Update News December 14, 2016

In The News

Indonesia Plans To Cooperate With India In Forming Digital Economy
The Jakarta Post, 14 December 2016

Indonesia plans to cooperate with India in forming a digital economy and supporting e-commerce."Indonesia is seeking opportunities to cooperate with India in the digital economy and e-commerce space.

The digital economy and e-commerce in India is considered to be highly prospective," Investment Coordinating Board (BKPM) head Thomas Trikasih Lembong said here on Tuesday.

Lembong said that India and Indonesia are experiencing a period of digital economic growth."There are digital companies growing in both countries.

In Indonesia, we have heard of Tokopedia, Traveloka, and Gojek. Such digital companies are also growing in India," he remarked.He claimed that several Indonesian e-commerce players use programmer and coding services from India.

"Indonesia is experiencing a shortage of programmers in the wake of the regions booming digital economy. The same happens in India, but the lack of programmers can be resolved," he noted.

He pointed out that this level of cooperation could be developed because India had decades of experience in developing information technology."I see this cooperation as very prospective," he stated.

Indian Prime Minister Narendra Modi also raised the issue of tourism cooperation possibilities and opportunities for Indonesia to cooperate in the Bollywood film industry."The president asked me to talk about e-commerce and the digital economy," he said.

President Joko Widodo (Jokowi) earlier invited Indian businessmen to invest in the pharmaceutical industry and the information technology and automotive sectors in Indonesia.

"Indonesia invites India to step up investment cooperation in the pharmaceutical, information technology, and automotive fields," the Indonesian head of state said in a joint press statement issued following a bilateral meeting with Prime Minister Modi at Hyderabad House, here, Monday.

He lauded the signing of a Memorandum of Understanding (MoU) on trade standardization between the two nations.The MoU will help boost bilateral trade and support economic cooperation, as well as people to people contact, Jokowi stressed.

India is an important partner of Indonesia, and the bilateral ties in the political, economic, and socio-cultural fields between the two countries have been strengthening over time, according to him."At todays meeting, we discussed comprehensively our efforts to step up economic cooperation," he noted.

Indonesia wished to increase trade with India and diversify its exported products."We also discussed efforts to intensify cooperation in investment," Jokowi remarked.

Indonesia considered cooperation in pharmaceutical raw materials with India a priority, Foreign Affairs Minister Retno LP Marsudi said."So, this is quite a strategic cooperation, and we will try to explore it further and look forward to concrete implementation," she stated.

So far, Indonesia has imported various pharmaceutical raw materials from India."But we are currently encouraging India to invest in pharmaceutical raw materials in Indonesia," she added

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Indonesia, Japan Extend US$22.7bn Swap Agreement
Tempo, 14 December 2016

Bank Indonesia and Bank of Japan agreed to extend a bilateral US$22.76 billion swap arrangement (BSA) for the next three years.

Under the swap cooperation agreement, Indonesia could overcome possible short-term liquidity problem in financing, Bank Indonesia said on Monday, December 12.

"This (arrangement) is also to sustain the regional financial stability amid continued uncertainty in the global financial market," Bank Indonesia Governor Agus Martowardojo said after the signing of the swap cooperation agreement with Bank of Japan.

Swap is a derivative instrument. With the bilateral cooperation, both parties could exchange cash flow to prevent a risk of liquidity problem in a financial system. Cooperation between Indonesia and Japan constitutes US dollar and rupiah swap partnership.

The first time Indonesia and Japan agreed on swap arrangement was on 17 February 2003 which was extended until December 2013, and again until 12 December 2016.
Under the new agreement, the swap cooperation is extended until 2019.

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Indonesia, India Sign Three Memoranda of Understanding
Tempo, 14 December 2016

President Joko Widodo met with Indian Prime Minister Narendra Modi on Monday, December 12, 2016. In a bilateral meeting held at Hyderabad House, New Delhi, the heads of state signed three memoranda of understanding on trade standardization, sports, and eradication of illegal fishing.

Jokowi has welcomed the agreement particularly in trade standardization, which he believed will boost trade and support economic cooperation.

“Indonesia expects to improve trade. Indonesia also expects to diversify its export products to India,”Jokowi said after the meeting in a joint press statement.

Below are the three memoranda of understanding signed by Indonesia and India.
1. A memorandum of understanding on trade standardization between the National Standardization Agency (BSN) and Bureau of Indian Standardization (BIS) through the Indonesian Foreign Minister and her Indian counterpart.

2. A memorandum of understanding on youth and sports including the exchange of information in the field involving Indonesian Youth and Sports Ministry and its Indian counterpart.

3. Joint Communique on Voluntary International Cooperation to Combat IUU Fishing & to Promote Sustainable Fisheries Governance.

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Indonesia Invites Potential U.S Investors
Antara News, 14 December 2016

The Indonesian Consulate General in New York, United States, invited investments from US investors at an Indonesian-style banquet on Tuesday (Dec 6).

A press release from the Consulate General received by ANTARA News here on Friday mentioned the dinner, called "Indonesian Dinner 2016," was attended by more than 100 leaders and financial directors of various well-known US companies, including Citi Group, HSBC, Duane Morris, and Thor Equities.

At the opening ceremony, Consul General Abdul Kadir Jailani said Indonesias economy is currently being transformed into a more open and competitive one, in line with the adoption of various policies that support foreign investments in the country.The consul general reiterated his commitment to continue facilitating partnerships between the US and Indonesian businessmen.

According to the consul general, the main purpose of Indonesian Dinner 2016 is to attract investors from other sectors, considering that so far, the US investment in Indonesia has largely been in the mining sector.

The guests were treated to a variety of Indonesian dishes while they enjoyed traditional dance performances by the Saung Budaya group. The prospective investors were from the property, pharmaceutical, and healthcare sectors as well as financial and management services.

Abdul Kadir noted the consulate had invited prominent US citizens to share their experiences and knowledge on the economic potential of Indonesia to US businesses.

"Information on Indonesia can be obtained from a variety of sources, so it is important for US investors to hear such information directly from the United States alone," he stated.

Former US ambassador to Indonesia Cameron Hume also attended the Tuesday night dinner and explained his views on the great potential value of Indonesias economic growth reaching 5-7 percent per year.

Hume, who served in Indonesia from 2007 to 2010, also pointed out that Indonesia has always held peaceful elections since 1998 with a safe transition of power.

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Bappenas To Facilitate Funding
The Jakarta Post, 14 December 2016

The National Development Planning Board (Bappenas) says it will facilitate funding for hand-picked strategic projects to speed up infrastructure construction.

The board is selecting ongoing public projects to be funded by non-state budget resources out of 225 projects listed in Presidential Regulation No. 3/2016, according to Bappenas deputy for development financing Wismana Adi Suryabrata.

Among the potential projects are the development of trans-Java section toll roads and the construction of power facilities under the government-backed 35,000 megawatt (MW) electricity generation project. “We will find the equity needed by companies, for example, a state enterprise that wins a project tender.

We hope they won’t rely on state capital injection [PMN] and it can be fulfilled by pension funds, for example,” Wismana recently said.The board will arrange a meeting for the investors and the chosen companies in need of equity or investment, he added.

Non-state budget infrastructure funding (PINA) will complement existing schemes for public private partnership, such as viability gap funds (VGF) and availability payment (AP). Under the PINA scheme, cash from pension funds, for instance, will be channeled into an intermediary that issues bonds.

Proceeds from the bond sales will used to buy equity in the companies executing the infrastructure projects. Once the infrastructure is in operation, the intermediary will sell the equity.

The 225 priority infrastructure projects stipulated in the presidential regulation comprise toll roads, railways, airports, seaports, power plants and one-million houses, among others.

The government estimates that out of around Rp 4.7 quadrillion (US$351.5 billion) required for infrastructure development until 2019, only 41 percent can be covered by the state budget.

The Committee of Infrastructure Priorites Development Acceleration (KPPIP) said last month that as of October, 86 were stranded in the preparation stage, with 83 having gone into construction, while the rest were either in negotiations or still lacking private sector participation.

However, the committee also revealed recently that 16 projects with a combined value of Rp 25.9 trillion had been completed. These cover the 14-kilometer Gempol-Pandaan toll road in East Java, Jatigede Dam in West Java and Kalibaru Port in Jakarta.

The completed projects may be inserted in the existing national strategic projects.“If this develops, we can also add more projects [for non-state budget funding] from the revision later,” Wismana said.

KPPIP program director Rainier Haryanto said the final revision would be out in January next year.“We are still considering the suggestions from the government and agencies,” he said.

Several ministries, including the Industry Ministry, Transportation Ministry and Public Works and Public Housing Ministry, have suggested a number of projects to be considered as national strategic projects.

The Industry Ministry, for example, proposed the inclusion of the mid-haul aircraft construction project to avert importation of the aircraft.

Institute for Development of Economics and Finance (INDEF) executive director Enny Sri Hartati said the government must thoroughly consider what constituted a strategic project in terms of the impact and multiplier effect. She advised that the funding facilitation for state enterprises be carried out in a prudent manner.

“They would then have to convert their shares if it happened and it would be privatization,” Enny said.“For a strategic project, it should be clear who will execute the plan. There should be a comprehensive calculation to minimize the moral hazard and the failure of the projects,”

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Minister Aims to Boost Cashless Toll Road Transaction
Tempo, 14 December 2016

Transportation Minister Budi Karya Sumadi has expressed his dissatisfaction with the lack of cashless toll roads (e-Toll) transactions. He said that cashless transaction can provide a solution to reduce congestion on toll roads.

Transportation Ministry plans to summon banks to address the issue. “We will summon banks who manage the cashless [transactions],” Budi said at the Karang Tengah toll gate in Tangerang on Monday, December 12, 2016.

Budi added that the penetration of e-Toll transactions relates to business process. He said that he will identify the issue to find out what is actually happening. “Is it because [customers] must purchase a card, or the lifestyle of Indonesians, who don’t fancy it,” he said.

The Minister will encourage law enforcement on cashless toll road transactions in order to improve road users’ compliance. “That is our aim, it must be achieved one day,” he said.

When pressed on whether similar treatment could be given to commuter rail passengers, Budi said yes. However, he underlined that it would take time. “We have to identify the issue before implementing it,” he said.

Yesterday, Minister Budi inspected Karang Tengah toll gate in Tangerang ahead of Christmas and New Year holidays. According to him, Karang Tengah toll road is among the worst traffic congestion hostpots.

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Angkasa Pura II Launches Airports App
Tempo, 14 December 2016

State-owned airport operator Angkasa Pura (AP) II president director Muhammad Awaluddin said that airports under AP II management are ready to serve passengers in this year's holiday season.

Awaluddin added that three airports have opened new terminals, namely Soekarno-Hatta International Airport in Jakarta, Husen Sastranegara Airport in Bandung, and Sultan Thaha Airport in Jambi.

"We believed that the new terminals will improve our services for passengers, particularly in terms of capacity during peak seasons, such as this year end," Awaluddin said on Monday, December 12, 2016, in Jakarta.

Awaluddin revealed that passengers can now access information on flights, commercial tenants at terminals, and other important information related to airports operated by AP II via an app called Indonesia Airports.

"The app is our new service, aimed at improving services, and a part of the smart airport campaign," Awaluddin explained.Passengers at the Soekarno-Hatta International Airport can also enjoy superfast Wi Fi connection up to 50 Mbps.

The number of passengers at 13 AP II airports during the year-end holiday season from December 22, 2016 to 4 January, 2017, is expected to reach 4.18 million, increasing by nine percent compared to that on regular days. Meanwhile, the number of flights is predicted to increase by 4.54 percent from 28,220 to 29,502.

AP II will continue to intensify coordination with other stakeholders, such as airlines, the customs office, the immigration office, military and police to ensure smooth operation during the holiday season.

The number of passengers is predicted to peak on December 23, 2016, while the counter-flow of passengers is expected to occur on January 1, 2016.

AP II forecasted that the number of passengers at the 13 airports in 2016 would grow by 11 percent to 93 million passengers when compared to last year. The company expects that the number will exceed 100 million next year.

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Hungary Energizes Indonesia’s Power Plant Projects
The Jakarta Post, 14 December 2016

Multiple gas-powered mobile power plant projects run by state-owned electricity company PLN would help boost exports from Hungary to Indonesia, as most turbines for the facilities will be manufactured in the Central European country, a Hungarian lender said.

Hungarian Export Import Bank Plc. (HEXIM) CEO Zoltán Urbán said a General Electric (GE) factory in the Hungarian city of Veresegyház would supply 15 of 20 turbines used in the new projects, which could generate 500 megawatts (MW) of electricity in total.

The mobile power plants are located in Lampung (4x25 MW), Pontianak (4x25 MW) in West Kalimantan, Bangka (2x25 MW) in Bangka Belitung, Riau (3x25 MW), Belitung (25 MW) in Bangka Belitung, Ampenan (2x25 MW) in West Nusa Tenggara, Paya Pasir (3x25 MW) in North Sumatra and Nias (25 MW) in North Sumatra .

Earlier this month, HEXIM along with Canadian lender Export Development Canada (EDC) agreed to finance the projects, worth a total of $435 million, in a 12-year syndication loan scheme to PLN."GE in Hungary cooperating with more than 600 Hungarian suppliers is a strategic partner of the Hungarian Government.

This deal proves that Hungary takes an important role in the global value chain of the energy sector," Urbán said in a statement on Tuesday.He added that the financing was HEXIM's biggest ever participation in a joint financing.

According to Trade Ministry data, as of September, Hungary's exports to Indonesia reached US$45.88 million, increased by 26.78 percent compared to the same period in 2015.

Meanwhile Indonesia's exports to Hungary reached $46.24 million, up by 1.62 percent compared to the same period in 2015.

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Garut to have Mini-Hydro Power Plant
Tempo, 14 December 2016

Bahtera Project and West Java branch of the State Electricity Company (PLN) signed a memorandum of understanding witnessed by a number of Ministers during the Indonesianisme Summit held by Bandung Institute of Technology Alumni Association (IA-ITB) at Grand Sahid Jaya, Jakarta on Saturday, December 10, 2016.

Marketing Director of PT Hidro Turbin Indonesia (HITI) Ismaryanto said that Bahtera Project will construct mini hydro power plants with a 2x2 megawatts electricity generating capacity in Garut to provide electricity for West Java PLN. The construction is expected to be completed in two years.

"The mini hydro power plant will be equipped a water turbine produced by HITI. It's a domestic-made turbine by HITI, a company developed by three ITB alumni," Ismaryanto said on Monday, December 12, 2016.

According to Ismaryanto, the MoU signing is a form of support to the development of domestic products, which is in accordance with the spirit of the Indonesianisme Summit.

Ismaryanto added that Indonesia often rely on imported materials from China, India, and Eastern European countries to build mini-hydro power plants. "That's why [ITB alumni] established HITI with an intention to take over the Indonesian market that has been dominated by imported products," Ismaryanto said.

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EARTH WIRE -- Danish Govt Explores Cooperation With S. Sulawesi
Antara News, 14 December 2016

The Danish government is exploring cooperation with the provincial government of South Sulawesi in the maritime and energy sector.

"We met with Deputy Governor of South Sulawesi Agus Arifin Numang to jointly promote cooperation in maritime affairs and renewable energy," Danish Ambassador to Indonesia Casper Klynge said after a meeting here on Tuesday.

At the meeting, the ambassador and deputy governor discussed renewable energy, and wind energy, in particular. Denmark is one of the worlds leading countries in the development of renewable energy.

"South Sulawesi can be a pioneer in the development of this energy. The region has the potential to develop wind energy," the ambassador stated.

In terms of maritime affairs, the ambassador noted that Denmark has the largest maritime companies in the world, including the largest shipping company in the world."We talked about how we can work together in the field of maritime connectivity," the ambassador affirmed.

Currently, he added, the cost of transporting containers by sea, from Makassar to Jakarta, is more expensive than the cost of transportation from Jakarta to Copenhagen, the Danish capital."It is unreasonable, if we look at the big picture," he said.

The Danish government has explored the possibility of investing in ports and other maritime infrastructure, as well. To follow up on the possibility of cooperation, the ambassador will visit Pelindo IV.

"We want to gain a clear picture of the port in Makassar. We will see what their needs are and what kinds of cooperation can benefit both parties," he concluded.

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Japan To Build Deep Sea Water Project In Indonesia
Antara News, 14 December 2016

Japan plans to develop a deep sea water project in Indonesia to produce renewable energy and electrify remote islands in the country, Maritime and Fisheries Minister Susi Pudjiastuti has said.

"The technology will be developed in Morotai Island (in North Maluku) as one of 12 integrated fishery centers (SKPT)," Susi said here on Friday.

Earlier on Thursday, she said, Japan had offered the deep sea water technology during a meeting in Jakarta to which the ministry had responded positively.The ministry has launched the SKPT program to attract investment and optimize business potential in the region, Susi said.

Japan has offered to develop renewable energy to electrify small and remote islands in Indonesia, the ministrys Director General of Sea Management Bramantyo Satyamurti Poewardi said.

The technology takes advantage of the temperature difference between the sun-warmed surface water and cold deep water to generate electricity.

The cold deep water could also be used for tuna fish farming, he said, expressing hope that the country will succeed in its efforts to get the technology.

Japan has reportedly intensified its efforts to promote investment in the fishery sector in Indonesia, including a plan to build tuna breeding and fish processing industries in some regions.

Indonesias Investment Coordinating Board (BKPM) has agreed on a commitment with Japans Sumitomo Mitsui Banking Corporation (SMBC) for mutual support in promoting and increasing investment in the country.

With the countrys economic growth at five percent amidst the global slowdown, Indonesia has become an interesting location for investment, BKPM chief Thomas Trikasih Lembong said.

Japans total investment during January to September amounted to US$4.4 billion in 2,122 projects, and has made it the second biggest investor in Indonesia after Singapore, whose total investment is US$7.12 billion

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State-Owned Energy Companies Should Build Synergy: Minister
Antara News, 14 December 2016

State owned energy companies and electricity firm PLN should build synergy to boost efficiency and improve peoples lives, State-owned Enterprises (SOE) Minister Rini Soemarno has said.

"Please build synergy with PLN. If the synergy can be developed together it would improve welfare of the people because it would reduce electricity and fuel oil cost and make it efficient," the SOE minister said during a Pertamina Energy Forum 2016 in Jakarta on Tuesday.

To create energy resilience, energy SOEs should cooperate with other state companies and private businesses."In the production of electricity, there are power generators that use fuels and gas. All this must be built with a synergy so that transportation cost will be lower, and primary energy production (cost) will go down. For state-owned oil firm Pertamina, it would make it efficient if purchases are made with a long-term contract," she said.

The minister encouraged Pertamina to develop domestic energy sources, exploit domestic oil reserves, be committed to developing renewable energy, and make overseas business expansion with mature calculations.

Rini also advised Pertamina not be complacent with its past achievements but continue to improve performance in the future."If now it is included in the worlds big five, Pertamina is expected to be included in the worlds big three in the future," she said.

The minister said the plan to form holding companies, one for state energy companies and the other for state mining companies, before the end of this year may not fructify, and may have to be delayed until early next year.

According to the plan, Pertamina will be the holding company for energy companies Pertamina and Perusahaan Gas Negara (PGN), while aluminum smelter company PT Inalum in North Sumatra will be the holding company for PT Inalum, coal miner PT Bukit Asam, tin miner PT Timah and multifarious mining company PT Aneka Tambang.

"We hope to establish the two holding companies before the end of this year but if it is delayed it would be brought to reality in the first quarter of 2017," Rini said here on Saturday.

On the sidelines of the ceremony celebrating the 59th anniversary of PT Pertamina, Rini said work on setting up the two holding companies is in the final phase.

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Palm Oil Companies Receive Sustainable Certificates
Antara News, 14 December 2016

Some 42 palm oil companies received the Indonesian Sustainable Palm Oil (ISPO) certificates, making it a total of 226 companies in the list of ISPO certificate recipients.

All 42 companies own a total of 87,772.06 hectares of plantations, producing approximately 332,775.42 tonnes of crude palm oil (CPO) annually, Chief of ISPO Commission Secretariat Azis Hidayat said in Jakarta Tuesday.

"So, that makes 1,430,105.31 hectares of total plantation grounds owned by 226 ISPO recipient companies, producing a total of 6,746,321.93 tonnes," he noted.

The ISPO certificate was handed over by the Agriculture Ministrys Plantation Directorate General Bambang on the commemoration of 59th Agriculture day and the official opening of the Indonesian Agriculture Museum in Medan, Saturday (December 10).

At the moment, the ISPO committee has received a list of 80 companies that have been audited by a survey institution, appointed by the government, Azis noted.

These companies will then be reviewed by the ISPO Committee assessment team in order to determine whether they fit the criteria listed in the Agriculture Minister Regulation number 11 of 2015 about a Sustainable Palm Oil Certification System.

Azis hoped that all 80 companies in the list would pass the verification process so that they could receive their certificates by March next year.

"My target is to hand them the certificates in March, in conjunction with ISPOs 6th birthday. That is the momentum that we use to hand over ISPO certificates," he said.

Meanwhile, Plantation Directorate General Bambang encouraged business makers and palm farmers to earn ISPO certificates so that their products could compete in the international market.

The negative campaigns against palm oil products are being conducted by foreign parties up until today, due to the competition between palm oil and vegetable oil, he believed.

"For that reason, we need to also show the world that Indonesian plantations are environmentally friendly," he said.

ISPO is a policy established by the Indonesian government through the Ministry of Agriculture in the hope of increasing the countrys palm oil competitiveness in the world market, while at the same time participating in the presidents commitment to diminish the glass-house effect as well as pay more attention to environmental issues, he stated.

The ISPO certificate shows that Indonesian palm oil plantations are committed to sustainable practices, Head of Indonesian Palm Oil Association (GAPKI) Joko Supriyono said.

"This is uncontested, especially with the growing number of companies that have passed the ISPO certification processes," he said.

Palm oil plantations have been making Indonesias land greener for 105 years. They have also contributed to the welfare of over 4.6 million farmer families and act as the backbone for Indonesias economy by being the biggest export contributor, he continued.

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Indonesia Ready To Cooperate With UN To Promote Global Peace
The Jakarta Post, 14 December 2016

The government of Indonesia has expressed readiness to cooperate with the United Nations (UN) to promote global peace and prosperity."Indonesia hopes to work with UN Secretary General Antonio Guterres and the Secretariat of the United Nations to promote global peace and prosperity," Minister of Foreign Affairs Retno LP Marsudi said here on Tuesday.

The foreign minister congratulated Guterres on securing the top UN job. The Indonesian government earlier welcomed the selection of Guterres as the next UN Secretary General to replace Ban Ki-moon as the new year begins.

"Indonesia lauds the process of selecting the UN Secretary General, which was carried out openly, inclusively, and transparently," said a press statement issued by the Ministry of Foreign Affairs.

The Indonesian government will continue to support the UN, and the country hopes Guterres will perform his duties based on the UN Charter, the statement read.

The Indonesian government urged the next UN Secretary General to promote the implementation of Agenda 2030, the Addis Ababa Action Agenda, and the Paris Climate Agreement, through advocacy, partnership, and support.

The new UN Secretary General was asked to provide strong and impartial leadership. Guterres is expected to include conflict prevention as a major item on the agenda of the UN in the field of peace and security.

Indonesia also called on the next secretary general to adopt a new approach in responding effectively to the humanitarian crisis as well as strengthening prevention and protection initiatives.Indonesia was concerned about improving the quality of peacekeeping troops facing complex challenges in various parts of the world.

Further, Indonesia expected that Guterres could encourage the reforms of the UN Secretariat to enhance accountability, efficiency, and effectiveness in supporting the member states in the implementation of various commitments and the global agenda.

"Indonesia is ready to cooperate with the new UN Secretary General in maintaining world peace and order," a statement from the Ministry of Foreign Affairs stressed.
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