Update News January 05, 2017

In The News

Gov't Prepares 15th Economic Policy Package
Tempo, 05/01/2017

The government is currently preparing another economic package. Coordinating Minister for Economic Affairs Darmin Nasution said that the government is drafting its 15th economic package, which is scheduled to be announced on January 2017. "The 15th economic package will cover logistics and national single window," Darmin said on Wednesday, January 4, 2017.

Specifically, the package will regulate ship dwelling time. Darmin added that President Joko "Jokowi" Widodo expected ship dwelling time to not exceed two days. Currently, ships spend an average of 2.9 days.

Darmin added that discussion on the economic package will involve the Coordinating Ministry for Maritime Affairs because it will relate to logistic issues.

Previously, the government had regulated ship dwelling time in the 2nd economic policy package, which provides an incentive for bonded logistics areas.

Coordinating Minister for Maritime Affairs said that the 15th economic policy package will be emphasized on efficiency. Luhut asserted that many businesses are still facing trouble with extra costs while they were out of port.

"There are still extra costs, we don’t want that. We want [dwelling time] to be handled holistically," Luhut said.

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Indonesia Optimistic About 2017 Prospects, Eyes Rp 678t In Investment
The Jakarta Post, 05/01/2017

The Investment Coordinating Board (BKPM) is optimistic about the country's prospects in attracting foreign direct investment this year, as it expects to see double-digit growth in investment for 2017.

BKPM chief Thomas Lembong said he was optimistic the country would remain one of the most attractive countries in the world compared to its counterparts in other regions.

"For now, Indonesia is the safest, most stable and most reformist country because, without the need to mention names, there were impeachments of heads of state in other countries," he told reporter in a press briefing on Wednesday.

The BKPM, Thomas said, was aiming to book Rp 678 trillion (US$50.17 billion) in investment this year, up 14 percent from last year’s target.

He was also optimistic the government would meet its investment realization target of Rp 594 trillion in 2016, although the official figure would only be announced by the end of January.

BKPM data shows that Indonesia, as of September, pocketed Rp 453 trillion in realized investment, up by 13.4 percent from the corresponding period last year.

The figure consists of Rp 295 trillion in foreign investment and Rp 158 trillion in domestic investment, an increase of 10.6 percent and 18.8 percent, respectively, from the same period last year.

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Indonesia To Boost Tea Exports In 2017
The Jakarta Post, 05/01/2017

Struck by a saturated local beverage market and a lack of price control, tea distributor PT Kharisma Pemasaran Bersama Nusantara (KPBN) aims to drive its focus toward the international market in 2017, which has also fallen amid global economic conditions.

Selling their supply of tea from PT Perkebunan Nusantara (PTPN), KPBN aims to move up to 40,000 tons of tea in 2017, compared to 36,000 tons in 2016. About 39 percent of Indonesian tea was exported, while 61 percent was for the local market.

KPBN president director Iriana Ekasari said they aimed to restore Indonesia’s tea export levels to how it was back in 2008, when nearly 100 percent of Indonesian tea was exported to international markets.

During its first auction of the year on Wednesday, 397,000 tons of tea leaves went up for sale, with local tea exporter company PT Trijasa Prima International buying most of it.

The prices, however, were still relatively low given the high production and planting costs that goes into producing tea, Iriana said.Indonesia is currently the seventh largest tea exporter in the world, falling behind heavyweights such as Kenya, Sri Lanka and Vietnam.

Around 27 percent of Indonesian tea exports go to Malaysia, which is the largest buyer today, along with 14 percent to the United States.

The strength of Indonesian tea exports also depend on trends overseas, such as the instant coffee and tea phenomenon of Starbucks in the United States, which is a major factor in keeping export numbers healthy in that market.

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Govt Improves Infrastructure To Support Tourism Industry: Minister
Antara News, 05/01/2017

The Indonesian Government is improving a number of infrastructure sites to support the tourism industry, as Indonesia hopes to receive more foreign tourists, according to a minister.

With better infrastructure and cleanliness, foreign tourists were expected to visit more than one tourist destinations in the country, Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said at Bogor Palace, here on Wednesday.

In addition to infrastructure, the government is also providing better accommodations and transportation in tourist resorts.He said the development of accommodations in Mandalika tourist resort, West Nusa Tenggara, is nearly complete.

President Joko Widodo is continuing to monitor infrastructure development in the Lake Toba tourist resort, North Sumatra, which is expected to be completed in 2019, according to the minister.

The government has set a target of attracting 20 million foreign tourists by 2019. The tourism ministry has intensified Indonesian tourism promotions, particularly in Sumatra, Papua, West Nusa Tenggara, and East Nusa Tenggara.

In the meantime, he said his office has been busy addressing problems of waste that are littering the seas.Indonesia's seas are the second dirtiest, after those in China, he said."We will deal with it seriously, because its hazardous.

Plastic waste could be swallowed by fish, and when the fish are consumed by people, it could affect our health," the minister said.The government will act to convert waste into sources of electricity, he remarked.

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New Sidewalks Not For Street Vendors: Sumarsono
The Jakarta Globet, 05/01/2017

Acting Jakarta Governor Sumarsono requested street vendors not to occupy the newly renovated and extended sidewalks in various parts of the city, as they are intended to provide a safe path for pedestrians.

"When street vendors occupy sidewalks and other spots [where trade has been prohibited], it makes the city chaotic," Sumarsono said at Jakarta City Hall on Wednesday (04/01).

Since sidewalks are meant to aid road safety by minimizing interaction between pedestrians and motorized traffic, the city's municipal police (Satpol PP) have been putting more effort lately into keeping them free of street trade to accommodate foot traffic. "The proper use of sidewalks should be promoted to change the attitudes of their users," Sumarsono added.

He also said that the city's administration will supervise more the implementation of the regulation banning street trading on sidewalks as soon as the renovation process is complete.

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Pelni Eyes Cruise Business For Tourism
The Jakarta Post, 05/01/2017

State shipping firm Pelni will expand into cruise ship operations, as it sees potential business in the country’s tourist industry.

Pelni president director Elvin Guntoro said the effort would begin this year, with the company possibly seeking a state enterprise partner to run the cruise ship around the country’s tourist destinations.“We will be the operator of the cruise ship,” he said on Wednesday.

Elvin stated that the company had pocketed Rp 5 billion (US$372,162) from its tourism service so far, but he said it would be a potential business going forward.

It is so far running its shipping service on six routes around a number of destinations such as Labuan Bajo, East Nusa Tenggara and Raja Ampat, Papua, among others.

Pelni commercial director Harry Boediarto said the cruise ship could be purchased in a joint venture manner, mentioning state hotel firm Patrajasa as a potential partner.

“We will run it around 10 emerging destinations,” he said, referring to the government’s 10 priority destinations to be develop,  including Lake Toba in North Sumatra and Mandalika in West Nusa Tenggara.

The company expects to carry out a cruise ship test run this year. The government itself has aims to welcome 15 million tourists this year, which will climb to 20 million tourists by 2019.

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Minister Luhut Eyes Cooperation Signings During PM Abe`s Visit  
Tempo, 05/01/2017

The government expects to sign cooperation agreement on megaprojects during Japanese Prime Minister Shinzo Abe's visit to Indonesia, scheduled on January 15, 2017.

"We hope to discuss what I announced [during the cabinet session press conference]," Coordinating Maritime Affairs Luhut Binsar Panjaitan said at the Bogor Palace on Wednesday, January 4, 2017.

Luhut hoped that the bilateral meeting with Prime Minister Abe would result in preliminary agreement on the Jakarta Surabaya High-Speed train project.

"We hope that we can sign a joint study between the Transportation Ministry and Japan International Cooperation Agency (JICA)," Luhut added.

In addition, the Indonesia government is currently planning to complete the Patimban Port project in West Java that needs an investment of above Rp 40 trillion (US$3 billion). After attending a cabinet plenary session, Luhut revealed that the government would focus on several matters in 2017.

In the energy sector, the government estimated that the capital expenditure for the Masela Block would reach US$16 billion. In addition, capital expenditures in its derivative industries, such as petrochemical and fertilizer industries would reach US$9 billion.

Luhut added President Joko "Jokowi" Widodo had instructed state oil company Pertamina to accelerate oil refinery developments and complete the projects by 2019 or 2020.

Meanwhile, in relation to revisions of government regulation and ministerial regulation on mineral export restriction, the government chose to be cautious. Luhut said that the revisions must not contravene the law. Luhut explained that the government has no plan yet to lift bans on nickel and bauxite exports.

Earlier, President Joko "Jokowi" Widodo held a cabinet plenary session at the Bogor Palace for the first time in 2017. Attending the session were all ministers of the working cabinet to hear President Jokowi's elaboration on government’s main focuses in 2017.

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New Regulation On Raw Mineral Exports Inches Away From Becoming Official: Minister
The Jakarta Post, 05/01/2017

A new government regulation (PP) that will offer further relief in the export of raw and partly processed mineral products is awaiting signatures from President Joko "Jokowi" Widodo and related ministers.

Energy and Mineral Resources Minister Ignasius Jonan said the draft regulation had been completed and submitted to the Office of the Coordinating Economic Minister.

“There is no need for another meeting [to discuss the draft]. It just needs the President's signature,” Jonan told reporters on Wednesday on the sidelines of a Cabinet meeting at the Bogor Presidential Palace in West Java.

So far, the government has only confirmed that mineral concentrates will be allowed to be exported past a mineral export ban set to kick in on Jan. 12.

However, a copy of the regulation obtained by The Jakarta Post shows that the relaxation will not just apply to copper concentrate, but also to raw nickel, bauxite, anode slime and copper telluride.

Jonan also said his ministry had prepared a ministerial regulation to enforce the government regulation. However, it would only be issued after the government regulation was issued.

The 2009 Mining Law initially included a mineral ore export and concentrate export ban in order to encourage development in the downstream sectors.

The law stipulates that mineral ore miners must complete their smelters by 2014, when the export ban should have been fully put in place.
The smelters are expected to bring in added value to the end products, as opposed to exporting ore in its raw form.

However, because none of the proposed smelters had been completed, the deadline was extended to 2017 by then-president Susilo Bambang Yudhoyono when he issued PP No. 1/2014 as an amendment to PP No. 23/2010 on the management of mineral and coal businesses.

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PGN Connects 8,158 New Customers
Tempo, 05/01/2017

State-owned gas company PT Perusahaan Gas Negara (PGN) continued to expand its services across the country by providing 8,158 households with gas services without relying on State Budget last year.

"We have a program called PGN Sayang Ibu [gas for housewives], and we continue to serve more customers in various regions, particularly where PGN has built gas pipelines," PGN spokesperson Irwan Andri Atmanto said in a press release on Wednesday, January 4, 2017.
Irwan revealed that PGN has distributed gas for 117 households in Cilegon, 213 in Tangerang, 192 in Jakarta, and 408 in Bogor.

In addition, PGN has served 355 households in Bekasi, 21 in Karang, 507 in Cirebon, 4,171 in Surabaya, 1,653 in Sidoarjo, 200 in Pasuruan, 260 in Medan, and 61 in batam.

Irwan added that the government mandated the PGN back in 2015 to distribute natural gas to 43,337 households in 11 regencies and cities in Indonesia. Last year, PGN was assigned to build natural gas network for 49,000 households in Tarakan, Surabaya, and Batam.

"At the national scale, PGN has distributed natural gas to more than 120,000 households in Sumatera, Java, Kalimantan and Papua," Irwan revealed.

PGN is the only company that distributes natural gas to various customer segments, namely households, small and medium enterprises, business entities (shopping malls, hotels, hospitals, and restaurants), industries, power plants, and transportation operators.PGN currently manages 7,200 kilometers of gas pipes or about 78 percent of the total national downstream gas pipes.

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Govt Mulls Extending Contracts of 8 Oil, Gas Blocks
Tempo, 05/01/2017

Energy and Mineral Resources Ministry is currently deliberating the contract extension of eight oil and gas blocks which will end in 2018. The ministry has until this year to make the decision.

“The Minister said that a decision has to be made at least one year before [contract] expiry. To allow a transition period,” director for oil and gas mainstream business management Tunggal said yesterday.

Data from the Energy Ministry show that some contracts will expire next year, including Tuban Block, operated by Joint Operation Body (JOB) of Pertamina-Petrochina East Java, Sang-Sanga Block, operated by Virginia Indonesia Company (Vico), South East Sumatra Block, operated by CNOOC, Ogan Komering Block, operated by JOB Pertamina-Talisman, Block B and North Sumatra Offshore (NSO) Block, operated by Pertamina, Central Block, operated by Total, and East Kalimantan Block, operated by Chevron.

Meanwhile, the contracts of other blocks will expire this year, namely Offshore Northwest Java (ONWJ) Block, Lematang Block, Mahakam Block and Attaka Block, which concessions have been given to Pertamina, except for Lematang Block which operation will be continued by PT Medco E&P.

Energy and Mineral Resources Ministry Regulation No. 15/2015 holds that Pertamina will have exclusive rights to operate oil and gas blocks which contract have expired. However, according to Tunggal, Pertamina must make a proposal accordingly.Of the said eight blocks, Pertamina is proposing extension for Block B, NSO Block, Tuban Block and Ogan Komering Block.

Pertamina will invest US$80 million in Tuban. The proven reserves in the block are expected to stand at 6,000 million barrel of oil equivalent per day (MBOEPD).

At JOB Ogan Komering, Pertamina plans to invest up to US$200 million. The block’s production capacity is 3 MBOEPD with reserves of 2,000 MBOEPD. “We will also get ownerships in the two JOBs,” Pertamina spokeswoman Wianda Pusponegoro said recently.

The company is eyeing ownership in Sanga-Sanga Block, which boasts a potential of 2,232 million stick tank barrels (MSTB) in oil reserves and 448.96 billion standard cubic feet (BSCF) in gas reserves. Pertamina, however, is facing competition from Vico who has proposed contract extension.

It is also targeting East Kalimantan Block. Pertamina mainstream business director Syamsu Alam said the company plans to merge it with Attaka Block for efficient operation. “It won’t be economical to operate them separately.”

The ministry is still mulling whether to approve Pertamina’s proposal. Tunggal said that approval would mean that Attaka and East Kalimantan Blocks will be merged. “The Energy Minister will decide on how we would operate them.”

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