Update News Desember 01, 2016

In The News



Jokowi Calls On Global CEOs To Invest In Indonesia
The Jakarta Post, 01 December 2016

President Joko “Jokowi” Widodo has reiterated a call for global business leaders and investors to take part in the country’s development, as Southeast Asia’s largest economy intensifies efforts to ease inbound investment to stoke growth.

Speaking on Tuesday evening in front of hundreds of participants of the 2016 Forbes Global CEO Conference in Jakarta, President Jokowi highlighted the government’s efforts to attract investors to the country, including by streamlining procedures to obtain business permits.

He also pointed out some of his signature policies, including the reallocation of funds previously used for fuel subsidies, the program for an additional 35,000 megawatts of electricity capacity and the tax amnesty, which would strengthen economic prospects in the country.

“I’m here to convince you that we will continue to carry out reforms and create an investment climate that is more business-friendly,” the President said.

Some 400 CEOs, business leaders, entrepreneurs and thought leaders from around the world are set to attend the 16th edition of Forbes Global CEO Conference, which runs from Tuesday to Thursday.

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Taiwan Promises Increased Investment In Indonesia
The Jakarta Post, 01 December 2016

Taiwan has once again expressed its intention to increase investment in Indonesia following a series of economic policy reforms under President Joko “Jokowi” Widodo’s administration.

Taiwanese firms met with the President and several Cabinet members early on Wednesday to discuss investment opportunities in Indonesia, particularly in the electronics, manufacturing, renewable energy and fisheries sectors, according to one of Taiwan’s delegates.

The president and chief executive officer of Cathay United Bank, Alan Lee, promised to bring leaders from 30,000 companies in the aforementioned sectors to Indonesia to better understand and take advantage of the country’s current investment climate and economic policies.

“There has been a lot of improvement in infrastructure, treatment for foreign direct investment [FDI] and overall government efficiency.

“Those are very important for foreign investors and through today we have a better understanding of the new policies,” he said, noting that Indonesia’s large population would be a boon for the manufacturing industry in particular.

“We believe those new policies will encourage more Taiwanese companies [to make] more investment in Indonesia, and create synergy between Taiwan and Indonesia.”

Since the beginning of Jokowi’s tenure, Taiwan has promised to boost its investment in Indonesia, but without many plans coming to fruition. Realized investment from Taiwan in the January to September period amounted to US$118.45 million in 288 projects, according to data from the Investment Coordinating Board (BKPM).

Although the figure showed a slight improvement from Taiwan’s $107.95 million investment in 2015, its FDI has decreased constantly from an all-time high of $646.9 million in 2012.

Bilateral trade has also dropped in recent years, partly due to the global economic crisis and the absence of a trade agreement. Trade has shrunk by 31.87 percent from 2011 to $8.22 billion in 2015.

However, Taiwan’s newly elected President Tsai Ing-Wen has pledged to reduce economic reliance on mainland China while also tightening ties with Southeast Asia, New Zealand and Australia through its “New Southbound Policy”, with a proposed budget of NT$42 billion ($1.32 billion).

Although BKPM chairman Thomas Lembong has kept mum on next year’s investment target from Taiwan, he noted that the government hoped to “ride on” the partnership between Cathay Financial Holdings, the parent company of Cathay United Bank, and Indonesian publicly listed private lender Bank Mayapada after the former invested $300 million in the latter.

Thomas also said that one Taiwanese delegate was interested in building an integrated township in Indonesia, similar to those in Vietnam and China.

“If the project is to be developed on Morotai Island [North Maluku], Tanjung Lesung [Banten] or Kendal [Central Java], then the company will partner with [publicly listed property developer] Jababeka,” he said, adding that it may team up with other groups if investment was focused outside those areas.

Meanwhile, Industry Minister Airlangga Hartanto said the government was trying to convince Taiwanese companies to set up semiconductor factories in Indonesia.

Taiwan is home to several semiconductor firms, including Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), one of the world’s largest dedicated independent semiconductor foundries, which supplies products to Apple.

The Indonesian Chamber of Commerce and Industry’s (Kadin) Taiwan committee chairman SD Darmono told The Jakarta Post that many Taiwanese businesses had greeted the southward looking policy with enthusiasm.

Greater investment from Taiwan would, in turn, boost exports of semi-completed machinery and goods to Indonesia.

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Indonesia To Take Part In World Expo 2017
The Jakarta Post, 01 December 2016

Relations between Kazakhstan, a small but rich Central Asian country, and Indonesia will get a big boost with the latter’s participation in the World Expo 2017, to be held in Astana next year, a top Kazakhstan diplomat said.

“Indonesia has agreed to participate in the World Expo 2017 in Astana. The expo will be held from June 10 to Sept. 10, 2017. The participation of Indonesia in the expo will strengthen bilateral relations,” Kazakhstan Ambassador to Indonesia Askhat Orazbay told The Jakarta Post in connection with Kazakhstan’s 25th Independence Day celebrations on Monday.

Kazakhstan became independent on Dec. 16, 1991 after the dissolution of the Soviet Union. The embassy held a reception to celebrate Kazakhstan’s silver jubilee, in which Law and Human Rights Minister Yasonna Laoly was the guest of honor.

“Indonesia will participate in World Expo 2017 in Astana. This will boost our cooperation in the energy sector. Both countries have huge potential and our bilateral ties will grow further,” Yasonna said.

Orazbay said Indonesia had appointed Rida Mulyana, the Energy and Mineral Resources Ministry’s director general for new renewable energy and energy conservation, as Indonesia’s national commissioner for the world expo.

Rida’s appointment was in line with the main theme of the expo, “Future Energy”.

“The expo’s theme will address global energy related challenges and problems. The expo will be very important as it will deal with solutions to tackle climate change, an issue that is high on the agenda of many nations, including Indonesia and Kazakhstan,” Orazbay said.

The expo’s website, ipm2016.kz, reveals the venue sprawls out across 174 hectares. It will have 18 U-shaped international pavilions, 10 buildings, a shopping mall, a 1,000-seat theater, a five-star hotel and office buildings.

“Indonesia will have a big pavilion, which covers an area of 633.7 square meters, at the expo, close to the thematic pavilions. It will be much bigger than Iran [505.6 sq m] and Vietnam [403 sq m], but it will be smaller than Japan [961.17 sq m]” Orazbay said.

About 105 countries and 17 international organizations will take part in the exhibition, which will attract more than 1 million visitors. It is the first time for a small former member of the Soviet Union to organize such a huge expo.

Indonesia, according to Orazbay, is important for Kazakhstan, rich in energy and minerals. Relations between the two countries have been growing at a faster rate in recent years.

“President Nursultan Nazarbayev has visited Indonesia twice, in 1995 and in 2012. Our bilateral trade surged to US$50 million in 2015, a significant jump from $39.1 million in 2014.

During the last 15 years, Indonesian companies have invested more than $500 million in Kazakhstan,” he said.

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Government To Propose Tax Cut For Renewable Energy
The Jakarta Post, 01 December 2016

The government is planning to offer renewable energy producers a tax cut following lawmakers’ refusal to approve a proposed Rp 1.3 trillion (US$95.87 million) subsidy in the 2017 state budget, an official said on Wednesday.

The Energy and Mineral Resources Ministry's director for new and renewable energy, Maritje Hutapea, said without a subsidy, the selling price of electricity from renewable energy sources would be too high.

The average price of electricity generated from renewable power plants currently stands at 15 US cents per kilowatt hour (kWh), much lower than the price offered by state electricity company PLN to households of 8 cents per kWh.

"After the subsidy proposal was rejected, we have to find another way. A tax cut is the alternative but we must work with the Finance Ministry [to achieve it]," Maritje said on Wednesday.

The government aims to supply 23 percent of the nation’s energy from renewable sources by 2025 in order to cut down on carbon emissions and wean the country off fossil fuels.

To reach the target, the General Plan for National Energy (RUEN) stipulates that renewable energy must make up at least 11 percent of the energy mix by 2017, equal to 25.5 million tons of oil equivalent (mtoe).

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Indonesia To Gain From Flegt Agreement: Retno
Antara News, 01 December 2016

Foreign Minister Retno Marsudi said FLEGT (Forest Law Enforcement, Governance and Trade) license gives Indonesian comparative advantage in timber exports to the European Union.
 
"With the FLEGT license, we should utilize the comparative advantage for our timber products in expanding market in the EU," Retno said in a statement received here on Wednesday.

The minister was speaking in a ceremony in Brussels, Belgium, making official the FLEGT license in the presence of EU representative for foreign affairs and security Federica Mogherini, and EU Commissioner for the environment, marine and fisheries Karmenu Vella.

FLEGT is an agreement between the EU and partner countries aimed at guaranteeing that timber to be exported by the partner countries are legal and produced with sustainable system in line with the principles of environment preservation.
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The FLEGT agreement is also aimed at helping the partner countries in putting an end to illegal logging through improvement of foreign management and regulations.

"Withe the FLEGT license, timber products from Indonesia could enter the European market through green track," Retno said.

She said the FLEGT agreement is an important milestone in the relations between Indonesia and the EU and at the same time reflects strong commitment of Indonesia to produce timber with sustainable system.

"As the first country to hold the FLEG license, Indonesia would have an advantage in EU timber market," she said.

"Competitiveness would be stronger and market access would be wider for Indonesian timber products. The opportunity should be fully utilized before other countries also receive the same license," she said.

Indonesia is one of the main suppliers of timber products to the EU with exports to that region valued at 485 euros in 2015.

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Chinese Investors Eyes Tourism Sector
Tempo, 01 December 2016

Chairman of the Indonesia Investment Coordination Board (BKPM) Thomas Lembong, said that a number of foreign investors, specifically from China, have expressed their interest in developing Indonesia's tourism industry. The investors, Fosun International and HNA Group, has high interest in the tourism sector, according to Minister Lembong.

"[The investors] have talked with President Joko Widodo, [expressed] their interest in the tourism sector," Lembong said.

Fosun International is a Chinese-based investment company who had been making investments in the health, torusim, fashion, and baking sector in the United States and Europe in the last few years.
Meanwhile, HNA Group is a Chinese prominent air transportation company who has shares ownership in 23 different airlines across the globe. In addition to Fosun and HNA, Lembong said that Chinese property company Wanda had also stated its interest in making investments in Indonesia.

Following the investors' interest over the tourism sector, Lembong reminded the government to pay close attention to Indonesia's tourism market. Lembong added that Chinese tourists are mostly interested in visiting regions in the eastern part of Indonesia.

"The currently popular [destination] is Manado," Lembong said.

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Gov't Restores 400,000 Hectares of Peatlands in 2017
Tempo, 01 December 2016

The Peatland Restoration Agency (BRG) has set a target to restore 400,000 hectares of peatland in 2017. Budi Wardana, Deputy for Planning and Cooperation of the BRG, said that the Agency will need Rp 1.44 trillion for the restoration effort while adding that only Rp912 billion are available.

To make up for the shortcoming, Budi has asked for help from non-governmental organizations based in the European Union, Norway, UK, Japan and South Korea.

"We are looking for development partners," Budi said in a discussion held by tempo.co in Kuningan, Jakarta on Wednesday, November 30, 2016.

Next year, the BRG is aiming to map 820,000 hectares of land in peat hydrological area (KHG), manage 104 peat villages and set up 80 KHG zones, a number much higher compared to last year's nine KHG.

The BRG has only started restoring peatlands this year, setting a target of 600,000 hectares of degraded peatlands restoration, as well as mapping peatlands, recording 606,000 hectares of land in four KHGs and managing 104 peat villages.

Managing 104 peat villages will include restoring 800,000 hectares of peatlands over the next five year. "Our target [until 2020] is managing one thousand villages in seven provinces," Budi said. The provinces are Riau, Jambi, South Sumatra, West Kalimantan, Central Kalimantan, South Kalimantan and Papua.

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Indonesia To Gain From Flegt Agreement: Retno
Antara News, 01 December 2016

Foreign Minister Retno Marsudi said FLEGT (Forest Law Enforcement, Governance and Trade) license gives Indonesian comparative advantage in timber exports to the European Union.

"With the FLEGT license, we should utilize the comparative advantage for our timber products in expanding market in the EU," Retno said in a statement received here on Wednesday.
 
The minister was speaking in a ceremony in Brussels, Belgium, making official the FLEGT license in the presence of EU representative for foreign affairs and security Federica Mogherini, and EU Commissioner for the environment, marine and fisheries Karmenu Vella.

FLEGT is an agreement between the EU and partner countries aimed at guaranteeing that timber to be exported by the partner countries are legal and produced with sustainable system in line with the principles of environment preservation .

The FLEGT agreement is also aimed at helping the partner countries in putting an end to illegal logging through improvement of foreign management and regulations.

"Withe the FLEGT license, timber products from Indonesia could enter the European market through green track," Retno said.

She said the FLEGT agreement is an important milestone in the relations between Indonesia and the EU and at the same time reflects strong commitment of Indonesia to produce timber with sustainable system.

"As the first country to hold the FLEG license, Indonesia would have an advantage in EU timber market," she said.

"Competitiveness would be stronger and market access would be wider for Indonesian timber products. The opportunity should be fully utilized before other countries also receive the same license," she said.

Indonesia is one of the main suppliers of timber products to the EU with exports to that region valued at 485 euros in 2015.

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Indonesia, EU Reactivate 'Parliamentary Friendship' Group
The Jakarta Globe, 01 December 2016

Foreign Minister Retno Marsudi said Indonesia and the European Union have reactivated a "parliamentary friendship" group between the union and Southeast Asia's biggest economy, a plan for which was touched on in a previous meeting between President Joko "Jokowi" Widodo and EU Parliament President Martin Schulz in April 2016.

Speaking in Brussels, Belgium, on Monday (28/11), Retno said the friendship group is a forum for European Parliament members who want to strengthen partnerships with Indonesia in a number of different sectors.

The group is chaired by Portugal's Ana Gomes and has two deputies, Jeroen Lenaers from the Netherlands and Urmas Paet from Estonia.

"The European Parliament and the Indonesian parliament have important roles to supervise the implementation of the Partnership and Cooperation Agreement (PCA)," Retno said, referring to an agreement signed between Indonesia and the EU in 2014.

The House of Representatives’ Commission I chairman Abdul Kharis Almasyhari said reactivating the group is a step in the right direction to revive inter-parliamentary relations between the EU and Indonesia.

"We need to involve all stakeholders, including both parliaments, to improve the relationship between Indonesia and the European Union, one that is based on mutual interests," Almasyhari said.

Currently, the group has 22 members from the European Parliament, with more members expected to join up soon.

The Indonesian ambassador to Belgium has welcomed the reactivation of the friendship group, and promised to facilitate its activities in Brussels.

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Indonesian Military To Boost Humanitarian Cooperation With Japan
Antara News, 01 December 2016

The Indonesian Military (TNI) and its Japanese counterpart plan to intensify cooperation, given that both countries have vast maritime territories and are vulnerable to disasters.

“In the future TNI will cooperate and boost cooperation in humanitarian assistance and disaster relief with Japan,” TNI chief General Gatot Nurmantyo said in Jakarta as he met with Admiral Katsutoshi Kawano, the Japan Self-Defense Forces (SDF) chief of Joint Staff in Jakarta on Wednesday.

Gatot said Indonesia and Japan had been cooperating in defense affairs for quite a long time, especially in education and humanitarian assistance.

Since 1998, for instance, Indonesia had assigned military officers and cadets to study at the Japan National Defense University (Boeidagaku).

Meanwhile, Admiral Katsutoshi Kawano said maritime cooperation was very important for Japan, especially cooperation with ASEAN countries.

“I expect growing cooperation in humanitarian and education affairs with Indonesia as a maritime country and the biggest country in ASEAN,” Kawano said.

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