the name of their next deputy governor as soon as this week, as Governor Basuki Tjahaja Purnama prepares to submit his picks to President Joko Widodo. The governor said on Monday that he was waiting for the president to issue an implementing regulation for an emergency decree introduced in October on the election of regional heads. “I’ve prepared two letters for my candidate picks that I’m ready to sent to the president as soon as he’s signed the regulation,” Basuki told reporters at City Hall. “I’ve heard that he’s going to sign it tomorrow [Tuesday].” He added that one of the letters would endorse a deputy gubernatorial candidate of his own choosing, and the other a candidate from Joko’s Indonesian Democratic Party of Struggle, or PDI-P.
Jokowi to Scrap ID Card for Indonesian Migrant Workers The Jakarta Globe 1st Dec 2014
President Joko Widodo has announced Indonesia’s migrant workers identification card program will be scrapped due to numerous cases of alleged extortion. Joko, popularly known as Jokowi, made the decision after speaking with Indonesian migrant workers in eight countries during a teleconference on Sunday. An Indonesian migrant worker in Brunei Darussalam told Joko that the identification card, known as KTKLN, was a “burden” mentally and materially. “We want the KTKLN program to be erased, not just revised or replaced with other similar cards,” the worker told the president, as quoted by news portal Tribunnews.com. “We want it to be scrapped.”
BKPM vows to help investors The Jakarta Post 28th Nov 2014
Following his inauguration on Thursday, new Investment Coordinating Board (BKPM) head Franky Sibarani promised to further simplify investment permits as his top priority in a bid to attract more investment. Streamlining whole licensing procedures under the BKPM as the single body to handle investment permits is one of President Joko “Jokowi” Widodo’s targets, a service he expects to be in place within six months.
Joko Welcomes New Investment, BNP2TKI Chiefs Amid Criticism The Jakarta Globe 28th Nov 2014
President Joko Widodo on Thursday swore in Franky Sibarani as the new chief of the Investment Coordinating Board, or BKPM, and Nusron Wahid as the new chief of the National Agency for the Placement and Protection of Indonesian Workers, or BNP2TKI. Secretary of the Cabinet Andi Widjajanto said Franky, a top figure in an influential business lobby, was picked because he has a strong business background and was put forward by the business community. Franky was a deputy secretary general of the Indonesian Employers Association, or Apindo.
Customs
Lion Air to build Indonesia’s largest cargo airport in Lebak Pattaya Mail 29th Nov 2014
Lion Air, Indonesia’s largest privately owned airlines, plans to build a cargo airport in Lebak, Banten province, which will be bigger than the Soekarno-Hatta International Airport, the company’s CEO, Rusdi Kirana, stated here on Friday. "We will focus more on building infrastructure," Rusdi noted after inking a contract for the purchase of 40 turboprop aircraft from Italys aircraft manufacturer, Aerei da Trasporto Regionale (ATR). According to Rudi, the cargo airport will be built on a six thousand-hectare plot of land in Lebak area and will be specifically used for cargo transportation catering to domestic and regional markets. "We have set a target to make the airport fully operational in 2018," Rusdi stated, adding that the groundbreaking of the new airport will be held next year. He expressed hope that the new cargo airport will ease domestic and international flow of goods.
Defense & Security
Minister Susi Launches Fishing Moratorium Plan The Jakarta Globe 4th Dec 2014
In a bid to preserve the nation’s marine ecosystem and resources, Maritime Affairs and Fisheries Minister Susi Pudjiastuti wants to impose a moratorium on fishing in large swathes of Indonesia’s Exclusive Economic Zone. Speaking at a Jakarta Foreign Correspondents Club event held at the Intercontinental Hotel on Thursday, Susi proposed that fishing be limited to a zone of 12 nautical miles to 20 nautical miles from the coast, and that there should not be any such activities beyond the 40 nautical mile point. Generally speaking, the EEZ extends to a distance of 200 nautical miles, or 370 kilometers, from the coast.
TNI looking for ways to sink illegal fishing vessels Antara News 3rd Dec 2014
Indonesian Military (TNI) Chief General Moeldoko has said the TNI was looking for the best possible way to sink foreign vessels fishing illegally in Indonesian waters. "I have ordered the Naval chief of staff to find the best possible way in accordance with President Joko "Jokowi" Widodos instruction to sink foreign illegal fishing vessels in Indonesian waters so as not to reap global criticism," Moeldoko stated. The TNI chief was speaking at a meeting with his ranking officers after opening a joint Tri Matra IX 2014 terrorist handling exercise at Halim Perdanakusuma on Monday. He stressed that while he wanted the TNI to carry out the Presidents order, he also wanted it to take a subjective view. Therefore, he held the meeting with the TNI high-ranking officers to discuss more elegant ways that may be internationally acceptable to sink foreign vessels caught fishing illegally in Indonesian waters.
Susi enlists aid of Navy for fight against illegal fishing The Jakarta Post 2nd Dec 2014
The Maritime Affairs and Fisheries Ministry has signed a Memorandum of Understanding (MoU) with the Indonesian Navy in an effort to increase marine surveillance and improve law enforcement in Indonesian waters. The agreement, co-signed by Maritime Affairs and Fisheries Minister Susi Pudjiastuti, the Navy chief of staff, as well as several high-ranking officers and senior representatives of the ministry’s departments, formalizes a multi-year cooperation initiative between the entities, spanning information exchange, capacity building, research and development and resources sharing.
Jokowi grants TNI demand for new structure to boost attacks Jakarta Post 29th Nov 2014
President Joko “Jokowi” Widodo agreed on Friday to continue with an Indonesian Military (TNI) plan for the formation of defense groups under a joint command, locally abbreviated as Kogabwilhan, designed for flexible and rapid troop deployment. The plan will integrate the regional resources of the Army, the Navy and the Air Force into multi-service groups that will be positioned in certain defense flashpoints integral to preserving the country’s territorial integrity and sovereignty. Each Kogabwilhan group will be equipped with its own fleet of warships, jet fighter squadrons and Army units. Each group’s commander, a three-star general, will be given the authority to respond without having to go through red tape at the TNI headquarters in Jakarta. “As soon as possible, we will have it materialized. Let the plan be discussed and finalized by the officials before it is given to me,” said Jokowi during a meeting with TNI commander Gen. Moeldoko and commanders of major commands from across the country on Friday at the Bogor Presidential Palace in West Java. “The plan not only includes the Kogabwilhan, but also the Central Armada,” Jokowi said.
Pollycarpus gets parole The Jakarta Post 28th Nov 2014
ormer Garuda pilot Pollycarpus Budihari Priyanto, who was sentenced to 14 years in prison over his role in the death of human rights campaigner Munir Said Thalib, has left Sukamiskin Penitentiary in Bandung on parole. “Pollycarpus is out of prison on parole,” penitentiary directorate-general spokesman Akbar Hadi said on Friday. He said Pollycarpus was considered as having fulfilled all the requirements necessary to receive parole. Justice and Human Rights Ministerial Regulation No. 1/2007 stipulates that a convict can receive parole after serving two thirds of his or her sentence.
Jokowi’s Maritime Doctrine and What It Means The Diplomat 29th Nov 2014
Despite coming into the Indonesian presidency as a man with minimal foreign policy experience, Indonesian president Joko “Jokowi” Widodo has attempted to launch a bold new foreign policy doctrine. Since the end of the Suharto dictatorship, Indonesian presidents have slowly rebuilt the country’s clout in regional and international affairs, which diminished greatly in the chaotic post-Suharto era. Former president Susilo Bambang Yudhoyono, though considered mostly a failure as a domestic reformer, did restore Indonesian leadership of ASEAN and play a significant role in helping mediate several regional conflicts. Still, no president since Suharto proclaimed so bold a foreign policy doctrine as the former Jakarta mayor just did at the East Asia Summit. The Jokowi doctrine, focused on Indonesia’s maritime trade, infrastructure, and security, announces an intention to vastly expand Indonesia’s maritime power. Whether the country has the resources and the political will to put Jokowi’s grand vision into action remains a serious question. The Jakarta Post has published excellent overview of Jokowi’s maritime doctrine. Jokowi and his advisors developed the doctrine during his presidential campaign and the new president outlined the doctrine in his speech at the East Asia Summit in Myanmar earlier this month. The doctrine posits that Indonesia is a maritime “fulcrum” between Indian Ocean powers (namely, India) and Pacific powers like China and the United States. It also proposes that both oceans should be areas of peace and free trade, and that Indonesia will help protect the natural resources of the seas. The Jokowi doctrine also commits Indonesia to vastly expanding its naval assets, supposedly in order to secure freedom of navigation and trade on these seas.
Economics
Clearing the Way for Local Bonds The Jakarta Globe 5th Dec 2014
Regional governments say their plans to raise funds bond sales have snagged on red tape, but observers question their readiness to face capital markets’ scrutiny. Local governments such as Jakarta and West Java have previously considered issuing bonds as an alternative source of funding, since most local governments’ revenues still rely largely on the state budget. A Finance Ministry regulation issued in 2006 provides a guidelines municipal bond issues, but interest has remained tepid. The Financial Services Authority (OJK) has encouraged more local governments to issue bonds as an alternative source to finance their infrastructure projects.
Indonesia Central Bankers Feel Inflation Pain in Their Paychecks Bloomberg 2nd Dec 2014
Weeks after Bank Indonesia Governor Agus Martowardojo won a 2015 pay increase for meeting his inflation target this year, a November fuel-price increase has put his next salary gain at risk. Indonesia’s inflation will probably average 6.4 percent this year and 6.95 percent next, above the central bank’s 3 percent-to-5-percent target, according to the median of six estimates in a Bloomberg survey. An overshoot would undermine the case for a subsequent salary increase for the monetary authority’s top officials, lawmakers say.
RI's trade balance returns to surplus The Jakarta Post 1st Dec 2014
The Central Statistics Agency (BPS) says that the country’s trade balance returned to surplus in October 2014 after suffering deficits in the previous few months. BPS data showed the trade balance enjoyed a US$23.3 million dollar surplus in October this year after suffering a deficit of $270.3 million in the previous month, the largest deficit that Indonesia recorded in the past five months of 2014. BPS head Suryamin said that Indonesia’s exports reached $15.35 billion while its imports stood at $15.33 billion in October. Based on the volume, he also said that the trade balance recorded a surplus of 30.7 million tons of commodities since the volume of exports reached 43.84 million tons while imports stood at 13.18 million tons. “In October, we also saw that the figure of non-oil and gas sector trade surplus was bigger than [size of] the oil and gas sector trade deficit,” he said.
Energy
Fixed Subsidies Seen by Finance Ministry Halving Indonesia’s Fuel Spending in 2015 The Jakarta Globe 5th Dec 2014
Indonesia’s spending on fuel subsidies might only be half the current budget figure for 2015, the finance minister said, if Southeast Asia’s largest economy introduces a fixed subsidy mechanism next year. In his first major economic policy decision, President Joko Widodo last month raised subsidized gasoline and diesel prices by more than 30 percent to help fund his reform agenda and tackle the country’s budget and current account deficits. Indonesia currently sets domestic fuel prices below the market price, with the government subsidizing the difference. The change would mean Indonesia could avoid ballooning subsidy spending when oil prices increase.
Indonesia Targets Pertamina Trading in Energy Industry Clean-Up The Jakarta Globe 5th Dec 2014
Indonesia will improve transparency at its offshore oil trading company as President Joko Widodo takes steps to clean up the energy industry, according to the government’s new oil and gas management reform team. Petral, the trading division of state company Pertamina, buys crude and fuel on international markets to ship to Indonesia, a net oil importer. The unit has become a target for the reform team as the government seeks to reduce the influence of a so-called energy “mafia” in the country, Faisal Basri, the head of the team, said in an interview in Jakarta on Thursday. “There’s pressure to dismantle it, but we can’t just do that,” Basri said. “Our task is not to catch the mafia, but to create a business climate for all to participate by the new rules. Our recommendations will be the new rules.”
Indonesian Miners Must Slash Coal Production by 100m Tons in 2015: APBI The Jakarta Globe 5th Dec 2014
The Indonesian Coal Mining Association, or APBI, has called on the country’s miners to set a lower production target next year in a bid to boost slumping coal prices. APBI chairman Bob Kamandanu on Friday underlined the need for coal miners to cut production by 100 million metric tons in 2015, from over 400 million tons of coal estimated for this year. “Coal miners are bleeding with current prices. So, if production volume is reduced, the price will get better,” Bob said. The coal reference price set by the Ministry of Energy and Mineral Resources was at $65.70 per ton in November, down 18 percent so far this year.
Indonesia to Sign Sales, Refinery Agreements With CNOOC, Saudi Aramco Next Week The Jakarta Globe 3rd Dec 2014
Indonesia expects to sign agreements with China’s CNOOC, Saudi Aramco and two other oil companies next week covering direct oil sales and refinery investments in Southeast Asia’s largest economy, a senior Pertamina official said. President Joko Widodo, who took office six weeks ago, is looking to modernize the country’s refineries and build new ones as part of sweeping energy reforms to squeeze out widespread corruption and meet ballooning energy demands. Pertamina is in talks with CNOOC, Saudi Aramco, Thailand’s PTT and a Japanese oil company to form joint ventures that would not only guarantee crude supplies to Indonesia’s refineries, but also help fund major upgrades.
BlackRock Says Oil Rout Leaves Funds With Outdated Holdings The Jakarta Globe 2nd Dec 2014
The rapid slide in oil prices has left many money managers overseeing outdated portfolios and missing emerging opportunities from Turkey to India and Indonesia, according to BlackRock’s Sam Vecht. Even as crude’s 36 percent plunge in less than six months eases the energy costs of importing countries and leaves scope for more consumer spending, investors haven’t been quick enough to churn their holdings, said Vecht, who oversees emerging Europe funds in London. The lag is pronounced in Europe where managers have yet to appreciate the boost from cheaper fuel on segments such as industrial-goods makers and consumer-product companies, he said. “Whether you’re in Europe, or the US — whatever kind of fund you manage — the portfolio that works well with oil priced at $110 oil is not the same portfolio that works at $70,” Vecht said in an interview on Nov. 28. “I really don’t think many people have moved their funds enough to reflect that change.”
Indonesia Reviews Subsidized Fuel Policy Amid Global Oil Price Drop The Jakarta Globe 2nd Dec 2014
As global oil prices tumble, Indonesia’s new government said on Tuesday it is reviewing its subsidized fuel policy to ensure consumers are not being charged above the market rate. In his first major economic policy decision, President Joko Widodo last month announced a more than 30 percent hike in fuel prices, expected to save up to $11.5 billion next year, to help fund his reform agenda and tackle the current account deficit. But since then, global crude prices have fallen nearly 10 percent as supply growth led by the US shale oil boom exceeded demand. “We keep reviewing fuel prices and will coordinate with the finance ministry to recalculate and find an effective subsidized price,” Energy and Mineral Resources Minister Sudirman Said told reporters.
Energy Minister Defends Oil Deal With Angola The Jakarta Globe 2nd Dec 2014
Energy and Mineral Resources Minister Sudirman Said defended on Tuesday the government’s decision to cooperate with Angola-based oil and gas firm Sonangol, emphasizing that there will be no blunders with the plan. The two countries, through Pertamina and Sonangol, signed a corporation agreement on Oct. 31, involving upstream operations, processing and trade. Sudirman said that direct cooperation with Sonangol was intended to get crude supplies directly from the producer, as an effort to cut down purchasing from traders. “We’re trying to look for other supplies, like from Angola. But what is currently happening is warring debate as if the president made a mistake [in cooperating with Angola],” Sudirman said at Corruption Eradication National Conference.
Cement Veteran Dwi Soetjipto Named Head of Indonesia’s Pertamina The Wall Street Journal 1st Dec 2014
Indonesia–Cement industry veteran Dwi Soetjipto was named the head of Pertamina, Indonesia’s state oil and gas company, and said he would spearhead a drive to make the net oil-importing nation self-sufficient in energy. Mr. Soetjipto, a veteran of the cement industry and most recently the president-director of state-controlled cement producer Semen Indonesia SMGR.JK +4.22%, was chosen for the position by President Joko Widodo, State-Owned Enterprises Minister Rini Soemarno told reporters Friday. Mr. Soetjipto takes over Pertamina at a time when Indonesia’s oil production has dropped below 800,000 barrels of oil a day for the first time in decades; the country has fallen from its former spot as the world’s top exporter of natural gas. It faces pressure to develop its offshore production capacity as Indonesia seeks to find new sources of oil and gas, and to expand its reach beyond its borders.
Dwi Soetjipto Appointed to Lead Pertamina The Jakarta Globe 28th Nov 2014
The government has appointed Dwi Soetjipto as the new president-director of state-owned energy company Pertamina. The decision to appoint Dwi was made during a shareholder meeting held at the Ministry of State Owned Enterprises. “The shareholder meeting has decided to appoint Dwi Soetjipto as the Pertamina chairman for the 2014-19 period,” Minister Rini Soemarno told a press conference on Friday.
Freeport’s production still below capacity Jakarta Post 28th Nov 2014
Production at Freeport-McMoRan Inc’s huge Indonesian copper mine has yet to return to full capacity after an export dispute with the government and disruption related to workers’ safety concerns, the local CEO said on Thursday. Relations between Freeport and its workforce remain strained after a series of blockades following a fatal accident last month, with at least two protests staged this week, union officials told Reuters. The government had also imposed a partial closure for a period after the accident. A prolonged fall in output or a flare-up in worker unrest at the Papua mine, which employs around 24,000 people, could provide some support for copper prices and would be a test for Indonesia’s new government. “In the short term, no significant impact,” Freeport’s local CEO, Rozik Soetjipto told Reuters by text when asked about the two protests earlier this week. “We can maintain production at 80 percent.
Financial Services
Analysis: Impact of fuel-price hike on banking industry’s liquidity Jakarta Post 3rd Dec 2014
Bank Indonesia (BI) raised its rate by 25 basis points (bps) to 7.75 percent — with an increase of 50 bps on its lending-facility rate to 8.00 percent and deposit-facility rate to remain unchanged at 5.75 percent — at an unscheduled meeting on Nov. 18, 2014. The rate hikes were undertaken to anchor inflation expectations and to ensure that inflationary pressures remain under control and temporary following the increase in subsidized-fuel prices. This policy was also undertaken in anticipation of the US Federal Reserve policy or the potential increase of the Fed funds rate next year. BI has moved ahead to keep the spread between the policy rate in the US and Indonesia and anticipate the effect of the Fed funds-rate increase to the volatility of rupiah.
OJK targets improved financial literacy rate The Jakarta Post 1st Dec 2014
The Financial Services Authority (OJK) is setting its sights on students and professionals as part of its effort to improve financial literacy in 2015. High school student Fero Octora, 16, could not tell the difference between Bank Central Asia and the central bank, Bank Indonesia (BI). She took a moment to think and said, “Bank Central Asia has a larger scope, I think, because it oversees the Asian region, whereas the Indonesian central bank only supervises Indonesia.” Little did Fero know that BI functions as a monetary regulator and private lender Bank Central Asia or BCA is a part of an industry that it regulates. Another student, Abigail Handoyo, 16, admitted that she was unfamiliar with terms such as “mutual funds”, “policy” or “unit link”. She said that she learned economics at school, but had never heard the terms before.
Food & Agriculture
Malaysia, Thailand to strengthen rubber, bilateral trade The Malaysian Insider 1st Dec 2014
Prime Minister Datuk Seri Najib Razak said Malaysia and Thailand will further discuss cooperation to stabilise natural rubber prices. He said it was important for Malaysia, Thailand and Indonesia to continue working together to support the work of the International Tripartite Rubber Council (ITRC) to shore up the commodity's price. "Both countries also agreed to include Vietnam in the process, as well as, to explore ways and means to increase the natural rubber usage in other new products," Najib told reporters after hosting a luncheon in honour of visiting Thai Prime Minister Prayuth Chan-o-cha at Seri Perdana today. The prime minister and his counterpart also discussed joint development strategies for border areas which included the establishment of rubber cities to promote the natural rubber industry of both countries.
Health & Life Sciences
Local pharmaceutical companies unprepared for free market The Jakarta Post 30th Nov 2014
Seventeen of the 38 pharmaceutical companies in East Java have yet to meet international drug production standards, making them vulnerable in the tough business competition to come with the free ASEAN market next year. The remaining companies that applied international standards were mostly foreign investors. East Java chapter Pharmaceutical Business Association head Paulus Totok Lucida said that the 17 pharmaceutical companies were medium-sized companies with working capital of below Rp 20 billion (US$1.65 million) and manufactured products that were safe for consumption based on local standards. He added that these companies generally could not afford additional production costs to meet international standard requirements and suggested that the medium-sized companies merge with other companies and for the government to provide facilities, such as credit loans, to the 17 pharmaceutical companies.
ICT
Xiaomi’s Cheap Smartphones Make a Splash in Indonesia The Wall Street Journal 1st Dec 2014
China’s Xiaomi Inc. entered Indonesia in September to sell low-cost smartphones to an increasingly mobile-hungry population, and its push into Southeast Asia’s largest market is already bearing fruit. “We’ve sold over 100,000 Redmi 1S and Redmi Note phones in Indonesia,” Hugo Barra, Xiaomi’s vice president for global operations, told The Wall Street Journal in an interview. The Redmi 1S is Xiaomi’s cheapest phone, selling at 1.5 million rupiah ($122), and the Redmi Note is its popular phone-tablet hybrid, or phablet. Over the past year the Beijing-based company has also expanded into emerging markets like India, where it has sold more than half a million phones since its first flash sale in July sold out in under 40 minutes. While sales in India have far outpaced those in Indonesia, Mr. Barra said he was quite happy considering Xiaomi is taking baby steps to understand the Indonesian market better. “It’s been really good so far,” he said.
Malaysia, Indonesia Sign MoU To Extend ICT Sector Collaboration Bernama 1st Dec 2014
Multimedia Development Corp (MDeC) and Indonesia's Badan Pengkajian dan Penerapan Teknologi (BPPT) Monday signed a memorandum of understanding (MoU) to collaborate in the information and communications technology (ICT) sector. The MoU is an extension of the collaboration that was inked between both parties on Dec 8, 2011. MDeC chief executive officer, Datuk Yasmin Mahmood, said both countries would use ICT to benefit the rakyat of both countries. "I hope in the short term, this government-to-government (g-to-g) platform will entice our private sector to find ways to collaborate with their counterparts in Indonesia," she said. Yasmin and chairman, Tan Sri Abdul Halim Ali, represented MDeC at the signing ceremony.
Infrastructure
Court jails former UI deputy rector for corruption The Jakarta Post 4th Dec 2014
In another gloomy passage for the country’s higher education history, the Jakarta Corruption Court on Wednesday sentenced former University of Indonesia (UI) deputy rector Tafsir Nurchamid to two-and-a-half years in prison in a graft case surrounding IT infrastructure procurement for the university’s library during 2010-2011. “Our examination into the case has found the defendant guilty of corruption, together with other parties in the case,” presiding judge Sinung Hermawan read from his verdict on Tafsir on Wednesday. The court’s panel of judges also ordered Tafsir to pay a fine of Rp 200 million (US$16,254) or serve an additional three months in prison.
Trans Sumatra to set out land acquisition The Jakarta Post 2nd Dec 2014
Public Works and Public Housing Minister Basuki Hadimuljono says the government will begin land acquisition for the Bakauheni-Palembang section of the Trans Sumatra toll road project in 2015, saying the section will start construction in 2017. The section was previously planned to stretch from Bakauheni to Terbanggi, however, Basuki said President Joko “Jokowi” Widodo had instructed the government to extend the section up to Palembang in South Sumatra with a length of around 500 kilometers from the initial 150 km. “The land acquisition will be fully funded by the state budget, and it will be conducted between 2015 and 2016, according to Law No. 2/2012 on land procurement that states the land acquisition process should only take up to two years to complete,” Basuki told reporters on Monday.
Indonesia giving private sector first dibs for infrastructure projects Reuters 28th Nov 2014
Needing some $450 billion spent on Indonesia's infrastructure by 2019, new President Joko Widodo has ordered ministers to give private investors first pick of money-making projects rather than let state agencies grab them as they usually do. Widodo will have to change entrenched attitudes at government ministries and state-owned enterprises, who have a vested interest in keeping the best projects for themselves.
Tourism assoc urges govt to accelerate infrastructure Jakarta Post 3rd Dec 2014
The Association of Indonesian Tour and Travel Agencies (ASITA) has urged the government to accelerate the country’s infrastructure development to strengthen Indonesia’s tourism position in the ASEAN market ahead of the much anticipated Asean Economic Community (AEC), which comes into effect in 2015. “We would be better able to develop our tourism sector and reach our targets if we had sufficient infrastructure to support this sector,” ASITA Bali chapter chairman Ketut Ardana said in Bali on Wednesday, as quoted by Antara news agency. He said infrastructure was a crucial element in tourism given the fact that the government aimed to attract 20 million tourists to Indonesia by 2019.
Land issues to hamper power plant projects Jakarta Post 3rd Dec 2014
Land-acquisition woes look poised to frustrate the government’s ambitious five-year plan to add 35,000 megawatts (MW) to the electricity grid by building multiple power plants. The power plant construction project proposed by President Joko “Jokowi” Widodo’s administration is expected to help the country avert a crippling power crisis, with electricity demand rising at a rate of 7 percent a year. Jarman, the director general for electricity at the Energy and Mineral Resources Ministry, revealed that out of the 35,000 MW goal, state-owned electricity firm PT PLN would develop 15.5 MW and private companies would develop the rest.
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