Update News November 22, 2016

In The News

APEC Leaders Agree On Indonesia`s Proposal
Antara News, 22 November 2016

The leaders of Asia Pacific Economic Cooperation (APEC) have agreed to Indonesias proposal on the development of rural areas and the prevention of poverty.

"Rural development is a productive development. I talk a lot about productive development," Vice President Jusuf Kalla said here on Sunday.
These issues have been included in the joint communique to be issued by the leaders of the Asia Pacific Economic Cooperation (APEC).

Pointing out that agricultural development will help achieve regional food security, the vice president noted: "Therefore, we should focus on the development of rural areas."

He underlined that the APEC member countries have expressed their commitment to develop the economy jointly, as stated in the Bogor Goals.
The vice president and other leaders also met the representatives of the International Monetary Fund (IMF).

"The IMF has predicted that the world trade will drop below three per cent," the vice president stated."So, all countries should improve their national economy in order to achieve global economic efficiency," the vice president counseled.

Indonesia understands that implementation of free trade mechanism in the Asia Pacific region should be based on the principles of resilience, inclusiveness and innovation, connectivity, and equitableness (RICE).

"In order to implement free trade, as the APEC declarers in Bogor indicated, we would continue to seek partnerships in keeping with the RICE principles," Vice President Jusuf Kalla pointed out during the first session of the APEC leaders in this Peruvian capital city on Sunday.

At the meeting of 21 APEC economic leaders, Kalla emphasized that amid the ongoing economic slowdown, Indonesia is set to try and achieve the "Bogor Goals" agreed upon by APEC leaders 22 years earlier.

He reminded that Indonesia is already carrying out a number of liberalization programs and has brought about many changes over the past several decades. As a result, the country has been able to cut import duties on goods from countries of the region.

"Indonesia has even jumped several ranks to figure among 10 countries where it is easiest to do business, according to a World Bank report.

A survey by the United Nations Conference on Trade and Development (UNCTAD) in 2016 said Indonesia was the 9th most attractive country for investors. This reflected the progress made since 2014 when Indonesia was ranked 14th," he recalled.

He explained that countries have to contend with three factors to cope with the global economic slowdown and growing protectionism."First is that free trade and investment need to be expanded and economic integration must be comprehensive.

This would need consultations and coordination between the legislative, executive and community elements, nationally as well as regionally," he added.Second, there should fair opportunity and healthy competition to boost economic growth, he continued.

Third, micro, small and medium enterprises, farmers, fishermen, unskilled workers and local business people need to be involved in the process of ensuring regional free trade and investment, he concluded.

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Sharia Banks` Assets Reach Rp331 Trillion
Antara News, 22 November 2016

The total assets of the Indonesian sharia banking industry in the third quarter of 2016 reached Rp331 trillion, accounting for 5.13 percent of the national banking industrys assets.

"The figure outstrips the target set by OJK (Financial Service Authority) at 5 percent," Chief of OJK Regional Office in Northern Sumatra Lukdir Gultom said at a campaign "I Love Sharia Compliant Finance (ACKS)" here on Sunday.

By campaigning for sharia compliant finance continuously, the public will increasingly be acquainted with and love sharia financial products and services and that the sharia banking industry will grow at a faster pace, he said.

OJK continued to encourage the sharia compliant financial service industry covering banks, non-bank financial institutions and the capital market.

"To date, Indonesia has a total of 13 sharia commercial banks, 21 sharia business units, and 165 sharia rural banks. We will try to increase their number," he said.

Chief of the Financial Bureau of the North Sumatra Provincial Government Agus Triyono said the sharia banking industry has now offered products and services as good, complete and modern as conventional financial products and services."North Sumatra whose majority of population are Muslim has the potential to become a hub for national sharia banking industry," he said.

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Franchise Transaction Value to Grow 20% in 2017
Tempo, 22 November 2016

"Especially with the presence of the ASEAN Economic Community (AEC), which makes things easier for foreign franchisers to tap into Indonesia's markets," the Indonesian Franchising and Licensing (Wali) chairperson Levita Supit said.

According to Levita's estimate, the franchise industry's transaction value grows on an average rate of 10-15 percent a year. However, in 2017, the increase is estimated to reach 20 percent, with regards to the projected improvement in the national economy.

Meanwhile, foreign franchisors see Indonesia as a sexy market, Levita said, given the huge population and the state's positive economic conditions.

Owners of local franchises are considered quite innovative and creative in creating products or services to offer. The Trade Ministry's records show that there are currently more than 600 franchises throughout Indonesia.

Of that total, 400 are foreign franchises. The number of outlets reached 24,400 with a total turnover of Rp172 trillion in 2015.However, only 360 franchises have obtained a Franchise Registration Certificate (STPW); comprising of 308 foreign and 52 domestic franchises.

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Economy In Brief: Govt Issues ‘One-Price Fuel’ Regulation
The Jakarta Post, 22 November 2016

Energy and Mineral Resources Minister Ignasius Jonan has issued a ministerial regulation on the acceleration of the one-price fuel policy, to be implemented in January 2017.

The types of fuels covered by the regulation are subsidized diesel and kerosene, and Premium-branded fuel with a registered octane number (RON) 88 specification. According to the regulation, which was issued on Friday, the ministry will set the floor price and retail price for the fuels.

President Joko “Jokowi” Widodo has declared that the one-price fuel policy, announced during his visit to Papua in October, is aimed at bringing justice for all Indonesian people.

In accordance with policy, fuel prices sold at filling stations for by distributors and agents outside Java will be the same across the country at Rp 6,450 (48 US cents) per liter for Premium, Rp 5,150 per liter for diesel oil and Rp 2,500 per liter for kerosene.

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Transjakarta`s New Route to be Ready in 2017
Tempo, 22 November 2016

The Transjakarta bus stops connecting Ciputat-Tendean are planned to be operational early next year. President Director of PT Transportasi Jakarta (Transjakarta) Budi Kaliwono said the construction of the 9,3 kilometers route is expected to be completed by the end of this year.

However, Budi stated a number of flyovers that are not yet connected. “Maybe it’ll be done this year, (and) it will be operational next year. There are a number of routes that are not yet connected, “ he said on Sunday, November 20, 2016.

According to Budi, Transjakarta is currently waiting for instructions from Binamarga Department and Department of Transportation related to the corridors’ operations. “Because there has no further information [about it], yet we are being included in the designing of the bus stops and other matters,” he said.

Budi has yet received the information on the number of operational buses that would be utilized to fill the new corridor next year. Currently, PT Transjakarta is running 1,200 buses in 12 corridors and will be added to 3,000 units.

The 9,3 kilometers flyover of Ciledug-Kapten Pierre Tendean that is planned to be used for Transjakarta's new corridor will be covering Ciledug, Kebayoran Lama, Trunojoyo, up to Tendean. The construction is split into eight segments that are constructed by different contractors in each segment.

The Ciledug-Tendean flyover that was first constructed in 2014 is planned to have 12 bus stops; 3 of them will be equipped with the combination of escalators and stairways. Bus stops with the height below 13 meters will only be equipped with stairways.

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New Pekanbaru Power Plant To Start Working In December
The Jakarta Post, 22 November 2016

Three years after the beginning of construction, the Tenayan coal-fired power plant (PLTU) in Pekanbaru, Riau, is set to commence operations next month, with President Joko "Jokowi" Widodo scheduled to attend the firing-up ceremony.

Speaking to reporters on Monday evening during a visit to the facility, state electricity company PLN's business director for Sumatra, Amir Rosidi, said the power plant, which is designed to generate up to 2 x 110 megawatts (MW) of electricity, was scheduled to start on Dec. 9.

"The construction of the power plant's Unit 1 was completed in April and Unit 2 four months later," he told reporters, adding that the facility was currently undergoing a series of commissioning tests.

To boost the country's electrification ratio, President Joko "Jokowi" Widodo's administration wants to build enough new power stations to produce an additional 35,000 MW of electricity by 2019.

Of the figure, 18,000 MW are actually new projects offered to private investors, while the remaining 7,000 MW are a carryover from president Susilo Bambang Yudhoyono's term and 10,000 MW are PLN's share.

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Villages To Spearhead Tourism Development
The Jakarta Post, 22 November 2016

The government will pin its hopes on boosting the number of foreign visitors by empowering villages to develop ecotourism and their respective unique cultural heritage.

Teaming up with the Villages, Disadvantaged Regions and Transmigration Ministry, the Tourism Ministry is expected to make use of the Rp 89 trillion (US$6.8 billion) of so-called village funds next year to be directed toward the improvement of tourism infrastructure.

The villages ministry’s director general for development and empowerment of villages, Ahmad Erani Yustika, believes that the so-called “Tourism Village” program is intended to boost the potential for tourism that is unique to certain areas.

Erani said that many villages were unaware of their tourism potential, be it natural or cultural.“For example, villages with abundant water resources can develop ecotourism destinations,” he said.

The village funds can be used for community entrepreneurship, standardization of tourism services and infrastructure development.The funds can also be used to boost the number of amenities, such as hotels and souvenir-production centers in each village.

Under the program, every village is entitled to received Rp 1 billion annually next year for infrastructure development. Village leaders, with the approval of their residents, will have the authority to decide on the type of infrastructure to be built in their areas.

In relation to tourism infrastructure, the village ministry has recorded around 150 villages that have focused their village funds on developing tourism, while most of the villages spent the funding to improve road networks, information and technology infrastructure, Ahmad said.

The villages ministry will focus on expanding tourism infrastructure particularly in 10 emerging destinations that include Morotai in Maluku, Mandalika in West Nusa Tenggara and Borobudur Temple in Central Java next year.

President Joko “Jokowi” Widodo’s administration aims to expand tourism to account for at least 15 percent of GDP by 2019, up from 9.3 percent at present.

Tourism, now the fourth-biggest contributor by sector to GDP, is also expected to bring in $20 billion in foreign exchange income by 2019, from the current $10 billion annually.

The government’s efforts were acknowledged by the World Bank in its Indonesian economic quarterly report, which said the country had the potential to develop world-class tourism, benefiting from its abundant endowment of tourist destinations and building on the success of Bali.

Tourism is also expected to generate significant employment and income multipliers for Indonesia, which could contribute to eliminating poverty and increasing shared prosperity in the country.

Tourism Ministry deputy for organizational development Ahman Sya said that efforts to boost tourism at the village level would strengthen the priority destinations.“We have chosen the villages around Borobudur, Tanjung Lesung [in Banten], to cite a few, as pilot projects,” he said.

Tourism analyst at the University of Indonesia Jajang Gunawijaya said the government should prioritize the development of IT infrastructure to expand internet capacities in villages as one the easiest ways to boost tourism in the short term.

“Tourist resorts and attractions are usually in villages rather than cities. That’s why infrastructure in these areas should now be a priority,” he said.

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12th Indonesian Palm Oil Conference to Discuss Market Trends, Developments
The Jakarta Globe, 22 November 2016

The 12th Indonesian Palm Oil Conference, which is the biggest annual conference of its kind, is set to take place at the Westin Resort in Nusa Dua, Bali, this week.

The conference with the theme "Palm Oil Development: Harmonizing Market, Society and the State," is organized by the Indonesian Palm Oil Association (Gapki), and expected to be attended by more than a thousand delegates from more than 30 countries. The three-day conference, which starts on Wednesday (23/11), will also highlight the 2017 Palm Oil Price Outlook.

This will see prominent speakers unveil palm oil market trends, current developments in the sector as well as the price outlook for the next year. Indonesia is the world's biggest palm oil producer and exporter.

"There are about 6 million families that depend on the palm oil industry for their livelihoods. That means about 24 million people live off the sector," conference charwoman Mona Surya said in a statement received by the Jakarta Globe.

Mona said through a positive campaign that is continuously being promoted, the public can realize the strategic role of the palm oil industry in the nation's economy. The sector is also a major contributor to the state coffers.

"Contributions to foreign-exchange revenue through exports amount to about $18.5 billion [per year]. This sector is the biggest forex revenue contributor in the country," she said.

Gapki chairman Joko Surpiyono, Coordinating Economic Affairs Minister Darmin Nasution, Land and Spatial Planning Minister Sofyan Djalil and Trade Minister Enggartiasto Lukita are also expected to attend the conference.

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Indonesia Struggling To Maintain Tea Production
The Jakarta Post, 22 November 2016

State-owned plantation firm PT Perkebunan Nusantara (PTPN) VIII is planning to establish cooperation with various research institutions next year in an effort to improve productivity levels in the company’s tea plantations amid recent volatile weather conditions.

The company will also continue its collaboration with a biotechnology research institution in Bogor, West Java, to find the right technology that could boost the annual productivity of its tea plantations, which amounted to only 1,200 kilograms per hectare last year as a result of the El Niño weather phenomenon.

“Technology introduced by the institution will help us to maximize the number of plucking points. For instance, with our current system, a 1-square-meter plot can only produce 200 plucking points.

With the new technology, it could increase to 350 plucking points,” PTPN VIII operation director Tatang Supriatna said in a discussion on Monday.

Tatang explained that the major threat to tea plantation productivity was climate change, which caused the temperature around the company’s plantation areas rise by 5-7 degrees Celsius.

“This is a big challenge for the industry since the growth of tea plants will be heavily influenced should the temperature be higher than 27 degrees Celsius,” he said.

The government’s plantation business is operated by 14 state plantation firms nationwide, with Medan-based PTPN III serving as the holding company.PTPN VIII, which is based in Bandung, West Java, currently manages over 40 plantations in 11 regions in the province and two other regions in Banten.

Its annual production capacity ranges from 45,000 to 50,000 tons of tea, around 40 percent of the national’s total production of 129,000 tons in 2015. Nearly 90 percent of the company’s production output is exported to countries in the Middle East and Europe.

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Urbanites Urged to Minimize Ecological Footprint: WWF Indonesia
The Jakarta Globe, 22 November 2016

After revealing that the world's wildlife population has plunged by almost 60 percent since 1970 as human activities overwhelm the environment, World Wildlife Fund Indonesia is urging Indonesian urbanites to minimize their ecological footprint.

According to WWF Indonesia, consumption of food and energy in urban areas contribute to the highest greenhouse gas emissions, making up 70 percent of total greenhouse gas emissions.

They are also the two main culprits affecting climate change according to the conservation group's annual Living Planet Report in October. “We often forget how much consumers living in urban areas with all the conveniences depend on nature,” WWF Indonesia acting chief executive, Benja Mambai said in a statement on Monday (21/11).

Benja also said that resources are limited and consumers have a responsibility to make the right choices in their daily consumption of products by actively seeking out the origin of products purchased and consumed.

Benja suggests that consumers should make better purchases by avoiding products which are harmful to the environment. This includes products which are made with destructive chemicals that harm the environment or produced by illegal logging or forest fires.

Benja also suggests purchasing eco-friendly products which are labeled accordingly. If the demand for eco-friendly products were to increase, then it would help drive the supply from retailers.

“The food system we adopt today enables industry players to gain power over natural resources and capital, ignoring the environmental and social factors of production and food distribution patterns.

This would increase the ecological footprint, which is almost uncontrollable, and [causes] economic inequality,” WWF Indonesia’s social development strategy leader, Cristina Eghenter, said.

Transportation is also a significant factor, as 20 percent of Indonesia’s national energy consumption comes from transportation, according to the Ministry of Energy and Mineral Resources research in 2012. Transportation is also the third largest contributor to greenhouse gas emissions.

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