Update News January 17, 2017

In The News

Sri Mulyani Expects Better Use of Rp60tn in Village Funds
Tempo, 17/01/2017

Finance Minister Sri Mulyani Indrawati stresses the importance of equal economic development throughout Indonesia this year. She expects an effective and efficient use of 2017 village funds.

“I’m very hopeful that Rp60 trillion in village funds can be effectively used,” she said in an opening speech at the launch of the World Bank’s Indonesia Economic Quarterly Report in cooperation with the Center for Strategic and International Studies (CSIS) in Jakarta on Tuesday, January 17, 2017.

According to Sri Mulyani, equal development across Indonesia is as important as achieving economic growth target this year. She said that other regions should enjoy the same development as Java. Sri said that evenly distributed economic growth is needed amid global uncertainty, adding that Indonesia has the potential and must continue to strengthen national economic fundamentals.

“Global [economic] conditions, particularly capital flows, export and import will also affect Indonesia’s economy,” she said.

Sri said that the government has the capacity to avoid a budget deficit. She pointed to last year’s deficit of 2.46 percent or Rp307.7 trillion, which was lower than expected. “It means that our fiscal credibility has increased but it also poses risks.”

She said that the Finance Ministry is striving to improve credibility in tax collection, including to enhance the existing human capital and system. “To bolster state revenue is imperative, but how we spend it is also important,” Sri said.

The minister explained that the bigger the budget allocated to local governments, the bigger the risks faced by them.

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Gov't Focus on SMEs in Tax Amnesty Third Period
Tempo, 17/01/2017

The government has decided to focus on micro, small, and medium enterprises (SME) in the third period of the tax amnesty program. Finance Minister Sri Mulyani Indrawati said that the government would also focus on professionals and other business sectors.

"We still have a lot of expectations in terms of the participant number. The message is that this is the last period. So, the next three months is the last opportunity [to participate in the tax amnesty program]," Sri Mulyani said in Jakarta on Monday, January 16, 2017.

Sri Mulyani added that the government would continue to improve its strategies based on evaluations of the first and second periods. Sri Mulyani revealed that the government would formalize SME's business activities through the tax amnesty program.

"My instruction is to simplify the form and the process," Sri Mulyani claimed.

Sri Mulyani added that the tax revenue target set in this year's State Budget was quite high. Therefore, the government planned to use data to disseminate the program.

The second tax amnesty program with a retribution rate of three percent ended on December 31, 2016. The Finance Ministry's Tax Directorate General had recorded 638,023 declaration letters with a total declared assets amounted to Rp 4,295.8 trillion (US$322.9 billion).

The total amount of repatriated funds was Rp 141 trillion (US$10.8 billion). Of the total value of declared assets, Rp 1,013 trillion (US$76.1 billion) was foreign assets and Rp 3,143 trillion (US$236.3 billion) was domestic assets. However, the achievement was still below the first period of tax amnesty program and missed the target set by the government.

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Financial Authority To Allow IPO Submissions At Local Offices
The Jakarta Post, 17/01/2017

The Financial Services Authority (OJK) will allow initial public offering (IPO) registration statements to be submitted to its local offices in a bid to encourage more local companies to list their shares on the Indonesia Stock Exchange (IDX).

"Legally, there is no regulation that prohibits such a submission," OJK commissioner for capital market supervision Nurhaida told a media briefing in Jakarta on Monday. "I have talked with our team and they're ready to receive the submissions starting tomorrow."

Currently, local companies wishing to go public have to submit their applications to the OJK's headquarters in Jakarta. Such a requirement often hampers the process.

Nurhaida expressed the hope that the relaxation would encourage more local companies to carry out IPOs.

The IDX has pledged to cooperate by opening more going-public information centers, aiming to have a center in all provinces nationwide, up from only five currently so that firms' representatives do not need to fly to Jakarta to seek IPO-related information.

"Proposed listed firms' [representatives] usually can't get into the bourse building because the [security] is just like that in the Pentagon," IDX president director Tito Sulistio said, describing the difficulties faced by the firms.

The bourse has recorded a decline in IPOs in recent years. Sixteen new IPOs were recorded last year and only 15 in 2015. The number of companies going public stood at 30 and 20 in 2013 and 2014, respectively. It expects to see 35 IPOs this year while the OJK expects only 21.

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Processing Industry Boosts Export Value
Tempo, 17/01/2017

The Central Statistics Agency (BPS) announced a trade surplus of US$8.78 billion in 2016. This is an increase from 2015's surplus of US$7.7 billion. According to the agency, the processing industry served as the backbone of last year's trade, contributing 76 percent of the total exports value.

BPS chief head said that although most of the processing industry players raised their production, the price of goods continues to rise. He refers to the value of CPO-based mineral fuels that jumped 9.0 percent to US$1.69 billion in December, "although production is stagnant," he said on Monday, January 16.

At the end of the year, BPS recorded a trade surplus of US$990 million. Despite the overall surplus, Suhariyanto said there were deficits in the oil and gas as well as agriculture balance.

"The price of raw commodities has not improved," he said.

BPS recorded a deficit of US$ 300 million in the export value of agricultural products like coffee, pepper, seaweed, and fresh fish, compared to last year.

Suhariyanto also mentioned the sluggish global economy that weakened export demand weakened, as well as the lack of market expansion for Indonesian products in countries outside the United States, China, and countries in Southeast Asia.

Other than palm oil, the trade of machinery and mechanical devices, iron and steel, recorded a transaction decline of 17-28 percent at the end of 2016.Although the price is slowly rising, Indonesia can no longer rely on oil-gas and mining commodities, as they only accounted for 9.0 percent and 12.5 percent to the total export value.

Coordinating Minister for Economic Affairs Darmin Nasution said the trade surplus is a sign of economic improvement. Darmin believes that imports will rebound in the near future, following the government's spending activities in the start of 2017. "Global trading is showing a tendency for improvement," he said.

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Japan To Submit Proposal For Railway Project
Antara News, 17/01/2017

Japan will submit an initial proposal to cooperate in the revitalization of the Jakarta-Surabaya railway  lines, Indonesian Transportation Minister Budi Karya Sumadi said here on Monday.

Based on the results of the meeting between President Joko Widodo and Japanese Prime Minister Shinzo Abe, the Indonesian government has requested Japan to draw up an initial proposal for the project on Javas north coast.

"The President has given an opportunity to the Japanese government to submit the proposal," he said.

Budi said the proposal would also contain a pre-feasibility study and agreement on the investment for the project.

He said the proposal from Japan would later be matched with the results of a study made by Indonesia's National Development Planning Board.

"We will conduct a study, while Japan also submits a proposal, and later the two will be matched," he said.

The minister said the Indonesian government has asked Japan to write an initial proposal as a prudential standard, in view of the value of the project, which is Rp80 trillion.

"This regards the future of the nation's transportation, so we have a prudential standard for it," he said.

Japan had earlier requested a government-to-government cooperation scheme for the project, but the National Development Planning Board has offered other funding options besides seeking funds from the national budget, such as a government to business cooperation scheme.

"The head of the National Development Planning Board has offered a government to business scheme, but Japan is still insisting on a government-to-government scheme," the Director General of Railway Service of the Ministry of Transportation, Prasetyo Boeditjahjono, said.

He added that Japan has continued insisting on the government-to-government scheme, because they considered it to be a quicker route to funding and development.

He said Japan thought it would be difficult to implement G-to-G or Business-to-Business schemes, because Japan knew more about transportation infrastructure development.

He said the greatest possibility for the implementation of the government-to-business scheme was for the procurement of facilities and maintenance, because it would be difficult to return the entire investment for the project.

"This is because the allocation of funding for facilities could reach 80 percent of the total cost of development, and that is huge. How will the investment be repaid?" he asked.

He also said the project, on the other hand, was different from a toll road development project, in which capital return is faster.

"The two projects are far different," he said.

In view of that, Prasetyo said the medium-high speed railway project was the obligation of the government.

"Until now, we have used the national budget as the reference to ease discussions," he said.

He noted that the decision, with regard to the funding of the project, would only be made after the feasibility study and detailed engineering designs were finished.

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Telecommunications Infrastructure Program Completed In 2019: Minister
Antara News, 17/01/2017

Communications and Informatics Minister Rudiantara said the government is set to complete the implementation of telecommunication infrastructure development program for eastern Indonesia in 2019.

The program is aimed at bringing down high telecommunications tariff in the eastern regions of Indonesia, the minister said.

"In 2019, we hope the tariff in eastern part of the country would not be too much higher than in western regions," he said after attending a dialog on the Law on Electronic Infomation and Transactions (ITE) at the University of Mataram, West Nusa Tenggara on Monday.

He said cellular telephone operators think that the cost of building telecommunication facility in eastern regions of Indonesia is much more expensive than in western part of the country.

"We hope when the infrastructure has been available with government subsidy, the tariff would not be far different in all regions of Indonesia," he said .

With the availability of the facility , e-commerce would expand equally all over the country with relatively cheap tariff, he said.

"In 2019, all regencies would have access to internet service, that we could push up development of small and medium enterprises to develop e-commerce," the minister said.
The ministry would team up with community groups, associations and organizations to develop and expand e-commerce, he said.

He predicted that e-commerce would contribute Rp1,500 trillion to the countrys economy in 2010.

"The government has prepared road map of e-commerce and associations would give accreditation," he said.

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Patimban Port Expected To Help Boost Automotive Exports
The Jakarta Post, 17/01/2017

The government expects the Patimban deep-sea port in West Java to help pave the way to boost Indonesia’s automotive exports in the future.

 “Patimban Port is expected to boost Indonesia’s automotive exports as Tanjung Priok’s capacity is already full,” Investment Coordinating Board (BKPM) chairman Thomas Lembong said over the weekend.

The port, construction of which will begin in 2018, will have a container capacity of 1.5 million 20-foot equivalent units (TEUs) once it is partly completed by 2019 and then 7.5 million TEUs by 2027, which is half the capacity of Jakarta’s Tanjung Priok Port, the country’s busiest port.

Data from the Transportation Ministry also show that the government plans to build a vehicle terminal within Patimban Port with a capacity of 485,000 completely built-up (CBU) units.

Last year, Indonesia exported almost 200,000 cars, seeing a slight decrease from 207,691 cars in 2015. Meanwhile, the country exported 248,065 motorcycles last year, up from 228,229 motorcycles in 2015.

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Mineral Boosts Non-Oil and Gas Exports in December 2016  
Tempo, 17/01/2017

The Central Statistics Agency (BPS) recorded that Indonesia's export value in December 2016 reached up to US$13.77 billion, increasing by 1.99 percent when compared to that in the previous month of US$13.50 billion.

BPS Chief Suhariyanto said that the increase in the export value was mainly supported by the non-oil and gas sector.

"The non-oil and gas contribution makes up 91 percent of the total export value," Suhariyanto said during a press conference held in Jakarta on Monday, January 16, 2017.

In December 2016, exports of mineral fuel increased by US$140.6 million or 9.06 percent to US$1.69 billion from US$1.55 billion in November 2016. Meanwhile, exports of jewelry and precious stones in December 2016 plummeted by US$132 million or 32 percent to US$280.5 million from US$412.5 million in November.

Exports of other commodities, namely mineral ores, crusts, and dust rose by US$99.4 million or 29.9 percent from US$340 million to US$440.1 million. Exports of rubbers and rubber products also climbed by US$73.4 million or 14.81 percent from US$492.2 million to US$568.6 million.

Iron and steel exports jumped by US$69.1 million or 44.82 percent from US$154.1 million to US$223.2 million. In addition, non-knit clothes exports increased by US$67.8 million from US$340.7 million to US$440.1 million.

In addition to jewelry, other commodities that experienced a decline in export value were vehicles and parts, which was down by US$98 million or 17.26 percent from US$567.8 million to US$469.8 million. Exports of machines and electrical equipment also declined by US$74.9 million or 10.44 percent from US$716.8 million to US$641.9 million.

Exports of machines or mechanical plane declined by US$38 million or 8.3 percent from US$458.3 million to US$420.3 million. Export of other products made of iron and steel declined by US$35 million or 28.52 percent from US$122.8 million to US$87.8 million.

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EARTH WIRE -- Bonn Challenge To Discuss Water Channels In Plantation Areas
Antara News, 17/01/2017

Indonesia will host the Bonn Challenge in the South Sumatran city of Palembang to discuss water channel problems on plantation and forest areas.

The Special Staff on Climate Change for the governor of South Sumatra, Najib Asmani, said on Monday that the issue was chosen for discussion as the problem is still present in Indonesia. According to Asmani, disorganized water channels in some plantations are the cause of some water shortages.

The organization, says Asmani, consists of environmental experts from various countries. "Good water channels are needed by plantation and forest areas," Asmani added.

He also said that proper water channels can support environmental preservation in forested areas.

At least 30 countries committed to environmental issues will join the Bonn Challenge that will be held in Palembang City on either March or April in 2017.

President Joko Widodo previously urged the Ministry of Environment and Forestry and the Ministry of Agriculture to rigorously enforce their policies regarding the preservation of ecosystems in utilized areas of peat land, while considering the welfare of the local population.

Jokowi also specifically asked for the maximum protection of the 6.1 million hectares of unutilized peat land.

According to the website www.bonnchallenge.org, the Bonn Challenge is an international effort to restore 150 million hectares of deforested and degraded land around the globe by 2020, and 350 million hectares by 2030.

It aims to put issues such as water and food security and rural development at the top of national priorities for member states, as well as climate change, biodiversity and land degradation.

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Indonesia Focuses On UAV Development For Border Security
The Jakarta Post, 17/01/2017

Minister of Research and Technology Mohammad Nasir said that the government is focused on the development of Unmanned Aerial Vehicles (UAV) (drones) to strengthen the defence and security at the nation's border.

"The Ministry of Research and Technology is focused on its development, while the Ministry of Defence will be in charge of its application," Minister M. Nasir said here on Monday.

The Ministry of Research and Technology is working, together with Bandung Institute of Technology, National Institute of Aeronautics and Space (LAPAN), and Technology Assessment and Application Agency (BPPT), in developing the technology and innovations used in the UAV.

Meanwhile, PT Pindad and PT Dirgantara Indonesia will be in charge of the production of the UAV.

The innovations and advanced technology of the UAV are expected to significantly improve security at the border area and along Indonesias outer islands, as well as to maintain the nation's sovereignty, the minister said.

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