Update News January 16, 2017

In The News

President Hopes For Faster Regional Economic Growth
Antara News, 16/01/2017

President Joko Widodo has expressed hope for faster regional economic growth across the country with increased transfers of funds to the regional administrations and village fund in 2017.

"Under the state budget 2017, the transfer funds to regional administration and village fund reach Rp764.9 trillion, higher than the budget for ministries and central governments institutions.

Because we want to see regional economy to grow faster," the President said at the celebration of the Indonesian Justice and Unity Partys (PKPI) 18th anniversary here, Sunday.

Jokowi, as the President popularly known, said the government in the revised state budget 2016, for the first time, set a higher budget for transfers to regional administration and village fund, compared to the budget for ministries.

The state budget 2017 has set the state revenue target at Rp1,750 trillion and expenditures target at Rp2,800 trillion. Of the total budget for state expenditures, spending for ministries/state institutions is set at Rp763.6 trillion or some 36.7 percent.

While budget for transfers to regional administrations and village fund is set at Rp764.9 trillion (36,8 percent), and for state general treasurer at Rp552 trillion (26.5 percent).

At the occasion, the President disclosed some policies to safeguard the nations sovereignty and self-esteem."This can be seen in our front lines, that have been renovated to make it better, such as cross-border posts in Entikong, West Kalimantan and Motoain, East Nusa Tenggara," he said.

With regard to connectivity, the President said, the government has targeted connecting all regions in the country by accelerating development of logistical infrastructure.

"We want to see Indonesia-centric not Java-centric development. With the improved connectivity, goods and people traffic would become smoother," he said.

On the development of sea toll routes in 2016, Jokowi admitted that some routes have yet to be completed. "In 2017, the routes will be more complex. More ships will pass big and small ports in Indonesia, goods and people traffic will become smoother to materialize social justice."

In addition to physical development, the government has also encouraged development in social sector."With our Indonesia Smart Card, Indonesia Healthy Card, and complementary feeding program, non prosperous families could improve their condition," Jokowi said.

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Financial Authority Foresees 21 IPOs This Year
The Jakarta Post, 16/01/2017

The Financial Services Authority (OJK) expects to see 21 initial public offerings (IPO) this year, lower than the 35 that has been targeted by the bourse.

"In deciding the target, we have to look at our achievements in recent years," OJK commissioner for capital market supervision Nurhaida said after attending the OJK's annual dinner in Jakarta.

Vice President Jusuf Kalla attended the event along with hundreds of businesspeople involved in the country's financial services.

The authority noted that the number of newly listed companies had been decreasing in recent years but it expressed optimism that with extra effort, the actual number could be higher than what was being targeted, Nurhaida added.

A total of 16 IPOs were recorded last year, which was slightly better than the 15 in 2015. The number of companies going public stood at 30 and 20 in 2013 and 2014, respectively.

"We will work with Kadin [Indonesian Chamber of Commerce and Industry] to approach prospective companies and encourage SOEs [state-owned enterprises] to go public," she said, adding that her office would also approach private companies that won the OJK's annual report award to list their shares at the bourse as they already practized good governance.

The Indonesia Stock Exchange (IDX) is struggling to lure more private companies to float their shares on the local stock market. Previously, IDX president director Tito Sulistio paid a visit to Finance Minister Sri Mulyani Indrawati, asking the government to help encourage 52 companies that listed their shares overseas to also do so on the local bourse.

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Islamic Development Bank Provided Indonesia With $1b in Funding in 2016
The Jakarta Globe, 16/01/2017

The Islamic Development Bank, or IDB, last year provided more than $1 billion in funding to support development in various sectors of the Indonesian economy, ranging from urban development to energy and education, the Jeddah-based multilateral development financing institution said in a statement on Friday (13/01).

"It [was] the highest annual pledge for Indonesia since the IDB's inception and represents 20 percent of the targeted envelope for Indonesia for the period 2016-2020," IDB Group president Bandar Al Hajjar said.

According to the IDB's website, it disbursed only $179 million in 2015. One of the projects the IDB approved for Indonesia last year was $330 million in funding for the National Slum Upgrading Project, which benefited 4,923 administrative villages in 116 cities in West Java, Sumatra and Kalimantan.

The bank also approved a $330 million loan to state utility company Perusahaan Listrik Negara (PLN) to expand power transmission infrastructure in Java, Bali, Sumatra, Kalimantan and Sulawesi.

The project will provide an additional 10,135-megavolt ampere, which contributes to the government's ambitious 35,000-megawatt power plant construction program.

There was also a $177 million financing package to four national universities – Sultan Ageng Tirtayasa University in Banten, Malang University and Jember University in East Java and Mulawarman University in East Kalimantan – to improve their capacity in curricula, staff development and research capacity to promote innovation.

"We are also undertaking significant efforts to deepen the Islamic financial services industry by providing technical assistance, capacity development, direct and indirect lending, equity investment and advisory services with national players such as the OJK [Financial Services Authority], Ministry of Finance, Bappenas [National Development Planning Agency] and Bank Indonesia," said Ibrahim Shoukry, Indonesia representative of the IDB Group.

Last year, the IDB invested $100 million in the government's shariah-compliant bonds. This investment increased its Indonesian sovereign sukuk holdings to more than $1 billion.

The International Islamic Trade Finance Corporation, the trade finance arm of the IDB, also provided a $109 million loan facility in Indonesia to innovate financing for coffee exporters and sugar and oil refineries.

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Regions Urged to Prioritize Three Sectors
Tempo, 16/01/2017

In a bid to develop regional economy, the National Development Planning Board (Bappenas) has urged regional governments to prioritize three sectors, namely agriculture, processing industries, and trade.

National Development Planning/Head of Bappenas Bambang Brodjonegoro said the three sectors give the biggest contributions for the country’s economy and create most job opportunities.

“So if we talk about the strategies to develop economies in the region, we have to prioritize these three sectors first,” Bambang said on Sunday (15/1).

The minister added that developing those three sectors, other sectors that become the priorities of each region could be developed.

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Jokowi Pledges To Launch Large Scale Land Reform This Year
Antara News, 16/01/2017

President Joko Widodo (Jokowi) pledged the government will take a big step in the implementation of land reform this year.

"What we did in 2016 was only an initial step in redistribution of assets. We will continue in large scale in 2017," the president said speaking at the 18th anniversary of the Indonesian Justice and Unity Party here on Sunday.

He said the government already gave recognition to nine groups of people of traditional law by distributing 12,544 hectares of lands to 5,712 farm families.

"There are almost 2,000 traditional communities but we had given only nine of them. This is only the beginning as we have 12.7 million hectares of lands ready to be distributed among groups of both traditional communities and people living around forests," Jokowi said.

He said from the beginning, his government has sought to implement economic policy inspired by Pancasila, the state ideology, marked with mutual assistance.

The economic policy is directed toward bringing about social justice for all Indonesian people, he said."This will continue to be our policy as we have started with BBM (oil fuel)," he said.

Jokowi has launched a bold regimented price policy for BBM that the selling price of BBM is the same in Java and Papua. Previously the BBM price could be ten times more expensive in the countrys easternmost province than in Java. He said it took 1.5 years for the government to get the policy through before it could be implemented last October.

He said the price of Premium gasoline in mountainous interior area of Papua ranged from Rp60,000 to Rp100,000 as against only Rp6,450 per liter in Java.

"It had been going on for tens of years. Now we make the price the same (in Java and Papua). A Rp500 hike in BBM price per liter triggered three month long demonstrations in Java. In Papua the price was Rp60,000 for years but there was no demonstration," he said.

He said the government is also planning to do the same with the cement price pointing the high disparity in price of the building material in Java and Papua .

"In Java the cement price is around Rp70,000-Rp80,000 per bag as against Rp800,000-Rp2.5 million in Puncak Jayawijaya, the mountainous district of Papua.

This is a problem we could not yet solve, but God willing we would continue seeking a solution," the president said.

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Indonesia Sees Japan As Model For Infrastructure Development
The Jakarta Post, 16/01/2017

The government has high hopes that Japan will help to boost national development in various sectors, including infrastructure, maritime affairs and tourism.

"To maintain the country's stability, it is important for us to bring about equality. Hence, we want to boost infrastructure development in the eastern part of the country, which has been left behind compared to the western part," Coordinating Maritime Affairs Minister Luhut Pandjaitan said in his opening remarks at the Japan-Indonesia Business Dialogue event in Jakarta on Sunday.

The event was held on the sidelines of Japanese Prime Minister Shinzo Abe’s visit to Indonesia, which will end on Monday."We look at Japan as an ideal model. Hence, we want to speed up Indonesia's infrastructure development and we hope there will be more Japanese businesspeople involved in such development," Luhut said.

He added that Indonesia was also seeking opportunities to team up with Japan in several other sectors, namely maritime affairs, fisheries and tourism.

"During this event, we have gathered and brought representatives of many Japanese companies to Indonesia. So, we see Indonesia as an important partner and we are really interested to develop our businesses in Indonesia," said Hiroto Izumi, special advisor to Abe.

Among the members of Japan's delegation are representatives of various companies, such as gas firm Tokyo Gas, trading giant Mitsubishi Corporation, glass manufacturer Asahi Glass and energy company Inpex.

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Electricity Privatization Regulation Introduced To Boost Rural Access
The Jakarta Post, 16/01/2014

The Energy and Mineral Resources Ministry has officially launched a ministerial decree, which allows private companies to develop their own electricity grids that are separate from state-owned electricity firm PLN.

On Monday, Energy and Mineral Resources Deputy Minister Arcandra Tahar introduced Ministerial Decree No. 38/2016 that was aimed to help expedite electricity development in 2,500 remote villages across the nation.

"This is an innovation from the government to provide a legal basis that will allow for fairer energy procurement and to increase the ratio of villages with electricity in Indonesia, which has only reached 96.95 percent out of a total 83,190 villages," he said at the ministry’s Electricity Directorate General headquarters in Jakarta.

According to data from the Central Statistics Agency (BPS), there are still 2,519 villages that had no electricity in 2014. Furthermore, PLN's plans until 2019 only covers 504 villages to be lit up through village electricity procurement projects.

The latest ministerial decree will allow private companies, provincial administration-owned companies and cooperatives to set up off-grid power plant projects in remote villages, 2,376 of which are located in Papua and West Papua.

Private investors must focus on procuring electricity through a hybrid-power system, supported by both renewable energy sources and conventional fossil fuels.

A hybrid-power system combines two or more modes of electricity production, usually involving at least one renewable energy source to ensure the villages can maintain power 24 hours a day.

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Energy Subsidy To Be Integrated With Social Security Cards
The Jakarta Post, 16/01/2017

President Joko "Jokowi" Widodo has said the government plans to integrate an energy subsidy into a social safety net program through the Prosperous Family Card (KKS) for the sake of distribution efficiency.

Jokowi said his ministers had discussed the integration plan during a Cabinet meeting on Friday."We will allocate Rp 32.3 trillion [US$2.42 billion] for a fuel and gas subsidy and Rp 45 trillion for an electricity subsidy in 2017, but I want to emphasize that the energy subsidy must reach the target," he said at the State Palace before the meeting.

However, Coordinating Human Development and Culture Minister Puan Maharani said the integration would be implemented in 2018 because the Social Affairs Ministry, Energy and Mineral Resources Ministry, state-owned electricity company PLN and oil and gas company Pertamina had to discuss the plan further.

"Whether the subsidy will be in goods or cashless through e-money should be discussed further so it will not break related rules," she said.

She added that four regulations related to the issue — the laws on oil and gas; electricity; poverty eradication; and social affairs — must be considered. She expressed the hope that no law revisions would be needed for the implementation of the integration.

Jokowi added that 65 percent of subsidized 3-kilogram gas canisters were bought by wealthy households as well as 900 VA electricity mostly being enjoyed by “non-poor people”.

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Govt Welcomes Investment in Coal Gasification
Tempo, 16/01/2014

The government welcomes investments in the coal-gas conversion (gasification) industry. The Industry Ministry's director general of chemical, textile and various industries (IKTA) Achmad Sigit Dwiwahjono said Indonesia's gasification potential is huge, considering the country's large volume of low-grade coal reserves.

"Low-grade coal can produce dimethyl ether, which can replace liquefied petroleum gas (LPG). It will eliminate our need to imports raw material," Sigit said last weekend.

Sigit said it takes about Rp13 trillion to produce 1,000 metric tons of coal gasification derivatives. During the pilot period, the industry can turn 100,000 tons of coal into 3,600 mmbtu of gas per day."This investment will generate substantial added value for the domestic industry. All we need is to build infrastructure," he said.

Industry Minister Airlangga Hartanto had said that the development of coal gasification is vital to obtain raw material supply for the fertilizer and petrochemical industries. "It is also an alternative energy that can be used by the industry," he said.

Minister Airlangga met with Fu Minyan, the CEO of Clean Energy Technology Zemag GmBh - a German company that will run the pilot for Indonesia's coal gasification facility project. "They want to invest in developing derivatives of coal gasification," Airlangga said.

He urged Zemag to cooperate with local companies and offered them plants site in Kalimantan and South Sumatra.
Fu Minyan said Indonesia has large resources of low-grade coal. He said he had discussed with the government about finding local partners. "We are exploring to invest in methanol with low-grade coal as materials."

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Norway to Support West Sumatra in Forest Conservation
The Jakarta Globe, 16/01/2014

The Norwegian environment ministry and the government of West Sumatra will work together to save 2 million hectares of the province's forests.

The province was chosen due to its sustainable forest management efforts and the local government's dedication to the conservation of peatlands.

On Thursday (12/01), Norwegian Environment Minister Vidar Helgesen, Indonesian Ambassador to Norway Yuwono A. Putranto and Governor of West Sumatra Irwan Prayitno discussed the strategies to improve the region's economy through forest conservation.

Since 2013, Norway has been collaborating with Indonesia under the United Nations REDD+ (reducing emissions from deforestation and forest degradation) program.

As the program has reached its implementation phase, the government of West Sumatra is now set to develop a number of conservation projects, such as improving market access for non-timber forest products.

"It's very relevant to focus on these efforts, as through them we can also improve the living standards of [West Sumatra's] communities," Yuwono said.

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Ministry To Expedite Agriculture Development In Border Areas
Antara News, 16/01/2017

Indonesias Agriculture Ministry would speed up the development of organic agriculture in border areas and export organically grown products to neighboring countries.

Addressing a meeting on food security here on Friday, Agriculture Minister Amran Sulaiman said organic food has become a potential export commodity.

Organic rice and onion can be cultivated in border areas, he added."Neighboring countries should be targeted as potential markets for our agriculture products," he advised.

The government has plans to establish an agricultural estate in Lingga district of Riau Islands. "We will develop organic agriculture in Lingga district and the products are likely to be exported to Singapore and Malaysia."

The ministry has also developed 50,000 hectares of estate in Entikong, West Kalimantan, which borders Malaysia.
"Agricultural products from Entikong will cater to the Malaysian demand. We will also build a huge agricultural market in Entikong, from where Malaysians will be able to buy products," Amran pointed out.

The minister encouraged development of organic agriculture in Sulawesi region to meet the demand from the Philippines."Similarly, cultivation of organic food in Papua is expected to meet demand in Palau and Papua New Guinea. We can export the commodity directly as we already have a port," Amran reminded.

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