Monday, 31 August 2009

New Regulation on Allocation Table of Radio Frequency Introduced

By end of July 2009 the Government issued a new regulation on table of allocated spectrum of radio frequency in Indonesia, hence legally replacing the Decree of the Minister of Transportation which had been effective for the past 8 years.

Head of the Information Center of the Department of Communication & Information Gatot S Dewabroto in a press conference stated the document of spectrum allocation for Indonesia’s radio frequency contained spectrum allocation for radio frequency in Indonesia which would serve as reference for the management of a more specific, detailed and operational frequency band. Users and would be users of existing band width were urged to recognize the allowed spectrum as ingrained in the document, in regard to types of services, allocation and channeling included therein.

Allocation of radio frequency spectrum in Indonesia which was included in the document referred to the table of allocation spectrum officially released by the International Telecommunication Union [ITU] as specified in the Radio Regulations, 2008 edition which also served as reference for other countries in the world. The table of radio frequency spectrum allocation consisted of three columns, each column contained distribution of allocated world frequency which was stipulated as allocation zone of ITU. The band width referred in each allocation table of radio frequency spectrum was placed on the upper left corner of the box area of the table.

The document consisted of four columns, the fourth column was the allocation of radio frequency spectrum in Indonesia which referred to Zone 3 of table allocation of radio frequency spectrum of ITU. The footnote reference appearing beneath the allocated institutions, was applicable for allocations. The footnote appearing on the upper right corner of the institution’s name, was only applicable for the said institution. The particular footnote for Indonesia on column four was marked with INS code, this allocation was breakdown of planning and application of the said band width nationally. The table of spectrum allocation of ITU frequency was previously translated into the Indonesian language before serving as reference in the formation of allocation tabulation of radio frequency spectrum in Indonesia.

Economic Growth Better Than Initial Projection

Minister of Finance Sri Mulyani Indrawati stated that Indonesia’s economic growth in September I-2009 as released by the Board of Statistics [BPS] amounting to 4.2%, was rated as much better than the Government’s previous projection where economy was expected to grow only by 3.7%. “The economic growth of 4.2% is by far better that the prediction at the beginning of this year” Minister Mulyani remarked on Tuesday [11/8].

According to Sri Mulyani, it has been predictable that the economic growth at September I-2009 was supported by household consumption above 4%, followed by Government’s consumption which showed notably high growth. However in the heartening trend there was the investment sector which needed to be observed. The problem was, the sectors showed relatively low percentage growth compared to the same period of previous year.

Government Budget Accountable
The Minister of Finance commented that it was not sufficient that a transparent and accountable Government’s State Budget be based on good intentions, but it should be performance based. Under such circumstances, output became the main focus instead of input. “To work out a state budget, it is not enough to rely on good intentions, but the implementation should be performance-based” the Minister remarked.

The implementation of performance-based Budgeting became a criteria of effective fund utilization which was more accountable and solid. It was expected that through performance based budgeting, the difference of spending in ministries and departments could be minimized and be in accordance with the book keeping in each ministry and departments. However, performance based budgeting in each ministry and institutions was not easy to implement. Moreover, in the future the government was urged to exercise budgeting based on actual business performance according to international standard.

“Duties and responsibilities of the Finance Minister in the period of 2009-2014 would be difficult, yet many applicants were interested. The ambition to be a minister of finance should not be a matter of political power, but there had to be high aim to maintain accountable financial report. In addition to that, the system of reward and punishment in financial reporting at ministries and departments becomes homework. The fact was that presently ministries and departments already had their natural appraisals without demanding any reward” the Minister concluded.

On-going Transaction of Semester II/2009 Shows a Deficit of USD 1,850 Million

On-going transaction in Semester II 2009 was projected to suffer a deficit of USD 1,850 million. This deficit was caused by the downturn of trade balance-sheet as related to the increase of import value, particularly import of capital goods and raw materials which were not recovered since Semester II of 2008. This was the report if State Budget implementation of Semester II/2009 which had been forwarded to the Parliament.

Within that period, the services and income sectors suffered deficit amounting to USD 6,123 million and USD 7,371 million respectively, whilst the transfer post had a surplus of USD 2,270 million. The surplus of transfer was among others related to transfer of Indonesian migrant workers abroad.

The case was the same as on-going transaction, performance of balance-sheet of capital and finance in Semester II of 2009 which was estimated to have surplus, after showing a deficit in Semester II of 2008. This improvement was driven by increase of capital inflow in the public sector i.e. project aids and stand by loan, and capital inflow of the private sector. The increase of inflow in the private sector was mostly due to direct investment and portfolio investment, while other investment were projected to have a deficit.

Producers of Machinery Tools from Japan and Germany Assure to Increase Buying of Machinery Tools from Indonesia

Producers of machinery tools from Japan and Germany strived to increase purchases of machinery tools from Indonesia up to half a year ahead, at least to buy six machines per month at the price of 20 million Yen per unit. This had been made possible with the special merger in sales and after-sales service between Mori Seiki Co. Ltd. Japan and DMG [Glidemeister AG], Germany this year, explained Takeshi Sato as VP Sales & Marketing HQ/Vice Executive Officer in Asia, Jakarta Tuesday [11/8] amidst the staging of MTT Expo 2009. Apparently Indonesia was regarded as a market of bright prospect.

“In Asia, the sales of Indonesian machine tools was the highest next to Thailand, where last year’s combined sales of the two companies reached 1,400 units. Meanwhile, the merger which was carried out in July 1, 2009 was followed by marketing campaigns to Indonesia, Thailand, Taiwan and Turkey, particularly in terms of sales and after sales service” Sato remarked.

Some countries like Malaysia and Singapore made relatively small purchases, around 100 to 200 units per year therefore the good number of production units spread out in some countries like Germany, Japan, China, Poland and other states [the two companies operated estimatedly 16 factories] Indonesia might be in a position to supply tools for the need of machine fabrication in those countries. This was disclosed by Motohito Yoshikawa, Regional Manager of Mori Seiki Indonesia.

“We are relying on our strength in better services, technical support, and sales through our network of effective service centers, whereby to ensure greater benefit to customers” said Saito. Mori Seiki company which was established in 1949, was a company specializing in machine tools based in Nagoya, Japan. The company operated a network of workshop centers all over the world and 39 technical centers in Japan. To strengthen its stronghold, the company also acquired other companies in laboratory technology, high precision machines, and workshop machines, etc.

Meanwhile DMG which was founded in 1870, was one of the producers of machine tools with headquarters in Germany, and strong market base in Europe. Now the company operated 13 factories and 69 service centers, all the way had acquired several companies in laser industry, and actively expanding business to solar energy technology, complementary to the existing main industry.

Now DMG/Mori Seiki Indonesia was serving 350 customers in Indonesia, operating more than 1,400 machinery units. Their customers included companies in engineering [33.4%], mold and Dies [21.4%], the automotive industry [20%], construction [1.6%] electronics and communication instruments [3.5%] and other industry lines like aviation and outer space technology, oil & gas, and agricultural machineries.

Local Food Consumption Tends to Decline

Today, people’s consumption of local food products showed signs of downturn. On the contrary, consumption of food with import content tend to increase. For this reason the Government was making efforts to jack up production of food with local content.

Ahmad Suyana, Head of the Board of Food Resilience, Department of Agriculture admitted to Business News in Jakarta, Friday [7/8] that the sensus outcome published by the Board of Statistics [BPS] on the development of food consumption showed that consumption of local based food tend to drop.

For example, in terms of root vegetables, the consumption of cassava in 2003 was 11.96 kg capita/year; it once went up in 2005 to reach 15.04 kg per capita/year but again in 2007 the consumption slipped back to become 12.89 kg/capita/year in 2008.

The case was the same with the consumption of sweet potatoes. In 2005 the consumption was 2.78 per capita/year “Consumption of root vegetation was expected to rise but apparently it plunged down”.

The condition was different compared to flour-based food. In 2003 the consumption was around 7.21 kg/capita/year but in 2008 soared to 11.21 kg/capita/year. In the past 5 years the average increase of consumption reached 1.5 kg/capita/year.

Generally speaking rice was still prevalent food in the eating habit of Indonesians. In 2008, rice consumption of 104.85 kg/capita/year in 2008 was an upturn compared against consumption of 2007 which was only 10.2 kg/capita/year. Meanwhile the consumption of local food as daily menu was still not optimized, in spite of the sufficient stock, particularly food like root vegetables as substitute of flour.

Consumption wise, the wheat type of food [like rice and flour] reached 326.0 grams way above expected ideal food pattern which was only 275 grams. On the contrary root vegetables were only below 51.7 grams below ideal expected food patterns [PPH] of 100 grams.

The consumption of animal meat in Indonesia was around 90 grams against the ideal PPH of 150 grams. The same trend occurred in vegetable consumption which was only 24.3 grams, way below the ideal PPH of 250 grams. This implied that the quality of food consumed by the average Indonesians were not diversified and not well balanced in terms of nutrition.

“The development of eating pattern of the average Indonesian toward root products was advancing reluctantly, therefore an integrated program was needed whereby an ideal figure could be attained” Ahmad remarked.

Among the important measures taken to accelerate food diversification where local food materials were prioritized, was the introduction of Presidential Decree No. 22/2009 [BN no 7828 pate 88-138] which was signed by the President on June 6 last. In the implementation the Government stipulated two phases.

In the first phase [2009-2011] activities were focused on internalization in food diversification through a safe and well balanced food. Other measures taken were the increase of raw food procurement and development of the domestic market of fresh or processed food.

“The Government would energize the development of food industry and market at all levels from medium to small-and-medium business and micro business relying on local food resources” Ahmad commented.In the second phase [2012 – 2015] the action would be to continue the first phase by additional activities and emphasis on the development of food industry. The main target was to attain the PPH score of 95 by 2015.

Indonesia Sets Forth a Recommendation to be Presented at The Convention of Climate Change in Copenhagen

Oceanography experts of Indonesia made a set of recommendations on Thursday to be presented at the Convention of Climate Change in Copenhagen on December 2009.

Indonesia proposed the need for a global umbrella policy and call for alliance of all communities of the seas, beaches, and small islands of the world to ratify of support the implementation of the proposition to the United Nations Convention on the law of the Sea [UNCLOS] which provide a legal framework for sea activities including the protection of eco-systems of the seas and beaches.

This was set forth after holding a workshop in Bogor on August 6, 2009, in a statement as obtained by Business News from the Department of Maritime and Fishery of Indonesia. The workshop was held since August 4, 2009.

The experts underscored the need to strengthen regional cooperation and coordination of related regional organizations and program coordination in the effort to strengthen Marine Protection Area Management.

They underscored the need to develop the national, regional and international programs to clear all doubts about the variety of oceanic bio life including coral reefs and wet land.

There was a need to enhance implementation of the Manado Ocean Declaration [MOD] particularly as complementary to Chapter 17 Agenda 212 which facilitated action plan to carry out sustained development on the sea and coastal regions including environmental preservation, continued utilization and conservation of bio-oceanic wealth to restore sports where the management of maritime environment was uncertain and critical; to observe the impact of climate change, fostering regional and global collaborations; coordination of international teamwork, and continuous development of remote islands.

Enhancement of coordination mechanism among institutions to maintain effective, transparent constructive handling of various maritime issues at national, regional and global level focusing on conservation of the eco-system of the sea and coastal areas.

To maintain coordinated, multi-disciplinary, and multi sectoral approach at all levels in handling coastal and maritime management, aimed at protecting the coastal and maritime eco-system.

To help the local governments and local communities in coordinating policies and programs at several levels aimed at the protection and continuous management of coastal and maritime resources.

To maintain productivity and variety of vulnerable coastal marine bio life including the areas within and beyond the jurisdiction zones of the state.

To facilitate and develop the application of instruments and approaches including the eco-system approach whereby to minimize destructive practices which might threaten the endurance of the coastal and marine life of the eco-system.
Strengthening of MPA stakeholder capacity in scheming up programs and cooperation mechanism aimed at maintaining the structure and enhancing the function of marine life of the coastal ands oceanic eco-system.

Indonesia’s Export in Semester Two of 2009 Projected to Improve

Indonesia’s export was projected to improve within the next six months in line with the improvement of the world’s commodity prices.

Minister Mari Pangestu stated that Indonesia’s export in the second semester this year was projected to grow by minus 10% compared against the same period last year, which according to the data of the Central Statistics Board [BPS] was USD 66.62 billion.

Previously the BPS Statistics Board announced that Indonesia’s export growth by Semester I of 2009 was down by 28.94% to become USD 50.02 billion compared against eh same period of 2008.

According to the Minister of Trade, improvement of the worlds economy would augment commodity prices in the international market which would jack up Indonesia’s export.

“Commodity prices are definitely higher than that of the First Semester. The present tendency shows that commodity prices get better with the improvement of the world’s economy, and this was advantageous to us at the Second Semester. Export in the second semester is probably minus 10%”. This was disclosed by Minister of Trade Mari Elka Pangestu to Business News on Friday [7/8] at JCC Jakarta.

The trend of upgoing export had been going on since the early few months of Semster I 2009, as shown by the 1.32% increase in June 2009 to become USD 9.3 billion compared against total export of May 2009; total export of March 2009 was up by 20.84% to become USD 8.7 billion according to data of the Board of Statistics.

Indonesia’s export had been sliding down since October 2008, just one months after the beginning of global crisis. However, Indonesia’s share of which was only 32% of GDP was not as big as that of other neighbouring countries.

The global economic crisis had lowered demand and price of Indonesia’s export commodities like oil palm, rubber, textile and manufacture products.

Indonesia was the largest producer of oil palm in the world and the world’s second largest producer of rubber.

Secretary General of the Department of Trade : Export Might Recover in Years to Come
Indonesia’s export performance might recover in years to come. The Government expected that products of high added value and high local content would contribute significantly to recovery efforts.

Among the products were automotive components, including commodities like crude palm oil, kakap, and rubber.

“We are looking forward to recovery of export performance in the coming years, relying on commodities with high degree of added value. We expect good export performance in products of high local content, especially products of the creative industry” this was disclosed by Ardiansyah Farman, Secretary General of the Department of Trade to Business News on Friday [7/8] at the Convention Hall, Jakarta.
“Recovery of the International market would propel the progress of Indonesia’s export by middle of this year” Farman concluded.

28-day SBI Bought in Large Quantity by Investors

Even though BI rate decreased, purchase of SBI by investors and banks was constant, even increased. Much of the investors’ attention was directed at 28-day SBI. Some commercial banks experienced quite significant over-liquidity. Facing this fact, Bank Indonesia re-accelerated tender of SBI and Syariah-based SBI by increasing total indicative target from Rp. 37.80 trillions on Wednesday (July 29) to Rp. 46.55 trillions on Wednesday (August 5).

Investors responded very positively. Total incoming bids reached Rp. 48.41 trillions or around 104.00% of target. Bid composition : Rp. 31.55 trillions for 28-day SBI; Rp. 12.83 trillions for 91-day SBI; Rp. 3.10 trillions for 182-SBI; and Rp. 0.93 trillions for Syariah-based SBI. But, total amount absorbed or contracted by Bank Indonesia only reached Rp. 44.32 trillions or around 95.21% of target or around 91.55% of total tender amount of Rp. 48.41 trillions. Bank Indonesia expected commercial banks to increase credit channeling, especially to medium-scale businesses that absorbed many laborers.

Some commercial banks experienced quite significant over-liquidity because they receive many deposits from investors. On the other hand, the banks were unwilling or were in difficulty to channel credit as a result of global economic crisis. Export from Indonesia to Europe and United States in first quarter of 2009 experienced a sharp decline and many industries operated under full capacity. Meanwhile, purchasing power of the society dropped sharply because many people spent their money on cost of education for their children. So, it was not surprising if SBI was eyed by investors. SBI was a very safe instrument, short-termed, liquid, and profitable. A source in Bank Indonesia told Business News.

Domestic Market Confidence Not Yet Increased

Sophia Liu, Media Communications Head of National Bureau of Statistics of China (NBS), informed Business News about Domestic Market Confidence that not yet increased. “The lowest level of Market Confidence was in March 2009. But, on the average, Market Confidence Index (MSCI) not yet increased too significantly. It was still at a low level.

In various analysis on China in the past few years, it seemed as if China’s economy had awakened and was to accelerate rapidly. But, such external perception was quite different from domestic perception.

“China’s economy was a fantastic phenomena in modern history. Everybody was amazed at China’s performance. A small positive progress showed by China was responded extraordinarily. This was the reason why the external world immediately declared that China’s economy already recovered and improved much faster than early predictions. We were, indeed, very proud of this appreciation. But, behind the above information, domestically, China was responsible to acquire the actual information about the general perception (MCI) whether it really had recovered. Facts showed that MCI not yet rose quite significantly to indicate economic improvement or fast recovery”.

In July 2009, MCI was estimated to stand averagely at 86.0%-87.0% or maximum 87.5%. It means that it was much below the average rate of 92.5 that happened in 2008. “MCI’s analysis showed that domestic real sector was in a “waiting” position. There had been no aggressive maneuvers. The pulse had increased, but not too rapidly. NBS predicted that the pulse would return to around MCI 90.0 level in September if the current trend could be maintained. The condition was very vulnerable for it to go down. Massive efficiency patterns in all over the world would certainly have an impact on the acceleration of recovery process. Efficiency was a very reasonable thing after the world was hit by a severe crisis in the last one and a half year.

National Taxation System must be Integrated

There is a plan to impose progressive tax and fuel tax on vehicle owners, while applying income tax and value added tax as well as regional taxes. They are various taxes viewed from administration standpoint, tax objects and others. Here, the main point is related to economic efficiency of the taxation system totally. Any of the vital issues is preventing a tax from overlapping with the other.

Principally, tax is a price of the use of public goods or service by communities. In this case, it’s necessary to re-think statement saying that tax is colleted without demand for achievement compensation from the government. In the modern era wherein the state concept has been deemed as a system of institution for public services, the principle of tax, viewed from benefits principle has been increasingly dominant.

Every tax must be able to demonstrate economic benefit of the development of public goods and service. The principle would be more suitable following the rampant campaign for good governance, demanding transparency and accountability.

Viewed from the administration level, which means dimension of good service and public service in public economy, the procurement cost of public goods must be borne by inhabitants of the sphere thereof or beneficiaries. Based on the spatial dimension of public goods and services, people may classify national, provincial, regental taxes and even taxes related to levies in neighborhood organizations (RT/RW), such as collection cost of rubbish of RT/RW. It clearly shows that tax is a source of funds for procuring goods used collectively in a right spatial dimension. The most concrete example is fund of road network system. The national road network system should be financed by national tax, provincial road network system should be financed by national tax, provincial road network by provincial tax and local road network by regental or municipal tax. It’s the basis principle.

Viewed from public economic standpoint, any of the public goods purely belonging to national dimension is defense surely under control of the Indonesian Military. Judicature also belongs to national dimension. If people refer to Regional Autonomy Law Number 32 Year 204, the central government manages only six businesses, namely foreign affairs, defense, security, judicature, monetary and fiscal and religious. Based on criteria of public economic science, national road network is actually national public goods not mentioned firmly in the law. Other public service also could have national dimension, such as center for the research of seeds of agricultural products and national administration system. It means criteria for national businesses mentioned in Law Number 32 year 2004 are not complete and potential to bring national difficulties.

Economic efficiency may be affected by inappropriate imposition of taxes. Levy on the transport of goods between two regencies, which passes through the third regency is an example. The burden would lower production of the commodity subject to the levy and totally, the same action would lower production in aggregate. The increase in pure regional income earned from the imposition of the levy would lower collective product of administration levels nationwide. People may point that the issuance of city transport license in Bogor, which is excessive, indeed increases the pure regional income but it also brings about a negative impact in the form of the rising number of empty city transport in the city, worsens traffic jam, the squandering of capital which is basically rare thus increasing inefficiency in national funds. The two examples are consequences of the imposition of taxes or levies not considering impact in aggregate. Many observers worry about the occurrence of the impact in government taxes, which is due time would be destructive to national economy, mainly those arising from the imposition of taxes which is not coordinated in all levels of national administration.

In relation thereto, the imposition of vehicle tax progressively, while applying fuel tax and parking levy needs to pass a study on integrated taxation and levy system. It’s necessary to separate tax on one having several cars or one family having several cars but the working family member is more than one, according to the number of cars which are owned. The imposition of progressive tax in the second case is negative particularly in a situation wherein the public transport system has not been adequate in the term of quantity, punctuality, convenience, imbalanced sphere of service. In cities in developed countries, public transport constitutes public service so as to obtain subsidy in considerable amount. It has not become a general principle of national city transport. In developed countries, fuel tax is the main source of funds to finance the maintenance of road so that the quality of road surface is guaranteed, in line with the volume of traffic flow.

In view of the disclosed issues, specialist debate systems potential to eliminate shortcoming in the existing taxation system. Tax duplication, for example, may be avoided by shifting tax system from income base to consumption. It’s tax system not imposing tax on tax object twice, deemed not supporting the increase in economic efficiency. Will the government make efforts to re-arrange the national taxation system? People are waiting due to numerous distortions.

New halal bill draws ire from industries

Three key industries – food and beverages, cosmetics and pharmacy – are bracing for hefty additional costs and to risk losing trillions of rupiahs in margins if the nation presses ahead with new halal certification procedures unde a new bill. Under the new halal certification bill, halal certificates and labels will be compulsory for these three sectors, not only for all ingredients but also for all equipment used during the production process, meaning new costs. The Indonesian Food and Beverage Association (Gapmmi) argues although certification and labeling fees were on Rp 1 million for SMEs and Rp 2 million for big firms, the bill will have a long-run impact
Source: The Jakarta Post, p.13, 26 Aug. 09

New bill allows local governments to issue power licenses

The new electricity bill will give full authority to regional administrations whose regions are outside state power company PT PLN's current service areas to issue licenses to local companies to provide electricity, The Jakarta Post reported. "The regional administrations may appoint regional government-owned companies or cooperatives to provide electricity for their areas," J Purwono, Director General for Electricity and Energy Utilization at the Energy and Mineral Resources Ministry, said on Monday.
He added that this policy would help the country to expand electricity supply to more areas. Currently only 65% of the country has electricity cover. "Some areas in Sulawesi, Kalimantan, and Papua are still isolated from electricity grids and access to power. (With this bill) regional government in these regions can establish companies to generate and sell power in these areas," he said. Purwono added that Local government may also provide subsidies if they want to have lower electricity tariffs in their areas. The electricity bill is being deliberated by the government and the House of Representatives in a process expected to be concluded by September. Currently, electricity in all regions is supposed to be provided and distributed by PLN with central government regulating tariffs and subsidies.
Source: Coordinating Ministry for Economic Affairs, Trade & Investment News, 20 Aug. 09

2010 growth targeted at 5%: Minister

Indonesia's economy is forecast to expand by 5% next year and the government will allocate fiscal stimulus to achieve its growth target, Finance Minister Sri Mulyani Indrawati said Thursday, Dow Jones reported. "This growth target is optimistic considering projected slower growth in the international economy, but it is achievable," Indrawati told members of House of Representatives’ budget committee.
The 2010 budget is expected to contribute Rp91.9 trillion ($9.19 billion) to the country’s monetary balance to accelerate the economy's growth while preventing "excessive" inflation, Indrawati said. She added that the 2010 budget would focus on boosting demand, with the government allocating Rp518.4 trillion for spending and Rp144.5 trillion for investment.
The 2010 budget bill is expected to be endorsed next month before new House members are inaugurated. The government this year plans Rp73.3 trillion in stimulus spending, largely in the form of tax breaks for businesses. She said infrastructure development, investment, exports and tourism among other sectors will drive growth next year. Bank Indonesia forecasts the economy to grow 3.5% to 4.5% this year, compared to 6.1% in 2008.
Meanwhile, State Minister for National Development Planning Paskah Suzetta said on Thursday that the government lacked the funds to finance infrastructure projects across the country, The Jakarta Post reported. Suzetta said the government had only allocated Rp40 trillion ($3.96 billion) for infrastructure projects next year, or 30% of the costs of all projects. From 2010 to 2014, the government will need Rp1,429 trillion to improve infrastructure, he said. “This amount of investment is needed to help our economy grow between 5% and 7%,” Suzetta said.
Source: The Coordinating Ministry for Economic Affairs, Trade and Investment News, 24 Aug. 09

Indonesia to get $2.7B IMF facility: BI

The International Monetary Fund (IMF) will allocate special drawing rights (SDRs) worth an equivalent $2.7 billion for Indonesia as part of its measures to strengthen global liquidity in 2009, Bank Indonesia (BI) said, Reuters reported.
“The allocation is for all member countries of the IMF and is part of global efforts to tackle the (current economic) crisis through the availability of global liquidity,” BI deputy governor Hartadi Sarwono said in a statement. The use of the facility is without conditions, BI said, and is different from an IMF loan facility extended to Indonesia to rescue the country during the Asian financial crisis of 1997-1998.
The IMF facility will increase Indonesia's foreign exchange reserves by 1.74 billion worth of SDRs equivalent to $2.70 billion, he said. Indonesia's foreign exchange reserves stood at $57.4 billion in July.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.
Source: Trade & Investment News, 24 Aug. 09

JCI Joins Regional Markets in Rally; Rupiah Gains for Third-Straight Day

Indonesian shares gained higher ground on Monday, joining markets across Asia in a broad rally on encouraging economic news from the United States and an increase in the price of crude oil. The Jakarta Composite Index posted its third-straight daily gain, rising 41.977 points, or 1.8 percent, to close at 2,375.87. Some 5.8 billion shares worth Rp 4.66 trillion ($466 million) changed hands. Gainers outnumbered losers 147 to 58, with 53 stocks closing unchanged. Agricultural and mining stocks led the way, rising 4.1 percent and 3.7 percent, respectively. Meanwhile, the rupiah rose slightly for a third day on Monday as appetite for emerging-market assets further improved on signs the financial crisis is ending, said Aris Setiawan, a currency trader at PT Bank Chinatrust Indonesia. The rupiah traded at 10,005 against the US dollar at the stock market close on Monday.
The Jakarta Business Globe, p. B, 25 Aug. 09

Q2 Growth Welcomed, but Downturn Still Looms: BPS

Jakarta's economy grew by 1.4 percent during the second quarter of this year, with communications and transportation sectors leading the way, recent data from the Jakarta Central Statistics Agency (BPS) revealed Monday.
"The growth was still below that of the entire nation," BPS chief Agus Suherman said, adding that the national economy grew 2.3 percent during the same period.
However, the city's income was significantly higher than that of Indonesia. The city's year-on-year income grew 5.01 percent, compared to the rest of Indonesia's 4 percent.
Cumulatively, courier services and communications posted the highest gains, at 15.42 percent, while construction and services grew by 6.40 percent and 5.74 percent, respectively.
However, the manufacturing and financial sectors have been declining since the beginning of the year, and will continue to fall. The growth of the services sector might mean more expansion in the IT sector since it does not need a very big workforce to get ahead.
These small businesses, however, absorb far less workers than large manufacturers, and most of their recruitment is organized through family or friends.
Businesses thriving in the hospitality sector, such as hotels and restaurants, might offer a better view of the services sector.
Government spending increased by 2.34 percent during the second quarter, compared to the -1.83 percent growth in the previous quarter, the BPS said.
"But the government needs to be quicker in spending its budget, to produce more projects and consequently more jobs for the community," Agus said, before citing the administration's habit of delaying spending until the third or fourth quarter of the year.
Jakarta is targeting 4 percent growth by the end of the year, but the current downturn may prevent it from achieving this goal, Agus said. (dis)
Source: The Jakarta Post , 12 Aug.09

PLN expects to save Rp10T in fuel costs

State power company PT PLN expects to save Rp10 trillion in fuel costs when its first-phase "crash program" power plants comes on line with its full 10,000 MW boost to capacity, Antara reported.
Most of the power plants will start operating next year, PLN president director Fahmi Mochtar said on Tuesday.
"In 2009, three of the 35 thermal power plants will start operations," he said.
The cut in fuel costs would result from the difference in prices between coal and fuel oil, he said. He said the operation of the power plants would also help PLN reduce the number of power cuts in several parts of the country.
Source: The Coordinating Ministry for Economic Affairs, Trade and Investment News, 18 Aug. 09

BI Sees 2009 Inflation below 4%

Bank Indonesia expects 2009 year-end annual inflation to fall to below 4 %, Senior Deputy Governor Darmin Nasution said on Friday, a downward revision on a previous forecast of below 5%, Reuters reported.
"At the end of the year, inflation may be below 4%," Nasution told reporters.
Nasution declined to comment on any implications of the forecast on the central bank's overnight policy rate, which currently stands at 6.5%.
Source: The Coordinating Ministry for Economic Affairs, Trade and Investment News, 18 Aug. 09

PLN to Put a Cap on Geothermal Prices

State utility PT Perusahaan Listrik Negara will soon set a ceiling on the prices it will pay for electricity bought from privately owned geothermal power plants, an official from the Ministry of Energy and Mineral Resources said on Monday.
Jacobus Purwono, the ministry’s director general for electricity and energy utilization, said that per his meeting with PLN, the ceiling price will be announced within two weeks. The move is expected to provide a boost to the geothermal energy sector, which is seen as advantageous for being renewable and potentially cost-competitive, but suffers from high up-front costs, long development periods and lack of standardized pricing. The ceiling price, according to Purwono, will vary depending on the capacity of each geothermal power plant and will also differ according to the project as well. “PLN can set the ceiling price as it wishes, our approval isn’t necessary,” he said. The Wayang Windu plant in Pengalengan, West Java, is currently the biggest geothermal power plant in the country, with two turbines that generate 110 MW and 170 MW. Its total generating capacity is expected to hit 400 MW by the end of 2012

Source: The Jakarta Globe, 18 Aug 2009, p. B2

Monday, 24 August 2009

SBY and Boediono Officially Announced as Election Winners

The nation’s election commission officially announced on Tuesday that Susilo Bambang Yudhoyono and Boediono had been elected president and vice president of Indonesia.Abdul Hafiz Anshary, chairman of the General Elections Commission (KPU), said that current president Yudhoyono had passed all the requirements to take a second five-year term in office following the result of the presidential election conducted on July 8, 2009.Suripto Bambang Setiadi, Secretary General of KPU, read the decision letter.“We declare Susilo Bambang Yudhoyono and Boediono as the elected president and vice president from the 2009 presidential election,” Bambang said.Hafiz said that the pair had met the minimum requirement of obtaining at least 50 percent of overall votes and 20 percent of votes in at least half of Indonesia’s provinces.However, the KPU has not yet announced the seat allocation for the House of Representatives following the legislative elections in April.
Source: The Jakarta Globe 18 Aug 2009 p.B3

Business Community Cautiously Welcomes New Regional Tax Law

The business community has welcomed the law on regional taxes and levies, passed on Tuesday, in which the closed-list provisions will help specify and limit regional taxes and improve the business climate. The long-awaited law seeks to address the need for a better investment climate, after complaints about the burden of illegal levies. Following the new law, regions can only impose taxes and levies specified in the closed-list. They are not permitted to impose other types of taxes and levies, which may harm the regional investment climate.
The law covers 16 regional taxes — five for provinces and 11 for cities or municipalities. It also includes provisions on 30 regional levies. The law introduces new regional taxes including on cigarettes, swallows' nests, land and buildings in villages and cities, alongside acquisition fees for land and buildings. The taxes of up to 75 percent on certain entertainment shows and a progressive tax on private vehicles "might hurt people's purchasing power and [the] automotive industry.
Finance Minister Sri Mulyani Indrawati said there are "preventive and corrective" mechanisms to avoid illegal levies issued by regions in a bid to ensure a more positive regional investment climate. "There are sanctions and mechanisms — preventive and corrective. If they [try to] issue [illegal levies], they can be prevented by recommendations from the Finance Ministry, to be implemented by the Home Ministry," she said.
Regions are given greater authority to determine levies and given extra discretion to determine the rate of such levies, but taking into account the benefits to their areas. However, Mulyani said regions should take into consideration local economic conditions and the state of their industries when determining tax rates, to avoid negative impacts to the national economy.
It is expected the new taxes and levies will already be effective by 2011. Regional revenues will account for 24 percent of regional budgets, up from 19 percent this year. Most taxes and levies stated in the law should start to be implemented by 2011, as the regions will need time to issue supporting regulations before implementing new taxes, although the new law will start to be effective by next year. Acquisition fees for land and buildings will be fully implemented by January 2011, while taxes on land and buildings and on cigarettes will not start until 2014.
Source: The Jakarta Post, headlines p.1, 19 Aug. 09

Tuesday, 18 August 2009

Jakarta Needs Strategic Alliances with other Destinations

As a tourist destination, Jakarta experienced a decline in reputation after the bomb blast at Mega Kuningan, in addition to sharper competition among destination in territorial, regional, and global levels. To recover its reputation and to win in the competition, Jakarta needs to established strategic alliances and to build networking with other destinations.

Arie Budhiman, Head of the DKI Jakarta Province Tourism and Culture Agency, in a discussion with Business News, stated that tourism development, recently, was increasingly sharper because each region and country placed tourism as a reliable sector in economic development, which had been proven to have contributed to state and regional revenues and absorbed many workers.

In order to win in the competition, besides increasing the attractiveness of a tourist destination, be it in the form of natural attraction, man-made attraction, or event that become objects of tourist visits, we also need to build networking with other destinations, especially destinations which were near Jakarta.

At present, the challenge faced by tourism in Indonesia, including Jakarta, was very big, as a result of Indonesia’s reputation as a safe and comfortable destination which weakened due to many terrors, such as tsunami, terrorism, bird flu, swine flu, and flight ban of Indonesia national airlines by European Union, and the recent suicide bombing at Mega Kuningan, Jakarta.

Attempts to restore the reputation of Indonesia, especially Jakarta, needs a commitment from each tourism component at all levels to improve the existing weaknesses, whether in policy structure or front-line services.

Nationally, tourism sector also needs an open-sky policy review supported with increase of airline seats capacities, socialization and expansion of visa on arrival, free-fiscal policy for certain tourism business operators, application of tax refund, and increase of role of society in the framework of increase of travel awareness.

Diyak Mulahela, Chairman of Association of Hotel Controller (AHCA), told Business News that Jakarta needed to eye domestic tourists, who, in 2008 alone, spent around Rp. 81 trillions. From such amount, around 52% was spent on accommodations and food & drink.
The restoration of safety is preformed by, amongst others tightening of supervision over hotel guests. But, security tightening should not be done extraordinarily that it may cause lack of comfort. If it was done based on international standards, hotel guests would feel that they were quite safely protected.

5.0 Percent Economic Growth in 2010

In Financial Notes and Draft State Revenue and Expenditure Budget (RAPBN) 2010, economic growth was estimated at 5.0 percent. Sources of economic growth would come from domestic demand and increase of offer. Besides through the improvement of welfare of government officials, members of Indonesian armed/police forces, and retirees, through increase of salaries, economic growth in 2010 would also be accelerated by fiscal stimulus in order to increase work opportunities through basic infrastructures, social protection for the poor, and labor-intensive projects that absorb many laborers.

Export was estimated to be relatively slow but improved, if compared to that in 2009 because the world economy was predicted to experience a slight increase. From aggregate demand side, economic growth would significantly be affected by various efforts to improve the real sector, progress in infrastructure development.

In line with increase of domestic demand due to economic recovery and commodity prices that started to increase, inflation in 2010 was predicted to be higher than in 2009 that reached 5.0 percent. Good coordination and harmonization of policies between Bank Indonesia and Government would make inflation target more credible.

In addition to Bank Indonesia’s carefulness in implementing its monetary policy and stability of the Rupiah exchange rate, the increasing economic activities were estimated to be able to be balanced from the production side, in line with increase of investment. Consequently, price pressures on prices of goods as a whole.

Fluctuation of prices in the global commodity market and high global crude oil prices were estimated to bring pressures on national inflation. But, the government will always and continuously evaluate the fiscal policy so it will go hand-in-hand with the monetary policy. From the offer side, the government would maintain availability of supply, especially supply of products that had a strategic role in affecting fluctuation, such as rice and oil fuels.

Players of Telematic Industry may Benefit from Small-And-Medium-Business & Cooperatives Payment Cheme

In the effort to seek for capital resources, players of the telematics industry particularly those of the small-and-medium category might benefit from the small-and medium category might benefit from the small-and-medium business and cooperatives payment scheme offered by banks or non-bank financial institutions.

Agus Muharram, Deputy of Financing, Ministry of Cooperatives and small-and-medium business, remarked to Business News in relation to grievances of the Business people of the telematics industry who were having problems in obtaining capital for their business.

One of the problem faced by players of the telematics industry in Indonesia was the limited access to credit facilities from financial institutions, particularly banks. As experienced by small-and-medium companies from the sectors, players of the telematics industry too were having difficulties in finding access to bank credit. This was on account of bank’s pre-requirements and procedures which was complicated and extremely bureaucratic, and inability of credit applicants to submit guarantee. In addition to that, the high bank interest imposed on borrowers were the main obstacle.

The truth was that not all players of the telematic industry were calcified as big enterprise and bankable. In terms of industrial category, only those of the hardware cluster like producers of computer hardware equipments, telecommunication network, multi media, equipments, musical instruments, video, film, photography, TV and digital radio were classified as micro, small and medium industry. Similarly Business lines like components and services, trading after sales service, consultant, were mostly microsmall-and medium business.

On small-and-medium business which were not business worth or bankable, might among others benefit from the services of among others: national program of people’s empowerment [PNPM] Mandiri; partnership and environmental partnership [PKBL], profit sparing of state owned enterprise, financing of Corporate Social Responsibility [SDR], Board of charity and zakat, [BAZIS] Rolling Fund by LKM, financing through empowerment programs through Social aid; gift, subsidy and financing by Provincial Governments and banks example: pawn by [KRISTA acheme].

Particularly for small-and medium business which were business worthy but not bankable, the following facilities were provided : financing by management of rolling fund by the State Minister of Cooperatives and Small-and medium Business [UKM], Financing or people’s Effort [KUR]; [Pawnshop and PNM] financing of venture capital through LKBB credit scheme and Financing of Subsidized Credit for Food Resilience.

Meanwhile for players of Small Business [UKM] who were business worthy and bankable, the financing program were : financing of KUMK SUP-005; Financing of Banking Plan for Small and-Medium Enterprise, Financing of linkage Program of bank with BPR/s and KSP/JJKS; financing of commercial credit and financing of credit for small business exporters.

Presently the number of small business which were not bankable reached around 35.49 million companies or approx. 70% of total micro business in Indonesia which numbered around 50.70 million companies. Self reliant micro business held the largest portion or around 98.80% of total business units in Indonesia.

Micro business which were business worthy but not as yet bankable were also numerous, i.e. potion reached 15.21 million or 30% of total micro business. Meanwhile small business units which belonged to this category were 208.9 thousand in number. Small business which were business worthy and bankable were posted at 23/8 thousand and the medium business reached 35.69 thousand units. Big business which were passable to go public were only 4.47 thosand or only 0.01% of total business in Indonesia.

In the field of transportation and communication the number of business units were posted at 3.2 million business units. The lines of business where small-and-medium business were prevelant were agriculture, livestock, forestry, and fishery i.e. 26.4 business units, followed by minery and excavation numbering 14.78 million business units.

Indonesia’s Export Predicted to Grow by Minus 15 Percent in 2009

Indonesia’s export would grow by minus 15 percent this year compared to total export of previous year which reached USD 137.02 billion as a result of global crisis. Hopefully by next year the curve line would move up to the level of plus five percent.

“Total export this year was apparently lower, the contracton was bigger, hopefully by next year it would bounch back to positive. So the prediction for this year was minus 15 percent, and next year to become plus 5 percent. This was based on the Government’s viewpoint.” This was disclosed by Minister of Trade Mari Elka Pangestu to Business News Thursday [30/7] at the Presidential palace.

The Government prediction was different from the prediction of the International Monetary Fund [IMF] which predicted that Indonesia’s export would grow by minus 9 percent this year and improved to minus 5 percent by next year.

The Government would remain to safeguard deficit of budget and provide sufficient for next year.

Indonesia’s export began to decline since October 2008, one month after the start of global crisis. However, the composition of Indonesia’s export which was only 38 % of GDP was not as big as the portion in neighboring countries.

The global economic crisis had reduced demand for Indonesia’s export commodities like oil palm, rubber, textile, and manufacture products.

Indonesia was notably the biggest producer of palm fresh plumes and the second largest rubber producer in the world.

National Electric Company (PLN) Opens Tender of Low Rank Coal Procurement

Fifty five companies had taken pre-qualification application of tender for the procurement of low rank coal amounting to 3.26 million tons/year. This coal supplies would be used to fuel the acceleration program of 10,000 megawatt of electricity in Java and outside Java. This was disclosed by Head of Primary Energy Unit of PLN Nasri Sebayang Friday [13/7].

He disclosed further that in the first week of August the companies should have submitted their application document for that said tender pre-qualification.

As known, the State Electric Company [PLN] openend tender for the procurement of Low Rank Coal amounting to 3.26 million tons/year.

In the effort to fill out deficit of coal LRC to fuel the Steam Powered Generators [PLTU] of the acceleration project and PUPTL Masterplan 2009-2010 PLN, the purchasing team [TP2B] invited coal mining companies or mining consortiums to join the pre qualification test in re procurement of low rank coals.

The procurement of coal was needed for the 20 year contract in a number of regions in Java and out side Java. The procurement of coal in Java would be channeled to Steam Powered Generator in West Java, whilst for outside Java it was for among others the Province of Nangroe Aceh Darussalam, North Sumatra, West Sumatra, Bangka Belitung, Riau Islands, and South Kalimantan.

To apply for the said tender, applicants might register starting from July 10 to 16, 2009 whilst the pre-qualification form could be obtained on July 13 to 17, 2009

Specially, the generators which were in need of low rank coal supplies were :

  • Steam Powered Generators [PLTU] Pelabuhan Ratu: calorie level: 4,000-4,500 calorie/kg
  • Steam powered Generator Nagan Raya, PLTU Pesisir, PLTU Bangka, PLTU Balitung, PLTU Bengkalis, PLTU Tarakan Baru, calorie level: 3.900-4,700 kkal/kg.
  • Steam powered Generator, PLTU Asam Asam, PLTU Selat Panjang, and PLTU Tanjung Balai Karimun with calorie value 4,000-4,700 kkal/kg.

Preventive Measures to Anticipate El Nino Effect

President Soesilo Bambang Yudhoyono asked the related authorities to maintain national rice sufficiency and ordered them to take anticipate measures.

Head of the Board of Meteorology, Climatology and Geographysics [BMKG] Sri Woro B. Harijono on Thursday disclosed that certain regions in Indonesia might undergo delay of rainy season i.e. 51.8 percent of 220 seasonal zones in Indonesia by end of this year. However El Nino did not reduce the total rainfall in Indonesia.

President Soesilo stated that according to the prediction of the Food and Agriculture of the United Nations might cause deficit of the Rice amounting to around 10 million tons in Africa, causing the price of rice in the international market to soar up.

All related parties in Indonesia were urged to maintain the domestic stock of rice which in July 2009 was posted at 2.6 million tons but to become at least 1.5 tons by the time the El Nino arrived so all related parties were urged not to be tempted to export rice which might cause rice shortage at home in Indonesia.

“The rice surplus is our domestic stock, which we should manage well. Never let it happen that just because the International price is high, some traders are tempted to channel out rice distribution overseas. This is a matter of loyalty to the nation and calls for national solidity, that our nation be safely protected from the hazards of El Nino” the President underscored this on Thursday [30/7] at the presidential palace.

In the effort to anticipate the El Nino, the President Instructed all Governors, mayors and all related authorities to take anticipate measures like securing procurement of subsidized rice as stipulated in the State Budget 2010, i.e. 16 kg for 12 months in 2010 for 17.5 million poor families to stabilize market price of rice – while the Government has their commitment to secure Rp 1 trillion as food fund for 2010.

To all governors and mayors, the President ordered to maintain and secure all water pools, dams and irrigation system and build new ones, to operate effective pumping system whereby the procurement of clean water be well managed.

The Board of Technological Development [BPPT] were ordered to scheme up plans for making artificial rain, to make use of soft soils and swamps where rice could be planted, to reschedule planting seasons and use of rice varieties which might grow on less watery soils.

Monday, 17 August 2009

Domicile Letter

Referring to the Instruction of Governor DKI Jakarta No.203/1977 jo the Instruction of Governor DKI Jakarta No.135 of 1988 regarding the Implementation of Utilization of Resident House for Office or Business Activities, it is firmly stipulated that the resident premises can not be used for office or business activities. The Company’s office must be located in the business district area or business building purpose. However, there is exemption to use a residence premise for the office with the following activities e.g. doctor, lawyer, drugstore, boutique, artist with the maximum 5 employees as well as social and education activities with maximum 10 employees.
Source: Bisnis Indonesia 11 Agustus 2009, Ribuan Usaha Terancam Bangkrut, the Instruction of Governor DKI Jakarta No.135 of 1988 regarding the Implementation of Utilization of Resident House for Office or Business Activities (“Instruction 135/88”)

Rp30T lost annually from Illegal fishing: Official

Illegal fishing by foreign vessels is incurring state losses of Rp30 trillion every year, said a member of the House of Representatives, Antara reported.
According to Syarfi Hutahuruk, the vice chairman of the House’s commission on fishing and maritime affairs, most of the poaching is done by neighboring counties.
“Poachers from neighboring countries are regularly apprehended in Indonesian waters,” Hutahuruk said.
Rampant poaching is also causing environmental damage, with mangrove forests and coral reefs in some area severely damaged due to illegal fishing, he said.
In May, the government pledged tougher action over increasing foreign poaching with Maritime and Fisheries Minister Freddy Numberi saying foreign ships caught poaching will be sunk and all suspects prosecuted to the fullest extent of the law.
Coordinating Ministry for Economic Affairs Trade and Investment News, 10 August 2009

Indonesia says economy expanded in 2nd quarter

Indonesia’s economy grew at a faster clip in the second quarter than the first, but expanded at its slowest annual pace in seven years, government data showed. Economists said the numbers suggested the central bank’s focus will shift toward containing inflation rather than stimulating growth. Economists had predicted the slowdown, citing the boost o economic output last tear from a spike in prices of commodities that Indonesia exports.
Source: PA Asia, Wall Street Journal, p.10, 11 August 09

Indonesia Emerges as Asia's Third Best-Performing Market on 67% Advance

The Jakarta Composite Index’s 67 percent gain this year makes the Indonesia Stock Exchange, which is celebrating its 32nd anniversary this week, the third best-performing bourse in Asia, the capital market watchdog said on Wednesday.
Two Chinese bourses, the Shenzhen and Shanghai markets, ranked first and second with gains of 93 percent and 74 percent, respectively, according to Bloomberg. The Taiwanese and Philippine markets ranked fourth and fifth in the region this year, gaining 47 percent and 45 percent, respectively. “Our market capitalization increased from Rp 1,143 trillion [$115.4 billion] on Jan. 5 to Rp 1,882 trillion on Aug. 11,” Fuad Rahmany, chairman of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK), said on Wednesday during a press briefing marking the anniversary of the Jakarta exchange, or IDX. He said gains in the index and the increased market capitalization underscored the revival of investor confidence since last year’s crash. Fuad said stock transactions totaled Rp 596 trillion from Jan. 5 to Aug. 11, with Rp 3.9 trillion in average daily transactions. The average daily trading frequency rose 44 percent to 85,000 daily transactions this year, while average trading volume rose 94 percent to 3.3 billion shares. The increase in trading volume and frequency was supported by the increase in the number of retail investors who traded stocks online.
Source: The Jakarta Globe, p.B2, 12 August 09

MK Decision Gives Business Certainty

The decision of the Constitutional Court (MK) related to the presidential election on securing President Susilo Bambang Yudhono has given certainty and political stability to business world and market shares. Kadin Chairman of the Standing Committee of Domestic Trade Bambang Soesatyo JK said that the decision has secured companies to take further business decision for new investment or business expansion. The decision has also given companies to continue their business plans.
Constitutional Court issued a verdict No.108-109/PHPU.B-VII/2009, dismissing allegations of electoral fraud filed by the losing candidates. The ruling shows there is no evidence of the alleged electoral fraud or other violations during the presidential election on July 25.
Bisnis Indonesia, p.1, 13 August 09

Tuesday, 11 August 2009

Indonesian Halal Requirements

The Indonesian policy on the required Halal certifications for food products has often been a topic of discussion since the Indonesian Council of Ulama (MUI), has in April 2009 published a new list of Accepted Overseas Halal Certification Bodies, to enter into force on 1st October 2009. The Trade Officer Economic and Trade Section from Delegation of the European Commission to Indonesia and Brunei Darussalam, Minna Piekkari, just received an update on the list. The news seems positive, since all the Certifiers with pending status have been approved. However, for certain product groups, the certification has been withdrawn.
These Halal certifiers are approved for conducting the Halal inspections in all EU countries. Additionally, there is one Halal Certifier Body in the UK, the "Halal Food Authority", which remains approved only for slaughtering. To be noted that the Certificates from these accepted overseas Halal bodies can only be used for exports to Indonesia of slaughtered meat or raw materials for manufacturing. In the case of products sold directly to Indonesian consumers, the Halal certification inspection has to be conducted by the MUI's own inspectors.

Government Slow to Develop Renewable Energy

The government's lack of commitment to develop renewable energy will leave the country facing an energy shortage in less than 25 years. The National Council on Climate Change vice chairman Armi Susandi said a presidential decree in 2005 had targeted an increase in renewable energy use to 10% of total consumption by 2025 and 30% by 2035, however, at the current pace that target would not be met. He added that the government had yet to prioritize renewable energy development and has held back from producing renewable energy technology because of cost.
The Jakarta Post, p.5, 30 July 09

SBY to Submit 2010 Budget Bill to the House Today

President Susilo Bambang Yudhoyono is set to officially bring out the 2010 state budget bill in the House of Representatives on Monday. Yudhoyono has declared the government next year will focus on shielding the people from the negative impacts of the global downturn, through a big spending budget to achieve the highest possible growth. Under the planned 2010 budget, the government expects the economy to expand between 5-6%, up from this year’s full-year growth forecast of 4.3%.
Source: PA Asia, The Jakarta Post, p.2, 3 August 09

Rupiah Appreciation Remains Positive

The rupiah exchange rate, which strengthened to Rp9,935 against the US dollar at the end of last week, still has a positive impact on the Indonesian economy, a central bank official said, Antara reported.
“The rupiah’s current appreciation is still within the limits of propriety as a result of investors` growing interest in local securities, particularly in the stock market,” Bank Indonesia (BI) deputy governor Hartadi A Sarwono said on Friday.
The positive sentiment was also fueled by the bullish market, which showed good prospects for the Indonesian economy, he said.
The dollar’s weakening against a range of foreign currencies including the rupiah was due to a surge in the deficit of the US state budget.
Source: Coordinating Ministry for Economic Affairs Trade and Investment News, 3 August 09

Streamlining the Way For Greater Investment

Indonesia received a package of good news this week. First, the government announced a prudent budget that laid down the foundations for strong economic growth in the years to come. A Rp 61.3 trillion ($6.2 billion) stimulus package and increased spending on infrastructure and education in 2010 are all welcome steps by President Susilo Bambang Yudhoyono. The president also announced stronger support for the private sector, thus preventing layoffs, stabilizing prices and maintaining consumer purchasing power. These are the building blocks for sustained and robust economic growth. His words and promises received market endorsement as the rupiah strengthened against the dollar to its highest level in recent months, while consumer confidence rose to its highest level in five years according to a recent central bank survey. The survey showed that the consumer confidence index rose to 115.4 in July, up from 109.1 in June. The latest figure is the highest since it hit 119.1 in December 2004. A reading above 100 means more consumers are optimistic than pessimistic. The rupiah is the best performer this year among Asia’s 10 most-traded currencies outside of Japan, having posted a 10.4 percent advance versus the dollar. The currency’s current level is still “good” for business, and it may gain further. These are all positive indicators of an improving economic, social and political climate.
Source: TheJakartaGlobe, p.Section B, 4 August 09

Government proposes ‘less expansive’ budget

The government has proposed a conservative, less expansive, 2010 state budget bill Monday, featuring more focused spending priorities that may make next year’s budget more efficient than previous ones. In a speech Monday at the House of Representatives, President Susilo Bambang Yudhoyono said government spending next year would reach US$ 101.69 billion. Much of the spending will go to paying for civil servants’ higher salaries and pensions, continuing social welfare programs for low-income citizens, and infrastructure projects in transportation, agriculture, energy and other labor-intensive sectors.
Source: PA Asia, The Jakarta Post, p.1, 4 August 09