Update News December 23, 2016

In The News

Trade Minister Inaugurates Batang Wholesale Market
Tempo, 23 December 2016

Trade Minister Enggartiasto Lukita inaugurated the Batang Wholesale Market in Batang District, Central Java, on Thursday.

The Batang Wholesale Market sits on an area of 14,710 square meters and was developed in two years with Rp67 billion in funds taken from the regional governments budget.

In his address during the inauguration, Minister Enggartiasto said even though the funds for the development of the market had come from the regional governments budget, the central government would continue to focus on market development and traders in the region.

"Markets and traders have been given priority. The construction of buildings must continue, so the market must be well maintained," the minister remarked.

He underlined the governments guarantee that basic commodity supplies would always be adequate, particularly during the Christmas and New Year holidays.

The minister claimed he had discussed the matter with entrepreneurs to ensure the smooth supply of commodities.

Enggartiasto said the development of markets by regional governments should always be adjusted to the Indonesian National Standardization (SNI) program.

Regional governments have the authority and obligation to meet the SNI requirements in adopting the SNI standard.

Meanwhile, the central government only determines the norms, standards, procedures, and criteria (NSPK) for development.

"Our policy is to establish 44 parameters in the SNI. We want the regional governments to refer to these parameters, particularly with regard to the physical parameters," the minister stated.

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Sri Mulyani Welcomes Credit Rating Improvement
Tempo, 23 December 2016

Finance Minister Sri Mulyani Indrawati positively welcomed the decision of international rating agency Fitch Ratings to improve the Indonesia's outlook sovereign credit rating from 'stable' to 'positive'.

"I'm glad to hear that Fitch's assessment [on Indonesia's credit rating] improves from normal to positive. I think this is a positive thing, and I hope that it will be well-translated in terms of our rating improvement," Sri Mulyani said in Jakarta on Thursday, December 22, 2016.

Sri Mulyani said that she would leave the rating improvement decision to Fitch, but she pledged to convince Fitch with data that Indonesia has sound economic fundamental and policies.

With government endeavors to minimize domestic and foreign risks, Sri Mulyani believes that Fitch view Indonesias economic management highly.

"It will lead to trust in the form of positive outlook, and hopefully it will be upgraded," Sri said.

Earlier, Fitch suggested that Indonesia could improve its rating next year by strengthening its external resiliency. In addition, Fitch suggested the government to boost investment climate and raise the its good governance standards. Indonesia is believed to more capable in maintaining its economic growth compared to other neighboring countries.

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Rupiah Expected to Stabilize ahead of Christmas, Year-end Holiday
Tempo, 23 December 2016

The rupiah's exchange rate is expected to stabilize ahead of the Christmas and New Year's holiday. The prediction is based on the consistent flow of funds to the state bond (SUN) market.

This morning, the rupiah weakened to trade for Rp13,473 per US dollar amid the greenback's strengthening against Asian currencies.

"Additionally, there is a strong capital outflow from the stock market.  The Jakarta Composite Index (JCI) took a deep plunge during yesterday's trade," Samuel Sekuritas analyst Rangga Cipta said in a written statement Friday, December 23.

According to Rangga, commodity prices that are still high will secure investors' trust in Indonesia's dollar liquidity prospects and help prevent the rupiah from being corrected too deep.

"The [government's] decision to ease mineral exports also helped increase expectations for higher surplus and 2017's growth prospects," he said.

The US dollar has been on a slight uptrend following the country's economic growth revision, which is raised to a number that exceeds market expectation.

The greenback gain is also followed by an increase in the US Treasury yield, which spreads to other developed countries' treasury markets. On another note, Rangga said that crude prices are still on an uptrend along with other major commodities.

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Indonesia Studying India's, Switzerland's Trade Measuring Instruments
The Jakarta Post, 23 December 2016

The Industry Ministry is studying the implementation of the Minimum Import Price (MIP) and Price Competitiveness Measure (PCM) trade measuring instruments adopted by India and Switzerland, respectively, to analyze whether they are feasible to maintain local industry's competitiveness.

The ministry's director general for industrial resilience and international access development, Harjanto, said MIP regulated the price of imported goods so prices could not be lower than locally produced goods. India implemented MIP for its steel industry in February.

"If India can implement it in their steel industry, why don't we?" he said on Thursday.

Providing an illustration, Harjanto said state-owned steel maker Krakatau Steel had been struggling with low steel prices due to the inflow of imported steel from China.

The PCM, meanwhile, was implemented by Switzerland for agricultural products. The import tariff was charged based on the availability of domestic products in the market.

"If domestic stock is abundant, they will increase the import tariff, but if they need to import, they will lower the tariff again," Harjanto said.

Indonesia currently has only 272 non-tariff measures (NTM), a relatively small number compared to its neighbors, including Malaysia and Thailand, which have 313 and 990 NTMs, respectively. Industrialist countries like Japan and China have 1,294 and 2,194 NTMs, respectively.

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Jasa Marga Launches JMCare App for Toll Road Users
Tempo, 23 December 2016

PT Jasa Marga has launched an application called JMCare which provides traffic information for toll road users during the Christmas and New Year’s holidays.

“The application has two main features for road users, which are the notification and the information features,” said the Assistant Vice President Corporate Communication PT Jasa Marga, Dwimawan Heru, on Friday, December 23, 2016.

According to him, the notification feature is a push notification message-based that provides traffic information in real time. “It’s for road users that use GPS on their mobile phone.”

Road users can easily look for information based on their needs. The feature is connected to Jasa Marga Traffic Information Center (JMTIC) that can be contacted at 14080. The line is available for 24 hours and is equipped with a live video streaming that is connected to Jasa Marga’s toll road CCTV cameras. The feature is also linked to Twitter.

Heru said the application can be downloaded at Play Store starting from today from any Android-based mobile phones. “And will follow soon for iOS devices on January 1, 2017.”

Jasa Marga will add other features to the app. One of them is the Smart Assistance, which can provide quick alternative routes. There is also a tow truck feature that can help the road users to request a towing assistance to the closest toll road exit.

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Jakarta’s MRT Project Secures Electricity Supply From PLN
Tempo, 23 December 2016

Mass Rapid Transit Jakarta has said state-owned electricity firm PLN will guarantee electricity supply to the major infrastructure project.

“The electricity distribution during the MRT’s operation will be guaranteed, without any disruptions,” MRT Jakarta director William Sabandar said on Thursday (22/12).

The guaranteed supply was established through the signing of electricity power purchase agreement, or SPJBTL, between both companies earlier on Wednesday.

William added that to ensure the fulfillment of the electricity supply during the operational phase, the company has procured a "premium silver service" from PLN, with higher quality of connectivity.

Next, PLN will distribute power to MRT Jakarta with a new connection of 60,000 kVA. The company is also constructing a 150 kV main electric substation in South Jakarta, along with a high voltage connection, or SKTT, to two of PLN’s main substations in Pondok Indah and CSW areas. According to the agreement, the energizing of MRT electric substation will start in December 2017.

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Indonesia Eyes Two Oil Fields In Iran
Antara News, 23 December 2016

The Indonesia government is eyeing two Irans gas fields of Ab-Teymoura and Mansouri.

"I hope a team from here would soon make preparation to the Iranian counterparts that operation of the two oil fields would be awarded to Indonesia," President Joko Widodo (Jokowi) said in a limited cabinet meeting here on Thursday discussing the result of his state visit to that country earlier this month.

Jokowi said in addition to oil sector, the two countries could cooperate in the development of power plants and possible imports of liquefied petroleum gas (LPG) at a more reasonable price from Iran.

He said during the visit, Indonesia and Iran agreed to build an oil refinery in Indonesia at a cost of US$5 billion with a processing capacity of 300,000 barrels of crude oil per day.

In addition, Jokowi wanted to hold follow up talks on cooperation agreement with India to increase Indonesian exports of coal and crude palm oil to that country.

Jokowi also reached an agreement with Indian leaders cooperation in the development of industry producing pharmaceutical basic materials.

The president visited India and met with leaders of that country before flying to Iran. A meeting between Jokowi and Indian Prime Minister Narendra Modi resulted in a agreement to hold negotiation on regional comprehensive economic partnership.

The agreement could also be followed up by related ministries or agencies, Jokowi said. Jokowi invited Indian investors to do business in Indonesia in pharmaceutical , technology and automotive sectors.
He said related ministers to go immediately to India to discuss the agreements in details with Indian counterparts.

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Pertamina, Saudi Aramco Agree on Cilacap Refinery Joint Venture
Tempo, 23 December 2016

State-owned oil company PT Pertamina (Persero) and Saudi Arabian Oil Company (Saudi Aramco) have finally agree on Cilacap refinery joint venture. The agreement was signed yesterday by Pertamina president director Dwi Soetjipto and Saudi Aramco president director Amin Naseer in Jakarta.

Both had previously expected to sign the agreement on November.

According to Dwi, the signing was suspended as both parties could yet agree on four issues: crude oil supply, control management, asset valuation and lifting.

On crude supply, he explained that both have agreed that Saudi Aramco will get 70 percent of supply. On management control, Pertamina will appoint three members of the board of directors, while Saudi Aramco will appoint two. On lifting, domestic refining will be handled by Pertamina and export may be carried out by both.

Dwi said that cooperation between Pertamina and Saudi Aramco is expected to boost refining capacity. At present, Cilacap refinery’s capacity is 348,000 barrel per day (bpd), which will be stepped up to 400,000 bpd.

Dwi further said that US$5 billion or Rp65 trillion has been invested to develop Cilacap refinery. Pertamina will hold 55% stake and Saudi Aramco will hold 45% stake.

Cilacap refinery development is part of the Refinery Development Master Plan Pertamina (RDMP) to meet national energy demand. Aside from Cilacap, the RDMP is rolled out in the refineries of East Kalimantan’s Balikpapan, Riau’s Dumai and West Java’s Balongan.

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Association Expresses Concern Over Clean Energy Investment
Tempo, 23 December 2016

The Indonesia Bioenergy Electricity Producer Association (APLBI) predicted that investments in the biomass power plant projects will remain stagnant if the government decided to reduce feed in tariff for clean energy.

The Association asserted that biomass energy business will lose its appeal compared to fossil energy if it is being sold very cheap.

"Biomass electricity producers will stop [doing business]. Because they would be powerless, unable to compete with other energy [producers]," said Jonathan Handojo, a member of APLBI Advisory Council in a discussion on renewable energy held by Tempo in cooperation with the Energy and Mineral Resources on Wednesday, December 21, 2016.

Jonathan asserted that biomass power plant developers are currently facing troubles because of a policy applied by the State Electricity Company (PLN), who refused to purchase biomass-produced electricity at US$13.5 per kilowatt hour (kWh). Jonathan explained that the price will allow developers to apply for a loan from banks.

Jonathan said that his company had developed eight biomass power plants with a capacity of 15 Megawatts (MW) since 2008. Jonathan added that he will cancel his investment on power plants in North Minahasa next year if the government decided to cut down biomass electricity subsidy.

"If [reduction] happens, we will [sell] the land that we have purchased," Jonathan said.

Energy and Mineral Resources Minister Ignasius Jonan said that he is currently in the process of revising a regulation on selling price of electricity generated using new and renewable energy. Jonan argued that the initial price of US$22 per kWh was too expensive.

"All new and renewable energy must be able to compete with fossil fuel. Selling prices must be competitive," Jonan said.

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Jokowi Tips Review of International Org Membership
The Jakarta Globe, 23 December 2016

President Joko "Jokowi" Widodo has called on his ministers to evaluate the country's membership in 233 international organization, citing budget constraints and concerns over productivity.

“I would like to emphasize that Indonesia’s memberships in international organizations should be based on the benefit to our national interests,” Jokowi said during a cabinet meeting on Thursday (22/12).

“I want a full evaluation on how far our membership goes in these 233 international organizations."
The president said Indonesia should not be a member of organizations simply to have its name listed while not providing and positive contribution to the global community.

“I do not want our memberships to be only as ‘followers.’ We have to remain steadfast to our ‘free and active’ foreign policy,” Jokowi said.

Indonesia temporarily resigned from the Organization of Petroleum Exporting Countries (OPEC) while the country suspends the export of raw oil.

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