Update News November 29, 2016

In The News

President Pledges To Further Increase Rural Fund Budget
The Jakarta Post, 29 November 2016

President Joko Widodo pledges to further increase the budget for rural fund to Rp120 trillion 2018 from Rp47 trillion this year.

"Next year the rural fund budget is already set Rp60 trillion. In the following year, we have calculated and I want it to double from the budget set for 2017," the president said when inspecting projects financed with rural fund in the village of Sumurgeneng, sub-district of Jenu, Tuban, on Monday.

He said the rural fund already gave multiplier effects on rural economy.

The plan is to increase circulation of funds in rural areas and the people would gain from the circulation, the president, who was accompanied by Minister for Rural development Eko Putro, Public Works and Housing Minister Basuki Hadimuljono, and East Java Governor Soekarwo, said.

He cited rural fund of Rp600 million of the village of Sumurgeneng plus district and provincial budgets of Rp400 million has propelled development of the local peoples economy.

"Although what we see are small things such as to harden village roads, improving irrigation systems , but money circulation in this village has exceeded Rp1 billion at Rp1.8 billion. Those are at is good figures," he said.

The president also said report from the Financial and Development Agency (BPKP) has also shown that rural funds have been used properly.

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Transport Minister Invites Denmark, Norway To Expand Sea Infrastructure
Antara News, 29 November 2016

Minister of Transportation Budi Karya Sumadi invites Danish and Norwegian corporations to establish partnerships with Indonesia in the sea transport infrastructure sector. To support this idea, the Minister said during a meeting event in Jakarta, Monday that he has decided to form a funding team specifically for transport investments.

"Denmark and Norway are homes to some of the most dominant sailing companies in the world and we would like to invite them to develop the Malacca Strait as well as our navigation and sailing sector," he said.

The Ministry of Transport will ask an Indonesian state-owned enterprise to work alongside Denmark and Norway in developing Malacca Strait. It is hoped for sailing activities in the Strait to go on smoothly in order to maintain sovereignty as well as shipping safety and security and preserving the marine environment.

Minister Sumadi then hoped for all 33 Danish and Norwegian companies who attended the event to cooperate with Indonesia in expanding the infrastructure sector.

The event itself was organized by the Ministry of Transportation and Ministry of Maritime Affair and Fisheries in partnership with the Embassy of Denmark and Embassy of Norway. Norwegian Ambassador to Indonesia Stig Traavik and Danish Ambassador to Indonesia Casper Klynge also attended the event.

There were 33 Danish and Norwegian corporations participating in the event, in which they offer business cooperation and investments to the Indonesian government and both private and public businesses. A signing was also carried out by both Ministries in regard to the prevention measures on illegal fishing the Strengthening of the National Fishing Fleet program.

Effort to heighten security for sailing activities in Malacca Strait have also been done by the government, in which the Transport Ministrys Sea Transports Directorate General made agreements with Singapore and Malaysia as sailors from the two countries often sail through the strait.

The Malacca Strait-Singapore route is a considerably crowded path, with up to 80,000 vessels passing back and forth every year, the path has become the meeting point for the boats and a lot of time it causes accidents.

Within the path, a Traffic Separation Scheme have been laid down, in which the deepest part of the Strait is used for vessel traffic from the West to the East while the most shallow area is used for traffic going from East to West as most of those vessels will already be empty.

However, Indonesia is yet to join the Traffic Separation Scheme services because the International Maritime Organization mandate says that navigation and scouting within the track are the Singapore and Malaysia Vessel Traffic Services jurisdiction.

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KAI To Serve 6 New Coal Companies In S. Sumatra
The Jakarta Post, 29 November 2016

State-owned railway company PT Kereta Api Indonesia (KAI) will expand its freight services in southern Sumatra starting next year and obtain six coal companies as new clients.

KAI’s spokesperson for southern Sumatra III division, Aida Suryati, said in Palembang on Monday that an agreement had been signed.

“The deal is sealed and we will start in 2017,” Aida said.

Aida refused to name the companies, but said they operated in Lahat, South Sumatra.

She said the six companies made a deal with KAI because transporting coal by train was more efficient than shipping it by truck.

The companies consider see the railway a better alternative because their coal trucks have to share the roads with private vehicles and they often experienced congestion.

KAI cooperates with coal companies like PT Bukit Asam, using designated routes from Tanjung Enim to Tarahan in Lampung and Tanjung Enim to Kertapati in Palembang, South Sumatra.

With the new cooperation, KAI will establish a designated route from Lahat to Kertapati.

“We don’t have to build anything new, the infrastructure is there,” she said.

In Lahat, the company cooperates with PT Gumay Prima Energi, which sends 3 million metric tons of coals 180 kilometers by railway from Sukacinta in Lahat to Simpang Station in Ogan Ilir regency, South Sumatra.

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W. Java Allocates Rp200 Billion For Ciletuh Geopark Infrastructure
Antara News, 29 November 2016

West Java provincial government has allocated Rp200 billion (US $ 14.8 million) for the development of infrastructure, including roads and bridges, to Ciletuh National Geopark in Pelabuhan Ratu, Sukabumi district, in 2017.

"We have developed the area since last year; we have built a road there with funds worth Rp90 billion. For 2017, we have allocated Rp200 billion for roads and bridges," West Java Governor Ahmad Heryawan said here on Monday.

The government would build a road along its coast stretching from Loji coast in Pelabuhan Ratu to Puncak Darma area.

"From Puncak Darma, it would descend and reach the main area of Ciletuh Geopark. Currently, we have footpaths," he said.

He expressed hope that the road construction could be completed by 2017 or 2018, and visitors could reach Ciletuh Geopark using the new road.

West Java government has signed agreements with various parties, including Sukabumi district administration, PTPN VIII, PT Biofarma, Perumahan Daerah (PD) Jawi, BJB Bank, Padjajaran University, to develop the area.

"Together, we will develop Ciletuh to become a Unesco Global Geopark, and we have prepared its documents," Heryawan stated.

Development of the 126 thousand hectares geopark would be integrated with the construction plan of Citarate Airport in Sukabumi, which is located near the geopark.

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Indonesia To Cooperate With Scandinavian Countries To Increase Maritime Innovation
Antara News, 29 November 2016

Indonesia will cooperate with Norway and Denmark to give a push to innovation in the maritime sector, Minister of Fisheries and Maritime Affairs Susi Pudjiastuti said here on Monday.

"Indonesia is a big country and with its proven potential in fisheries and maritime sectors, it will have cooperation with Norway and Denmark," she told a conference on Indonesian maritime innovation here.

She noted that the two Scandinavian countries are known as pioneers in the maritime field technology. The cooperation will help support the fishery industry through environment-friendly scientific and technological innovations.

She noted that sustainability is one of the aspects promoted by the Indonesian Ministry of Fisheries and Maritime Affairs.

This conference is expected to lead to cooperation with companies operating in the fisheries and maritime sectors in these countries. The conference is held concurrently with the ministrys monthly investment forum.

"I am glad that Norway and Denmark could participate today in the marine and fisheries business and investment forum that we hold every month," Minister Susi underlined.

Their participation came as a follow up to the visits undertaken by the representatives of the governments of Denmark and Norway to Jakarta last year and the invitation to the embassies of Denmark and Norway for the forum in January 2016.

The two European countries are expected to support Indonesias plan to develop its infrastructure and facilities in the catch fishery, marine surveillance, cold chain system and processing industry.

"With the help of Norway and Denmark, we will be able to develop the Indonesian fisheries and marine development sector to achieve the Indonesian governments vision of becoming a maritime country," Susi noted.

Thirty-three companies from Denmark and Norway, which attended the conference, would offer business and investment cooperation to the Indonesian government and businesses, including state-owned and private businesses in the fisheries and maritime sector.

The Ministry of Fisheries and Maritime Affairs and the Ministry of Transportation are also scheduled to sign cooperation agreements as part of the efforts to eradicate fish poaching by empowering the national fishing fleets.

Among the forms of cooperation that have been agreed upon is optimizing the implementation of tasks and functions of parties to expedite the process of measuring again the size of fishing boats and ensuring integrated licensing.

As a follow up to the signing of the cooperation pact, a joint decree of ministers of fisheries and maritime affairs and transportation to ensure one-stop administrative service will be issued.

Transportation Minister Budi Karya Sumadi stressed that he hoped the cooperation with the Ministry of Fisheries and Maritime Affairs would be able to help realize a new system in the transportation sector in the country, especially in the fisheries and maritime sectors.

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Kamojang Unit I Geothermal Plant To Operate In October Next Year
The Jakarta Post, 29 November 2016

Kamojang unit I geothermal plant in Bandung, West Java, is expected to resume operations in October next year following its turbine damage in April 2014, an official has said.

Pertamina Geothermal Energy's (PGE) Kamojang plant maintenance manager Faiq Kautsar attributed the damaged turbine to its expired shelf life, saying that the turbine had been operating 32 years past its shelf life.

Faid was quoted by Antara news agency as saying that the replacement and building process of the geothermal turbine needed more time compared to conventional ones as the turbine parts needed to be compatible with geological substances.

According to Faid, the shutdown of the 30-megawatt (MW) capacity unit I plant affected the plant's overall performance.

Currently, the plant can only produce 205 MW from its five units' maximum capacity of 235 MW. PGE Kamojang's unit I is managed by PT Indonesia Power, a subsidiary of state electricity firm PLN. Indonesia Power manages unit I, unit II and unit III of the Kamojang plant, leaving two other units under the management of PGE.

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Indonesia Invites Iran To Invest In Refinery Business
The Jakarta Post, 29 November 2016

The government has called on Iran to invest in Indonesia’s oil refinery projects as the oil-rich country can supply local refineries from its reserves.

"We have asked [Iran] to invest either in Bontang refinery [in East Kalimantan] with [state-owned oil and gas firm] Pertamina or establish its own refinery as we already allow 100 percent [foreign] ownership in the business," Energy and Mineral Resources Ministry director general for oil and gas IGN Wiratmaja Puja said on Monday.

The request, Wiratmaja said, had been conveyed last week to a visiting Iranian delegation led by Communications and Information Technology Minister Mahmoud Vaezi.

Wiratmaja added that Indonesia currently bought liquefied petroleum gas (LPG) from Iran and was also planning to buy crude oil from there as well.

"Should Iran invest in refineries here, it can supply the refineries with its crude oil," he said.

Previously, the government successfully invited Saudi Arabia’s Aramco to invest in the Cilacap refinery revitalization project in Central Java. After the plant begins its operations in 2022, Aramco will supply most of its crude oil.

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Renewable Energy Targets Difficult Without Private Sector
The Jakarta Post, 29 November 2016

Life may be a beach in the archipelagic country of Indonesia, but hot sun, cool breeze or rushing waters alone is not enough to develop renewable energy sector without private sector’s involvement.

Energy and Mineral Resources Ministry’s new and renewable energy director general Rida Mulyana said recently that the government’s desired energy mix would be hard to realize with only limited funds in the state budget for the development of renewable energy.

The government has set a goal to supply 23 percent of the national energy mix from renewable sources by 2025 in order to cut down on carbon emissions and wean itself from fossil fuels.

To reach the target, the General Planning for National Energy (RUEN) stipulates that renewable energy must make up at least 11 percent of the energy mix by 2017 or equal to 25.5 million tons of oil equivalent (mtoe).

However, the New and Renewable Energy Directorate General is facing a tight budget with Rp 900 billion (US$66.32 million) removed this year due to unexpected tax shortfalls, leaving only Rp 1.7 trillion in its coffers.

“The budget is not a large enough fund to reach the energy mix. The energy mix can only be achieved with the help of private sector investors,” Rida said.

The uphill battle to develop the renewable energy sector has become more challenging recently. Several months ago, the government proposed a Rp 1.2 trillion subsidy in next year’s state budget to cover the price gap that state-owned electricity company Perusahaan Listrik Negara (PLN) had to bear in its operations. The proposal was rejected by the House of Representatives’ Budget Committee, which argued that PLN could not be subsidized as a corporation.

The ministry has promised to issue a new regulation that would set a fixed feed-in tariff for geothermal power to clear uncertainties for investors and drive their investments higher.  Data from the ministry shows that as many as $1.198 billion worth of investments were recorded in the renewable energy sector from January to September, making up for 87.4 percent of this year’s target.

A majority of investments went to geothermal energy at $840 million, equal to almost 90 percent of what is expected throughout this year. By the end of the third quarter, the total national electricity capacity from geothermal energy reached 1,513.5 megawatts (MW), supported by the installation of four new power plants.

The government is also waiting for developed countries to follow through on their commitments to establish a $100 billion climate fund, following the Conference of Parties 22 ( COP22 ) in Marrakech, Morocco, recently.

Once established, Indonesia will submit a funding proposal for several programs to conserve and develop renewable energy, including the Indonesia Terang (Bright Indonesia) program, which hopes to light up more than 12,000 villages across the nation with renewable energy.

Meanwhile, Private Electricity Producers Association (APLS) chairman Ali Herman Ibrahim said that despite the country’s vast resources, many investors were reluctant to develop renewable energy sources due to piling red tape.

“There needs to be a national consensus on developing renewable energy because sometimes companies find it difficult to get things signed off on in the regions,” he said.

The Indonesian Renewable Energy Society (METI) chairman Surya Darma said renewable energy in Indonesia is “always connected to lower cost pricing policy, with a limited off-taker. This means there will be no market if PLN does not buy electricity to distribute to the people”.

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W. Nusa Tenggara, S. Korea Cooperate On Forest Management
Antara News, 29 November 2016

The West Nusa Tenggara provincial administration and the National Institute of Forest Science (Nifos) South Korea have established a partnership for forest management in the area. The cooperation is in line with the provincial forestry development which is based on institutional strengthening, West Nusa Tenggara governor M Zainul Majdi said here Monday.

"Of course, we need assistance from experienced entities such as Nifos so that our forests can be used and maintained at the same time, and bring maximum impacts for the people," the governor said after meeting Nifos president Nam Sung Hyun in Mataram.

Nifos has been working with West Nusa Tenggara provincial administration in the forestry sector through West Rinjani forest management unit for five years.

The width of critical lands in the province are currently very extensive, nearly 500 thousand hectares, consists of forest and soil as well as areas where rainfall is very little, the governor said.

"Korea has best practices in dealing with critical lands and we very open to working together," the governor added.

Meanwhile, Nifos President Nam Sung said he was very proud of the cooperation between West Nusa Tenggara and the institution.

"I am proud to be associated with, and cooperate in research projects for five years in the fields of forestry, socio-economy, culture and community institutions," Nam Sung said.

The partnership is undertaken in the form of a survey involving local people, he added.

"We hope this cooperation can continue to run and be sustainable," Nam Sung said.

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President Jokowi Plants Tree To Mark World Record Event
Antara News, 29 November 2016

President Joko Widodo (Jokowi) planted a teak tree to mark the beginning of an endeavor to set a world record of planting 230,000 trees within one hour in Tasikharjo Village, Jenu Sub-district, Tuban District, here on Monday.

"Let us all plant trees simultaneously within this one hour," the head of state said while pushing a button to mark the beginning of the world records process.

The president was accompanied by First Lady Iriana Jokowi on this occasion. The simultaneous tree planting movement is aimed at making it to the Guinness Book of Records.

Some 5,500 local villagers and members of the Anugrah Bumi Hijau Producer Cooperatives (Koprabuh) planted 238,000 trees within one hour.

Adjudicator Swapnil Mahesh Dangarikar of the Guinness Book of Records presented a certificate of most planted trees in one hour.

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