| National Affairs
Govt insists on holding regional polls this year The Jakarta Post 5th Feb 2015
The government has insisted that concurrent regional elections take place in September this year, contrary to most political factions in the House of Representatives, which recently agreed to elections in 2016. House Commission II overseeing governance and regional autonomy has argued that there is not enough time to prepare for quality elections. Home Minister Tjahjo Kumolo said the government had decided on the House’s proposal in a plenary Cabinet meeting on Wednesday at the Presidential Office. “There are those who proposed that [the elections] be held in early 2016 [and those who proposed] it remain in 2015. However, the government still expects a consensus [among lawmakers] that [the elections] remain in 2015 because the KPU [General Elections Commission] is ready,” he said.
E. Kalimantan to Stop Issuing Mining Permits in Forests Jakarta Globe 5th Feb 2015
The governor of East Kalimantan has announced a plan to stop issuing land-use permits for mining and plantation concessions in the province’s forests. “Starting from this year, there will be no more permits for land lend-use for coal mining and forestry activities,” East Kalimantan governor Awang Farouk Ishak said on Thursday. Awang said he was confident banning the awarding of concessions for mining and logging would not hamper the province’s economic growth. He said the measure was necessary to protect the environment for the longer term. A land permit, known as a IPPKH, is required for companies wanting to carry out economic activity in forestry areas.
Next Police Chief Will Shake Up the Force, Says Advisor The Wall Street Journal 4th Feb 2015
A member of the team tasked with advising President Joko Widodo on the current conflict between Indonesia’s anticorruption body and its national police says he is confident Mr. Widodo will not inaugurate his controversial current nominee for police chief and will choose someone able to make significant changes to the powerful police force. Speaking at panel on the current impasse between the two institutions, the most serious crisis so far of Mr. Widodo’s young presidency, Erry Riyana Hardjapamekas said that major police reforms were needed and he believed that the president was committed to combating corruption. The conflict pits Mr. Widodo’s sole nominee for police chief, Budi Gunawan, against the much-respected anti-corruption commission, which named him a graft suspect shortly after his nomination. Mr. Gunawan has denied any wrongdoing.
Jokowi to Reshuffle Only if Ministers Fail in Three Years: Cabinet Secretary The Jakarta Globe 4th Feb 2015
President Joko Widodo (Jokowi) will only replace ministers if they fail to meet expectations after three years, despite mounting calls for the president to axe wayward members of the cabinet. “The president’s only reshuffling target is if the ministers fail to do their jobs in three years,” Cabinet Secretary Andi Widjajanto said. The President is embroiled in a political crisis of his own making, after nominating Budi Gunawan to be chief of the National Police despite corruption allegations against Budi.
US Ambassador Leads American Investor Visit to Batam Jakarta Globe 3rd Feb 2015
US Ambassador to Indonesia Robert O. Blake, Jr., has led a delegation of 12 US companies and business associations to Batam as part of ongoing efforts to identify trade and investment opportunities for US companies and deepen commercial and diplomatic ties with key cities throughout Indonesia, the US Embassy has said in a press release. While in Batam on Thursday and Friday last week, the ambassador and delegates met with Riau Islands Governor Muhammad Sani, Batam Mayor Ahmad Dahlan, Batam Indonesia Free Trade Zone Authority (BIFZA) chairman Mustofa Widjaja and local business leaders.
Susi Earns Highest Approval Rating Among Indonesian Ministers Wall Street Journal 3rd Feb 2015
Indonesian Minister of Maritime Affairs and Fisheries Susi Pudjiastuti – who has made blowing up boats to curb illegal fishing one of her main missions – has won the highest approval rating among a recent survey of the country’s ministers. The brash, outspoken high-school dropout received a 61% approval rating, a survey conducted by the Indonesian Survey Institute polling agency shows. She is the only one of the 28 ministers included in the poll to earn a rating above 50%.
Indonesia to certify 47 outer islands this year ANTARA 2nd Feb 2015
The Ministry of Agrarian Affairs and National Land Office said 47 outer islands would be certified this year to confirm Indonesian sovereignty over the islands. According to Doddy Imron Cholid, deputy at the ministry, there are 92 outer islands and all of them have been surveyed, but 47 have yet to be given the certificate this year. Some of the 47 islands located in 8 regencies are uninhabited.
Papua to implement one-stop service system for investors ANTARA 2nd Feb 2015
The Integrated Permission and Investment Board of Papua administration will implement a one-stop service system for investors, John Way, the head of board, said. He pointed out that in 2014, hundreds of permit letters were received based on the governors decision.
Strong Opposition to Extension of Freeport’s Contract of Work Hukum 30th Jan 2015
After failing to reach consensus on amendments to the Contract of Work (Kontrak Karya– KK) between them, both PT Freeport Indonesia (Freeport) and the Indonesian government have agreed to extend their memorandum of understanding (“MoU”) that expired last Saturday. First signed in July 2014, the MoU was intended to settle arrangements between Freeport and the government for the extension of Freeport’s KKin return for Freeport accommodating certain renegotiation points proposed by the government. Unfortunately, the extension has drawn negative reactions from the public which sees this outcome as inconsistency on the government’s part in protecting national interests. Underlying the negative reaction is the fact that the extension of the MoU includes an extension to the approval permitting Freeport to export raw mineral products.
Indonesia President Builds Ties With Subianto The Wall Street Journal 30th Jan 2015
Indonesian President Joko Widodo is building links with the man he defeated in last year’s election, with political analysts calling the move a warning to members of the president’s own coalition three months into his term. On Thursday, Mr. Widodo met with former Army Gen. Prabowo Subianto, leader of a majority coalition rivaling Mr. Widodo in Parliament, and said afterward that his old rival supported his government. The meeting was “to signal to [Mr. Widodo’s party] that his patience has limits and he has other options to gain political support,” says Yohanes Sulaiman, a political lecturer at Indonesia Defense University. Political tensions have been growing for Mr. Widodo in recent weeks. His decision to back a party-supported candidate for chief of police, Budi Gunawan, prompted protests from some of the president’s most ardent supporters when Mr. Gunawan was named a graft suspect by the country’s anticorruption agency.
Most Indonesians Are Unhappy With President’s Job Performance, Poll Finds The Wall Street Journal 30th Jan 2015
President Joko Widodo hasn’t lived up to people’s expectations in his early months of leading the country, a just-released poll suggests. Indonesia Survey Circle, or LSI, found out that almost 54 percent of the people aren’t satisfied with Mr. Widodo’s administration, while 42 percent said they are satisfied. The survey of 1,200 people was conducted across 34 provinces on Jan. 26 and 27 via mobile phones. “His approval rating has dropped drastically because of economics, politics and legal issues,” said LSI reseacher Adjie Alfaraby. Before Mr. Widodo took office in October last year, an August survey by LSI showed that nearly three in four Indonesians said they had high expectations that his government would improve the country. LSI however, did another survey in November, shortly after President Widodo increased fuel prices. The results showed that 44 percent of people weren’t satisfied with his performance, citing distress over his decision to raise fuel prices.
House criticizes SOE capital stimulus, seeks clearer objectives The Jakarta Post 30th Jan 2015
The government’s plan to inject capital into several state-owned enterprises (SOEs) has hit a rough patch as the plan came under heavy scrutiny at the House of Representatives. During a meeting held on Wednesday afternoon, lawmakers at the House’s Commission XI, which oversees finance and development planning, bombarded Finance Minister Bambang Brodjonegoro and SOE Minister Rini Soemarno with questions regarding the capital injection, commonly referred to as PMN. Commission XI held the meeting as it must approve the disbursement of state funds through the state budget, even though SOE matters are actually within the remit of Commission VI.
New Taxman Seen Facing Challenges in Meeting Ambitious Revenue Target The Jakarta Globe 30th Jan 2015
Indonesia’s newly appointed tax director general will have to come up with a strategy to reach an ambitious revenue target this year and continue efforts to eradicate corruption within the tax office, an analyst said. President Joko Widodo named Sigit Priadi Pramudito late on Wednesday to head the tax directorate general at the Finance Ministry, replacing Fuad Rahmany who retired in December 2014. “He is not a controversial figure, and he seems to be widely accepted within tax office,” said Yustinus Prastowo, the executive director of Center for Indonesian Taxation Analysis on Thursday. Yustinus said that Sigit needed to continue the tax office program in reorganizing the tax office structure and improve tax administration with the electronic tax report, in order to meet this year’s ambitious target.
Customs
RI to revive talks on partnership deals with EU The Jakarta Post 4th Feb 2015
Indonesian trade officials will soon meet their EU counterparts to revive long-delayed negotiations on a comprehensive economic partnership agreement (CEPA) to boost trade and investment. Trade Ministry director general for international trade cooperation Bachrul Chairi said in Jakarta on Tuesday that the meeting would be held following a meeting between Trade Minister Rachmat Gobel and European Trade Commissioner Cecilia Malmstrom on the sidelines of the World Economic Forum (WEF) in Davos, Switzerland, recently. “Our concern is that other ASEAN countries are in the final stages of negotiations [on free trade agreements with the EU]. If we don’t follow suit, we will lose our market share in Europe,” Bachrul told The Jakarta Post after a press briefing on Tuesday.
New smartphone regulation may boost smuggling The Jakarta Post 2nd Feb 2015
The government’s plan to require smartphone manufacturers to use local components may help the local cellphone industry, but trade observers warn that the restriction will also encourage smuggling. Beginning 2017, all 4G smartphone manufacturers will have to use a minimum of 40 percent local content, as part of the government’s efforts to promote the country’s growing cell phone manufacturing sector. Ali Cendrawa, the chairman of the Indonesian Cell Phone Dealers and Importers Association (Aspiteg), said on Friday that his association fully supported the government’s move as it would help the local component industry grow.
Trade Minister Vows Crackdown on Secondhand Clothing Imports Jakarta Globe 3rd Feb 2015
Indonesian Trade Minister Rahmat Gobel has vowed to ban imports of secondhand clothes, arguing that under a 2012 regulation they shouldn’t be permitted. “The import of secondhand clothes is, of course, illegal,” Rahmat said in Jakarta on Tuesday as quoted by Vivanews.com. “I will work together with the [Finance Ministry’s] Directorate General of Customs and Excise to ban those goods from entering the market and being sold.” He cited a 2012 government regulation on trade that states that only newly made items may be imported into Indonesia. However, the trade in secondhand clothes, mostly from Europe and Japan, has thrived for decades, with Pasar Baru and Senen markets renowned as hubs for used garments.
Jokowi draws on experience to improve trade ties The Malaysian Insider 2nd Feb 2015
President Joko Widodo's business acumen and experience would put him in good stead in strengthening trade ties between Indonesia and Malaysia, Indonesian Ambassador to Malaysia Herman Prayitno said. He said the challenges, difficulties and bureaucracy that the president had encountered as a businessman before would enable him to provide a platform for trade and investment. "He makes investors feel more at ease now as everything comes under one roof at the Investment Coordinating Board. Investors can just make a visit, see what they want and get everything done there. Everything is centralised," he said in an interview with Bernama, recently.
Defense & Security
Japan, Indonesia To Sign Defense Partnership The Diplomat 5th Feb 2015
On February 3, Indonesian media reported that Indonesia’s ambassador to Japan Yusron Ihza Mahendra had said that the two sides would sign a defense partnership soon. According to Yusron, the two sides will ink a memorandum of understanding (MoU) covering defense with a particular focus on the transfer of Japanese-manufactured equipment to Indonesia as well as “joint research and production” between the two countries’ defense industries. Though he did not confirm when the agreement would be signed, he said he expected it to be concluded when Indonesian president Joko “Jokowi” Widodo visits Japan around March.
Indonesian Air Force wants to replace F-5 tigers with Sukhoi SU-35S ANTARA 4th Feb 2015
The Indonesian Air Force (TNI-AU) wants more sophisticated fighter jets, such as Russia's Sukhoi SU-35s, to replace its F-5 Tigers, Chief of the Air Force Vice Marshall Agus Supriatna has said. Currently, the country operates two types of Sukhoi jets, the Su-27 and Su-30 MK2, which stand by at the Sultan Hasanuddin Airbase of Makassar.
Air Force Calls for More Radars TEMPO 4th Feb 2015
Air Force chief of staff Air Chief Marshal Agus Supriatna has appealed to the government to purchase more radars for the Air Force immediately. Agus said Indonesia only had 20 out of the required 32 surveillance radars. Radars are part of the country’s key components of air defense besides fighter jets, as it would detect alien objects trespassing into Indonesian territory.
No need for new squadron in eastern Indonesia: Air Force The Jakarta Post 4th Feb 2015
The Indonesian Air Force might cancel its plan to create a new jet fighter squadron in eastern Indonesia, a high-ranking military official said on Wednesday. “There is no need to establish a new squadron base in eastern Indonesia, as we can send our jet fighters from Hasanuddin air base,” the newly appointed Chief of Staff, Air Chief Marshal Agus Supriatna, told reporters during an air force executive meeting in Cilangkap, East Jakarta, on Wednesday. Currently, the 11th Air Squadron at Sultan Hasanuddin Air Force Base just outside Makassar, South Sulawesi, is the country's easternmost fighter squadron. The squadron is made up of Russian-made Sukhoi Su-27/30 Flanker heavy fighter jets.
Tanker missing off Indonesia after 'pirate' boarding IHS Maritime 260 2nd Feb 2015
An Indonesian-flagged chemical tanker went missing after being boarded by armed men off North Sulawesi, Indonesia. MT Rehobot was carrying around 1,100 tonnes of diesel before setting off from Bitung, North Sulawesi, on 28 January, according to a report from the Singapore-based anti-piracy watchdog, ReCAAP Information Sharing Centre (ReCAAP ISC), which was informed by the Singapore-based maritime security information hub, Information Fusion Centre (IFC).
Economics
RI’s economy grows 5.02% in 2014: BPS The Jakarta Post 5th Feb 2015
The Central Statistics Agency (BPS) head, Suryamin, says that the country’s gross domestic product (GDP) grew by only 5.02 percent throughout the 2014 fiscal year. The figure is the lowest GDP growth the country has recorded in the past five years.
House likely to scrap aid for leading state firms The Jakarta Post 5th Feb 2015
The House of Representatives’ budget committee decided on February 4 not to approve the government’s proposal to inject capital into publicly listed Bank Mandiri and PT. Krakatau Steel — the nation’s largest bank and its biggest steel producer, respectively. The committee also slashed the capital allocated for publicly listed mining company PT. Aneka Tambang (Antam) by half. After hours of debate with executives of 35 state-owned companies slated to receive capital injections, the budget committee decided not to approve several of the proposed allocations, commonly referred to as PMN.
Indonesia, UK commit to increase bilateral trade, investment ANTARA 5th Feb 2015
The governments of Indonesia and the United Kingdom agreed to a two-fold increase in bilateral trade and investment, Indonesian Foreign Affairs Minister Retno Marsudi and her British counterpart Philip Hammond confirmed. At present, the UK is the fourth largest trade partner of Indonesia, with the trade value between the countries at US$2.7 billion. It is also the biggest investor from the European region, with a total US$1 billion in investments in 2013.
Indonesia government to launch tax amnesty Asia One 4th Feb 2015
Aimed at expanding the persistently diminutive taxpayer base, the government and the House of Representatives are working to provide a tax amnesty to encourage those who may not have reported their taxes for years to comply. Finance Minister Bambang Brodjonegoro confirmed to The Jakarta Post on February 3 that there would be a revision to the General Taxation System (KUP) Law that would include a tax amnesty.
House Lowers 2015 Oil and Gas Revenue in Revised State Budget The Jakarta Globe 4th Feb 2015
A House of Representatives committee agreed to a lower oil and gas revenue in the revised 2015 state budget, due to lower global oil prices and decline in oil production. The energy committee of Budgetary Body at the House decided that oil and gas revenue at Rp139.4 trillion (US$11 billion) this year, lower than the Rp156.1 trillion in the initial government proposal.
Govt to implement one city, one factory concept ANTARA 3rd Feb 2015
The Indonesian government plans to introduce a "one city, one factory" concept to boost the economies of cities across the country, Coordinating Minister for Economic Affairs Sofyan Djalil says. He believes the concept will be able to develop cities in the country and help alleviate the burdens borne by investors, including those related to production costs and wages that continue to increase in and around Jakarta.
Borrowing Costs in Indonesia Likely to Stay High Despite Easing Inflation The Wall Street Journal 3rd Feb 2015
Indonesian consumers can breathe a little easier knowing that an increase in the cost of goods and services slowed in January. But the cost of borrowing to buy a home or motorcycle may stay high for some time, say economists. Inflation in Southeast Asia’s largest economy eased from 8.36% in December to 6.96% in January thanks to lower fuel prices, the national statistics agency reported on Monday. To bring down the sizable current-account deficit, however, economists say the central bank still needs to keep a tight hold on its current monetary policy. Bank Indonesia Governor Agus Martowardojo has repeatedly said curbing the current-account deficit is the central bank’s priority. The goal is to bring the deficit down from 3.1% of gross domestic product in the third quarter of 2014, to between 2.5%- 3% of GDP.
Not So Fast: Why Indonesia Could Miss Growth Target in 2015 Bloomberg 3rd Feb 2015
Indonesian President Joko Widodo says Southeast Asia’s biggest economy can achieve the official growth target of 5.7 percent this year. That could be a taller order than he anticipates. The president, known as Jokowi, is promising to rev things up by fast-tracking large road, port and power projects and cutting red tape. He’s seeking to woo investment and boost non-commodity exports, targeting an expansion of as much as 6.3 percent to 6.9 percent next year. Yet the World Bank sees Indonesia growing 5.2 percent this year and 5.5 percent in 2016. The economy probably expanded 5.06 percent in 2014, according to a Bloomberg survey ahead of data due Feb. 5 in Jakarta. Here are five things that could stand in the way of Indonesia’s growth goal for this year.
Investors ready to help unlock huge potential Bangkok Post 2nd Feb 2015
As Asean’s largest economy, Indonesia continues to be an attractive market for foreign investors, especially Japanese businesses. Indonesia in 2013 moved from fifth place to second, just ahead of Thailand, as a recipient of Japanese investment in ASEAN, according to the October 2014 issue of “Spotlight Asia” by Kroll, a multinational risk and security consulting firm. “Indonesia is certainly catching up and many Japanese companies have been saying that they are going to be putting more capital into Indonesia and making the country a hub to export to the Middle East and African markets,” said Tadashi Kageyama, Senior Managing Director and Head of Asia for Kroll.
Indonesia suffers US$1.88 billion trade deficit in 2014 ANTARA 2nd Feb 2015
Indonesia suffered a trade deficit of US$1.88 billion in 2014 with imports reaching US$178.89 billion and exports US$176.29 billion, stated Suryamin, the head of the Central Statistics Agency (BPS). The deficit in the year was caused by pressure on the oil and gas balance of trade, which recorded a deficit of US$13.13 billion, while the non-oil/gas sector recorded a surplus of US$11.24 billion.
President Jokowi encourages Indonesian diplomats to push for economic diplomacy ANTARA 2nd Feb 2015
President Joko "Jokowi" Widodo encouraged all Indonesian diplomats posted overseas to push for economic diplomacy, so that greater benefits of state diplomacy can be reaped by the people. "Based on my experiences as a governor and mayor for almost nine years, I conclude that almost 90 percent mission of the representatives of most developed countries is economic diplomacy," President Jokowi said.
Understanding Bank Indonesia’s policies The Jakarta Post 2nd Feb 2015
In an opinion piece by Dian Ediana Rae, Executive Director and Regional Head of Bank Indonesia for Sumatra, more flexible and responsive policy is considered a must in order to catch up with the progress and welfare of developed economies. In the context of Indonesia, Bank Indonesia has to embrace the broader interpretation of its inflation mandate to include both supply and demand sides, a conundrum that pushes the central bank to better engage in supply-side issues.
BKPM to put stalled projects back on table The Jakarta Post 31st Jan 2015
The Investment Coordinating Board (BKPM) is aiming to settle a number of projects in Papua and West Papua that have been stalled, mostly because of land disputes and infrastructure problems, as part of an attempt to boost investments in the eastern part of the country. BKPM head Franky Sibarani said on Friday that his office was currently working to accelerate the realization of investments with a combined value of Rp 113 trillion (US$8.8 billion) from 10 companies that were currently being hampered by several problems. “The planned investments cover various sectors, including marine and fisheries, plantation, cement and mining. Six of the firms are connected to foreign investments in the marine sector,” Franky said.
Energy
Revenue target from coal & mineral sector raised The Jakarta Post 5th Feb 2015
The government expects an increase in state revenues from the coal and mineral sector this year to offset the projected decline in revenues from the oil and gas sector. In the proposed revision of the 2015 State Budget, the government raised state revenues from the mining sector by 28.5 percent to Rp52.2 trillion (US$4.13 billion) from Rp40.6 trillion in the original budget, or about 50 percent higher than Rp35.4 trillion last year.
Sudirman Said: I Chose To Secure The Freeport Operation TEMPO 5th Feb 2015
Energy & Mineral Resources Minister Sudirman Said once said he would freeze the export license of Freeport Indonesia, but then he suddenly changed his mind. When the validity of Freeport's export license ran out on January 25, Sudirman not only extended the license, he signed a memorandum of understanding (MoU) to extend the contract renegotiation period. In an interview with Tempo, he explained his decision.
Government boosting biofuel development ANTARA 5th Feb 2015
The government is boosting the development of biofuels in a bid to substitute conventional fuels as the countrys fossil fuel reserves are steadily depleting. Commission VII on energy affairs of the parliament (DPR) on February 4 approved the proposal of the Minister of Energy and Mineral Resources Sudirman Said to increase the subsidy for the biofuel mix program.
Indonesia's Energy Regulator: Total Relinquish Papua Exploration Block Rigzone 3rd Feb 2015
French energy company, Total, has relinquished its South West Bird's Head exploration block in Papua, an official at Indonesia's energy regulator said without giving a reason. Total informed Indonesia that it was to relinquish the block on January 20 with immediate effect, Zikrullah, acting deputy of commerce at regulator SKKMigas told Reuters via a text message.
Indonesia Struggles to Strike Oil Wall Street Journal 3rd Feb 2015
Oil and gas investment in Indonesia fell 26% short of the government’s target in 2014, underscoring a hard truth for Southeast Asia’s largest economy: oil is getting harder to find and extract, and without more help from government in an era of riskier plays, few companies are betting big. Government data shared with The Wall Street Journal shows investment in the former OPEC member reached US$18.9 billion last year, more than US$6 billion shy of its goal—the first decline in at least five years.
House pushes for Freeport smelter location in Papua The Jakarta Post 3rd Feb 2015
The House of Representatives is pushing the government to make copper giant PT. Freeport Indonesia establish its smelter in Papua, increasing concerns over whether the company will be able to complete development by 2017 when a full ban on ore exports will be implemented. The House’s leaders brought up the Papua smelter issue during a meeting with President Joko “Jokowi” Widodo on February 2. The House’s deputy speaker, Agus Hermanto, claimed that the President had agreed that Freeport Indonesia should build its smelter close to its mine in Papua instead of following its plan to build in Gresik, East Java.
Pertamina ‘eligible’ to be sole gas aggregator: Expert The Jakarta Post 3rd Feb 2015
State oil and gas company Pertamina is eligible to be mandated as a sole gas aggregator that handles the management of Indonesia’s gas exploration activities from upstream to downstream due to its capacity, experience and position as a state-owned enterprise, an expert has said. “If we ask who should become the gas aggregator, it is Pertamina that is eligible for the duty,” said Budyatna, a public policy expert from the University of Indonesia, as quoted by Antara news agency in Jakarta on Tuesday. Citing Article 33 (3) of the 1945 Constitution, Budyatna said: “The earth, water and natural resources contained in it are controlled by the state and used for the optimal welfare of the people”.
BP to partly shut Indonesia LNG plant in Q2 The Economic Times 2nd Feb 2015
BP's liquefied natural gas (LNG) train-2 at its Tangguh facility in Indonesia will shut for routine maintenance in the second quarter of 2015, a company spokesman said. The Tangguh project is Indonesia's third LNG hub and produces up to 7.6 million tonnes of LNG a year.
Cascadiant Expands its Agreement with Indonesia's Technology Agency SYS-CON Media 2nd Feb 2015
Green energy solutions company based in Singapore, Cascadiant Energy, has expanded its agreement with Badan Pengkajian dan Penerapan Teknologi (BPPT), the Indonesian Agency For the Assessment and Application of Technology. The two parties have deployed BPPT's first hydrogen fuel cell. This fuel cell will serve as the agency's platform in expanding its fuel cell research and development program as well as serving as the commercial back-up power source for BPPT's data center.
Govt to sell LNG through spot market amid low domestic use The Jakarta Post 30th Jan 2015
Despite a low selling price, the government will sell some cargoes of liquefied natural gas (LNG) through the spot market this year because of weak domestic consumption. Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) chief Amien Sunaryadi said as many as 25 cargoes of LNG were still uncommitted this year, meaning that the cargoes should be offered through the spot market. “If we cannot market the cargoes well, the [domestic] gas production should be halted and gas fields must be shut down,” Amien said.
Financial Services
AXA seeks to boost market share, inks deal with Sanofi The Jakarta Post 4th Feb 2015
Major insurance group AXA Indonesia eyes a bigger market share in the country, buoyed by its recent partnership with pharmaceutical firm Sanofi Group. As a group, AXA now sought to increase its share of the market, which stood at about 11 percent last year. AXA has set a target of around 100,000 corporate clients and 20,000 individual policy holders during the initial phase of the deal. The government’s national health insurance (JKN) program is expected to contribute to AXA’s growth this year as well.
Indonesia weighs merging Islamic banking units, but 2 banks say no plan yet Reuters 4th Feb 2015
Indonesia's state enterprises ministry and financial regulator are talking about potentially merging the Islamic units of three state-controlled banks, but two of them said they have no plans for any such merger yet. Local media previously reported that Bank Mandiri, Bank Rakyat Indonesia (BRI), and Bank Negara Indonesia (BNI) may merge their Islamic banking businesses.
Indonesia parliament rejects state injection of funds for Bank Mandiri Reuters 4th Feb 2015
Indonesia's parliament has rejected a government plan to inject 5.6 trillion rupiah (US$444 million) into state lender Bank Mandiri, saying there was not a strong enough case for the capital injection, the deputy head of parliament's budget committee said. Last month, the government proposed to parliament that Bank Mandiri could raise 9 trillion rupiah in a rights issue, 5.6 trillion of which the government would subscribe to.
Indonesian Asset Managers Aim For Double-Digit Growth in 2015 Jakarta Globe 4th Feb 2015
Asset management firms in Indonesia anticipate double digit growth in assets under management this year as they plan to launch more mutual funds amid improving investor confidence on the back of higher economic growth. BNI Asset Management, an arm of state lender Bank Negara Indonesia, aims to grow its managed funds by half this year, said the president director Reita Varianti. The fund managers targets to manage up to Rp 15 trillion ($1.19 billion) of funds this year — or 51 percent higher than the Rp 9.9 trillion that it currently manages — from its new mutual fund products. “A lot of our the products we plan to launch this year will be carry-overs from last year. There were a lot of issues that made investors choose to wait-and-see, such as the fuel subsidy price hike,” Reita said on Wednesday.
Top Indonesia Banks Strong Enough Without Merger Bloomberg 4th Feb 2015
Indonesia’s biggest banks, among the world’s most profitable, are strong enough to face down overseas rivals without the need to merge to cope with Southeast Asia’s economic integration, said the head of state lender PT Bank Negara Indonesia. Indonesian banks can build on their geographical reach within the sprawling archipelago to retain an advantage over new entrants in Southeast Asia’s largest economy, President Director Gatot Suwondo said in an interview in Jakarta on Wednesday. Employees at his bank, numbering 27,000, would resist any merger with PT Bank Mandiri, he said.
New NCD, LDR rules to help banks The Jakarta Post 4th Feb 2015
Major banks are looking forward to revised loan-to-deposit ratio (LDR) rules, which will add securities and negotiable certificates of deposit (NCD) to the calculation of the ratio, as they will help broaden the scope of liquidity and deepen the financial markets. Local banks have been faced with increasing LDRs, which means that loan growth has outpaced that of deposits, hence raising the need for broader funding sources. Funding sources or third party funds (DPK) that are included in the LDR calculation currently only include savings, demand deposits and time deposits.
Indonesia Pushes Ahead With $8 Billion Shariah Megabank Jakarta Globe 3rd Feb 2015
Indonesian authorities are pushing ahead with a plan to create an $8 billion Islamic megabank, even after a similar proposal fell through in Malaysia. A potential merger of the shariah-compliant units of government-controlled Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia could happen as soon as this year, Financial Services Authority (OJK) chairman Muliaman Hadad said. Talks are ongoing with the State-Owned Enterprises Ministry, which first proposed the merger in May 2013. The megabank could help drive a quadrupling in Islamic banks’ market share to 20 percent by 2018, compared with 10 percent without it, the Indonesia Islamic Banking Association predicts...“If the shariah banking sector is left to evolve and progress on a purely organic basis, it may experience a long-drawn process with a marginal growth rate,” Alhami Abdan, head of international finance and capital markets at OCBC Al-Amin Bank, said last Thursday in Kuala Lumpur. “The creation of such a megabank may provide an anchoring catalyst for the Shariah banking sector.”
ICBC’s $500m bonds set to help grow lending by 35% Jakarta Post 2nd Feb 2015
Private lender Bank Industrial and Commercial Bank of China (ICBC) Indonesia has raised funds worth some US$500 million from a global bond issuance in a bid to boost loan growth by 35 percent this year, primarily for infrastructure and other long-term projects in the country. The three-year term debt paper was absorbed recently by ICBC Indonesia’s main shareholder, Beijing-based ICBC Ltd., executives said. Surya Wijaya, a deputy head of strategic management and transformation office at ICBC Indonesia, said that proceeds from the bond issuance would be used mainly for financing various infrastructure projects and other sectors, such as manufacturing, telecommunications and agriculture. “Our loan target in 2015 is perhaps quite high compared to the banking industry’s average growth due to the effect of our bond issuance,” he added.
Fund Managers to Include Foreign Assets in Indonesia Thailand Business News 2nd Feb 2015
Indonesian investment fund managers may be allowed to include foreign assets in their mutual funds (conventional and Islamic-based mutual funds), offered to investors, soon. Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan/OJK) is currently formulating new regulations – expected to be finalized by June 2015 – that would allow to include foreign assets in an attempt to reduce risks by diversifying mutual fund portfolios. Indonesian investment managers had been requesting for this new regulation.
Turning optimism into productive growth in Indonesia The Banker 2nd Feb 2015
Indonesia's banking sector holds much promise, thanks in large to the country's vast unbanked population. And with a new, business-friendly president Joko Widodo, hopes are high that it can finally realize this vast potential.
Governor Ahok to use e-money to defeat Jakarta’s hoodlums The Jakarta Post 30th Jan 2015
In his war against hoodlums, who have for decades controlled the lucrative parking and street vendor business in Jakarta, Jakarta Governor Basuki “Ahok” Tjahaja Purnama launched on Thursday an electronic-payment system for parking, street vendors and microentrepreneurs operating on sidewalks and city facilities. The country’s giant banks, Bank Mandiri, BCA, BNI and BRI, are enthusiastic about participating in Ahok’s program as they see it as promising business and it is also in line with the National Non-Cash Movement (GNNT). Bank Mega and Bank DKI are also participating. The city administration also launched on the same day an electronic payment system for parking meters on Jl. Agus Salim, popularly known as Jl. Sabang, in Central Jakarta. The new system will only accept payment via e-money cards issued by the aforementioned six banks, replacing coins, starting next week. Coins were still accepted this week to give motorists time to adjust to the new system.
Food & Agriculture
Ministry to improve farmland in NTB The Jakarta Post 5th Feb 2015
Agriculture Minister Amran Sulaiman says his institution will improve 100,000 hectares of land in West Nusa Tenggara (NTB) province to help support the government’s food-security programs. Amran said the ministry would provide free seedlings and fertilizer to farmers across the province. He said the efforts were projected to boost crop production by 25 to 30 percent annually. “I have told the NTB agriculture office head that we need to carry out this program immediately,” he said in Lombok on Wednesday as quoted by Antara news agency.
Local food franchises optimistic amid foreign chain competition The Jakarta Post 3rd Feb 2015
Local food chains are maintaining a positive outlook for their businesses amid the plans of a handful of food franchises from neighboring countries to cash in on the Indonesian market ahead of the ASEAN Economic Community (AEC), which is slated to begin at the end of this year. Indonesian food chains Kebab Baba Rafi, Es Teler 77 and Amazy are among local food franchisors that are giving positive signals for foreign franchises to enter the country, saying that competition was normal and that the open market would also help them to expand overseas. The Philippines’ restaurant chain Jollibee Foods Corp. (JFC) and Malaysian retail conglomerate Texchem Resources Bhd. are among those confirmed to open restaurants — burger and Japanese food — in Indonesia.
Health & Life Sciences
We can beat cancer The Jakarta Post 4th Feb 2015
Delayed cancer treatment is common in Indonesia. As we commemorate World Cancer Day on February 4, we will be reminded of the four pillars that serve as the foundation for cancer management: healthy lifestyle, delivering early detection, equal treatment for all and maximizing quality of life. In Indonesia, the Basic Health Survey in 2013 discovered that almost 3.5 per 1,000 citizens aged above 45 years old had been diagnosed with cancer.
Listerine & PDGI Encourage Indonesian Consumers To Take Care More of Dental and Oral Health The Jakarta Globe 2nd Feb 2015
Listerine, one of the leading mouthwash brand, announced its latest study on oral health and its relationship with the Indonesian consumer habits in consuming variety of foods. Based on the study involving approximately 947 respondents, with majority resided in several major cities in Indonesia concluded that 89% of the respondents knew that some foods and drinks have a negative impact on oral health, but most of them do not have the regular habit to take care of it.
The Rising Demand for Indonesian Herbal Remedies GIVnews 2nd Feb 2015
Although herbal remedies are popular all across Asia, with companies from China and Malaysia as the current market leaders, it is Indonesia that has the biggest and fastest-growing traditional medicine business in the region. According to a report by Euromonitor International, by 2017 the turnover is expected to reach $800 million per year, up 55% from about $500 million in 2012.
Indonesian human development index improving: Minister ANTARA 1st Feb 2015
Indonesian Health Minister Nila Farid Moeloek said the Indonesian Human Development Index has improved to 7.3 from the previous 4 points. However, the total achievement is still below Malaysia's and Thailand's indexes. The Minister noted that Indonesia still needs to make efforts to improve the nutritional intake of the people.
ICT
Govt to impose IT certifications ahead of AEC The Jakarta Post 4th Feb 2015
The government is exploring the possibility of requiring the country’s information and technology (IT) professionals to obtain certain certifications, a move which would enable them to tap into the growing IT market following the launch of the ASEAN Economic Community (AEC) later this year. Communications and Information Minister Rudiantara said that his ministry, along with the Manpower Ministry and a number of IT associations, would discuss the plan this month and come up with an agreement in March.
IT Spending Set to Boom Through Manufacturing, Transportation Growth The Jakarta Globe 3rd Feb 2015
Indonesia’s manufacturing and transportation sectors are slated to increase spending in information and communication technology over the next four years, as the government rolls out public infrastructure projects, according to international market research company Frost & Sullivan. Spending from the country’s manufacturing and transportation industry is projected to reach US$552 million and US$253 million by 2019 with a compound annual growth rate (CAGR) of 23 percent each
Indonesia To Place VAT On E-Commerce Tax-News 3rd Feb 2015
The Indonesian Minister for Finance, Bambang Brodjonegoro, has confirmed the Government hopes to introduce value-added tax (VAT) on e-commerce. Speaking on February 1, 2015, Brodjonegoro said the Ministry of Communications and Information Technology has been instructed to prepare regulations to tax online shopping at the 10 percent VAT rate. In brief comments, he added that Indonesia is also to seek to tax foreign companies that receive revenues from hosting online adverts on behalf of Indonesian businesses, naming Google and Youtube.
Channel NewsAsia enters strategic partnership with Indonesia's KapanLagi Network Channel NewsAsia 2nd Feb 2015
Television audiences in Indonesia will soon have their own version of Channel NewsAsia's reality TV series Start-UP as the regional broadcaster works with Indonesian entertainment website KapanLagi to adapt the show's concept for Southeast Asia's largest country. The two companies announced the tie-up at a networking event in Jakarta on February 2. Both companies said their aim is to encourage and nurture entrepreneurial spirit in Indonesia and regionally.
3 myths about foreign investments and acquisitions in Indonesia’s startup world Tech in Asia 1st Feb 2015
Although it’s a given in most nations that foreign investments are crucial to support startup growth, it may not be as obvious to the entrepreneurs residing in emerging market nations like Indonesia. Tokopedia CEO William Tanuwijaya claims it’s common for him to hear netizens mock his company because it has accepted foreign investment time and time again.
Infrastructure
Airline industry reaches saturation point The Jakarta Post 5th Feb 2015
Indonesia’s airline industry is thought to be reaching its saturation point because an increase in seat capacity does not seem to be supported by an increase in airport capacity and improvements in infrastructure, according to an industry group. A lack of infrastructural development, particularly for airports, has prevented airlines from increasing the number of passengers on their flights, said Indonesia National Air Carriers Association (INACA) chairman for the scheduled airline division Bayu Sutanto. The growth of airline passengers traveling overseas last year slowed to 5.41 percent (13.7 million passengers) from 9.47 percent in 2013 (13 million), data from the Central Statistics Agency (BPS) showed.
Lebak prepares 4,000 hectares for new airport The Jakarta Post 5th Feb 2015
The regional government of Lebak in the province of Banten has prepared 4,000 hectares of land in Curugbitung and Maja sub-districts to develop a new airport. The new airport would be twice as large as Soekarno-Hatta International Airport, since it would have four runways with designed to accommodate large aircraft such as the Airbus A380.
Commuter trains winning Jakartans over The Jakarta Post 4th Feb 2015
Greater Jakarta commuter train operator PT Kereta Commuter Jabodetabek (KCJ) hopes in 2015 to add 50 million passengers to the 205 million serviced a year ago. KCJ president director Tri Handoyo announced on Tuesday that some 647,000 passengers were using the trains each day so far this year, a 32 percent increase from last year’s average of 490,000 passengers. “The peak day for passengers is Monday, when around 730,000 people ride,” he said. Despite the increase, Tri said demand was on the rise, and that the company was working to accommodate more riders.
New Rules Aimed at Boosting Safety, Security in Indonesian Aviation The Wall Street Journal 3rd Feb 2015
In the wake of December’s AirAsia crash, Indonesia’s Transportation Ministry has drafted a number of new policies and will roll out some this month aimed at improving safety and services. Officials at the ministry say in addition to improving safety, they also hope to see Indonesia’s airline industry achieve a ratings upgrade by the Federal Aviation Administration (FAA), which downgraded the country’s rating in 2007 for not complying with international safety standards set by the International Civil Aviation Organization. The ministry said the FAA will re-evaluate its aviation safety performance in April. Here’s a summary of some of the latest rules rolled out by the ministry.
Jakarta Wins Top Spot For Worst Gridlock The Wall Street Journal 4th Feb 2015
Jakarta has just won the distinction of having the world’s worst traffic, according to a recent index, which features two – yes, two – of Indonesia’s biggest cities among the top 10 kings of gridlock. The Castrol Magnatec Stop-Start index, named for the British motor oil company that compiled it, looks at traffic conditions and number of annual start-stops per car in 78 cities around the world to determine how traffic affects journey times. In first place is Jakarta with 33,240 start-stops per year followed by Istanbul, Turkey, with 32,520 start-stops, and Mexico City with 30,840. Jakarta residents and visitors have long loved to talk about the Indonesian capital’s traffic conundrum – lines of cars that barely budge or creep along for hours just to cover a distance of a dozen kilometers — and the index has been gaining attention and shares on social media, with many users sarcastically hailing Jakarta’s No. 1 ranking.
Indonesia Must Focus on Tourism and Infrastructure: Economists The Jakarta Globe 3rd Feb 2015
Indonesia could achieve faster economic growth in the long term if it focuses on key aspects of the economy such as tourism and infrastructure, some economists say. Indonesia’s primary concern should be ensuring the country could “build confidence in the long-term strategy,” said Benedict Bingham, the International Monetary Fund’s senior resident representative for Indonesia, in a meeting with journalists in Jakarta last week. The new administration under President Joko Widodo has helped to ease the investment process which could pave the way for more foreign companies to undertake infrastructure projects.
Manufacturing
Manufacturing in doldrums for 4 months The Jakarta Post 3rd Feb 2015
Indonesia’s manufacturing activity slowed for the fourth straight month in January to a level that posed more serious threats of unemployment. HSBC Indonesia Purchasing Managers’ Index (PMI), which measures the health of the manufacturing sector, settled at 48.5 in January on falling output and new orders despite edging up from its all-time low level of 47.6 registered in December last year. As the consequence of slower manufacturing activity, manufacturers reported job losses for the sixth month in January, marking the longest period of job shedding in the survey’s 46-month record.
GM confirms Indonesia factory plan with China's SAIC Motor Reuters 1st Feb 2015
General Motors reveals that one of its Chinese ventures plans to establish manufacturing operations in Indonesia to take advantage of growth in Southeast Asia's biggest vehicle market. Confirming a Reuters report published on January 31, the U.S. carmaker said SAIC-GM-Wuling (SGMW), a joint venture between GM China, SAIC Motor Corp Ltd and Wuling Motors, is planning to establish a manufacturing facility near Jakarta to build Wuling brand vehicles. Construction of the facility is planned to begin this year, subject to government approval.
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