Wednesday, 22 October 2008

Arno F. Damien Rizaldi Kwok: The World Bank Doing Business 2009 Certification of Appreciation

Arno F. Damien Rizaldi Kwok: The World Bank Doing Business 2009 Letter of Recognition

Jakarta business opportunities

Jakarta Investment Board (BPM & PKUD), a Jakarta Provincial Government's body that specialized in facilitating foreign investment in Jakarta is planning to held a seminar on investing opportunity in Jakarta with theme "Jakarta Business Opportunities", Jakarta Business Forum - Invest Jakarta 2008. The event will be held in Jakarta on October 23rd, at Gran Melia Hotel Jakarta. For more information about Invest Jakarta 2008, please log on to

Biofuel policy reduces palm oil exports

Palm oil exports may decline by 1.5 million metric tons following the implementation of a policy on the mandatory use of renewable energy, a government official said Wednesday, Bloomberg reported. “In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to the Coordinating Minister for Economic Affairs, said, adding that it will cut palm oil exports.
The government has issued a ministerial decree that will make the use of biofuel mandatory from 2009. The decree states that for biodiesel, transportation must use a blend of 1% palm-based biodiesel and 99% diesel oil, while industry and power plants must use a blend containing 2.5% and 0.25% palm-based biodiesel respectively.
By 2010, the palm-biodiesel content will be increased to between 2.5%-3% for transportation, 5% for industry and 1% for power plants. For bioethanol, the use of a 1-5% blend of bioethanol and 99-95% of gasoline for transportation will become mandatory in 2009. Industry will have to use a 5% blend of bioethanol -- which is made from cane molasses and cassava feedstock -- and 95% gasoline next year, increasing to 7% by 2010.
Evita Legowo, Director General of Oil and Gas, said the government would start trials for the blends from October 1, Reuters reported. Indonesia's biofuel industry can produce between 1.3 million tons to 1.5 million tons annually, said Krisnamurthi. Capacity may double to three million tons by 2010, he said. “The country's palm oil output will be more than 19 million tons next year and exceed 20 million in 2010” he added. Food and chemicals industry may use 4.5 million tons this year and next, and five million tons in 2010, Krisnamurthi said.

Government offers tax benefits to attract investments

The government is offering tax benefits for certain new investments as part of efforts to improve the investment climate amid the deepening global financial crisis, the Coordinating Ministry for Economic Affairs said Monday, Dow Jones reported.
"The government will continue to improve the investment climate and national competitiveness with various policies, which are not only expected to mitigate the impact of the global financial crisis, but also to keep economic growth momentum, which has been on the rise in the last five years," the ministry said in a press release.
The government said that companies investing in certain industries will be subject to lower income tax for six years and will be able to amortize assets over a longer period and may receive compensation for losses for between five and 10 years.
The measures will benefit investors in diverse sectors, including those in steelmaking, forestry, geothermal, animal husbandry, low-rank coal mining, textile, pulp and paper, oil refining, small-scale gas liquefaction, various chemical and agricultural industries, automotive spare parts and electronics.The ministry said the policy will be evaluated within two years. The steps are part of Presidential Instruction No. 5/2008 on Focus Economic Program 2008-2009, and are specifically aimed at improving the investment climate.

Inflation hits 12.14% in September

Inflation during September came in at 0.97%, up on the August figure of 0.51% and taking the year-on-year figure to 12.14%, the Central Bureau of Statistics (BPS) stated on Monday, Detikcom reported.
The cost of food through the Muslim fasting month of Ramadhan was the major contributor to the higher inflation with a rise of 1.9%, Ali Rosidi of BPS told a press conference.
Nevertheless all cost areas showed higher trends. Packaged foods, drinks and cigarettes rose by 0.9%, housing, electricity and other household utilities were up by 1.22%. Clothing rose by 0.5%, health expenses by 0.3% and transport and communications by 0.22%.
Inflation was experienced in every city in Indonesia in which measurements are taken, with the highest in Tarakan in East Kalimantan at 2.8% and the lowest in Manado, North Sulawesi at 0.03%.

Tuesday, 14 October 2008

Report of capital investment activity

After obtaining a BKPM Approval, PT PMA has obligation to submit a report of Capital Investment Activities (“Laporan Kegiatan Penanaman Modal or LKPM”) to BKPM. PT PMA that has not yet obtained a Permanent Business License (“IUT”), shall submit a Semi Annual Report of LKPM to BKPM. Whilst, PT PMA that has obtained IUT shall submit an Annual LKPM. The said report is in the standard form of BKPM. Furthermore, the copies of LKPM also shall be delivered to the relevant government institutions, such as Department of Trade, Bank Indonesia or the Regional Office of the relevant technical department.

Government to cut fuel prices

The state oil and gas company Pertamina announced to cut nonsubsidized fuel prices for industry by up to 13,2 per cent. Premium (gasoline) will be cut by 5,4 per cent, kerosene by 6,9 per cent, diesel by 5,9 per cent, diesel fuel by 6,5 per cent, diesel V10 by 7,8 per cent, and fuel oil by 13,2 % per cent. The new prices will be effective starting from Wednesday (1/10). Pertamina said the price cut was due to lower Mid Oil Platts Singapore by 5,4 per cent to 13,2 per cent and as the rupiah weakened by 2,1 per cent. Pertamina said it is adjusting fuel price twice every month based on the international oil price.

Bank Indonesia to regulate foreign investment products

Bank Indonesia (BI) will soon issue a regulation on foreign investment products to anticipate the future prospects of financial markets. “As a seller and foreign products investor, a bank must be careful,” said BI deputy governor, Muliaman Hadad, last Friday. He said the regulation will involve Stock Exchange Monitoring Agency (BPPM) and financial institutions to avoid overlapping. After the Lebaran holidays, the central bank will hold discussions to accelerate the implementation of the new regulation. According to Muliaman, the bank must be the institution responsible for publishing securities and assuring that concerned banks and securities are registered in the country of origin. The products must also be clearly described so that consumers are aware of the risks involved and the expected revenues.

Indonesia suspends share trading for a third day: official

Indonesia suspended morning trading on the local stock exchange Friday as Asian markets plummeted, backing away from an earlier plan to reopen the bourse after a two-day halt, an official said. "We will suspend share trade in the morning session," Indonesia bourse president director Erry Firmansyah was quoted by AFP as telling Dow Jones Newswires.He said Indonesian authorities will continue monitoring the global market situation before deciding whether to lift the suspension in the afternoon session (starting 0630 GMT).Indonesian Finance Minister Sri Mulyani Indrawati had said Thursday night that trade would resume Friday after a two-day freeze.Trading on the Indonesia Stock Exchange was suspended after it plunged more than 10 percent to a two-year low Wednesday following huge losses on Wall Street, as global financial turmoil hit Southeast Asia's largest economy. Indrawati on Thursday announced a raft of new rules to restore market confidence, including a government pledge to spend four trillion rupiah (420 million dollars) to buy back shares in state companies. The minister also announced new rules allowing companies to buy back up to 20 percent of their paid-up capital in an effort to reduce selling pressure on the local bourse.

Tuesday, 7 October 2008

Micro-small-medium scale enterprises

The government issued a new regulation on the Micro-Small-Medium Scale Enterprise (“MSMSE”) (Law No.20 of 2008) replacing the old law (Law No.9 of 1995). One of the significant changes is the amount capital for the criteria of MSMSE. The criteria of micro scale enterprise is enterprise with net asset IDR 50.000.000,- excluding land and buildings. The criteria of small scale enterprise is the enterprise with net assets more than IDR 50.000.000,- up to IDR 500.000.000,- excluding land and buildings. Then, the criteria of medium scale enterprise in the enterprise with net asset is the amount of more than IDR 500.000.000,- up to IDR,- excluding land and buildings.

Rabobank wants to acquire more banks

Hollands’ Rabobank Group said it sees encouraging prospects in banking business in Indonesia and wants to buy more banks in the country, Asia Pulse reported.R abobank acquired two small banks - Haga Bank and Bank Hagakita - earlier this year. Hagabank, with assets of Rp4.76 trillion ($517 million) and Bank Hagakita valued at Rp1.7 trillion, were then merged into its Indonesian unit PT Rabobank International Indonesia to avoid problems with Bank Indonesia's Single Presence Policy. Rabobank will grab any opportunity to acquire more banks in the country, Antonio da Silva Costa, an official of PT Rabobank told the newspaper Investor Daily.

MRT construction to be delayed

Construction of the Mass Rapid Transportation (MRT) project in Jakarta will be most probably delayed for around two years as the second phase of the agreement with Japan Bank for International Cooperation (JBIC) has not been signed. Originally, it was planned to start construction by end of 2008 so that Jakarta residents would be able to use MRT by 2010. “We hope the second phase of the project will be started end of 2009 or 2010”, said Jakarta Governor Fauzi Bowo yesterday (22/9). The MRT route will run from Lebak Bulus to Dukuh Atas for a distance of 14.3 kilometers.

500,000 irrigation networks damaged

Public Works Minister Joko Kirmanto has said that while the government targeted to repair 1.5 million irrigation networks by 2009, 500,000 irrigation networks has just been discovered to be damaged. “We just have to keep working and upgrading¨, he said when sending off 15 staff from his ministry to the Netherlands on a scholarship program. Indonesia needs to have experts in the future to manage water, added Djoko. Irrigation is important to support rice development in the country.

Forestry Ministry to stop issuing new HTI licenses

The forestry ministry will not accept new applications for licenses to open industrial timber estates (HTI) after the end of October, 2008, a ministry official said, Asia Pulse reported.
The ministry has already issued licenses for 9 million hectares of HTI and new applications have been received for license to open 4 million more hectares, director of HTI development Bejo Santosa said. Santosa said the ministry wants license holders to immediately implement their projects, adding failure will result in revocation of their license. The license holders are given six months to prepare work and if there are no activities after six months their licenses will be given to other investors, Forestry Minister MS Kaban said earlier. Santosa said the ministry has set a target to open up to 15 million hectares of HTI by 2013, adding that therefore 6 million more hectares will be needed.HTI concessions have been grown mainly with acacia trees to feed pulp and paper factories.

Special Economic Zone will replace Free Trade Zone

The Special Economic Zone (KEK) concept is designed to replace the Free Trade Zone (FTZ). The design to attract foreign investors on the KEK is more comprehensive than the FTZ. Bambang Susantono from the Coordinating Ministry for economic affairs said that KEK will be automatically replacing the FTZ. One of advantage points of the KEK is the seven exclusive zones that could be built matched to its classification. They are techno park zone, export processing zone, logistics zone, industrial zone, and other economic zones. Each zone will have special facility in line with its classification, for example, industry that is located at the export processing zone will receive a higher reduction on the export duty compared to other zones.