National industry policy promulgated

Although it takes almost twenty five years after the enactment of Law No. 5/1984, Indonesia finally has a comprehensive national policy on the country’s industry. The policy is contained in Presidential Regulation No. 28 of 2008 regarding National Industry Policy. The details of the National Industry Policy (“NIP”) are set forth in the Attachment to the Presidential Regulation No. 28 of 2008. The Regulation imposes on the Minister of Industry the task of compiling a “Road Map” that sets out the direction for master industries such as manufacturing, agro-business, electronics, and telematics, creative industries, as well as certain small and medium scale industries. It opens the possibility for the provision by the government of fiscal or non-fiscal facilities to priority industries, pioneer industries, industries located in remote areas, innovative industries, industries carrying out infrastructure development, industries that are focused on technology transfers, and industries that open up job opportunities The NIP also foresees a fundamental change in the structure of the Indonesian economy from traditional agriculture being the most significant contributor to a more diverse and high technology agribusiness cluster, among others. It sees a shift in the country’s major exports from textile and forest products to stainless steel, motors and motor vehicles, electronics, and basic chemicals. With the NIP, it is hoped that by 2025 the country will have a competitive, world class manufacturing sector of unabated growth that will be the prime mover of the economy. The Regulation has become effective since the day of its issue on 7 May 2008.

West Java proposes five new geothermal sites

West Java Mining and Energy Office proposes five new geothermal sites to be considered as power plants. They are located at Mount Papandayan, Ciremai, Cikuray, Guntur Masigit, and Malabar. “Mount Papandayan and Ciremai are still under Pertamina’s management,” West Java Mining and Energy Office chief, Tb. Hisni, in Bandung. For these two sites in particular, Hisni said it needed to be discussed with the Mining and Energy Department. Previously, Pertamina agreed to hand over these sites to the government. “The government will then hand them over to the West Java Regional government.” (http://www.tempointeraktif.com/)

An energy self-sufficient village in NTB to be built

The West Nusa Tenggara Mining and Energy Office is developing an energy self-sufficient village to cope with electricity shortages. The project will exploit water falls in seven locations to construct the Teras Genit micro hydro power plant in West Lombok. West Nusa Tenggara Mining and Energy Office deputy-chief, Heryadi Rahmat, said the power plant will be able to produce 30 KW of electrical power. The project is expected to become an example in exploiting new, untapped energies. “The potential is huge”, said Heryadi in Mataram yesterday. Besides the waterfalls, the energy self-sufficient village will make use of geothermal energy source in Sembalun, East Lombok. Based on a study by the Geological Agency, geothermal sources can generate 65 MW of energy. The same goes for the geothermal source in Dompu regency. Meanwhile, garnering energy from under-sea current sources in East Lombok will be one of three similar projects in the world. (http://www.tempointeraktif.com/)

Investment promotion will be focused on eight provinces

The Investment Coordinating Board (BKPM) is giving priority to eight provinces in order to attract foreign investments in Indonesia this year. These eight provinces are Riau, Bengkulu, West Kalimantan, Central Java, Central Sulawesi, Gorontalo, North Maluku, and Papua. The potential investment projects of these provinces are still large according the BKPM. The potential investment projects are 5.15 milliard hectare land for palm oil processing in Riau, coal 160 km railways in Bengkulu, bauxite mine in West Kalimantan, textile, shoes, and automotives industry in Central Java, petrochemical industry in Central Sulawesi, corn and sugar plantations in Gorontalo, and nickel mine in North Maluku. (Bisnis Indonesia, July 18, p. 2)

Change of operating hours applicable only in Java and Bali

The policy to change industrial work hours from Monday-Friday to Saturdays and Sundays starting July 21, will only be applied in Java and Bali. Industry minister Fahmi Idris said that to facilitate implementation, the policy will be divided based on four major areas: West Java and Banten, West Java and Yogyakarta area, East Java and Bali. “There are 12.000 industrial plants in the four areas,” said Fahmi. “They use 38 percent of the total electricity required,¨ he added. (http://www.tempointeraktif.com/)

State electricity company (PLN) and entrepreneurs discuss rates for industry

The State Electricity Company (PLN) began negotiations with the Indonesian Chamber of Commerce and Industry (Kadin) about the electricity rates for industry. “We want the rates on weekdays to be Rp1,300 kilowatt per hour,” said PLN's director Fahmi Mohtar yesterday. He said that by using this, rates on weekends will be cheaper than weekdays. Fahmi explained that PLN has divided work hours into 12 clusters based on the distribution region. The cluster will shift work hours every month. Earlier, the entrepreneurs preferred to have higher rates than it does with shifting the work schedule to weekends. According to Kadin's head, Mohammad S. Hidayat, around 40 percent of 120 members of Kadin's members support the rate rise. “We are being realistic about the electricity supply,” he said. (http://www.tempointeraktif.com/)

Fuel oil consumption to be only 20 percent in 2025

The government is trying to reduce the consumption of crude oil to 20 percent in 2025. Luluk Sumiarso, Director General for Oil and Gas from the Energy and Mineral Resources Department said that this was an initiative for developing a green oil and gas industry. “We need to secure fuel and gas supply,” he said yesterday (14/7). It is also aimed at encouraging gas consumption, increasing public and industrial awareness to save energy, and to reduce oil and gas waste that could damage the environment. There are supply and demand perspectives in this policy. (http://www.tempointeraktif.com/)

Shell plans to build storage tanks by 1Q 2009

Royal Dutch Shell Plc plans to build its first terminal and six tanks in Indonesia to store fuels imported to meet the country's rising demand, a company spokeswoman said, Dow Jones reported.Three of the 5,000-kilolitre tanks in Gresik, East Java, are expected to be ready by the first quarter of 2009, said Fathia Syarif, spokeswoman for Shell Indonesia.
The remaining tanks with the same capacity "will be made available in stages in 2Q 2009", she said. She declined to say how much the project will cost.
Shell plans to store gasoline and gasoil at these tanks, Syarif said. The oil major is currently renting storage facilities in West Java.
http://www.ekon.go.id/

New procedures for the employment of foreign workers

The Minister of Labor and Transmigration on 28 March 2008 issued Regulation No. PER.02/MEN/III/2008 regarding Procedures for the Employment of Foreign Workers (the “Regulation”). The new Regulation was issued to replace a number of regulations regarding the same subject matter, in light of the development of regional autonomy. The Regulation also serves as the implementation regulations for Article 42(1) and Article 43(4) of Law No. 13 of 2003 regarding Manpower Article 2 of the Regulation stipulates that the Regulation applies to the employment of expatriates in Indonesia by the following employers:i. foreign trade representative offices;ii. foreign private companies;iii. foreign contractors;iv. companies established under Indonesian law;v. institutions involved in social, educational, cultural and religious activities; as well as those involved in entertainment.As a general rule, the Regulation stipulates that all of the above employers must possess a Plan for the Utilization of Foreign Workers (Rencana Penggunaan Tenaga Kerja Asing /”RPTKA”). The RPTKA is the basic document that is required to be attached to the application for the Permit to Employ Foreign Workers (Izin Mempekerjakan Tenaga Kerja Asing / IMTA). The Regulation also requires these employers to register their foreign workers in an employee social security program and / or provide them with life insurance.One important feature of the Regulation is the requirement stipulated by the Regulation that has to be met by the employees in the employment of the expatriates i.e. the expatriate employee must have at least a suitable education and / or five years experience in the field in which they are to be employed; are ready to transfer knowledge and skills they have to an Indonesia colleague, and the expatriate must also be able to communicate in Indonesian.As the Regulation concerns with the mechanics of employing expatriates in Indonesia, the remaining articles of the Regulation contains procedures in RPTKA and IMTA including extension of RPTKA and IMTA and official in charge in issuing them. The Regulation has been in force since the day of its issue on 28 March 2008.

Geothermal projects are targeted to operate by 2013

The government will decide 19 geothermal working areas as part of the second phase of the electricity power plant development. The geothermal projects will be starting in 2009. Director of Ground Water Management and Geothermal Possession of the Energy and Mineral Resources Ministry, Sugiharto Harsoprayitno, explained that these 19 geothermal projects will be stipulated by the presidential decree (keppres).
(Kompas, July 9, p. 17)

Industry is requested to cut electricity usage by 50 percent

The State Electricity Company (PLN) suggested large consumer like industries and offices to reduce the electricity usage by 50 percent. “We can economize more,” said PLN's General Manager for distribution in Jakarta-Tangerang, Purnomo Willy yesterday. He claimed large industries and offices consume most of the electricity supply in Jakarta.
http://www.tempointeraktif.com/hg/nasional/2008/07/10/brk,20080710-127928,uk.html

Power supply will be increased by 10,000 megawatts

The government is targeting an additional electrical power supply of 10,000 megawatts to cover national needs. The current supply of 50,000 megawatts is considered insufficient for the needs of the general public and industrial sectors. The additional power supply will be built gradually, said President Yudhoyono when signing a cooperation agreement for the construction of four steam-powered electricity generating plants in Kutai Kartanegara, today (7/7).
The President said that the insufficient power supply resulted in electrical blackouts in various regions in Kalimantan and Sumatra. Director of the State Electricity Company (PLN), Fahmi Muchtar, confirmed the power deficit. He said that all of Kalimantan and North Sumatra were of high concern for PLN. The energy crisis is the worst there. They need additional power supplies as soon as possible, said Fahmi.
http://www.tempointeraktif.com/hg/nasional/2008/07/07/brk,20080707-127647,uk.html

Verification procedures for industries utilizing import duty reduction/exemption facilities

To ensure that the granting of import duty reduction/exemption facilities to certain national industries is correctly made to the ‘target industries’, the Minister of Industry has issued a regulation as on verification of the industries that are making use of these facilities, and the verification procedures. The regulation is Regulation of the Minister of Industry No. 27/M-IND/PER/5/2008 (the “Regulation”)The Regulation basically requires that all industrial companies utilizing import duty reduction and exemption facilities be verified. Each of such companies must have what is referred to as an Industry Verification Certificate (Surat Keterangan Verifikasi Industri) which is issued by an independent surveyor appointed by the Minister.The verification process is divided into three main stages, respectively the preliminary, production, and final stage, each of which comprises further phases of inspection by the surveyor. The Regulation has been in force since the day of issue on 15 May 2008

West Java is ready to manage geothermal power plants

The Governor of West Java, Ahmad Heryawan, said his province is ready to supply electricity from geothermal power plant. He made this statement after meeting Vice President Jusuf Kalla yesterday (30/6). The government is planning to build several new power plants to meet the electricity demand of 10,000 megawatts. Construction of these new power plants is targeted to be finished in 2010.
(http://www.tempointeraktif.com/)

President inaugurates east Kalimantan project

President Susilo Bambang Yudhoyono will inaugurate infrastructure projects for energy and public works in East Kalimantan. The projects are gas and condensation field; 150 kV transmission line (SUTT) in Tenggarong; 150kV relay station in Embalut; 150kV relay station in Tenggarong; a Manggar dam in Balikpapan; low cost rental flats in Nunukan; water supply system in Sepaku Penajam Paser Utara, Melak in West Kutai, South Malinau, and Loa Janan Kutai Kartanegara. The inauguration of these energy projects will be followed by the steam power plant projects in Bangka Belitung, Papua, South Kalimantan, and South Sulawesi.
(http://www.tempointeraktif.com/)

Year-end inflation could reach 10 – 11%

The annual inflation rate rose to 11.03% in June as the full impact of the fuel price increasing. The annual rise in June is the highest since September 2006 when the CPI rose to 14.55%. The government predicted that the year-end inflation rate could hit 10% to 11%, higher than the government's previous forecast of 6.5%,
(Kompas, July 2, pg 17)

Power plant utilization only 6 percent

The potential of water by power plants can be utilized to cope with the electricity crisis, said Djoko Kirmanto, Minister for Public Works. He hopes that the 7.000 megawatt out of the 10.000 megawatt electricity project will use water. “Indonesia is the country to have the fifth largest water surface in the world¨ he said yesterday. The State-owned electricity company (PLN) director, Fahmi Mochtar, said that from the 70.000 megawatt Water-Generated Power Plant (PLTA) potential in Indonesia, only 6 percent or 3.529 megawatt has been utilized. He also mentioned that the operational cost of water-generated power plant per kilowatt per hour is Rp140 and it is the lowest compare to other power plants elsewhere.
(Kompas, July 3, p.22)

Haga and Hagakita banks merged into Rabobank Indonesia

Netherlands-based Rabobank Group will officially merge Haga and Hagakita, two small banks it has acquired into its subsidiary PT Rabobank International Indonesia on June 30, Asia Pulse reported.
With the merger PT Rabobank Indonesia will have a total asset of Rp11 trillion ($1.22 billion), a bank official Alimhamzah said, adding the central bank already given its approval for the merger.
The Rabobank Group acquired Haga and Hagakita two years ago from the Djarum Group, one of the country's largest cigarette makers.
Alimhamzah said despite the merger the core business in retail banking of the two units will be maintained.
Last year, Haga reported a net profit of Rp206.88 billion ($22.3 million) and Hagakita Rp45.06 billion, but Rabobank Indonesia suffered a loss of Rp10.14 billion, the newspaper Bisnis Indonesia reported.
Source: www.ekon.go.id

Fifty four investors interested in developing CBM

Around 54 energy investors have made requests to the government to develop CBM (coal bed methane) in Indonesia.
Acting Director of Oil and Gas Upstream Business Development Heri Poernomo revealed data by the Directorate General of Oil and gas as of June 2008 showed there were 54 requests made to develop CBM. "CBM potential in Indonesia is huge and CBM is an alternative to oil," he said in Jakarta yesterday.
According to him, of several investors making requests to the government, four had completed their joint evaluations, three were conducting joint evaluations, and one was conducting a joint study.
One consortium that has signed a CBM development partnership contract is the PT Medco CBM Sekayu and South Sumatera Energy Inc consortium.
CBM is gas fuel contained in coal. CBM is extracted from coal layer through drilling, which will not reduce the coal content.
Despite strong interests in CBM development, the government still has to face many obstacles. As quoted from the Directorate General of Oil and Gas website, one of the obstacles was not all investors interested in CBM development had understood requirements made by the government.
Another obstacle was the widespread issuance of mining concessions by regional governments.
Concerning the obstacle, the government will revise the Minister of Energy and Mineral Resources Regulation No. 33/ 2006 on CBM Procurement
(Bisnis Indonesia, p. T1)

Jakarta targets reducing energy by 20 percent

This is based on Presidential Instruction 2/2008 regarding energy and water reductions. This was mentioned during the socialization of the Energy and Mineral Resources (ESDM) Department’s energy reduction program today (25/6) at Jakarta City Hall. According to Mining Office Head Peni Susanto, Jakarta would be a model for national energy conservation. “The target is 20 percent,” he said. Peni explained that energy consumption in the capital city was huge with 18 percent of national electricity being consumed in Jakarta.
(http://www.tempointeraktif.com/hg/nasional/2008/06/25/brk,20080625-126656,uk.html)

Trans-Kalimantan to be connected to Borneo Highway by 2009

Ministry of Public Works targets that the international Pan Borneo Highway to be connected to the trans-Kalimantan road at the end of 2009.
Director General of highway construction and maintenance at the Department of Public Works Hermanto Dardak said the connection between the trans-Kalimantan and Malaysia and Brunei was part of the sub-regional agreement between Brunei, Indonesia, Malaysia, the Philippines and the East Asia Growth Area (BIMP EAGA).
The Department of Public Works previously signed a contract on the construction of 3,200 km long trans-Kalimantan road, which is targeted to start operation by the end of 2009. The trans-Kalimantan road will be connected to Kuching (Malaysia) and Brunei.
(Bisnis Indonesia, p. 5)

Government plans 10% mandatory biofuel mix by 2010

Indonesia plans to start its mandatory biofuel blending program in September with a 2.5% mix of either bioethanol or biodiesel, a senior industry executive said, Dow Jones reported. The blend will gradually be raised to 10% by 2010 in a bid to reduce reliance on fossil fuels, said Erwin Duma, biofuel business development manager of PT Molindo Raya Industrial.
Many ethanol plants are being built to meet the targeted production capacity of 4 million kiloliters of bioethanol by 2010. Indonesia currently produces around 160,000 kiloliters a year, while consumption of ethanol for industry and biofuel purposes is currently around 150,000 kiloliters.When biofuel blends reached 10%, Duma estimates that around 2 million kiloliters of bioethanol will be required every year.
PT Molindo is currently the sole supplier of bioethanol to state-owned oil and gas company PT Pertamina, which has been tasked by the government to sell biodiesel since 2006. "Most of the ethanol plants will use cassava as feedstock," said Duma. PT Molindo is in the midst of constructing two more ethanol plants in Sumatra and Java with a combined capacity of around 100,000 kiloliters a year that will use cassava to make bioethanol.
Duma expects the export price of bioethanol, currently at $550-$620 a metric ton, free-on-board, to rise 20%-30% in the second half of the year due to rising international prices of gasoline and feedstock such as molasses and cassava.
Source: www.ekon.go.id

Government proposes to cut tax rate on dividends

The government plans to lower the tax rate on dividends to 15% from 20% in an effort to improve the investment climate and encourage the development of financial markets, the tax chief said, reported Reuters.
The government is keen to develop the country's young financial market by improving regulations and providing tax incentives for people still wary of investing in the stock market.
"We want to attract more people to invest and not only put their money in banks ...The substance of the new tax bill is to improve our investment climate," Darmin Nasution said. "The discussion is whether a tax rate of 15% would provide a sufficient incentive."
The government is hoping to draw more people to put their funds in the market by cutting the tax rate on dividends which currently is the same as that on bank interest. The plan is one of a string of measures in a new tax law being drafted by the parliament aimed at tackling widespread tax evasion and providing tax incentives to investors in the country.
The parliament is expected to pass the tax bill in the third quarter. The bill also proposes to cut income tax levels for individuals and corporations in a bid to attract investors to open businesses.
Source: www.ekon.go.id

Government sets deadline for tax evaders

The government will fine unregistered taxpayers 20% of their total taxes if they fail to register by the end of this year, as part of efforts to increase tax collections, a legislator said, quoted by Reuters Indonesia has a population of 230 million, but only four million people are on the tax register and just one third of those actually pay tax. Parliament is expected to pass a new tax bill in the third quarter in an effort to step up tax collections and tackle widespread evasion by providing incentives for people to be registered and taking stronger measures against tax dodgers.
"Starting next year, unregistered taxpayers will be fined," Melchias Markus Mekeng, the head of a parliamentary commission drafting the new tax law, said.
Mekeng said registered taxpayers will also be exempted from paying a departure tax paid for overseas travel from next year as incentive for people to register as taxpayers.
Under the current scheme, Indonesians and foreigners working in the country have to pay Rp1 million as departure tax at the airport for every overseas trip.
"The departure tax will be lifted in 2011, but in the transition period, starting 2009, people who have a tax ID will be relieved from paying the country's departure tax." Darmin Nasution, the Director General of Tax, said in an interview in August that he expected the number of registered taxpayers to reach 10 million by the end of 2008. Indonesia has set a tax revenue target of 609.2 trillion rupiah, or about 70% of the total budget revenue, this year. The finance ministry has forecast tax revenue will rise by 19% to 723.9 trillion rupiah in 2009.
Source: www.ekon.go.id

Government to re-evaluate regional funding

The central government may next year cease general allocation funds (DAU) to regions enjoying hefty windfall profits from the soaring prices of natural resources, The Jakarta Post reported. Finance Minister Sri Mulyani Indrawati said the central government was seeking to allocate more funds to regions with limited or no natural resources. The proposal is slated to be submitted to the House of Representatives during the upcoming 2009 state budget discussion. "We will ask for the House's approval on this soon," she said.
DAUs account for an average of more than 50% of a province's or regency's annual revenues. Should the House approve the proposal, profiting regions could establish autonomous administrations while underdeveloped regions would receive more funds. Wealthy Riau and East Kalimantan provinces, for example, may no longer receive any DAUs, the Finance Ministry's Director General of Fiscal Balance Mardiasmo said. With abundant gas, gold, rubber and palm oil resources, Riau province is one of the richest in Indonesia, while East Kalimantan is endowed with coal, gold and oil and gas. For this year, the central government has allocated Rp179.50 trillion for DAUs, up from Rp164.78 trillion last year.

Western Sulawesi highway to open in 2009: Official

The Western Sulawesi Highway will be fully functional in 2009 with construction already underway and 80% of land already acquired, said the Public Works Ministry directorate general Hermanto Dardak.
The four-lane, 1,000-km highway starts in Makassar, South Sulawesi, and continues north to Maros, Takalar, and Pare-Pare. The highway then travels north to Polewali and Mamuju, West Sulawesi, continuing east to Donggala and Toli-Toli, Central Sulawesi, before winding up in Gorontalo province and ending in Bitung, on the northern tip of North Sulawesi.
"The highway will increase shipping which should also increase economic growth two-and-a-half fold," said Hermanto in a report from Antara.
Sulawesi will be the third major area in the country to build a trans-island highway after the Java Northern Coastal Highway, known by its local acronym Pantura, and the Sumatra Eastern Highway.

Non-performing loans reach 50%

The chairman of the Industrial-Trading & Cooperating Agency (Disperindagkop) for Banyuwangi, I Nyoman Wirayatsa, said the non-performing loans of small-to medium-sized firms and enterprises have reached an average of 50% in 2003 to 2008. Credit reached Rp152 million for small-to medium-sized firms from loans of Rp600 million, while there is no return from total loans of Rp150 million given to small-to-medium-sized enterprises. The community-based cooperation also has a non-performing loan of Rp313 million from a total loan of Rp800 million. “Most of them are bankrupt,” he told Tempo today (6/6). He said the entrepreneurs having difficulty with the fuel price rise that occurred three times since 2005. Nyoman said that the departments sent warning letters many times to them to pay back their loans. (http://www.tempointeraktif.com/hg/nasional/2008/06/06/brk,20080606-124623,uk.html)

Government plans second series of 10.000 MW plants

The government is drawing up a program to build a second series of power plants with a combined capacity of 10,000 MW across the country to keep up with the mounting public need for electricity according to Energy and Mineral Resources Minister Purnomo Yusgiantoro
Some aspects of the program were disclosed by Yusgiantoro following a meeting on acceleration of the first 10,000-MW power plants project at the vice presidential office in Jakarta on Wednesday.
The government had decided to set up another series of power plants with a total capacity of 10,000 MW because domestic demand for electricity was growing fast. "In a number of regions outside Java, the need for electricity is now growing at almost 10% per year," the minister said.
While the first series of power plants were all coal-fired, the second series would only consist of 30% of coal-fired plants. The remainder would be made up of geothermal, hydropower and other types of power generating facilities, he said. The geothermal power plants would have a total potential of 27,000 MW and the hydropower facilities 60,000 MW with the rest to be provided by plants running on new and renewable energy sources.
About the time it would take to build the additional power plants, the minister said it would be a 'multi-year project' that would transcend the five-year term of any single administration. The project was estimated to require a total investment of between $8 and 9 billion, he added.

Credit insurance corporation for SMEs

In order to assist the financing of the SMEs, the government of Klaten will establish a credit insurance corporation this year. The government hopes that the low interest credit could be granted to help SMEs following the increasing of fuel price. (Kompas, Tue June 3, p. 23)
http://cetak.kompas.com/read/xml/2008/06/04/01043788/penjaminan.kredit.bagi.ukm

Entrepreneurs raise food and transport allowances

The Indonesian Employers Association (Apindo) stated that the entrepreneurs have eventually followed the government's suggestion about helping reduce the burden on employees after the fuel price rises by increasing their meal and transportation allowances. “The allowances will be realized this month (June),” Manpower and Transmigration Minister Erman Soeparno told Tempo in Jakarta. Erman acknowledged that he had met with the entrepreneurs to confirm the raises. PT. Indofood Sukses Makmur Tbk. will raise the allowances by 25 percent for transport and 20 percent for meals, while PT Djarum will raise both by 15 percent.
(http://www.tempointeraktif.com/hg/nasional/2008/06/04/brk,20080604-124396,uk.html)

Inflation reached two digits

The Indonesian Bureau of Statistics (BPS) reported the increasing of year-on-year inflation in May has reached 10.38% following the increasing of goods and services prices. The chairman of the BPS, Rusman Heriawan, said that this is the highest rate since October 2005. (Bisnis Indonesia, Tue June 3, p. 1)

Drinking water projects need investment Rp. 86 trillion

Public Works Ministry will prepare the tender for the connection of 10 million drinking water supply pipes project that worth Rp. 86 trillion, following the approval to write off the debt of the Drink Water Regional Company (PDAM). Directorate General of Cipta Karya, Department of Public Works, Budi Yuwono Prawirosudirdjo, said that they are still calculating the cost to connect the 10 million water pipes. The preliminary prediction is Rp. 86 trillion. (Bisnis Indonesia, Mo June 2, p. 5)

North Sumatra will become the center for electronic industry

Ministry for industry would develop the North Sumatra province to become the center of national electronic components industry. Directorate general of telematics and transportation of Ministry for Industry, Budi Darmadi, said that North Sumatra has natural resources, international market access, and many businessmen from the electronic industries. Those will be the capital for this province to become the center of national electronic industry. (Bisnis Indonesia, May 31, p. F11)

SMEs get more problems by the increasing of fuel price

The impact of the increasing of fuel price about 28.7% has made the SMEs get more problems. The increasing of production cost and product value is not as bad as in 2005, but this still become big problems for the SMEs. This study from Cooperation and SMEs Ministry together with Central Bureau of Statistics (BPS) is published by Cooperation and SMEs Minister, Suryadharma Ali. (Kompas, Fri 30 May, p. 17)
http://cetak.kompas.com/read/xml/2008/05/30/01443196/umkm.makin.terimpit

Port investment limited only for terminal

The government limits the port investment by only offering the development and management of the terminal. Directorate General of Sea Transportation of the Ministry of Transportation, Effendy Batubara, said that this limitation is also valid to the shareholder by foreign investor at national port companies, with maximum amount 49%. According to regulation No. 17/2008 about shipping, the new investment is focusing to the management of new terminal. (Bisnis Indonesia,May 30, p. 1)

Export volume will decrease

Entrepreneurs think export growth for non-oil and gas this year will be only at 10% maximum. The Secretary General for Indonesian Exporters Association, Totok Dirgantara, said that last year Indonesian export volume can survive as the international commodities price improved. “But it is likely stagnant for this year while our export volume decreased,” he told Tempo. He explained it is caused by the weakened global economy and fuel price hike that reduces the demand. “Many countries now limit their imports to secure their food stock,” he said. Totok asked the government to stabilize the local currency. “If the rupiah reaches Rp.10,000 for one dollar, Indonesia will be in the same situation such as ten years ago when it was hit by the monetary crisis.” (http://www.tempointeraktif.com/hg/nasional/2008/05/30/brk,20080530-123987,uk.html)

Tender for airport railway project

The government finally open the tender for new investors that are interested to build and to manage the airport railway project at Soekarno-Hatta International Airport, Cengkareng, that worth Rp. 4.6 trillion with concession period 30 years. Directorate General of Railway from the Ministry of Transportation, Wendy Aritenang Yazid, said that this tender would be open in July this year. (Bisnis Indonesia, Wed May 28, p. R1)

The poor increased by 4.5 million

National Institute of Sciences (LIPI) said the number of poor this year will increase by 4.5 million people after the fuel price rise. In total, there will be 41.7 million or 21.92% of the total population. It is higher than the government's prediction of 14.8 % to 15%. According to Adi Wijaya, LIPI researcher, without a direct cash aid program, the number of poor would be more grave equaling 53.7 million, or an increase of 16.5 million people. “The direct cash aid program helps three million families from near-poor groups,” he said in a press conference in Jakarta. (http://www.tempointeraktif.com/hg/nasional/2008/05/29/brk,20080529-123900,uk.html)

Simeulue has potential of billion barrel hydrocarbon

The government of Simeulue, Nanggroe Aceh Darusalam asked the Ministry of Energy and Mineral Resources to follow up the finding of Agency for the Assessment and Application of Technology (BPPT) about the potential of oil and gas at that area. The researchers from BPPT unintentionally found that location when they studied the impact of tsunami in 2004. Head of Economic Section of Simeulue government, Haili Syamsuddin said that they hope the government will follow up this research as soon as possible. (Bisnis Indonesia, Wed May 28, p. R1)

Export of 10 major products would be interfered

Ministry of Trade predicted that the growth target of 10 major export products would be corrected, especially products with the highest energy components. Chairman of the National Export Development Board, Bachrul Chairi, said that the impact of the increasing of fuel price would influence the export performance of the major export products. (Bisnis Indonesia, Wed May 28, p. 4)

Foreigners could become railway operator

The government gives the opportunity to the foreign companies to invest in railway sectors following the end of operator monopoly of railway by PT Kereta Api (KA). The government has a new regulation for the railway sectors (UU No. 23/2007). Directorate General of Railway from the Ministry of Transportation, Wendy Aritenang, said that according to the regulation, the foreign private sectors are allowed to invest as railway operators. (Bisnis Indonesia, Tue May 27, p. R5)

Batam economic growth corrected with 7.1%

The increasing of labor cost and transportation tariff following the increasing of fuel price would decrease the competitiveness of Batam as Free Trade Zone. Assistant of Economic and Development of Batam, Syamsul Bahrum, said that the increasing of labor cost will influence the production process, the price, and the competitiveness in the world market. Furthermore, Batam also has electricity crisis problem because PLN has decreased their electricity supply to Batam. (Bisnis Indonesia, Tue May 27, p. R1)

148 oil palm plantations are inactive

About 148 oil palm plantation companies in Riau province, about 95,261 ha, can not realize their investment. As the result, that plantation is inactive, said Akmal J.S., deputy of agriculture agency. That amount reached almost 50% of plantation companies in Riau. Governor of Riau, Rusli Zaenal, said that Riau government will continuously improve the oil palm industry and they have prepared Rp. 450 billion to replanting the 1.6 million ha oil palm plantations. (Bisnis Indonesia, Mo May 26, p. T1)

World Bank considers Indonesia has succeeded in budget reform

The World Bank said it considers Indonesia has succeeded in reforming the budget in the last 10 years. “Indonesia has been working hard in reforming the budget,” said the World Bank's country director for Indonesia Joachim von Amsberg during the seminar of 'Budgeting for Performance; Modernizing Public Financial Management' at the Grand Hyatt Hotel in Jakarta. According to Joachim, this achievement was extremely surprising. There were significant changes in the budget reform that encouraged economic development. Joachim said he considered that the budget reform would be asset for the Indonesian government to improve its economic work performance by creating more employment opportunities, reducing poverty, increasing investment levels and public services. Successful budget reform is a sign of good governance. (http://www.tempointeraktif.com/hg/nasional/2008/05/26/brk,20080526-123726,uk.html)

More than 100 container cranes

This year, Rotterdam will become the first port outside Asia with more than 100 specialised container quayside cranes in operation. Last year, the number was 92, this year it will be 103. This is according to the latest edition of "Rotterdam Port Statistics".
A unique feature of the port of Rotterdam is the large number of specialised cranes for inland and coastal shipping: 30. It requires less investment and it is possible to load and unload more quickly if smaller canes are used to handle smaller ships.
This year, new cranes have arrived or will be arriving: Euromax Terminal, ECT Delta Terminal Delta Barge Feeder Terminal, Interforest Terminal Rotterdam and Rotterdam Shortsea Terminal.

Increasing of the fuel price decrease the investment

The Indonesia Investment Coordinating Board (BKPM) predicted that investment interest to Indonesia would be decreasing, following the government decision to increase subsidized fuel price. Chairman of BKPM, Muhammad Luthfi, refers to the investment condition after the increasing of fuel price in 2005. (Bisnis Indonesia,Sat May 24, p. 2)

BI: Inflation could reach more than 12%

The Indonesian Central Bank (BI) calculated that the increasing of fuel price about 30% would lead to a 12% inflation in 2008, two times higher than the last two years, about 6%. Deputy of BI governor, Hartadi A. Sarwono, said that without the increasing of fuel price, the inflation rate was predicted more than 9%. This prediction is much more than this year inflation target, around 5%. (Kompas, Fri May, 23, p. 1)

Oil and natural gas investment in Indonesia became less competitive

In the middle of decreasing national oil production, Indonesian based oil and natural gas companies have evaluated that the investment climate in this sector has become less conducive. Amount of problems related to the bureaucracy and cost recovery that appeared in the last two years need a solution. According to the survey from PricewaterhouseCoopers (PwC), there are five problems that make the oil and natural gas industrial in Indonesia became less conducive and competitive. They are the lack of diligence for the oil and natural gas contact, uncertainty on the cost recovery especially related with the findings of the Indonesian Supreme Board (BPK), taxation, intervention from the government institution other than Ministry of Energy and Mineral Resources, and the safety guarantee on assets. (Kompas, Fri May, 23, p. 18)

West Sulawesi invites investors to build infrastructure

The government of West Sulawesi invites investors to help in speeding up the development of infrastructure and the basic needs of this province that worth Rp. 4.2 trillion at the beginning of next year. The Governor of West Sulawesi, Anwar Adnan Saleh, explained that they need investors that are willing to have business in West Sulawesi. This province received only Rp. 500 billion this year from the central government. (Bisnis Indonesia, Fri May, 23, p. R1)

Water crisis in West Java

West Java is having a water crisis. It is not just limited access to clean water but also to sources of good quality water. “This is the consequence we have when the government is reluctant to invest in the water source,” said environmentalist of Forestry and Environmental Observation Board, Tatar Sunda, Mubiar, in Bandung yesterday. However, the government claimed that they have provided clean water through a water management system since 2003. It is being carried out in Bekasi, Indramayu, and Karawang. “We also have it in Subang and Cirebon,” said Aat Taryana from city planning department for West Java. (http://www.tempointeraktif.com/hg/nasional/2008/05/23/brk,20080523-123552,uk.html)

Price of geothermal electricity increased

The government issued the price regulation on geothermal electricity. Based on this regulation, the price of geothermal electricity is 7-8 cent USD per kWh, higher from the price before that less than 5 cent USD per kWh. The government hopes that with this new price the geothermal electricity business will become more interesting. This new price regulation is stated on the regulation of Ministry of Energy and Mineral Resources No. 14 Year 2008 (Kompas, p. 17)

Export of textile and its products shifted to Europe

The Indonesian producers and exporters of textile and its products (TPT) start to shift their export market from the United States to the EU countries and Japan, following the economy recession in the United States that has decreased their demand up to 30%. Up to now the US has become the main export destination country for Indonesian TPT products that worth US$4.3 billion per year or 43% from total of the TPT export. (Bisnis Indonesia, Wed May 21, p. T2)

Foreign investors are allowed to invest in palm plantation

The Indonesian government will allow foreign investors to invest in palm plantations. Directorate General of Plantation of the Ministry of Agriculture, Achmad Mangga Barani, said that the government has accommodated this with regulation for foreign investors that would like to open palm plantation business in Indonesia. (Bisnis Indonesia, Wed May 21, p. T6)

Tender of 21 oil and natural gas work areas is postponed until June

The government is postponing the tender of 21 oil and natural gas work areas including the delivery of tender documents from May to June. Directorate General of Oil and Natural Gas, Luluk Sumiarso, said that this is due to adjustments that need to be done for the terms and conditions of the tender. (Bisnis Indonesia,Mo May 19, p. T4)

CSR funds could become an alternative funding for SMEs

The government said that the Corporate Social Responsibility (CSR) funds from every company could become an alternative for funding and empowering the SMEs. Deputy for Funding Sector from the Ministry of Cooperation and SMEs, Agus Muharam, said that the empowerment is meant especially for women. He said that women have strategic value in the developing the SMEs. In Indonesia there are around 40 million small and medium entrepreneurs. 60% of them are women entrepreneurs. Research of the Ministry of Cooperation and SMEs showed that the credit turnover rate of women entrepreneurs is good. (Bisnis Indonesia, Mo May 19, p. R2)

Batam tries to find electricity investor to replace PLN

Batam needs an unlimited supply of electricity especially after Batam received the FTZ status. The status of FTZ opens the opportunity for foreign investors to supply electricity in Batam. (Bisnis Indonesia, Mo May 19, p. R1)

Energy sector will be reformed

Ministry of Energy and Mineral Resources (ESDM) is preparing at least six blue prints in electricity and energy sectors, besides the revisions of the ministerial regulations in oil and natural gas sectors. Draft of the advanced economic policies package that will be soon issued by the government reveals that the blue print and policy revisions will be finished at the end of December 2008. It says that the reformation of the production policies in oil and natural gas sectors will become the focus priority of government’s program 2008-2009. (Bisnis Indonesia, Mo May 19, p. 1)

Bali to build modern port for cruise ships

A modern and permanent port for foreign cruise ships will be built in Bali, Putu Sujana Cahyanta, chief of the Bali Provincial Transportation Office, said Thursday, Asia Pulse reported.
He expressed hope that after the completion of the port, foreign cruise ships passing by the Indonesian waters would take a few days to make a port call at the island. "Luxury cruises ships carrying tourists from other countries to Singapore are expected to come to Bali as well after the modern, permanent port is ready," Putu Sujana said.
He pointed out that at least 300 luxury cruise ships, each with 1,500 to 2,000 tourists, arrived in Singapore every year. "Those floating hotels on their way to a number of countries in Asia usually pass Indonesian waters, and therefore they are expected to make a stop in Bali when the port is ready," Putu Sujana said, adding that the facility was under construction in Karangasem district.
Financing was being provided by the central government, Bali provincial administration, and Karangasem district administration with completion due in 2009. (http://www.ekon.go.id/)

Informal sectors decreased the unemployment rate

Central Bureau for Statistics (BPS) announced that the unemployment rate in February 2008 has decreased compared to the data of February and August 2007. The unemployment problem is saved by informal sectors that use a lot of manpower. The Deputy Chairman of the BPS, Arizal Ahnaf, said that number of employment in February 2008 is 9.43 million, decreased 584,000 than August 2007 or decreased 1.12 million from February 2007. (Kompas, Fri May 16, p. 1)

Regulation on Free Trade Zone (FTZ) council

Regulation on Free Trade Zone (FTZ) council
The businessmen in Batam, Bintan, and Karimun (BBK) finally get the certainty about the FTZ following the issued of the organizational structure of the zone councils. The Investment Coordinating Board chairman (BKPM), Muhammad Lutfi, said that three presidential decrees (Keppres) about the zone councils at BBK, all in Riau province, have been signed by the President. The government issued the FTZ regulation in order to attract more foreign investors to the islands, thereby boosting economic development, creating more jobs and increasing non-oil and gas exports. In the FTZs, the government will build free ports, a one-stop investment office and easier immigration procedures to attract businesspeople and investors.
(Bisnis Indonesia, Fri May 16, p. R2)

Import duty reduction for 14 group products

The government will speed up the import duty reduction for 14 raw materials used in the manufacturing of film and camera products in order to increase the growth of the real sectors. The raw materials are currently subject to import duties of between 10% and 40%. Industries that use the materials are facing tough competition from lower-cost, higher-quality imports.
This regulation is in Peraturan Menteri Keuangan No. 70/PMK.001/2008 about Import Duty Fee Regulation for Specified Imported Products. (Bisnis Indonesia, Fri May 16, p. 1)

Internet in Indonesian villages by 2011

Minister of Information and Communication Muhammad Nuh is optimistic that the internet can be accessed by entire villages in Indonesia by 2011. “We plan to have it four years earlier than what the Education Department targeted as 2015,” he said in Jakarta yesterday. According to M. Nuh, 38,000 villages in Indonesia need more access to connect to the phone and internet. He requested the internet and phone users not to be concerned about the price. “The internet price will be reduced by this July,” he said. (http://www.tempointeraktif.com/hg/nasional/2008/05/16/brk,20080516-123198,uk.html)

NSW system will be fully adopted in December

The National Single Window (NSW) system will adopted in December 2008 at five ports and airports, following the success of the tryout at Tanjung Priok since the end of 2007. Susiwijono, Head of the NSW Technical Executor, said that the application of NSW will be start in December 2008 at Tanjung Priok port and Soekarno-Hatta Airport (Jakarta), Belawan (Medan), Tanjung Perak (Surabaya), and Tanjung Emas (Semarang). (Bisnis Indonesia, Thu May 15, p. R3)

The World Bank will stop Indonesian soft loan

The World Bank and Asian Development Bank will stop soft loan for Indonesia this year because the GNP of Indonesia has reached more than US$1000. The World Bank said it will stop offering soft loans to Indonesia as the country has been promoted to the category of middle income nation starting June. Meanwhile the Asia Development Bank is considering doing the same by the end of 2008. Country director Joachim von Amsberg said the donor agency will no longer accept IDA requests from Indonesia, which already has a per capita income far exceeding $1,000 per year.

Minister of Industry: this year industrial growth target only 5%

Minister of Industry, Fahmi Idris corrected the industrial growth target to 5 - 5.5% from 6%. This is the second correction of industrial growth target for this year, after in April the ministry has corrected the target from 7.4% to 6%. Fahmi Idris said that the global recession and the increasing of world fuel price has increased the production cost of manufacturing sectors. (Bisnis Indonesia, Tue May 13, p. T1)

Nine industrial centers will be built

This year the government will build nine industrial centers in border region, underdeveloped and isolated area in order to develop their potential commodities. The Ministry of Cooperation and SMEs together with the Ministry of the Remote Area Development (PDT) will build these industrial centers. Deputy assistant for investment facilitation of the Ministry of Cooperation and SMEs, Bonar Hutauruk said that the location is still being discussed by these two ministries. (Bisnis Indonesia, Mo May 12, p. R2)

Transportation cost to the port is to increase about 30%

The Indonesian port operators will recalculate all service charges following the government’s plan to increase the fuel prices at the end of May. The industrial circles have to bear the additional cost following the price increasing that may reach to 30%. Maradang Rasjid, Secretary of Seaport Special Shipment Owners of Tanjung priok said that the transportation cost to and from the port will be increased if the fuel price increased. (Bisnis Indonesia, Mo May 12, p. 1)

European Luncheon: High commodity prices a problem for Indonesia because of inefficiencies

At the joint European luncheon on 21 May, speakers Enrique Aldaz-Carroll of the World Bank and former Coordinating Minister for the Economy DR. Rizal Ramli, analyzed the impact of the high commodity prices on the Indonesian economy. Aldaz-Carroll expected commodity prices to remain high for the foreseeable future. Both speakers expressed their concern that the inflation that affects the poor is much higher than the official inflation rate. Aldaz-Carroll stated that food inflation in April was 16%, and that this inflation level will push 4.5 million people, who are spending two thirds of their income on food, into poverty. Rizal Ramli expects overall inflation in Indonesia to be in 'double digits' but inflation of prices that are important to the poor to be twice as high. Aldaz-Carroll said that fuel subsidies are not well-targeted and are not really helping all the poor. He also stated that the high oil and gas prices had not led to a substantial increase in oil and gas production in Indonesia because of the poor regulatory investment conditions. Economic growth in Indonesia could be 11% if the investment response in oil and gas would have been unhampered by the investment conditions. Rizal Ramli added to this that Pertamina's production costs per barrel are 25% higher than in other oil producing countries. Transmission losses at PLN are 11%, also much higher than in other Asian countries. Rizal Ramli expressed concern that the planned increase in fuel prices would cause serious trouble, and stated that 'this is not the right time for increases'. He also stated that Bulog's current stocks are less than 40% of the level that is needed to ensure sufficient supply for the poor and to stabilize prices. Therefore, Bulog will be unable to control rice prices in the coming months. He suggested that the Rp 14 trillion that is planned for cash transfer to the poor, would be better spent on infrastructure, most notably the 1300 km trans Java toll road. Less than 5% of this has been built, because concessions have been given to poorly qualified companies who are now waiting for buyers to take over the concession from them. Besides, the government will need to give partial guarantees to private investors.

Non-bank companies’ foreign loans

Bank Indonesia, the national central bank, recently issued its Regulation No. 10/7/PBI/2008 regarding Foreign Loans of Non-Bank Companies (the “Regulation”). The Regulation states as the consideration of its enactment the central bank’s anticipation of the growing amount of inflow of foreign loans into the country and its need to minimize this phenomenon’s negative impact. The Regulation imposes a reporting requirement as well as the obligation to apply the prudential principle on non-bank companies that obtained foreign loans. The foreign loans that have to be reported to Bank Indonesia comprise all types of loans either in terms of the maturity or the securities used to procure the loans, hence they include ordinary bank loans, loans that use securities as the instrument of the issuance irrespective of whether the issuance is through private placement or public offering, and domestic debt notes issued in a foreign currency.Of the most important provisions of the Regulation is the requirement for these companies to obtain a debt rating before they obtain a long term loan. The rating must then be reported to Bank Indonesia, which report must include the company’s financial ratio, financial report, and an analysis by the management of the company’s risks.The Regulation came into effect on 19 February 2008, which was the date of its issue.

Government to focus on port, railway projects

The government will prioritize the development of port and railway infrastructure this year to ease the flow of goods and reduce high transportation costs in the country, Transportation Minister Jusman Syafii Djamal says. Among development plans for this year, he said, was the modernization of navigation systems in three international airports: Kuala Namu airport in Medan, Lombok airport in Lombok and Hasanuddin airport in Makassar. He also said the ministry will develop ports designed to load crude palm oil (CPO) as the commodity had become the country's main export. http://www.bkpm.go.id/en/node/2026

Palm oil export tax lowered

The government has reduced export taxes for palm oil products in May to bring them in line with international prices, the trade ministry said on Friday, Reuters reported.
The export tax for crude palm oil in May will be cut to 15% from 20% in April.
The base export price for crude palm oil will be cut to $1,082 a ton from $1,196 in April, while the export price for RBD palm olein, used as cooking oil, will be down to $1,229 a ton compared to $1,303 in April. The base price and export tax will be valid from May 1 to the end of the month.
The base export price is used to calculate export tax paid by exporters.
Crude palm oil makes up 45% of the country's palm oil exports. Higher priced palm oil by-products such as RBD palm olein make up the rest.
The government meanwhile introduced mandatory checks on vessels carrying crude palm oil and its derivatives from April 24 in a bid to curb smuggling of the commodities, Detik.com quoted Ardiansyah Parman, director-general for domestic trade, as saying Tuesday.
Cargo records will be cross-checked to ensure the volume and type of palm oil being shipped from one domestic port tallies with that unloaded at the next port of berth, Dow Jones reported.
The move comes after the government found some palm oil that was only allowed to be sold locally being smuggled overseas, said Parman.
http://www.ekon.go.id/

BI provides Rp70 billion in credits for farmers in West Sulawesi

Bank Indonesia (BI), the central bank, provided Rp 70 billion in credits for the agricultural sector in West Sulawesi province to support the farmers in marketing their produce. "BI provides the credits to support the farmers in the marketing of their produce in West Sulawesi," Head of the BI Makassar office Rijal Javara said after a meeting between banking circles and the West Sulawesi provincial administration in Mamuju on Friday. The meeting was attended by West Sulawesi Governor Anwar Adnan Saleh and a number of high-ranking officials of the provincial administration, as well as representatives of local banks. Javara said BI provides credits for the agriculturtal sector which are expected to overcome the problems facing the farmers in the marketing of their produce. Anwar Adnan Saleh during the meeting hoped for the support of banking circles to speed up the region's economic growth. (http://www.antara.co.id/en/arc/2008/4/19/bi-provides-rp70-billion-in-credits-for-farmers-in-w-sulawesi/)

Indonesia imports over 90 percents of its pharmaceutical raw material needs

Indonesia still imports over 90% of the pharmaceutical raw materials it needs, showing that its dependence on overseas industries is very high, a pharmaceutical trader spokesman said. "And some 70% of the imported raw materials come from China," Kendrariadi Suhanda, deputy secretary general of the Indonesian Pharmacies Association (GPFI) told the press on the occasion of “Indo Medica Expo 2008” here on Thursday. He said Indonesia was predicted to become increasingly dependent on imports from China because the latter was continuously increasing the number of its raw material pharmaceutical industries and to improve the quality of their products. "European countries whose pharmaceutical industries are advanced have begun to establish alliances with Chinese pharmaceutical raw material industries," he said. He said Indonesia still lacked strong industries in the production of pharmaceutical raw materials. (http://www.antara.co.id/en/arc/2008/4/18/ri-imports-over-90-pct-of-its-pharmaceutical-raw-material-needs/

Indonesia to ask World Bank to disburse US$1.2 billion program loan

Indonesia will ask for the disbursement of a US$1.2 billion program loan by the World Bank to cover its revised 2008 state budget deficit which reaches Rp94.5 trillion or about 2.1 percent of its gross domestic product (GDP), a senior finance ministry official said. Director General for External Debts Management of the Finance Ministry, Rahmat Waluyanto, said here on Friday that the total loans the government would withdraw amounted to US$2.9 billion, of which US$1.1 billion would come from the Asian Development Bank (ADB) and US$500-600 million from the Japan Bank for International Cooperation (JBIC). "The international institutions have different capacities in providing their loans," Waluyanto said when asked about the composition of the loans. He said that some of the JBIC loans were provided with regard to Indonesia's effort to handle the climate change issue. (http://www.antara.co.id/en/arc/2008/4/18/ri-to-ask-wb-to-disburse-us12-billion-program-loan/

Jakarta guarantees MRT management will be professional

The Jakarta provincial government (DKI) has guaranteed that the selection of MRT Management Company would be carried out professionally. “There will be high standards in selecting directors and commissioners,” said Jakarta governor Fauzi Bowo after meeting representatives of the Japan Bank for International Cooperation (JBIC) at city hall yesterday (17/4). The MRT project, according to Governor Fauzi, was a vital one for the future of Jakarta in order to help overcome traffic jams in the capital city. He said that the government was still working on setting the company PT MRT Jakarta. “Starting in March 2009, construction is planned to be started,” explained Fauzi. The MRT project will cost Rp10.264 trillion, made up of loans of Rp8.359 trillion from JBIC, Rp651 billion from the regional budget, and Rp1.254 trillion from the state budget to cover tax. (http://www.tempointeraktif.com/hg/nasional/2008/04/18/brk,20080418-121588,uk.html)

SMEs will be subject to final income tax

Directorate general of taxes, Finance Ministry will charge final income tax (PPh final) to the SMEs with maximum revenue Rp5 billion per year. This policy has become the part of directorate general of taxes to focusing at the large and middle tax obligation in Indonesia. (Bisnis Indonesia,Thu 17 Apr, p. 1)

BI to issue six banking policies this month

The central bank, Bank Indonesia (BI), is scheduled to issue a package of six banking policies later this month to give commercial banks a leeway in extending loans. The package of banking policies was necessary for the banking industry to face current pressures on the Indonesian economy, Bank Indonesia Deputy Governor Muliaman D Hadad said in a press conference here on Tuesday. "It is important to give banks a leeway in extending their loans amidst the current pressures (on the Indonesian economy)," he said. He expressed hope the policies would boost the national banks to increase the amount of their loans despite global economic pressures. The policies concern among others the reduction of weighted risk in the calculation of risk-weighted assets for small business loans to boost banking loans for small businesses. (http://www.antara.co.id/en/arc/2008/4/16/bi-to-issue-six-banking-policies-this-month/)

Seventy percent of Indonesia's mangrove forests damaged: minister

Forestry Minister MS Kaban said here Indonesia had 9.4 million hectares of mangroves but about 70% of them were in damaged condition. He said lack of understanding among local people about the importance of the mangrove ecosystem had helped speed up mangrove forest degradation. The minister said mangrove forests were performing an important function in preventing land abrasion by sea waves and tsunamis. "Mangroves can also serve as a source of wood for human beings and as habitats for other creatures," he said. (http://www.antara.co.id/en/arc/2008/4/15/seventy-pct-of-ris-mangrove-forests-damaged-minister/)

Special Economic Zone will get maximum facilities

The government proposed that every area of KEK (Special Economic Zone) will get maximum facilities in order to increase the investment. Bambang Susantono, secretary of preparation team for KEK said that there is no negative investment list for that area. (Kompas, Mo, 14 Apr, p. 18)

World Bank backs “New Deal” for poor, hungry

The World Bank on Sunday launched a "New Deal" to fight hunger and poverty and urged governments to take action against a food crisis that has sparked deadly unrest in developing countries. A doubling of food prices over the past three years could push 100 million people in poorer developing countries further into poverty and governments must step in to tackle the issue, World Bank President Robert Zoellick said. "Based on a rough analysis, we estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty," Zoellick was quoted by AFP as saying at the end of the World Bank spring meeting here.
(http://www.antara.co.id/en/arc/2008/4/14/world-bank-backs-new-deal-for-poor-hungry/)

CBI –survey on mango and long haul tourism

The survey aims to provide exporters of mangos from Developing Countries (DC’s) with
product-specific market information about gaining access to the EU market(s). This product survey comprises all information on this market: market sizes, trends, trade, distribution channels, website of buyers, prices and doing business.
Mango survey; Long haul tourism survey
The CBI’s product survey is a complementary to the general information and data provided in the CBI’s market survey ‘The fresh fruit and vegetable market in the EU’ and the ‘The long haul tourism market in the EU’, which can be downloaded from http://www.cbi.eu/marketinfo.

Indonesia among the most optimistic markets in Asia: Survey

Indonesia is the third most optimistic market in Asia after India and China, according to a quar­terly investor survey by Dutch financial institution giant ING. The Jakarta Post reported (01/18/08)
Despite global market uncertainty and the impact of U.S. sub-prime crisis during the first quarter of this year. The fast growing markets of India, China and Indonesia have gained the highest level of investor confidence.
The ING Investor Dash­board survey measures and tracks investor sentiment and behavior quarterly from 13 Asia Pacific markets, with each market assigned an investor sentiment score ranging from 0 (the least optimistic) to 200 (the most optimistic).
India, China and Indonesia recorded the highest level of investor optimism scoring 168, 136 and 131 respectively.
Other countries surveyed included Hong Kong, South Korea, Malaysia, the Philip­pines, Singapore, Thailand, Taiwan, Japan, Australia and New Zealand.
ING Asia chief investment officer Hou Wey Fook, howev­er, said Indonesia — like the rest of Asia — was not insu­lated from global market uncertainty.
According to Fook, 58 per­cent of Indonesian investors claimed the crisis had somehow affected their investment decisions during the first three months of the year.
More, please visit http://www.bkpm.go.id/en/node/1946.

Food prices expected to remain high in 2008-2009: minister

Trade Minister Mari Elka Pangestu said that food commodity prices were expected to remain high in 2008 and 2009 as a result of high prices of food commodities in the world market."Food commodity prices in 2008 and 2009 will remain high such as those of maize which will increase by 27 percent, soybean 23 percent and rice nine to 10 percent," the minister said at her public lectures at the Sebelas Maret University (UNS).She said that food prices in the past one year had increased by 35 percent and there were several food commodities whose prices rose to even more than 100 percent.The minister said that increase in food prices took place not only in Indonesia but also in the world market. After 30 years of downward trend, the real prices of food commodities had in the past three years been on the rise.
(http://www.antara.co.id/en/arc/2008/4/14/food-prices-expected-to-remain-high-in-2008-2009-minister/)

Regional forum seeks to attract investors for RI development

President Yudhoyono is set to open a regional investment forum in late May, designed to attract foreign and local investors in development projects across the country. The Indonesian Regional Investment Forum, which will take place at the Ritz-Carlton in the Sudirman Central Busi­ness District in South Jakarta on May 26 and 27, is expected to secure at least US$6 billion, the organizer said. A region must present three or more feasible projects worth a total of at least $50 million to participate in the forum. The projects will cover a range of areas, including agribusiness, planta­tions, biofuel, infrastructure, mining, power, oil, gas, property and tourism. More than 500 foreign and local investors are scheduled to attend the forum and channel funds to provinces, cities or regencies, said Irman Gusman, the forum's chairman and deputy speaker of the Regional Representatives Council. (http://www.bkpm.go.id/en/node/1908)

Steady Q1 GDP growth on spending

The economy is estimated to have grown by around 6.2-6.3% in the first quarter from a year ago, as steady consumer spending underpinned growth, the finance ministry said on Wednesday (09/04/08), Reuters reported.The estimate compared to annual 6.25% growth in the last quarter of 2007 and 6.32% expansion for the whole of 2007, which was the fastest annual growth rate since 1996. Anggito Abimanyu, head of fiscal analysis at the finance ministry, said steady consumer spending should support growth, despite problems in the global economy and the threat of inflation. Exports performed strongly in the fourth quarter of last year, supported by global demand for commodities such as palm oil and rubber, while consumer spending and private investment were steady following interest rate cuts. The government has cut its GDP growth forecast for 2008 to 6.4% from 6.8% because of concerns over the global economy. Bank Indonesia said Monday that full-year economic growth is expected to slow slightly to 6.2% this year from 6.3% in 2007, and is likely to be between 6.2% and 6.8% next year, Dow Jones reported. The central bank said growth is expected to be between 6.7% and 7.4% in 2010; between 7.2% and 7.8% in 2011; and between 7.4% and 8% in 2012. For this year, the central bank predicted in a publication that household consumption would grow 5.4%; government spending to rise 3.8%; investment to increase 9.3% and exports to be up 7.9% and imports to gain 7.9%.The central bank predicted the unemployment rate to be around 9% at the end of this year. The World Bank earlier cut its Indonesia's 2008 growth forecast to 6.0% from 6.4%, and expects 6.4% growth in 2009. http://www.ekon.go.id/

VAT on import of goods for oil and gas industry borne by the government

The Minister of Finance on 28 December 2007 issued Regulation No. 178/PMK.011/2007, stipulating that the Government is Bearing the Value Added Tax on the Imports of Goods for the Commercial Upstream Exploration of Oil and Gas and Geothermal Energy (“Regulation 178”). The purpose of the regulation is to provide the industry with an incentive to increase the production.The VAT referred to by Regulation 178 is the VAT on the importation of the equipment/goods needed by entrepreneurs in the business field of oil and gas and geothermal energy, for their upstream exploration. The goods which importation qualifies for the incentive are: (i) equipment not yet produced domestically, and (ii) goods that are already produced domestically but the quality or quantity of the domestically produced goods is inadequate. On the other hand, the entrepreneurs who are qualified for the incentive are (i) those who are already in a cooperation contract with the government based on the provisions of Law No. 22 of 2001 regarding Oil and Gas, and (ii) those who are conducting geothermal exploration and have signed a contract with the government or have obtained a geothermal mining license after 31 December 1994.One important feature of Regulation 178 is the provision that the facility granted by the government is not eligible for reimbursement and cannot be entered as recoverable cost.Aside from Regulation 178, the Minister of Finance also issued two other regulations, No. 177 and 179, regarding import duties on oil and gas equipment.Regulation 178 was issued on 28 December 2007 and is effective for the period as from 1 January 2008 to 31 December 2008.

Technical recommendation requirement for investment in plantation

The Department of Agriculture has issued the implementation regulations for Article 44 of its Ministerial Regulation No. 26/Permentan/OT.140/2/2007. The implementation regulations are embodied in Regulation of the Director General of Plantation No. 129.1/Kpts/HK.320/12/071 (“Regulation No. 129”) regarding Guidance on the Granting of the Plantation Technical Recommendation in the Framework of Investment.Article 44 of the Ministerial Regulation stipulates the requirement for a technical recommendation from the Director General of Agriculture for the issue of an investment license in plantation and in post-harvest processing of plantation products. The technical recommendation for the investment license may be applied for by foreign or domestic individuals and corporations. As denoted by the title, Regulation No. 129 stipulates the requirements for the application of the technical recommendation, and the procedure for the granting of the recommendation. The regulation comes with three attachments, respectively containing the standard form for the application, the standard form the application acceptance and the standard form for the application rejection. The Directorate General is required to issue the acceptance or rejection within seventeen working days as of its receipt of the application. The Regulation has been in force since the day of issue on 3 December 2007.

Port business sector will open for foreign investment in 2009

The Government will open investment in port sector for local investor and foreign investor next year. After Shipping Law is enacted, the Government will issue at least 8 government regulations for the implementation of the Shipping Law, including government regulation for local and foreign investment in port sector. However, according to Minister of Communication, Mr. Jusman Syafii Djamal, the maximum of foreign investment in port sector will be limited in maximum 49% ownership. If foreign investors want to invest in port sector, they should ask Indonesian partner for the joint venture, either private or state owned enterprise. Directorate General of Sea Communication Mr. Effendy Batubara said that the limitation of foreign investment namely 49% is reasonable because transportation sector is very strategic, therefore the majority of share ownership should be owned by local investor subject to Investment Law. [Source: Bisnis Indonesia daily newspaper, 18 April 2008]

Solid Waste Law

A new law on Waste Management, which only covers solid waste, has been recently passed by the House of Representatives. There are three types of wastes regulated under the law, household wastes, wastes similar to household wastes, and specific wastes. In order to reduce the amount of wastes, the law indicated that the Government could provide incentive to people doing waste reduction and dis-incentive to businesses not doing waste reduction. Under the new law, all producers are required to place a waste reduction notice and instructions on wastes handling on its packaging. Businesses are responsible to collect and process their own products' packages that cannot or is difficult to be naturally processed.The proposed law also regulates the tasks and obligations of the Government, both at the national and local levels, as well as cooperation and partnership with the private sector in managing wastes, including private sectors in waste management. Licenses for companies involving in waste management are to be issued by the Local Government.The law also suggested the conception of Waste Management Forum which can be facilitated by the local Government to provide input, consideration, and recommendation on wastes management to the local Government. Members of the forum may comprise of public figures, NGOs, private sectors, and wastes experts. The law also prohibits the importation of wastes to be dumped in the Indonesian territory. Importation of waste similar to household waste with permission from the Ministry of Trade based on recommendation from the Ministry of Environment may be granted, when the wastes will be used as raw materials. The new law also prohibits littering, open dumping wastes management, mixing dangerous and toxic wastes with rubbish, or burning waste not in accordance with waste processing methods.

Implications of the New Company Law - theme of European Joint Luncheon

On 17 April 2008, a European Joint Luncheon was organized by Ekonid at Intercontinental Midplaza Hotel with theme the Implication of the New Company Law. The speaker was Mrs. Kartini Muljadi, S.H., Senior Partner of Kartini Muljadi and Rekan. Basically, she only summarized what's new in New Company Law (Law No. 40 of 2007) which came into effect on 16 August 2007.
In this luncheon, she reminded that all Indonesian limited liability companies that obtained status as a legal entity before 16 August 2007 are required to adjust their Articles of Association to the terms of New Company Law prior to 16 August 2008. The sanction for any company that does not comply with said requirement may be dissolved by virtue of a decision of any Court of First Instance at the request of a public prosecutor or any interested party.Further, she also stated that New Company Law emphasized about personal liability of the Board of Directors ("BOD") of the Company. BOD should execute the management of the Company in good faith and full responsibility. Because there is an obligation to prove that the BOD cannot be held liable for the company's loss. Failing which, the BOD should be fully responsible for the company's loss and the shareholders can file lawsuit before the District Court against the BOD with regard to the company's loss due to the BOD's fault or negligence.

HPSP visited new greenhouses and screenhouses of melon farmers association

In April 4, 2008 HPSP visited 3 sites of greenhouses and screenhouses own by melon farmers association in Pekalongan (Asosiasi Melon Tani Manunggal).These buildings are part of the partnerships activities under HPSP support in improving the production capability of the farmers to answer the challenges from their buyers. It is expected to contribute in the melon farming integrated pest management and reducing the effect of the natural factors such as season. This is a new technological initiative for melon farming in the surrounding area. The initiative has attracted lot of attentions from the other farmers as well as the government. Within the next 2 months harvesting time, the association and other related parties will fully experience whether this good starting initiative is applicable and workable as well as producing better harvest.

New (revised) Shipping Law

On 8 April 2008, the house of representative approved revised Shipping Law No. 21 of 1992. This Law will allow foreign and domestic private entities to operate ports in Indonesia without having partnership or seek aid of state port operators PT Pelindo I, II and III, which partly function as port regulators, as well. PT Pelindo will no longer be the sole port operator and it will be treated similar to the private entities. This will end state monopoly on port ownership and there is an opportunity in the future that Indonesia will have an international port capable of serving direct shipments of Indonesian goods to overseas destinations. Further, some licenses will be transferred to Regional Government. The Law contains 22 chapters and 355 articles, with eight new chapters regulating mortgages and loans, maritime safety and security, the harbor master and the establishment of a sea and coast guard. PT Pelindo is given for 3 years for any adjustment of the New (revised) Shipping Law. For more information on this regulation, please contact Mr. Gatot Sanyoto at kusnalaw@kusnandar.com

Investors cannot extend their rights over land in advance all at once

On 25 March 2008, as the result of judicial review, the Constitutional Court of RI decided to amend Article 22 paragraph (1), (2) and (4). It means that the investors cannot extend their rights over land in advance all at once because it is contrary to Article 33 paragraph (3) of the Constitutional Law of 1945. The extension of rights over land for investor will be subject to Land Law No. 5 of 1960.Thus, the prevailing wording of Article 22 paragraph (1), (2) and (4) as amended by the Constitutional Court of RI are:(1) The facilitated services and/or licensing of the rights over land can be granted and extended and renewed upon the request of the investor.(2) The rights over land can be granted and extended for capital investment with the following requirements:a. the long term capital investment and related with the competitive restructuring of Indonesian economics structure;b. capital investment with high risk related with the return of capital in long period based on type of capital investment activities;c. capital investment which does not require big area;d. capital investment which use the right over state land; ande. capital investment which does not disturb the principle of people's justice and does not harm public interest.(4) The grant and extension of the rights over land which can be renewed may be terminated or annulled by the Government if capital investment activities abandons the land, harms the public interest, uses or cultivates the land other than in accordance with the aims and purposes of the grant of such rights over the land, and otherwise violates the provisions of laws and regulations on land.

Three companies to develop sago plantations in Riau and West Papua

Three domestic companies are ready to develop sago plantations in Riau and West Papua Provinces to meet demand for raw materials to make bio ethanol as alternative energy, an Agriculture Ministry official said. The three companies are PT Nasional Timber, PT Nusa Ethanolasia and PT Austindo Nusantara Jaya, Director General of Plantations at the Agriculture Ministry Achmad Mangga Barani said. He said PT Nasional Timber planned to develop 10,000 hectares of sago plantation in Riau after developing 10,000 hectares of sago plantation in the province. Both PT Nusa Ethanolasia and PT Austindo Nusantara Jaya would develop sago plantations in West Papua, he said. (http://www.antara.co.id/en/arc/2008/4/5/three-companies-to-develop-sago-plantations-in-riau-west-papua/

Lampung issues "Exporters Directory 2007"

The Lampung provincial administration has published a "Lampung Exporters Directory 2007" to promote its export-oriented products and commodities internationally. The book has been distributed to various foreign embassies in Jakarta and Indonesian embassies worldwide, Lampung Trade Office Head Suparmo said. The provincial administration had already received some feedback regarding the book from foreign embassies, including from the embassy of the United Arab Emirates in Jakarta, he said.
Lampung enjoyed a trade surplus amounting to US$1.9 billion in its export-import activities in 2007. (http://www.antara.co.id/en/arc/2008/3/31/lampung-issues-exporters-directory-2007/)

Balikpapan, Jayapura to get new container terminals

Jakarta, 04/08/2008 - State-owned port operator PT Pelabuhan Indonesia (Pelindo) IV will soon implement a plan to build new container terminals in Balikpapan in East Kalimantan and Jayapura in Papua, Asia Pulse reported.Tenders will be held soon with construction of the projects estimated to cost Rp800 billion ($87.2 million) possibly starting this year, Pelindo IV president Djarwo Suryanto said. The existing container terminals in Balikpapan and Jayapura are too small, Suryanto said. The new terminal to be built in Balikpapan will add capacity of 250,000 TEUs, he said. In Jayapura the new terminal will have a capacity of 150 TEU. (http://www.bkpm.go.id/id/node/1893)

Upcoming tender for Jakarta waste management

The Jakarta BPM PKUD (Investment Coordinating Board and Local Assets and Business Empowerment or known as the Jakarta Investment Board) is preparing tender for the waste management of Jakarta, together with the Jakarta Sanitation Agency and an outside consultant from BPPT. The tender will be open in the fourth week of April, with a 45 days window to submit offers. The technology to process the waste is still open. It could also use CDM related technology, as in Bekasi. Each tender participant will be requested to make a presentation to the tender committee, probably by mid May.

Government to name ports allowed to serve foreign ships

The Transport Ministry will name 25 ports this week which will be allowed to serve ships engaged in international shipping, reducing the number from 141 at present, Asia Pulse reported. The decision is aimed at reducing room for smuggling or illegal trading, said Sea Transport Director General Effendi Batubara. Indonesia has 977 general seaports and 141 of them are still open for ships serving international shipping. The country also has 565 special ports which are almost all open for international ships. The 25 ports are located in various islands - two in Sulawesi, five in Java and Sumatra each, four in Kalimantan and Papua each and one each in East Nusatenggara, Bali, Maluku and Batam. Exports or imports via the remaining 166 general ports will have to be made via the 25 ports, said Batubara. (http://www.ekon.go.id/)

World Bank cuts Indonesia 2008 growth forecast to 6 pct due to global slowdown

The World Bank reported it has revised down its growth forecast for Indonesia to 6 percent this year from 6.4 percent forecast earlier as Indonesian exports are likely to slow down due to a weaker global economy. The World Bank sees Indonesia's export growth slowing to 7 percent this year from 8 percent last year."Domestic demand, especially investment and consumption, should remain robust as the economy's momentum carries into 2008," it said in its latest report.With higher international fuel prices and subsidies, Indonesia's budget deficit is projected to widen to over 2 percent of GDP from 1.3 percent in 2007, with the debt-to-GDP ratio falling further to 31 percent by the end of 2008 from 35 percent, the bank was quoted as saying by Thomson Financial.The bank, however, expects Indonesia's economy to bounce back again in 2009."Indonesia is expected to weather the global slowdown reasonably well, with growth slowing to 6 percent in 2008 before returning to 6.4 percent in 2009," it said.Last year Indonesia's economic growth accelerated to a 10-year high of 6.3 percent.The drivers of growth shifted over the course of the year, it said.During the first half of 2007, the economy drew strength from external demand while in the second half, the driving force was investment coupled with consumer demand.Investment picked up substantially in the year, reaching 24.8 percent of GDP.This growth rate reduced Indonesia's poverty rate to 16.6 percent from 17.8 percent a year earlier, based on the government's measurement of the poverty line, it said.The growth rate also reversed the recent trend towards increasing unemployment as the jobless. (http://www.antara.co.id/en/arc/2008/4/1/world-bank-cuts-indonesia-2008-growth-forecast-to-6-pct-due-to-global-slowdown/

Establishment of IP rights management center

The government of Indonesia continues its efforts to enhance the protection of industrial intellectual property rights (“IPR”) in the country, by establishing an Intellectual Property Rights Management Center, in the Department of Industry. The Center is to be referred to as ”PM - HKI Depperin”. The provisions regarding PM-HKI Depperin’s establishment as well as its function and tasks are embodied in Regulation No. 59/M-IND/7/PER/2007 (”PM - HKI Depperin” (the “Regulation”). The Regulation was widely disseminated to the public only recently.Among the main tasks of PM - HKI Depperin are the following: i. to consolidate and coordinate the planning of annual activities and programs, work standards, promotion and information network, and the professional management as well as the business administration of all of the work units in the department; ii. to provide administration, information and consultation as well as technical guidance services; and iii. to facilitate the commercialization of the IPR subjects.The duties and tasks of PM - HKI Depperin are further elaborated in Attachment I of the Regulation. PM - HKI Depperin is required to report on the realization of its programs at least every six months to the Minister. The Regulation has been in force since the day of its issue on 12 July 2007.

Jakarta invites foreign companies to bid for waste management

Foreign companies are invited to invest in a waste management project in Jakarta for garbage management at Bantar Gebang, Bekasi. “The bid will be offered openly and internationally,” said Governor Fauzi Bowo to journalists. According to Fauzi, the decision to invite foreign investors is an alternative taken after it was found that the Jakarta government cannot manage the waste properly. Foreign investors are expected to manage the waste in a modern, effective, and efficient way by using the approved technology system. Due to the large amount of investment, companies will have a certain time to come up with a plan. Technically, the bid will be announced through the internet in April. It is expected to decide the bid by June and to have the project running by July. “Consultants with an international certificate will also be involved,” said Fauzi. Some countries have stated their interest in this project. They are the Netherlands, Japan, South Korea, Australia, and Belgium. Total investment is Rp 140 billion for one thousand tons of cubic meters of garbage. (http://www.tempointeraktif.com/hg/nasional/2008/04/02/brk,20080402-120291,uk.html)

Indonesian high speed train project offered to investor

Indonesia's Transport Ministry has offered investors the chance to build a US$6.14 billion project of high speed trains and tracks covering a distance of 683 kilometers between Jakarta and Surabaya in East Java. Railway Director General Wendy Aritenang Yazid said the government will facilitate the process of securing the license and guarantee legal certainty for investor agreeing to build and operate the project. Prospective investors may build and operate the project without involving the state-owned railway company PT Kereta Api, Yazid said. She said the tracks for high speed train may be built over unused land along the existing railway tracks of PT KA.
She said the investors have to be involved as the project could not come to reality by relying on the cash strapped government. A feasibility study carried out by French railway company Societe Nationale des Chemins de Fer (SCNF) says the high speed train could cover the distance in three hours as against more than 10 hours normally. Investors from France, Japan and South Korea have indicated interest in the project. (http://www.bkpm.go.id/en/node/1838)

World Bank - live online discussion on "East Asia Update: Testing Times Ahead"

Growth in developing East Asia will decline by around one to two percentage points to around 8.5% in 2008 as a result of the unfolding financial turmoil in the US and the resulting global slowdown, says the World Bank’s latest six-monthly review of the East Asia and Pacific region’s economies.
But despite the likely drop from recent double-digit levels, overall growth remains healthy across the region and most countries are well positioned to navigate the global slowdown because of the investments they’ve made in the last 10 years in structural reforms and putting sound macroeconomic policies in place, the report says.
With the slowdown of the US economy, what spillover effects will it have on East Asia and the Pacific? With China as a powerful regional locomotive, has the region "decoupled" from the US economy? Will the region’s economic fundamentals be strong enough to help it weather the volatility? With its large reserves, could the region withstand further shock if the financial situation in the US worsens? These are some of the questions addressed in the report.

Comment on Fitna

The short film Fitna, made by Dutch parliament member Geert Wilders is a collection of old news images that relates the terrorist attacks by Al Qaeda-related groups to certain texts in the Koran. It also shows some Muslim preachers call for violence against Jews and people of other faiths. It shows some extremists who use Islam to justify their intolerant opinions and violent actions. The film then calls upon Muslims to remove these texts from the Koran.
The Dutch society has almost unanimously rejected the film. Not only the Dutch government, but also all the major Dutch organizations and all political parties from left to right (with the exception of Wilders’ own party) have rejected the film. None of the Dutch TV stations has been willing to broadcast the film. In fact, rarely has the Dutch society been so in agreement about anything as about refusing the suggestions raised in this film. The Dutch people respect freedom of speech but oppose insults and lack of respect as these do not contribute to a climate of tolerance.

Minister Sofjan Djalil addresses European companies on policy for state-owned companies

On 25 March, at the joint luncheon of the European Chambers of Commerce, Minister of State-Owned Enterprises Sofjan Djalil set out his vision for the state-owned companies in Indonesia. He started out to deny that his privatization plans have been postponed, merely saying that the expected proceeds from privatization would not be included in this year's fiscal budget. He acknowledged the strong political barriers, especially from the parliament, which he is facing in his reform of the state-owned sector. He did not give a vision on which sectors should be controlled by the state and which sectors should be fully privatized.
He wants to create sector-based holding companies for the 140 companies owned by the national government (companies owned by local governments are not under the control of his Ministry). These holding companies will then be held by one or a few national holding companies, comparable to Singapore's Temasek Holding. The Minister is placing strong emphasis on professional management and corporate governance that will allow corporate decision making without his ministry's involvement. He emphasized that top managers of state-owned companies are increasingly recruited from the private sector, and that they will be fired if they make mistakes. He vowed to further open up the sectors in which state-owned companies operate to private competition, like in the downstream oil industry where thanks to competition from Shell and Petronas the performance of Pertamina stations has much improved.

Re-exportation of imported goods

A regulation of the Minister of Finance has been issued on the release of imported goods from Indonesia's customs zones for their re-exportation. The regulation is the Minister of Finance’s Regulation No. 149/PMK.04/2007 regarding Re-exportation of Imported Goods (the “Regulation”), and is the implementation of Article 10 A section (7) of Law Number 10 Year 1995 regarding Customs.
The Regulation provides that the following imported goods may be re-exported from Indonesian customs zones: (i) goods which are not in accordance with the specification in the respective order; (ii) goods which have been wrongly sent; (iii) goods which are damaged; or (iv) goods banned from importation under a government regulation. Goods excepted from the list of goods that may be re-exported are, among others, goods that are imported for a temporary time, goods that are warehoused in bonded zones, and goods that are imported for use.Importers or transporters who wish to re-export imported goods should submit a re-exportation application along with all the relevant supporting documents to the Directorate General of Customs and Excise, stating the reason for the re-exportation. If the application is rejected, the goods will be treated as ordinary imports and be processed through the normal importation procedures. The Regulation became effective on 15 December 2007.

Batam and Bali: smart premium card

The government will limit the subsidized gas of Premium and Solar. The limitation will be implemented through a smart-card system. It will be first tried in Batam and Bali.
Energy and Mineral Resources Minister, Purnomo Yusgiantoro, said Batam and Bali were selected for geographic and affluence reasons. “They have better a life style and buying power, and are easy to be controlled because they're fairly isolated,” he said yesterday.He explained that the government will not rush to implement this fuel limitation nationally. The government still needs to disseminate the information.
According to Tubagus Haryono, head of the Downstream Oil and Gas Regulating Body, he said Rp 50 billion is needed for the premium and solar limitation project. It will be for disseminating the information, calculating the number of vehicles, and to research fuel consumption behavior.
(http://www.tempointeraktif.com/hg/nasional/2008/03/26/brk,20080326-119826,uk.html)

World Bank plans to revise Indonesia`s growth rate

The World Bank plans to revise downward its Indonesian economic growth rate projection for 2008 to 6.0 percent from 6.4 percent due to the US economic slowdown but assures the move will not affect the government`s effort to achieve the target of reducing the poverty rate."That is still a favorable growth. The projected growth rate of 6.0 percent is chiefly caused by improving macro economic policy, particularly fiscal policy. The drop is fairly slight as it falls to 6.0 percent from 6.4 percent," World Bank Country Director for Indonesia Joachim von Amsberg said on Tuesday.He said the projected 6.0 percent growth rate still enabled the government to create more jobs and reduce the poverty rate although it would not be as fast as 7-8 percent. "The projected 6.0 percent growth rate is still quite favorable to Indonesia amidst the turbulent global economy," he said.
(http://www.antara.co.id/en/arc/2008/3/26/world-bank-plans-to-revise-indonesias-growth-rate/)

Government to maintain conducive business climate: President

President Yudhoyono said the government would continue to maintain a conducive business climate in the country so that business people could play a bigger role in efforts to solve problems faced by the nation.
Addressing the 8th National Meeting of the Indonesian Businessmen's Association (Apindo) at the State Palace, the president said if a conducive business climate was maintained, business players could contribute to the country's
On the occasion, the head of state also called on business makers to create harmonious relations between workers and employers.
President also called on businessmen to make use of business opportunities although at present global economic conditions were less favorable and energy sources were limited.
(http://www.antara.co.id/en/arc/2008/3/26/government-to-maintain-conducive-business-climate--president/)

40% growth in foreign investment projects in the Netherlands in 2007

Figures released by the Netherlands Foreign Investment Agency (NFIA) indicate that the number of foreign investment projects brought to the Netherlands, with the assistance of the Dutch Ministry of Economic Affairs, increased by an impressive 40% in 2007 compared to the year before. This represented a 60% increase in the number of new jobs created. The total investment amount was 25% higher than in 2006. Minister for Foreign Trade, Frank Heemskerk, (Economic Affairs) announced the results on Thursday 21 February during the ABN Amro Globalization Congress in Rotterdam. In 2007 the NFIA realized 155 projects, the majority of which came from developing markets in Asia, with a total investment amount of 578 million Euro. In due course, these projects will create some 3107 new jobs. (http://www.nfia.nl/)

IMF sees Dutch GDP growth of 2.3 percent in 2008

The IMF expects economic growth in the Netherlands of 2.3 percent in 2008 and 1.8 percent in 2009, officials said during a briefing in The Hague.
An IMF official said there were four risk factors to the fund's growth projections, namely lending conditions, house and equity prices, energy prices, and external demand.
"There's a surprise every week, if these bad surprises continue, it might be that these lending conditions will be less favourable than we assume," the official said. The Dutch economy grew 3.5 percent in 2007, the highest growth rate since 2000, but expansion is set to slow as the global credit crisis takes its toll. (http://www.guardian.co.uk/feedarticle?id=7391742)

Underwater electricity for Kepulauan Seribu begins

After being delayed several times, the government of DKI Jakarta launched an underwater electricity network with a prepaid-based system. The delay was due to damage of the cable in the sea last January. “This electricity will be a main energy source for the Kepulauan Seribu,” said vice governor of DKI Jakarta, Prijanto, at city hall, after the launching in Untung Jawa island. The Jakarta government invested Rp 240 billion for the 30-year period. In the past, this area was supported by 43 electric generators and managed by the DKI government. The electricity system is by the cooperation of the Jakarta government with the state-owned electricity company (PLN), distribution division for Jakarta and Tangerang. “In the next 30 years, DKI can save approximately Rp 1 trillion,” Prijanto said. (http://www.tempointeraktif.com/hg/nasional/2008/03/14/brk,20080314-119281,uk.html)