| National Affairs
City Wants Operation Zebra to Continue Indefinitely to Reduce Traffic The Jakarta Globe 12th Dec 2014
Police in the capital could extend a 12-day operation that clamped down on anyone committing a traffic violation as a means to boost safety and reduce traffic on city roads. Operation Zebra was held throughout Greater Jakarta from Nov. 26 to Dec. 9. The goal was to increase road safety and minimize traffic congestion. “Thanks to Operation Zebra the traffic was in order — it was not as congested as usual,” City Council speaker Prasetyo Edi Marsudi said.
After Meeting SBY, Jokowi Says Democrats May Join His Coalition The Jakarta Globe 8th Dec 2014
President Joko Widodo on Monday hinted that the Democratic Party might officially join the ruling coalition next month. “We will see in January 2015, Susilo Bambang Yudhoyono has made it very clear so I don’t need to keep repeating it,” Joko said on Monday after meeting with the Democratic Party chairman and former president. Joko met with Yudhoyono to discuss the government regulation in lieu of the regional election law (Perppu) that was issued just before Yudhoyono ended his second presidential term. The current president said Yudhoyono and his party were committed to support his policy to uphold the direct election of regional-level leaders like mayors and governors.
Golkar Rift Widens, Legal Challenge Planned The Jakarta Globe 8th Dec 2014
The Golkar Party’s leadership rift took a new turn late on Monday after disputed chairman Agung Laksono said his camp planned to file a lawsuit against a rival faction led by tycoon Aburizal Bakrie. Agung, who was appointed as party chairman in Jakarta on Sunday, said his camp would file a lawsuit challenging the result of a Bali congress, which declared Bakrie leader. The lawsuit was announced on Monday afternoon at the same time as Agung’s camp submitted the results of its Jakarta congress to the Justice and Human Rights Ministry. “We officially register the result of Golkar’s 9th congress, the one held democratically based on the party’s constitution,” faction member Priyo Budi Santoso said.
Govt to ‘Help’ Lapindo With Mudflow Compensation, Offers to Buy Assets The Jakarta Globe 8th Dec 2014
Victims of the Lapindo mudflow disaster in Sidoarjo, East Java, are one step closer to being compensated for losses — eight years after dozens of villages and hundreds of hectares of farmland were swamped. The government announced on Monday that it would buy assets from the company accused of triggering the disaster, Lapindo Brantas, which could then use the proceeds to pay out Rp 781 billion ($62 million) due to victims this year. Minister of Public Works Basuki Hadimuljono said the government would buy about 20 percent of the company’s assets, which was mostly land, in affected areas.
House ends paralysis after AGO arrests Golkar politician The Jakarta Post 5th Dec 2014
A plenary session of the House of Representatives unanimously agreed on Friday to pass an amendment to the Legislative Institutions (MD3) Law, ending a two-month legislative standoff between the coalitions of President Joko “Jokowi” Widodo and defeated presidential candidate Prabowo Subianto. The passing was made hours after the Attorney General’s Office (AGO) arrested a senior member of Golkar Party, the nation's second biggest party and a member of the opposition camp, for alleged involvement in a graft case. Law and Human Rights Minister Yasonna Laoly said passing the amendment would allow the government to permit ministers and other government officials to attend House hearings after the two opposing camps agreed to bury the hatchet by allowing the passing of the law.
ASEAN
China’s New Confrontationalism Could Spark Investment Boom in SE Asia The Diplomat 8th Dec 2014
In recent months, Chinese authorities have levied multimillion-dollar fines against Western firms, sometimes on the flimsiest of justifications. Automakers Volkswagen and Chrysler, Korea’s electronics giant Samsung, and American multinationals GlaxoSmithKline and Johnson & Johnson were slapped with huge fines for what China called monopolistic behavior. Microsoft, Qualcomm and Daimler-Benz remain under investigation. Such charges sound like backdoor protectionism in an open market where dozens of car makers or household goods producers compete for consumers and where competition is cut-throat. It may not be a coincidence that these fines are applied to industries in which China has plans to create its own products but has failed to make significant inroads, such as high-end cars and computers. Enforcement of business regulations is often left to local officials who lack the experience and training necessary for a complex investigation of multinational corporations. Yet they end up hauling away reams of confidential company data. Huge fines are announced sometimes only a few weeks after the raid, while the companies in question have little opportunity to respond to the charges. In response to this and other problems, a number of companies have shifted production facilities elsewhere, mostly to Southeast Asia, including Vietnam, which has received significant investment projects. Samsung alone expanded its first facility in Vietnam with a total investment of $2.5 billion, and is building two additional ones to the tune of $3.4 billion – all this since the summer of 2013.
Customs
Japan unlikely to file complaint on ore-export ban with WTO The Jakarta Post 5th Dec 2014
Japan is unlikely to move forward with its plan to challenge Indonesia’s mineral-ore export ban through the World Trade Organization (WTO) as both parties may have reached an agreement on how to solve the issue, officials have said. Indonesia, a major exporter of minerals like nickel and bauxite, imposed a ban on the export of ores in mid-January in a move to court investment in local smelters and develop the domestic processing industry. Trade Ministry special staffer Gusmardi Bustami said Wednesday that Japan might have understood the reasons for the export ban, therefore calling off its previous plan to file a complaint with the global trade governing body. “So far, there are no more requests from Japan for consultations with us, thereby it should have become clear,” said Gusmardi, who previously led a special team tasked with dealing with Japan’s planned formal complaint.
Government to require letters of credit in exports again to manage earnings The Jakarta Post 9th Dec 2014
The government plans to require the use of letters of credit (L/C) in exports, in a move that may see the country’s export earnings better managed and may strengthen foreign exchange (forex) reserves. Vice President Jusuf Kalla said such a measure would enable the government to better detect the movement of control earnings generated from overseas shipment as L/C, which are issued by banks guaranteeing international transactions are paid on time, would be issued by local banks. “There should no longer be any outflow [of export earnings] without our knowledge. All exports must use L/C, thereby we can register our forex reserves,” he said when speaking to businesspeople at the opening of a leaders’ meeting of the Indonesian Chamber of Commerce and Industry (Kadin) on Monday.
Defense & Security
China worries may boost Indonesia defence spending to $20bil yearly The Star 10th Dec 2014
Indonesia's defence spending could grow to US$20 billion (£12.75 billion) a year by 2019 to protect its sovereignty, including an area of the South China Sea near China's claims, an adviser to new Indonesian President Joko Widodo said on Tuesday. Luhut Panjaitan, a former commander of Indonesia's special forces, said Jakarta had no plans to use force to resolve territorial disputes in the South China Sea and would continue to promote dialogue between Beijing and its regional rivals. But he said it was important to strengthen the Indonesian military to protect national interests, including Natuna - a scattering of 157 mostly uninhabited islands off the northwest coast of Borneo that are rich in oil, gas and fish.
Commentary: Furthering military bonds in Southeast Asia Army Times 10th Dec 2014
Indonesia and the United States have been developing a strong military bond for a number of years. This bond reflects the growth of Indonesia's democracy, the great strides toward professionalism that have been made by Indonesia's armed forces, and the strategic importance both countries place on our security ties under the Indonesia-U.S. Comprehensive Partnership. We have repeatedly demonstrated the growing value of our military cooperation for peacekeeping, disaster relief, intensified joint training, and modernizing weapons systems. As new priorities and challenges arise, the Indonesia-U.S. military relationship will be ready to respond. Nowhere is the value of the military relationship more tangible than in disaster relief. This month we will commemorate the 10th anniversary of the tsunami that devastated Aceh. Out of this tragedy, we witnessed the best our militaries have to offer as Indonesian and American soldiers worked side-by-side in a tireless effort to save tens of thousands of lives. The Indonesian military's growing capacity to respond to natural disasters is a well-earned source of pride and a continued focus of our joint training.
Alarming rise in support for ISIS in Indonesia, says counter-terrorism chief Straits Times 8th Dec 2014
Indonesia's National Counterterrorism Agency (BNPT) has warned that a lack of concerted efforts in fighting the proliferation of the radical ideology propagated by the Islamic State in Iraq and Syria (ISIS) has resulted in an unprecedented rise in the number of Indonesians leaving for the Middle East to fight for the group. Newly-appointed BNPT chief Saud Usman Nasution said recruitment of ISIS fighters from Indonesia had jumped by more than three times in just a few months. "In June 2014, the number of ISIS followers embarking from Indonesia was 86. The number soared to 264 in October," Saud said on the sidelines of a recent meeting of Nahdlatul Ulama (NU), the nation's largest Muslim organisation. - See more at: http://www.straitstimes.com/news/asia/south-east-asia/story/alarming-ris...
Economics
Park and Jokowi Pitch for Deeper Ties at Asean Talks The Jakarta Globe 11th Dec 2014
Trade between South Korea and Indonesia should be buoyed by the creation of a joint commission between the governments of the two countries, President Joko Widodo said in Busan as part of his tour meeting Asean and South Korean leaders. “We appreciate the bilateral relations that Indonesia and South Korea have now and in order to create even better relations we suggest both countries’ foreign ministries meet in the form of a joint commission,” Joko said in South Korea’s second-largest city. The Indonesian government has already ordered three submarines worth approximately $250 million from South Korean shipbuilder Daewoo, while Indonesians are voracious consumers of Samsung phones and other South Korean-made electronics.
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.
Energy
Plans for Natural Gas Filling Stations Running on Empty in Jakarta The Jakarta Globe 12th Dec 2014
The Jakarta administration admitted on Friday that it had failed to open more natural gas filling stations in the city this year, citing a lack of enthusiasm among investors due to the low selling price of the alternative fuel. According to the city’s Industry and Energy Agency, the plan for this year was to add five stations that can provide compressed natural gas (CNG), which can be used by motorists as an alternative to gasoline and diesel. Agency chief Haris Pindratno said on Friday that investors had remained unwilling to invest in the business of natural gas filling stations, known locally as SPBG. “Apparently investors are not attracted because the selling price [of the gas] is not competitive compared to other fuels. Meanwhile, huge investments are needed in this gas business,” Haris said.
Indonesia Considers New Oil and Gas Contract System to Boost Output The Jakarta Globe 11th Dec 2014
Indonesia is eying a new contract system for oil and gas firms to improve returns and production, government officials said, as Southeast Asia’s biggest crude producer overhauls its energy sector to meet growing demand and reduce costly imports. The former OPEC member has been hit by falling oil output, insufficient gas infrastructure and a series of corruption scandals that have led to the downfall of top energy officials. The situation has scared off foreign investors and forced Indonesia to become a major fuel importer. Newly appointed President Joko Widodo has pledged to restore Indonesia’s energy independence, an ambitious target for a country whose domestic crude output has been declining since 1997 and whose reserves have been dropping since 2001.
Oil takes another dive on OPEC report, US supplies The Jakarta Post 11th Dec 2014
The price of oil took another dive Wednesday, plunging to five-year lows amid mounting evidence that global supplies are far outstripping demand. The U.S. Energy Department reported a surprise increase in domestic oil inventories and OPEC projected that demand for its crude would sink next year to levels not seen in more than a decade. Benchmark U.S. crude slumped 4.5 percent, or $2.88, to close at $60.94 a barrel on Wednesday. Prices have not been that low since July of 2009. U.S crude prices have fallen 17 percent in two weeks and are now 43 percent below the $107.26 that a barrel fetched at its peak this year.
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.
Financial Services
Rupiah may continue its depreciation next year: Bank Indonesia The Jakarta Post 9th Dec 2014
Bank Indonesia governor Agus Martowardojo says that the rupiah is likely to continue its depreciation next year since the US dollar is getting stronger in the market. According to the bank’s real-time data, the rupiah is currently traded at Rp 12,347 per US dollar, down from the previous trade of Rp 12,352 per US dollar. Agus said that the depreciation of the domestic currency was mainly triggered by the appreciation of the US dollar and the country’s trade-balance deficit. “We are hoping that we can record more surpluses in the future so that the rupiah trade will be improved,” he said in Jakarta on Tuesday as quoted by kontan.co.id. Central Statistics Agency (BPS) data showed that the country’s trade balance enjoyed a US$23.3 million surplus in October 2014 after suffering deficits in the previous months.
Bank Indonesia Expects Slower Loan Growth This Year, Pick-Up in 2015 Jakarta Globe 5th Dec 2014
Indonesia is expected to have its slowest loan growth since 2010 this year due tight liquidity at banks, a central bank senior official told Reuters on Friday. Juda Agung, the executive director of Bank Indonesia’s economic and monetary policy department, estimated 2014 loan growth at 11-12 percent, or just over half of last year’s pace of 21.4 percent. Earlier, monetary authorities believed that this year’s loan growth would be close to 15 percent. Agung said loan growth should pick up next year to 15-17 percent because of better economic conditions. In September, bank loans were 13.2 percent higher than a year earlier, according to data from Financial Services Authority.
Jokowi Gets Growth Lifeline From Bond Rule Change Jakarta Globe 5th Dec 2014
Indonesia’s bond market is poised to deliver a funding boost to President Joko Widodo’s efforts to revive the economy. Sales of notes will increase after a proposed central bank rule change allows banks to use funds raised in capital markets for corporate lending purposes, according to Moody’s Investors Service. Local issuers have sold Rp 41.8 trillion ($3.4 billion) of notes this year, 25 percent less than the 2013 total, according to data compiled by Bloomberg. Indonesian manufacturing declined in November after Joko delivered on his election promise to raise fuel prices, export demand is faltering and the economy is growing at its slowest pace in five years. The nation’s lenders issued only 4 percent of local bonds this year, compared with 33 percent for Malaysian banks, even after their assets grew four-fold over the past decade.
Billionaire Widjaja Family to Cut Stake in Indonesia Exchange Jakarta Globe 5th Dec 2014
The Widjaja family plans to reduce its controlling stake in Indonesia’s largest derivatives exchange over the next three years after recovering losses from the bourse, said Chief Executive Officer Megain Widjaja. Among those that have expressed interest in the Indonesia Commodity & Derivatives Exchange, or ICDX, are foreign financial institutions, Widjaja said in an interview in Singapore on Dec. 4. The family currently owns between 50 percent and 60 percent of the ICDX, he said, without giving the size or a valuation for the planned stake sale. Billionaire Eka Tjipta Widjaja, 91, controls a business empire that includes Golden Agri-Resources, the world’s second-largest palm oil producer.
Health & Life Sciences
Indonesia drug firm Kimia Farma says may merge with Indofarma; shares surge Reuters 9th Dec 2014
Indonesian state-owned pharmaceutical firm PT Kimia Farma Tbk said on Tuesday it may merge with peer PT Indofarma Tbk as part of a government consolidation plan for the sector, sending their stocks surging. The merger options include a share swap or a straight acquisition.
Indonesia “Most Promising” Emerging Market in 2015 PharmExec.com 8th Dec 2014
Indonesia is expected to be the most promising market for pharma next year, thanks to its new healthcare insurance scheme Jaminan Kesehatan Nasional (JKN), according to Reenita Das, partner and senior vice president of Healthcare & Life Sciences at Frost & Sullivan. It is estimated that the drug spend as a percentage of total health expenditure will be close to 19 percent after JKN implementation.
Are Indonesian physicians ready for ASEAN Economic Community? The Jakarta Post 6th Dec 2014
Next year, a few weeks from now, Indonesia will face the realization of Asian Economic Community (AEC) policy. More and more professionals, including foreign doctors, will come to Indonesia and have practices here. The AEC will remove substantially all boundaries on trade so that ASEAN will become a region with liberated movement of services, investment and skilled labor, including in the healthcare sector.
Infrastructure
Transportation Ministry to Open 4 Short Sea Ports in January The Jakarta Globe 11th Dec 2014
The Transportation Ministry announced on Thursday that four new short sea shipping ports would open no later than January, adding that the Indonesian government would seek to create incentives in order to reduce shipping costs. Short sea shipping, sometimes called marine highways, is short-haul shipping that typically follows coastlines rather than longer-distance routes crossing oceans. “We already have the ports so there’s no need to build a new one,” said Bobby Mamahit, the director general for sea transportation at the ministry.” The four ports are at Panjang in Lampung, Marunda in Jakarta, Kendal in Central Java and Paciran in East Java.
Tanjung Carat Port to be included in sea highway program The Jakarta Post 8th Dec 2014
President Joko "Jokowi" Widodo says that the planned Tanjung Carat Port area, near the Tanjung Api-Api integrated zone in Banyuasin regency, South Sumatra, would be included in the sea highway program initiated by the central government to facilitate cargo shipments to various regions in Indonesia. “Tanjung Carat is included in the sea highway program, but we must look at the regulation first,” Jokowi said during a blusukan (impromptu visit) to Tanjung Api-Api Port in Banyuasin on Sunday. The statement came in response to questions from South Sumatra provincial officials, as data from the National Development and Planning Ministry failed to include the Tanjung Carat deep-sea port on the list of 24 ports to be built under the so-called sea highway program.
Transportation ministry cuts permit processing time by 50% The Jakarta Post 8th Dec 2014
The Transportation Ministry decided on Monday to cut the processing times needed to get any permit in the transportation sector by 50 percent in an attempt to help reduce the country’s high logistical costs. “Permits that usually take around 14 days to be issued will now only take seven days; those that usually take around five days will be reduced to only three days and so on,” the ministry’s special staff in public information division Hadi Mustofa Djuraid said in Jakarta on Monday, as quoted by Antara news agency. Hadi said that the new policy to cut the permit processing times for air, land, rail and sea transportation was signed by Transportation Minister Ignasius Jonan on Friday last week through a ministerial decree.
Jokowi to kick off govt projects early The Jakarta Post 8th Dec 2014
Aircraft maintenance firm PT GMF AeroAsia (GMF), a subsidiary of national flag carrier Garuda Indonesia, signed a memorandum of understanding (MOU) in Jakarta on Monday with Bintan Aviation Investment (BAI) to develop the country’s first aerospace industrial park — set to involve aviation research and development — on Bintan, Riau Islands. GMF president director Richard Budihadianto said that the company decided to work with BAI and develop integrated aircraft maintenance, repair and overhaul (MRO) facilities on Bintan because the island was close to Singapore, a home for many representative offices of international airlines and aviation business companies. In addition to that, Richard said the fact that Bintan was part of the Batam-Bintan-Karimun free trade zone would benefit GMF.
Riau to develop its coastal area The Jakarta Post 8th Dec 2014
The Riau provincial administration would develop the province's coastal area more starting in 2015, in its effort to close the development gap with inland areas, acting governor Asyadjuliandi Rachman said in Pekanbaru on Monday. "We will direct development more to coastal areas because the residents there have yet to enjoy the results of development in the province," he said as reported by Antara news agency. He added that the provincial administration would hold a meeting between it and the city and regency administrations to reach development synergy at all levels.
Jokowi: Papua Railway Development to Start in 2015 The Jakarta Globe 8th Dec 2014
The government will start building a railroad network in Papua next year, President Joko Widodo promised on Monday. “The railway development in Papua will start next year. We want the provincial development agency to support us so the development can start as soon as possible,” Joko said on Monday during a teleconference with district heads and governors from Papua and Maluku, both in the east of the country. “We want the railways to reach higher areas in Papua.” A preliminary study is set to be concluded in six months and building can start immediately afterward, the president said, adding that old railways in Biak that are no longer in use will also be reactivated from next year.
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