Update News November 30, 2016

In The News


Italy To Invest More In Indonesia
The Jakarta Post, 30 November 2016

Former Italian prime minister Enrico Letta conveyed Italy’s interest in boosting economic ties and investing more in Indonesia in Jakarta on Monday.

“Despite this period of domestic political turbulence in Indonesia, Italy trusts Indonesia,” said.

Letta founded the Italy-ASEAN Association and was prime minister of Italy from 2013 to 2014.

“Next year, we want to invest more in Indonesia. We are not troubled [by domestic matters in Indonesia] and we are sure that Indonesia can overcome this present turbulence,” said Letta, adding that Italian companies were very much interested in investing in various sectors, including in infrastructure, energy and automotives.

“Our country is at the top with geothermal renewable energy technology. So we think that we can have very good joint cooperation in this area. We want to help them invest, not to sell goods only,” he said.

Letta said Italy and ASEAN had agreed to conduct the first Italy-ASEAN forum to be held in Jakarta and Milan next year, in conjunction with ASEAN’s 50th anniversary, “to establish a closer relationship between Italian entrepreneurs and Indonesian entrepreneurs”.

He said hundreds of Italian business delegates and several ministers would come to Indonesia to participate in the event.

Letta said during his visit here that he had met the ASEAN secretary-general Le Luong Minh to strengthen economic relations between Italy and ASEAN member states.

“We want to make Italian entrepreneurs more aware of the opportunities they can have here in ASEAN. [We also] want to encourage Italian companies and entrepreneurs to invest in Indonesia and in ASEAN countries,” he said.

Based on data from the Indonesian Investment Coordinating Board, realized Italian investment from January to March in 2016 was US$15.06 million. According to the Trade Ministry, Indonesia enjoyed a trade surplus of $504.69 million in 2015 with total trade between Indonesia and Italy worth $3.24 billion. The value of Indonesian exports to Italy in 2015 reached $1.87 billion, while imports hit $1.3 billion.

Italian Ambassador to Indonesia Vittorio Sandalli said the main export commodities from Indonesia to Italy were oil and gas and timber, while Italy exported industrial machinery to Indonesia.

“One of the targets of the Indonesian government is to revitalize Indonesian industry and Italy is ready to participate in this process with our expertise,” Sandalli said.

He further said that among ASEAN member states, Indonesia had generated the fourth-largest amount of investment in Italy.

“ASEAN is a success story for the future,” Letta said, adding that ASEAN’s process of further integration was “a great decision.”

“Italy-Indonesia, Italy-ASEAN, there is room to improve. We can have more exchanges and more investment.”

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Payment Gateways No Longer Problem For E-Commerce: Players
The Jakarta Post, 30 November 2016

E-commerce companies should not think of payment gateways as a problem in serving their customers anymore since there were varied payment alternatives nowadays, business players said on Tuesday.

Online payments facilitator Midtrans said that currently e-commerce businesses could direct customers to pay via bank transfer, mobile wallet, cash on delivery, as well as other types of payment.

“There are many payment methods for customers. Midtrans offers 17 payment methods for e-commerce,” Diera Yosefina Hartono, Midtrans’ vice president of community management, said.

Fanny Verona, marketing director of e-money application Uangku, shared the same view. However, she said that payment options for social commerce - transactions done through messaging apps or social media - were still limited at present.

“Actually, e-commerce buyers who purchase things on e-commerce platforms only account for 20 percent [in Indonesia], the rest is from social commerce,” she said.

The remaining 80 percent of consumers who bought through messaging apps and social media was the market Uangku was trying to tap into. The company aimed at targeting consumers who preferred to use mobile phones to pay instead of cash, she explained.

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JCI Tops ASEAN Markets; Foreign Investors Continue Selling
Tempo, 30 November 2016

The Jakarta Composite Index (JCI) ended today's first trading session with a 0.81-percent gain, or up by 41.42 points to 5,155.99. So far today, the JCI recorded the highest gain among other ASEAN index.

Asjaya Indosurya Securities chief researcher William Surya Wijaya said foreign investors are still selling their stocks despite the Index's climb.  

"Foreign investors recorded a net sell of Rp126.17 billion," William said on Tuesday, November 29, 2016, as reported by Bisnis Indonesia.

This morning, the index opened with a slight correction of 0.11 percent or 5.82 bps at 5,108.75. The JCI maintained a steady gain that continued until the end of today's first session.

Throughout the day, the index moved upwards within the range of 5108.75 to 5,164.58, unlike other Southeast Asian indexes that tend to weaken. The FTSE Malaysia KLCI fell 0.09 percent, the FTSE Singapore Straits Time edged is down 0.04 percent, the SE Thailand index rose 0.26 percent, while the Philippines PSEi index fell 0.43 percent.

"The JCI is on a technical rebound," said William.

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President Asks REI Members To Join Tax Amnesty Program
Antara News, 30 November 2016

President Joko Widodo (Jokowi) has asked members of Real Estate Indonesia (REI) to join the governments tax amnesty program, because the taxpayers number taking part in the program in the first period was still small.

"We hope that taxpayers would join the tax amnesty program in the second period. I call on the REI members who have not yet joined it to take part in it. After all, its redemption tariff is still low, namely three percent," the head of state said while attending the 15th National Meeting of REI in Jakarta on Tuesday.

The president said that the implementation of the tax amnesty program in the first period, which ended on September 30, 2017, was the most successful program in the world.

"The value of the asset declaration reached Rp3,480 trillion, which is expected to be invested in the property sector," he said.

But when examining the data, the president said that the participants of the program in the first period were still relatively small.

"The number of participants in the first period is still below five percent of the total number of taxpayers. There are still 95 percent taxpayers whom I still have to hunt, so that all will be clear and clean in the taxation sector," Jokowi asserted. On the occasion, he also asked the REI members to remain focused on developing houses for low-income people.

"The backlog in the housing sector still reaches 11.8 million units. We should push for the development of houses for low-income people, so that the shortage of 11.8 million units would be covered," Jokowi stated.

He said that Indonesias economy now is relatively strong, where its growth reached 5.0 percent. "Compared to the economic growth in other countries, we are still behind India and China. We are in the third position with a growth of 5.18 percent. This growth should be utilized to boost the growth of the property sector," he asserted.

According to the head of state, inflation is also under control at below 3.5 percent, indicating that commodity prices are well curbed.

Jokowi also pointed out that the 13th economic policy package on housing development has also been implemented, including the simplification of licensing.

"The needed licensing permits have been streamlined from 13 to 11. If there is problem in the field, please let me know," he said.

He explained that the main objectives of the 13th economic policy package were to develop houses that are within the financial reach of low-income people. "The program should not be misled from its main objectives, such as houses being bought for re-investment or for a second or a third house ownership," he noted.

However, the president admitted that there is a government regulation (PP)as needed, based on the economic policy package, which has not yet been accomplished.

"Before I came here, I checked the whereabouts. It was no longer at the Ministry of Public Works and Public Housing. The PP draft has been sent to the office of the chief economic minister who promised to issue it in December 2016," he said.

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Jokowi Tells Developers To Build More Cheap Housing For Low-Income People
The Jakarta Post, 30 November 2016

In a gesture to convey the serious commitment of his administration to affordable housing, President Joko “Jokowi” Widodo has called real estate developers to build many more houses for low-income people.

His clear message came up after the government issued its 13th economic stimulus policy package in late August, which aims to simplify procedures for development of inexpensive housing targeted at the lower segment of the society.

With lesser permits and period to tackle administrative stuff, the cost will be pushed down by 70 percent.

Speaking at the opening of the Indonesian Real Estate Association (REI) national meeting on Tuesday, the president expressed his determination to reduce the housing backlog which currently stood at 11.8 million houses.

The official target is to cut down the figure by more than 40 percent to 6.8 million by the end of his term in 2019.

 “I want to remind us all that the core of the economic policy package is to accelerate provision of affordable housing for low-income people and I emphasize once more, [it’s] housing for low income people, not the other [kinds of housing],” Jokowi said in his remarks.

According to the existing rule, developers must build houses for the poor and middle-income people in the same regency or city where they built upscale homes. However, the obligation has been largely ignored by developers due to complicated permit requirements and lengthy process.

“Please avert constructing [using the incentives] many houses bought as investment instruments by those who already own two or three houses. Instead use the to build more houses for low-income people,” the president said, adding that a government regulation (PP) as the legal base to implement the policy package would be issued soon.

Under its current plan, the government aimed to construct 1 million houses for the low-income segment next year, up from only around 700,000 in 2016 and 690,000 in 2015, Public Works and Public Housing Minister Basuki Hadimuljono told journalists in the sidelines of the event.

“With increased budgets, which are Rp 9.4 trillion (US$694 million) for FLPP [the government-backed mortgage] and Rp 9.2 trillion for low-cost apartment provision, and easier licensing process, we hope it will be faster and easier [for us] to achieve the 1 million houses target next year,” he said.

In the similar occasion, REI chairman Eddy Hussy demanded that the government revoke the tax for luxurious houses as it would affect affluent people’s appetite to buy posh properties.

“We expects the government to continue the FLPP and broaden this program to include urban dwellers with income ranging from Rp 4.5 million to Rp 7 million, who currently are not benefiting from the subsidy,” Eddy said.

At present, the middle-class is also struggling to own houses amid soaring property prices, untouched by the government’s housing programs that are mostly targeted at low-income group defined by its income of less than Rp 4 million per month.

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E. Kalimantan`s Maloy Railway Construction To Start In December
Antara News, 30 November 2016

Railway construction in Maloy industrial zone in East Kutai district is expected to start in December, Awang Faroek Ishak, East Kalimantan governor, said.

"God willing, Maloy industrial zone will start its activity on December 1, marked by the launching of railway development. This project is run in cooperation with Rusias Blackspice," Faroek said in a statement here on Tuesday.

Maloy industrial zone is part of Maloy Batuta Trans Kalimantan Special Economic Zone (KEK-MBTK) located in East Kutai district.

Faroek explained that the construction of the railways southern and northern tracks is be ready to be started.

The tracks would serve in transportation of coal, as well as other natural resources in the region.

"The development of the two railway tracks would be done in stages," he added.

Its southern track would be built along 203 kilometers, starting from North Panajam Paser district to West Kutai, while the northern tracks will be 217 km long from Lubuk Tutung in East Kutai district to Tabang in Kutai Kartanegara district.

"The southern and northern tracks will be connected to the border line between West Kutai and Kutai Kartanegara. The tracks will also be connected to Maloy Special Economic Zone in East Kutai," he stated.

Salman Lumoindong, President Commissioner of PT Kaltim Pelabuhan Internasional Maloy, said railway construction to Maloy special economic zone would be handled by PT Surya Ganda Managemen Teknik Indonesia (GMTI), an affiliation of Blackspice.

"God willing, Transportation Minister and Coordinating Minister for Economy will launch the railway development program," he stressed.

The governor has visited some projects in the provinces northern area from November 30 to December 2, including the development project of Samarinda Baru airport in Samarinda, Samarinda-Bontang-East Kutai road to Berau district and projects in Maloy industrial zone.

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Ministry Drafts Guide on Social Media Use
Tempo, 30 November 2016

The Communications and Information Technology Ministry said regulations alone are not enough to monitor the ethics of using social media. The ministry said there has to be social settlement efforts as well.

"Hoaxes and negative contents, as well as negative persuasions by means of social media cannot be settled with a regulatory approach alone. Social approaches are also necessary," Minister of Communications and Information Technology Rudiantara said in Jakarta, Tuesday, November 29.

"Communications and Information Technology has blocked nearly 770 thousand content on the Internet, but it was not enough," Rudiantara said.

A revision of Law No. 11/2008 on Information and Electronic Transactions (ITE) was officially enacted on Monday, November 28, 2016. One of the important points in the revision is the government's authority to block or cut off public access to unlawful electronic information; including social media accounts that spread negative content.

"Blocking [negative websites] all the time is tiresome. Reporters also keep asking how many hundreds of thousands of sites we have blocked," Rudiantara said. Therefore, he said, the Ministry is appealing to sociologists and humanists to jointly create an ethical guideline in using social media.

Rudiantara said this guide will contain more than suggestions. In the future, the government will also focus on the upstream, not only the downstream. "The upstream aspect is more important; which is to educate the public," Rudiantara said.

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FM Retno, EU High Rep Mogherini Agree to Stronger Indonesia-EU Partnership
The Jakarta Globe, 30 November 2016

Foreign Minister Retno Marsudi urged for a stronger partnership between Indonesia and the European Union to face challenges in Southeast Asia and Europe in a speech delivered at a meeting between Indonesia and an EU Joint Committee in Brussels, Belgium, on Monday (28/11).

"Partnership is key in a networked world, no country can stand on its own," Retno said in her speech. "In an increasingly uncertain global politics, a strong Indonesia-EU partnership can be a strong foundation to improve the welfare of over 750 million Indonesian and EU citizens."

Indonesia and the EU are already implementing the comprehensive Partnership and Cooperation Agreement (PCA) signed in 2014, which has already resulted in improved relations between the union and Southeast Asia's biggest economy.

These include taking three Indonesian airlines off the EU no-fly list; further discussion on the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) and launching the FLEGT (Forest Law Enforcement, Governance and Trade) License — practically a green light for Indonesian timber companies to export wood products to the EU.

Federica Mogherini, the European Union high representative for foreign affairs and security, who met Retno face-t0-face, highlighted the importance of accelerating IEU-CEPA negotiations, as the agreement will definitely open greater opportunities for trade and investment.

In reply, Retno said "Indonesia welcomes a second round of negotiations on IEU-CEPA in 2017," Retno said.

Mogherini also said she had the utmost respect for the way the Indonesian government has tried to maintain pluralism and harmony among its citizens, and that it can serve as a good example for a multi-ethnic Europe.

The EU will put this respect into action by launching a project in 2017 to study pluralism and religious and ethnic harmony in Indonesia.

Retno and Mogherini also took the time to discuss various regional and global issues, including the continuing conflicts in the Middle East, migration, terrorism and radicalism.

Both ministers agreed the challenges Indonesia and the EU are facing demand a stronger partnership between the two and an innovative management of Indonesia-EU relations.

"We hope this joint committee meeting can help identify new rooms for partnership between Indonesia and the EU, to solve bilateral, regional and multilateral issues," Retno said.

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Indonesia-Australia Education Partnership Builds 2,725 Schools: Minister Effendy
Antara News, 30 November 2016

Indonesia and Australia have built 2,725 junior high schools in 30 provinces under education partnership programs over the last 10 years, Education and Culture Minister Muhadjir Effendy said.

"The government is under obligation to meet childrens right to have basic education. We have received continuous support from Australia through this partnership," he said at the 10th anniversary of Indonesia-Australia education partnership here on Tuesday.

Muhadjir informed that these schools could accommodate 366,300 students in 10,185 classrooms.

During the decade for which the program has been running, Australia provided a total A$353 million worth of funds, comprising A$197 million in soft loans and A$156 million in grants.

"The partnership between Indonesia and Australia will be continued as it is based on the principle of achieving mutual prosperity," he stated.

Meanwhile, Australias Deputy Ambassador Justin Lee noted that the partnership program has contributed to 12.04 percent increase in gross participation rate (APK) at junior high school level in Indonesia, from 88.68 percent in 2006 to 100.7 percent in 2015.

APK is the ratio for active students in a certain grade compared to population at an age group corresponding to that level. Lee disclosed that Australias next target is to focus on empowerment of teachers and principals in Indonesia.

The Indonesia-Australia education partnership to build schools was launched in 2006, after the completion of the reconstruction program undertaken in the wake of the deadly tsunami that had hit Aceh and West Sumatra.

The program was started with Australia-Indonesia Basic Education program (AIBEP) in 2006-2009 under which 1,570 junior high schools, comprising 835 new regular school buildings and 735 one-roof schools for elementary and junior high school students, were built.

The AIBEP was followed by Australias Education Partnership with Indonesia (AEPI) from 2011 to 2015. Under it, 1,155 junior high schools, comprising of 582 new regular schools and 573 one-roof schools, were built.

The schools construction was undertaken by involving local communities. Among the schools built under the program are SMPN 9 Ruteng (East Nusa Tenggara), SMPN 50 Batam (Riau Islands), SMPN Satu Atap 14 Lamputan Island, SMPN 4 Sinjai Barat (South Sulawesi), and SMPN 25 Pesawaran (Lampung).

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President Jokowi Promotes Tourism in Forbes Global CEO Conference
Tempo, 30 November 2016

President Joko "Jokowi" Widodo encourages CEOs attending the Forbes Global CEO Conference held at Shangri-la Hotel in Jakarta to invest in the country’s tourism sector.

“Indonesia is home to thousands of Bali-like beautiful destinations, such as Raja Ampat, Mandailika in West Nusa Tenggara and Komodo Island in East Nusa Tenggara,” Jokowi said on Tuesday in his opening speech at the event, as quoted by Antara.

To boost the economy through tourism development, Indonesia is adding more direct flights of flag carrier Garuda Indonesia to attract potential tourist to visit several regions, such as Manado City in North Sulawesi.

Indonesia continues to develop infrastructure such as land, sea and air transport to improve flow of goods and services as well as people, particularly in remote areas and national borders, such as Papua and Miangas to boost the economy.

The Forbes CEO Global Conference brings together CEOs of multinational companies and is held on November 29 to December 1.

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