Update News Jauary 10, 2017

In The News

Rupiah Strengthens to Rp13,357 per-U.S. Dollar
Tempo, 10/01/2017

Rupiah strengthened to trade for Rp13,357 per U.S. dollar or up by 23 points on Monday morning, January 9, 2017.

“Rupiah has started to get its momentum back, an optimistic sentiment on commodity prices has increased the attraction of rupiah-denominated assets,” says an Economist from Samuel Sekuritas, Rangga Cipta.

Bank Indonesia has placed its trust once again in the domestic economic growth amidst the decreasing global uncertainty. It stated that there is room for a monetary easing.

From the external sector, Rangga explained, the underperforming U.S. economic data has pressured the U.S. dollar, which is parallel with the drop in the U.S. Treasury yields.

An analyst at Binaartha Sekuritas, Reza Priyambada, says that the increased trade balance deficit and the lack of orders received by U.S. based companies have also affected rupiah’s progress.

Other than that, uncertain trade relations between the U.S and China has caused market players to designate themselves at the market of developing nations.

"The Trump Effect has also weakened since the U.S. President-elect Donald Trump has yet to realize his policies which caused the investors to once again invest in developing countries including Indonesia,” he said.

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Gov`t to Step Up Industrial Area Development in Sulawesi
Tempo, 10/01/2017

Industry Minister Imam Haryono plans to step up development of three industrial areas this year, namely Bitung Industrial Area in North Sulawesi, Konawe Industrial Area in Southeast Sulawesi, and Palu Industrial Area in Central Sulawesi.

Imam said that the construction of infrastructure projects in the said industrial areas will become the government’s priority because investors are set to develop them. “An investor engaging in pharmaceutical business has expressed its interest [to invest] in Bitung,” he said.

The minister added that investors engaging in essential oil processing and rubber are also interested in operating in Bitung Industrial Area.

Three out of 14 priority industrial areas outside Java have started operations, namely the industrial areas of Sei Mangke in North Sumatra, Morowali in Central Sulawesi, and Bantaeng in South Sulawesi.

Meanwhile, the remaining priority industrial areas are still in the planning phase, namely the industrial areas of Teluk Bintuni in West Papua, Buli in North Maluku, Ketapang in West Kalimantan, Landak in West Kalimantan, Batu Licin in South Kalimantan, Tanggamus in Lampung, Kuala Tanjung in North Sumatra, and Jorong in South Kalimantan.

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Repatriated Funds Boost Indonesia`s Forex Reserves
Tempo, 10/01/2017

Bank Indonesia (BI) reveals that Indonesia’s foreign-exchange reserves as of December 2016 stood at US$116.4 billion, an increase compared to the preceding month of US$111.5 billion. Repatriated funds in the tax amnesty program were among the contributors.

“Foreign-exchange reserves were boosted by the foreign fund inflow in the financial market concurrently with repatriated funds,” local lender Bank Permata economist Josua Pardede told Tempo on Tuesday, January 10, 2017.

December saw the end of the second period of the tax amnesty program. The Directorate General of Tax has announced that it has collected Rp141 trillion in repatriated funds in the tax amnesty program.

The issuance of US$3.5 billion global government bonds in December also helped bolster foreign-exchange reserves. Meanwhile, foreign net buy was recorded in the bond market at US$754 million.

“There was also a decrease in capital outflow through the capital market,” he said. According to Josua, rupiah exchange rates throughout December were relatively stable even though it weakened 0.7 percent at one point compared to the preceding month.

Increased foreign-exchange reserves also represent improved exports in December. Government debt is expected to decline. “BI’s monetary operation tends to accommodate [yield] in the auction of SBBI [Indonesia’s foreign exchange bill] amounting to US$320 million compared to the preceding month of US$310 million.”

All in all, Josua foresees an increase in foreign-exchange reserves for 2017 albeit at a lower year-on-year figure. “It will be affected by improvement in current account deficit [CAD] and drop in capital balance on the balance sheet,” he said. The factors will result in a lower balance of trade.

Josua, however, is hopeful that strong fundamentals of Indonesian economy can sustain potential global risks. “Meaning that foreign-exchange reserves at the end of 2017 are expected to stand at around US$115-120 billion.”

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Jokowi Expects Batang-Semarang Toll Road to Finish Before Eid
Tempo, 10/01/2017

During his visit to the location of the Batang-Semarang toll road project, President Joko "Jokowi" Widodo hoped that the toll road can be completely operational for the 2017 Eid Al-Fitr annual homecoming.

Jokowi expressed his optimism towards the project because all land acquisitions related to the project will be finalized in February. "If land acquisitions are done, it means that the construction has been accelerated through two to three shifts," Jokowi said on Monday, January 9, 2017.

Furthermore, President Jokowi also revealed that land acquired throughout Batang District has been completed.

The process will continue to regions in Kendal and Semarang. "The land acquisition process went quickly because it is supported by laws and regulations," Jokowi said.

Construction of the Batang-Semarang toll road is divided into five sections. The first section will cover 3.2 kilometers of road construction in East Batang while section two covers 36.35 kilometers of toll road connecting East Batang and Weleri.

Section three and four will cover the construction of 11.95 kilometers of toll road from Weleri to Kendal, and a 13.5 kilometers of toll road connecting Kendal and Kaliwungu, respectively.

Meanwhile, section five will connect Kaliwungu and Krapyak with 10.9 kilometers of toll road.

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Indonesian Govt To Start 392 Kilometers Of Toll Roads This Year
Antara News, 10/01/2017

The Indonesian government is targeting to start the operation of new toll roads, spanning a total of 395 kilometers (km), across the country this year.

A total of 172.9 km of toll roads became operational in the last two years, Minister of Public Works and Public Housing Basuki Hadimuljono stated in the midst of a working visit alongside President Joko Widodo (Jokowi) in Batang on Monday.

A total of 567.9 km is projected to become operational by the end of 2017. Furthermore, he revealed that the ministry is optimistic of making 1,182.7 km of toll roads operational in 2018 and 1,851.4 km in 2019.

"Thus, we can hopefully achieve our target to build 1,000 km of toll roads in the next five years, even surpassing it and reaching 1,851.4 km," he remarked.

According to data released by the Ministry of Public Works and Public Housing, 34 sections of toll roads will officially become operational in 2017, including section 1 (Pangkaljati-Jakasampurna) of the Bekasi-Cawang-Kampung Melayu route, section 3 (Bawen-Salatiga, 17.6 km) of the Semarang-Solo route, section 1 of the Solo-Mantingan route segment Sragen-Mantingan (21.35 km) and section 2 (Mantingan-Ngawi, 34.2 km), as well as the Kartosuro-Karanganyar segment of the government-funded Solo-Ngawi route.

Some of the longer toll roads, scheduled to officially open this year, include the first to third sections of the Ngawi-Kertosono route, with a total of 49.51 km, and section two (Jombang-West Mojokerto, 19.9 km) of the Kertosono-Mojokerto route.

Several new toll roads will also become operational on the island of Sumatra this year, including the second section (Helvetia-Semayang, 6.18 km) and third section (Semayang-Binjai, 4.28 km) of the Medan-Binjai route, section 1 (Palembang-Pamulutan, 7.75 km) and section three (KTM-Simpang, 9.28 km) of the Palembang-Indralaya route, as well as seven different sections of the Medan-Kualanamu-Tebing Tinggi route, with a total of 61.75 km.

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Jakarta LRT To Be Operational In Two Years
Antara News, 10/01/2017

The first phase of Jakarta Light Rail Transit (LRT), a type of rapid transit that uses electric-powered trains, will certainly be ready for operation in the next two years.

Started in September 2015, the first phase, connecting Dukuh Atas in downtown Central Jakarta with Cibubur in East Jakarta, is confirmed to be operational in 2019.

The construction of the Jakarta Light Rail Transit was launched as a substitute for the Jakarta Monorail project which was planned in early 2000s and started construction in 2004 but immediately stalled due to lack of funding., the Jakarta Light Rail Transit is meant to ease the congestion of the capital citys gridlock traffic.

Transportation Minister Budi Karya Sumadi remarked in a written statement received here on Monday that the first phase of the LRT project can be completed in 2018 in order to be in operation in March 2019.

To ease traffic congestion, the government has planned the construction of mass transport projects, including an 83.6 kilometer Light Rail Transit (LRT) for the Jakarta, Bogor, Depok, Tangerang, and Bekasi (Jabodebek) area.

The first phase of the LRT project is to cost some Rp11.9 trillion for the three tracks -- Cibubur-Cawang line covering 13.7 kilometers (kms), Cawang-Dukuh Atas, 10.5 kms and the Bekasi Timur-Cawang line covering 17.9 kms.

The second phase will travel through Cibubur-Bogor, Dukuh Atas-Palmerah Senayan and Palmerah-Grogol for 41.5 km, and will cost the same as the first phase.

The LRT is a rail-based means of transportation that is eco-friendly and built to operate above roads and highways.

President Jokow has said it will be integrated with all other public transport in Jakarta, including TransJakarta, airport railway and the Jakarta-Bandung speed train.

The transportation minister appreciated the construction of the LRT by using the latest technology, Precast.Precast technology is a smart way to build any type of buildings, safely and affordably.

Originally developed in the Nordic countries, modular precast is one of the world's most common and resource-efficient ways to build.

This technology ensures faster construction times, higher profitability and better quality. Precast also has lower lifetime costs than any other building solution.

"With Precast, Indonesia is more advanced because such a technology has just been used by several countries in Asia, such as China, Hong Kong, Singapore and Japan," Minister Sumadi remarked.

The Light Rail Transit is a rail-based means of transportation that is eco-friendly and built to operate above roads and highways.

It is integrated with all other means of public transport in Jakarta, including TransJakarta, airport railway and the Jakarta-Bandung speed train, according to President Joko Widodo (Jokowi). Due to this, work to build the mass transport infrastructure should be completed on schedule, the president has said.

The President also expressed his optimism about the LRT project not being stalled like the monorail project, which had faced numerous impediments. In comparison, the LRT project was said to be running relatively smoothly, the President stated after the groundbreaking ceremony of the LRT project in East Jakarta in 2015.

Since the beginning, it has not encountered any problems. It is different from the monorail project that was plagued by issues, which must be parsed. It is not easy to unravel these problems in a short period of time.

The President also explained that the rest of the monorail project, such as the pillars, which had been built, will be used for the LRT project.

Jokowi refused to comment on the problems faced during the implementation of the monorail project and decided to delegate affairs to Jakartas Governor.

Jakartas Governor, Basuki Tjahaja Purnama, popularly known as Ahok, was also present at the ceremony and insisted that the problems related to the monorail project had been addressed.

Moreover, the President has set a deadline for Ahok to complete the LRT project in Jakarta by 2018 when the city will host the Asian Games, so that it can be integrated with the LRT in Jakartas satellite towns. Nine state companies collaborate for the development of the LRT in the Greater Jakarta area.

The synergy between state companies is needed in land development, financing, construction, and operation, to create added value, both for the corporations and the people. PT. Adhi Karya has allocated Rp 2.75 trillion (US$ 193 million) as initial capital for the project.

The other eight companies involved in the project are publicly listed PT Jasa Marga, Perum PPD, PT Rajawali Nusantara Indonesi (RNI), Perum Bulog, PT Bank BNI, PT Bank Mandiri, PT Bank BRI, and PT Bank BTN.

PT Jakarta Propertindo, a company owned by the Jakarta city administration, is also involved in the construction of the Rp23.8 trillion mass transport project to ease the traffic congestion in Jakarta.

As a solution to this problem, the authorities have provided a number of public transportation means, such as the Trans-Jakarta bus service and commuter train KRL Jabodetabek to serve the Greater Jakarta or Jabodetabek.

And now, the presence of the Jakarta LRT is expected to resolve the grave traffic congestion that has inflicted material loss of some Rp65 trillion annually.

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Pelindo, Japan to Operate Patimban Port
Tempo, 10/01/2017

Transportation Minister Budi Karya Sumadi said that the Patimban Port development project in Subang, West Java, will be handed over to state-owned port operator PT Pelindo II and Japanese investors.

Although the Japanese partner has not been selected yet, the Transportation Ministry is currently discussing the detail engineering design (DED) with the Japan International Corporation Agency (JICA).

"Now we need to decide on the technicality, since JICA wants us to do so," Budi said at the Coordinating Maritime Affairs Ministry on Monday, January 9, 2017.

After the DED is decided, the Transportation Ministry will later select Pelindo's partner to handle the Patimban Port project.

Budi hopes that the decision on the Japanese partner will be made in a few days, so that the deals can be signed during Japanese Prime Minister Shinzo Abe’s visit to Indonesia in mid-January.

The Ministry estimated that the DED would be completed in the second semester of this year, so that the groundbreaking can be conducted in the fourth quarter.

Pelindo II director Elvyn G. Masassya estimated that project would cost Rp 40 trillion (US$3 billion), and Pelindo's shares in the project would be 51 percent of the total investment.

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Indonesian Government Pushing for Clean Energy Use
Tempo, 10/01/2017

Energy and Mineral Resources Minister will push for clean energy use amid growing pressure on Indonesia over the reduction of coal use for power plants.

Last week, European financial service companies canceled their investment in coal-fired power plant (PLTU) projects for environmental reasons.

Energy and Mineral Resources Ministry spokesman Sujatmiko said that the government is aiming to cut the target of coal-fired power generation from 42,000 megawatts (MW) to 35,000 MW by 2025. “On the other hand, the use of natural gas will increase by 24 percent,”

Moreover, Sujatmiko said that the government will step up development of mine mouth coal thermal power plants. He said that it was more efficient and cleaner because it will be located at mining area.

Earlier, European financial service companies withdraw from financing Indonesian PLTU projects. Having agreed to limit global warming to 2 degrees Celcius as set forth in Paris COP 21 agreement, Societe Generale has canceled plans to finance development of PLTU Tanjung Jati B in Jepara, Central Java. Credit Agricole has also canceled the loan for PLTU Jawa 1 project in Cirebon with a capacity of 1,000 MW.

Energy Minister Ignasius Jonan said that clean energy will be the government’s main focus. However, he said that the government will have to evaluate the price to make it competitive against fossil fuel.

State-owned electricity company PT PLN procurement director Supangkat Iwan Santoso confirmed the development of mine mouth coal steam power plants will be included in the planned revision to Electricity Power Supply Business Plan for 2017-2026 term. “We have submitted the proposal,” he said.

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Indonesia Hopes To Produce 9,500 MW Of Geothermal Power In 2025
Antara News, 10/01/2016

Geothermal power is expected to contribute 9,500 megawatts to the countrys energy requirement in 2025 when oil contribution is to be cutback by 30 percent.

Stability of production of geothermal power is more reliable as it is not affected by weather, Deputy Minister for Energy and Mineral Resources (ESDM) Arcandra Tahar said when visiting Pertamina Geothermal Energi (PGE) of Kamojang Area on Sunday.

The superiority in production stability makes geothermal power base load in electricity provision by state electricity company PLM for the public, Arcandra said. Production of geothermal power as a base load would continue at full capacity when the use of power at its lowest level, he said.

"Geothermal power plants (PLTP) could continue to operate at full capacity while oil fueled and coal fired power plants have to be shut down as bad weather," he said.

He said the challenge in the development of geothermal power is competitiveness of the geothermal power price.

The production cost of geothermal power is high making it less competitive in price facing power produced from other facility such as, gas, oil and coal fired power plants. Data at the Geology department of the ESDM Ministry showed that Indonesia holds the largest reserve of geothermal in the world.

The data said Indonesia has known geothermal reserves of 29 GWe found in 265 locations in the country or around 40 percent of the worlds reserves.

If the potential could be fully converted into reality, the country would save 1.2 million barrels per day needed to generate energy, Arcandra said.

Meanwhile, Operation Director of PGE Ali Mundakir said by the end of 2016, the installed capacity of PGE was 537 MW electricity equivalent. Four of 14 Geothermal Working Area (WKP), have been in operation by PGE. They are Kamojang Area in West Java, Sibayak in North Sumatra, Lahendong in North Sulawesi, and Ulubelu in Lampung.

Five other WKP are operated by its partners including Sarulla in North Sumatra, Gunung Salak, Darajat, Wayang Windu, all three in West Java and Bedugul in Bali, Ali said.

He said the Kamojang Area is the first WKP in Indonesia producing geothermal power. It started commercial operation with PLTP Monoblok built in 1987 with a capacity of 250 kWe officially commissioned by then Mining and Energy Minister Subroto.

Commercial operation of the PLTP in Kamojang started in 1983 with Kamojang Unit-1 coming on line (30 MW), followed by Unit-2 and Unit-3 in 1987 each with a capacity of 55 MW.

"The three units of PLTP are owned by Indonesia Power (IP), a subsidiary of PLN. PGE, therefore, sold geothermal steam to IP," Ali said.

The Unit - 4 of PLTP Kamojang came on line in 2008 with a capacity of 60 MW and PLTP Unit-5 in 2015 with a capacity of 35 MW.

PGE handled the jobs from explorations to development of the field as well as the construction and operation of the power plants."The output in electricity is sold to PLN which deals with the end users," Ali said.

Altogether the total installed capacity of the Kamojang Area is 235 MW electricity equivalent, supplied to the high voltage 150 KV cabel of the Java-Madura-Bali interconnection.

Ali said the Kamojang Area has received a citation of Proper Emas (Gold) from the Ministry of Environment and Forestry in six successive years from 2011 to 2016.

On that Sunday, Arcandra also visited Geothermal Information Center (GIC), PLTP operation areas, Kamojang Crater tourist area, and Kamojang Eagle Conservation Center (PKEK), built by PGE in cooperation with the Natural Resources Conservation Center (BBKSDA) of West Java.

Accompanying Arcandra included Director General for New and Conservation Energy (EBTKE) Ridha Mulyana and Geothermal Director Yunus Saefulhak.

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Indonesia Seeks To Boost Tourist Visits From Europe
Antara News, 10/01/2017

Indonesia is seeking to lure more European tourists to visit the country by promoting its national tourism industry in the Matka-Nordic Travel Fair 2017 that will be held from January 19-22 in Messukeskus, Helsinki, Finland.

"Indonesia has set the target of attracting at least 2.1 million European tourists to Indonesia," Deputy Assistant of Europe, Middle East, America and Africa Market Development of the Tourism Ministry Nia Niscaya said here Monday.

Pointing out that the travel fair will be held in Finland, Niscaya stated the Nordic countries, including Denmark, Finland, Iceland, Norway and Sweden, offered great potentials for the countrys tourism industry.

In 2015, the official data showed that as many as 98,960 tourists from the Nordic countries had visited Indonesia.

"The number is predicted to be more in 2016, as until October itself, the number of tourists from the Nordic nations visiting Indonesia had reached 95,196," Niscaya revealed.

During the largest travel exhibition in Northern Europe, Indonesia will showcase several industries that will present and promote the countrys tourism potential at the Pavilion Indonesia booth. Several Indonesian traditional dances will also be performed during the travel fair.

Visitors would also be invited to taste Indonesias traditional drink in the exhibition booth, Niscaya mentioned. "Using the tagline Wonderful Indonesia Explore Further, we want to showcase its biodiversity, unique handicrafts, music, variety of culinary delights, tourism destinations and most importantly, its diversity and the hospitality of the people," Niscaya explained.

The government of Indonesia has set a target of increasing the number of tourist visits from 9.5 million in 2014 to 20 million in 2019.

The country has also developed 10 prioritized destinations, namely Lake Toba in North Sumatra, Tanjung Kelayang in Belitung, Mandalika in South Lombok, Wakatobi in Southeast Sulawesi, Morotai in North Maluku, Seribu Islands in Jakarta, Tanjung Lesung in Banten, Borobudur Temple in Central Java, Mount Bromo in East Java, and Labuan Bajo in East Nusa Tenggara.

The government has also provided short stay free visa on arrival for tourists from 169 countries, including Finland, to increase the number of tourist visits.
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