Update News January 09, 2017

In The News

Indonesia Entering Transitional Period Of Digital Economy: Minister
Antara News, 09/01/2017

Indonesia is currently entering a transitional period in terms of digital economy and is forecast to take 10 to 15 years to complete, according to a minister.

"It is undeniable that we are entering a transitional era of digital economy for the next 10-15 years," Coordinating Minister for Economic Affairs Darmin Nasution stated here, Thursday, while speaking on Digital Economy to Support Entrepreneurship at an event to celebrate the 54th anniversary of the University of Brawijaya, which was also attended by Communication and Information Minister Rudiantara, Public Housing and Public Works Minister Basuki Hadimuljono, and East Java Governor Soekarwo.

To optimize economic growth and equity, Indonesia needs to benefit from technological progress by implementing a regulation on digital economy. Small- and medium-scale enterprises (SMEs) should be empowered to become a foundation of creative economy, which is capable of playing a significant role in global trade through e-commerce.

Hence, the government has envisioned that Indonesia would become the largest digital economy in Southeast Asia by 2020, according to the minister.

"The target is to create 1,000 digital start-ups, having a business value of US$10 billion, e-commerce growth of 50 percent per year, and transactions worth US$130 billion," he revealed.

The focus will be on start-ups and SME-based digital economic development. Indonesias digital economic potential is huge, as cellular penetration is 126 percent; internet, 52 percent; young population, 30 percent; and the number of SMEs reaching 60 million.

"The contribution of SMEs to the gross domestic product is 57.6 percent. This is very strategic," he added.

Meanwhile, Indonesia has planned to cooperate with India to establish a digital economy and to support e-commerce.

"Indonesia is seeking opportunities to cooperate with India in the fields of digital economy and e-commerce. Digital economy and e-commerce in India is viewed as an area of immense potential," Investment Coordinating Board Head Thomas Trikasih Lembong had noted in New Delhi, India, last December.

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 programming 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 deficit of programmers can be addressed," he noted.

He pointed out that this level of cooperation could be developed since India has decades of experience in developing information technology.

"I view this cooperation as very prospective," he added.

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100,000 Subsidized Houses to be Built This Year: Apersi
Tempo, 09/01/2017

The Association of Housing Development in Indonesia (Apersi) has set the target of building 100,000 subsidized houses in 2017.

Apersi Head Junaidi Abdillah said the target is quite realistic given a number of positive policies the government launched last year whose impacts will be effectively felt this year.

For the record, in 2016 Apersi built more than 80,000 subsidized houses as targeted. Therefore, Junaidi was upbeat that the target of building 100,000 subsiized houses this year can be meet.

“Seeing that has Apersi has more than 3,700 members, we are very optimistic to reach the target of building 100,000 subsidized houses,” he said on Thursday.

Furthermore, Junaidi said that challenges that Apersi often faces in the regions are among others the process of providing supporting infrastructures such as electricity, running water and roads.

In addition, permits and illegal levies often pose challenges in the process of building subsidized houses, he added.

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Dubai Port Expected To Invest In Tanjung Api-Api KEK
Antara News, 09/01/2017

The South Sumatra provincial administration said it hopes Dubai Port Authority Corporation would not cancel its plan to invest in the Tanjung Api-Api (TAA) Special Economic Area (KEK) and in the port of Tanjung Carat, Banyuasin, South Sumatra.

South Sumatra Governor Alex Noerdin was worried with the latest statement of the operator of the Port of Dubai that it would invest in the KEK only after it is fully completed.

"Dubai Port does not want to start from zero . It wants KEK running before it enters. Whereas we want it to be the pioneer to motive other foreign investors to invest in the KEK," Alex said here on Friday.

He said the provincial administration has also asked the central government to help persuade Dubai Port to go ahead with its investment plan in TAA .

"Actually everything has been done to persuade Dubai Port. Even the president has brought the proposal to Dubai port during his visit to Saudi Arabia. We also has tried to convince Dubai port when its representative visited South Sumatra in March, 2016. But it is not as easy as expected," he said.

Alex said for South Sumatra the TAA KEK is a dream that has not come true over the past years.

IF TAA KEK is fully implemented the port of Tanjung Carat of South Sumatra would break to the ranks of first class port cities in Asia including Singapore.

"TAA KEK would occupy 4,045 hectares including Tanjung Carat reclamation land of 2,015 hectares . Now it is in the process of land clearing," he said.

The plan is the KEK would have coal gasification plant, power plant, coal liquefaction plant, fertilizer factory, cement factory , tire factory , crude palm oil processing plant, oil refinery and downstream petrochemical factory.

TAA is strategically located in the middle of the trade route leading to Europe and other Asian countries. It would be a threat to Singapore when it starts operation.

State-owned port operator Pelindo II has said it wants to develop the port of Tanjung Carat as part of the Tanjung Api Api KEK development program.

Pelindo II Chief Executive Elvin G. Massayssa said he would coordinated with South Sumatra governor to accelerate development of the port.

"If necessary we would propose the issuance of a presidential decree that the process of development could implemented soon," Elvin has said.

He said Pelindo II already carried out feasibility study on the capacity of the port . The capacity is to be around 1.5 million Twenty-Foot Equivalent Unit (TEU) iin the first phase.

Tanjung Carat Terminal development in South Sumatra initiated by PT Pelabuhan Indonesia (Pelindo) II is predicted to cost USD 3.3 billion investment.Corporate secretary of Pelindo II Hambar Wiyadi the first phase of expansion of the port would cost US$1.2 billion and the second phase US$2.2 billion.

The first-phase of expansion will include development multipurpose terminal, container terminal, as well as dry and liquid bulk terminals. President Joko Widodo said the port would be included in the program of sea highway (sea toll) program.

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Part Of Trans-Sumatra Toll Road To Enter Operation This Year
The Jakarta Post, 09/01/2017

The Public Works and Public Housing Ministry will start operations on some 89 kilometers of the under-construction Trans-Sumatra toll road this year as part of a large-scale road construction program on the island.

Public Works and Public Housing Minister Basuki Hadimulyono said that in addition to the toll roads that had been developed in the last two years, the government would launch operations on 568 km of toll roads across Sumatra this year.

“We hope that we can achieve our target of developing 1,000 toll roads within five years. Hopefully, we will even exceed the target of 1,851 km [in 2019],” Basuki said, as reported by kontan.com on Monday.

Toll road sections in Sumatra to enter operation this year include Section II from Medan to Binjai and from Helvetia to Semayang, Section III from Semayang to Binjai and from Palembang to Indralaya, Section I from Palembang to Pamulutan, Section III from KTM to Simpang, and a 61.75 km section from Medan via Kualanamu to Tebing Tinggi.

The Trans-Sumatra toll road is being developed by state-owned company PT Hutama Karya.

Meanwhile, the government is speeding up the development of 645 km of eight toll roads expected to be completed by 2019: These connect Medan with Binjai, Palembang with Indralaya, Bakauheni with Terbanggi Besar, Pekanbaru with Dumai, Terbanggi Besar with Pematang Panggang, Pematang Panggang with Kayu Agung, Palembang with Tanjung Api Api and Kisaran with Tebing Tinggi.

The government also plans to develop three more toll roads with a total length of 700 km from Medan to Banda Aceh, from Pekanbaru to Padang and from Tebing Tinggi to Prapat.

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LRT Project Needs Rp 7 Trillion This Year
The Jakarta Post, 09/01/2017

State-owned construction company PT Adhi Karya needs around Rp 7 trillion (US$523.36 million) in funding to achieve its development target on the light rail transit (LRT) project in 2017.

Adhi Karya CEO Budiharto said the funds were expected to come from bond sales, loans from state-owned banks and the state budget.

“Rp7 trillion is needed this year. Rp 2 trillion is expected from bond sales, while Rp 5 trillion will come from the loan of a state-owned bank syndicate and the state budget,” said Budiharto, as reported by tempo.co on Monday.

The company had so far spent Rp 2.5 trillion on the LRT project, he added.

Adhi Karya estimates that the total cost of the Jakarta-Bogor-Depok-Bekasi LRT project will reach Rp 23 trillion, but the company is still waiting for a consulting company to calculate the final cost figure.

Transportation Minister Budi Karya Sumadi said his ministry was also waiting for the calculation of the project’s contract value.

“The value of the contract will be decided by a consultant. We do not know whether we can negotiate or not, but we will use the figure from the consultant,” he said, adding that the Development Finance Comptroller (BPKP) would evaluate any disbursements for the project.

Adhi Karya’s contribution to the LRT project includes a 14.5-kilometer stretch from Cibubur to Cawang (17 percent), 17.5 km from East Bekasi to Cawang (12 percent) and 10.5 km from Cawang to Dukuh Atas (2 percent).

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PLN Splashes Rp7.7bn on Kalimantan Infrastructure Projects
Tempo, 09/01/2017

State-owned electricity company PT PLN (Persero) has disbursed over Rp7.7 billion for electricity infrastructure projects in Central Kalimantan.

The projects include 20 circuit kilometers of medium voltage overhead power lines (SUTM), 4 circuit kilometers of low voltage overhead power lines (SUTR), 1 Transformer with a capacity of 100 kilo Volt Ampere (kVA) and 2 Transformers with a capacity of 50 kVA, respectively.

As many as 350 heads-of-household in Telang Baru Village, Central Kalimantan, can now enjoy electricity supply after 55 years of waiting.

PLN South and Central Kalimantan general manager Purnomo said that the synergy between the company and the people was key for establishing electricity infrastructure.

“Electricity is the starting point of economy development and prosperity, the PLN is proud to be able to give a special present to the villagers of Telang Baru and Juru Banu,” Purnomo said Sunday, January 8, 2017,d in a press release, as quoted by Bisnis.com.

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Gov`t Urged to Shift 35,000 MW Program Target to 2020
Tempo, 09/01/2017

Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwan has urged the government to move the target of achieving 35,000 Mega Watt electrification from 2019 into 2022.

"The 35,000 MW electrification program is realistic but the time it is expected to be achieved has to be considered again. Although President Joko Widodo says that the target is still the same, the time it has to be achieved can be moved to 2021 or 2022," Fabby said in Jakarta on Sunday.

Fabby added the government should recalculate the need for electricity because the 35,000 MW program is determined with the assumption of economic growth of 7 percent in 2019.

"However, the reality is that in two years, our economic growth is only 5 percent. Until 2020, it can increase into 7 percent or not. It means, we have to calculate the need for electricity. It won’t reach 35.000 MW. So we’d better re-calculate the acceptable figure,” Fabby said as quoted by state-run news agency Antara.

Nevertheless, Fabby considered that the 350,000 MW electrification program is indeed important to boost the electrification ratio in Indonesia. Yet, he said the target would be very difficult to achieve in 2019.

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PLTU Batang To Be Operational In 2020
Antara News, 09/01/2017

Construction of southeast Asias largest power plant in Central Java would be completed in 2020, its contractor PT Bhimasena Power Indonesia (BPI) said.

The steam power generating plant (PLTU) with a capacity of 2x1,000 megawatts is being built in the regency of Batang, BPI spokeswoman Ayu Widianingrum said here on Saturday (Jan. 7).

"We are optimistic the process of construction of the US$4.2 billion facility would be completed as scheduled," Ayu said.

She said the power plant would supply electricity to the Java-Bali interconnection.

The project occupies a 226 hectare plot of land in the village of Ujungnegoro, Ponowareng, and Karanggeneng.

The process of land clearing which has been the main factor causing a drag in the implementation of many infrastructure projects in the country has been comp0leted, she said.

"The transfer of ownership of all 226 hectare plot of land from land owners has been wrapped up," she said.

PT Bhimasena Power Indonesia is a joint venture between Electric Power Development Co. Ltd (J-Power), PT Adaro Power,which is wholly owned by Adaro Energy and Itochu Corporation (Itochu).

Ayu said PLTU Batang is the first infrastructure project built under the "Public-Private Partnership" scheme .

It is part of the program of acceleration of the countrys economic development , she said.

"PLTU Batang will use the latest technology which is environmentally friendly and efficient. Ultra Super Critical," she said.

Japan Bank for International Cooperation and a syndicate of international banks provide financial support for the project.

Its output would sold to state electricity company PLN under a power purchase agreement (PPA) for 25 years after the operation.

Under the build-operate-own-transfer used for the project, ownership of the assets including the buildings and land would be transferred to PLN after 25 years of operation.

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Five Airports to Launch New Terminals: PT Angkasa Pura
Tempo, 09/01/2017

State-owned airport operator PT Angkasa Pura II announced that new terminals in five airports would be operated this year.

Airports with new terminals to be operated are Husein Sastranegara airport in Bandung, Depati Amir airport in Pangkalpinang, Silangit aiport in Tapanuli Utara, Supadio airport in Pontianak, and Soekarno-Hatta airport with the new Terminal 3 for international flights.

PT Angkasa Pura II President Director Muhammad Awaluddin, said one of the facilities in the new terminals is digital infrastructures provided to improve services.

“We are preparing Rp9 trillion to strengthen our digital infrastructures,” he said on Sunday.

Awaluddin said that with the new terminals, the capacity of the airports is expected to increase.

The new terminals are also expected to boost tourism industries in Indonesia.

Awaluddin expressed his optimism that in 2017, Indonesia can attract at least 4 million foreign tourists. In 2016, there were 2.4 million tourists visiting Indonesia.

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Indonesia Must Focus On South Asia: Dino Djalal
Antara News, 09/01/2017

Indonesia, particularly its foreign policy experts, do not pay enough attention to South Asia, which has been developing significantly, founder of Foreign Policy Community of Indonesia (FPCI) Dino Patti Djalal stated.

"Often, we focus on East Asia or other regions, but there is significant development in South Asia," a former Deputy Foreign Minister of the Republic Indonesia said, during a discussion on international politics here Friday (Jan. 6).

One major development can be seen in India, which is the largest country in this region and has been improving its economy and defense power, Djalal noted.

"The Indian economy has been growing rapidly, supported by its overseas companies," a former Ambassador of the Republic of Indonesia in United States said.

"In the defense sector, India already has an aircraft carrier," he added.

Further, the South Asian countries are located in the Indian Ocean, which is important to Indonesias security, and hence the national foreign policy experts must take this region seriously, he asserted.

Importantly, Indonesia can use its chairmanship (2015-2017) of the Indian Ocean Rim Association (IORA) to establish more stability in the region, which is seeing interstate and inter-regional conflicts such as the India-Pakistan border dispute over Kashmir and India-China attempt to exert geopolitical influence in the Arabian Sea, Djalal explained.

"We must play a role to maintain security there (South Asia)," he said.

Currently, as the chair of IORA, Indonesia is working to finalize the IORA Concord and the Action Plan 2017. Both documents are technical and include a practical code of conduct for good governance to help countries face new challenges in the Indian Ocean region.

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