Update News February 06, 2017

In The News

Bank Indonesia to Improve MSME Access to Financial Services
Tempo, 06/02/2017

Bank Indonesia plans to increase local micro, small and medium enterprises (MSME) access to the financial services industry.

"One of the efforts aimed at encouraging the development of MSMEs is to increase their capacity, and improve their access to financial services," Head of BI Office in North Sulawesi Province, Soekowardojo, said on Friday.

If MSMEs have access to financial services, they will continue to grow, he stressed."In principle, financial services are inseparable from the business world. However, (banks) must exercise caution in channeling credits," he underlined.

He assured that he will always encourage banks to increase the amount of loans channeled to the real sector.

In addition, the central bank will also help MSMEs find regional and international markets, minimize information disparities and increase coordination and cooperation with stakeholders, he observed.

"As we all know, MSME is one of the sectors that can encourage the national economy. In total, MSMEs make up 99.9 percent of the total business units. They contribute up to 57 percent of the gross domestic product," he explained.

The MSMEs can also become a highly competitive sector that can even resist foreign and domestic upheavals, he pointed out.The MSMEs also play a bigger role in creating jobs, and currently account for 97.2 percent of the total jobs.

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Indonesia`s Economy Remains Stable: IMG
Tempo, 06/02/2017

Central bank Bank Indonesia (BI) welcomed the good result of the assessment of the International Monetary Fund (IM) of Indonesia’s economy in 2016.

The IMF considered that Indonesia has managed to keep the stability of its macro economy and adjusted to the external changes.
"We appreciate and welcome the assessment by the IMF,” said BI Governor Agus D.W. Martowardojo on Saturday (4/2).

Agus added although Indonesia is facing a number of risks, the outlook of the country’s economy remains positive and better than that in the previous years.

IMF considered that Indonesia’s macroeconomic policies, coupled with its structural reforms have helped Indonesia in facing a number of challenges.

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Government Strengthens Domestic Economy To Anticipate Uncertain Global Condition
Antara News, 06/02/2017

Finance Minister Sri Mulyani stated the government has strengthened the domestic economy to anticipate uncertain global conditions occurring throughout 2017."Based on the situation abroad, the government improves the domestic economy," Sri Mulyani said here on Friday evening.

One of governments efforts was to improve investment performance in a bid to provide optimal contributions to national economic growth."From the sources of economic growth, we will balance investment and consumption growth," the minister said.

He acknowledged the 2016 investment performance was slow. However, the government continued to make any efforts to increase the investment performance in the country, including the involvement of state-owned and private enterprises.

The National Development Planning Agency or the Bappenas earlier predicted that Indonesias economy will grow at 5.1-5.3 percent in 2017.

"Yes, for economic growth in 2017, I have predicted a range of 5.1 to 5.3 percent," Minister of National Development Planning and Head of Bappenas, Bambang Brodjonegoro, said during a discussion on the 2016 Year-End Final Evaluation and Outlook 2017, in the Bappenas office here on Saturday.

According to him, the estimate is based on the assumption that the countrys economy will still be dominated by consumption.
Meanwhile, what impact the global economic turmoil will have on the national economy is as yet uncertain. "We cannot yet predict the impact of the global economic turmoil. After all, the global economy is not bright," said Brodjonegoro.

Nevertheless, the national economy was still able to grow by 5.1 percent in 2016.
This, he said, indicated that Indonesias economy was still able to survive global economic upheavals. Therefore, measures to ensure that the national economy can adapt to global change are important to lift growth.

"Even with the uncertain global conditions, we can still grow 5.1 percent. It is nice. So, if we can predict and control global conditions, it means that Indonesia can adapt to global change. That will be good for the economy of Indonesia," said he.

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BPKM Chief Reveals 5 Barriers to Making Investment in Indonesia
Tempo, 06/02/2017

There are five main barriers to making investment in Indonesia, according to Chairman of the Investment Coordinating Board (BKPM) Thomas Lembong.

Those barriers are, first, many regulations and legal uncertainty that discourage investors. Therefore, Thomas said, measures are needed to simplify the regulations.

Second, tax system that does not give more space for businessmen. As a result many investors choose to invest in other regions that give ease in tax matters.

Third, the low quality of human resources. To address this issue, Thomas said the government has encouraged young people to take vocational schools so they can have specialized skills needed by industries.

Fourth, land issue both in the central government and regional governments. Investors who are interested to make investment often face the problems of land certification, building permits or land zonation.

Fifth, the issue of infrastructure to support industries. According to Thomas, to address this issue, the government has been making great efforts to build infrastructures such as electricity, clean water, garbage management facilities, and many others.

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President Jokowi Urges Agencies Synchronize Indonesian Branding
Antara News, 06/02/2017

President Joko Widodo (Jokowi) has urged all ministries and state agencies to synchronize efforts to boost Indonesian branding at the international level.

"I urged all ministries and agencies to synchronize efforts to promote Indonesia and Indonesian products," Jokowi stressed here on Friday (Feb. 3).

Jokowi held a closed door meeting with several ministers at the Presidential Office in Jakarta where they discussed efforts to promote Indonesian branding in the global market.

According to the president, each ministry and state agency has its own tagline to promote national branding.The Indonesian brand power, says Jokowi, should be enhanced in various domains, including trade and investment as well as tourism sector.

The government recorded that the Indonesian branding grade in trade and investment was ranked 6.4 percent, behind Singapore and Thailand.
Meanwhile, the Indonesian branding power in tourism was ranked 5.2 percent, behind Thailands 9.4 percent and Singapores 8.6 percent.

"These ranks should be improved. I noticed that there were many countries that strongly promote their national branding rankings," Jokowi added.

Improving the Indonesian brand power strategy, Jokowi hoped, would help increase Indonesias competitiveness when it comes to trade, investment and tourism sector.

The president said some countries build their image by conducting soft diplomacy through means such as a cultural approach, film screenings, culinary and sports promotion.

The agencies and ministries, underlined Jokowi, should also comprehend Indonesias strengths and weaknesses to redesign their promotion strategies.

He urged all Indonesian envoys abroad to consolidate efforts to ensure effective promotion in order to compete with other countries.

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Central Govt Picks Up Pace On Jakarta Sewage System
The Jakarta Globe, 06/02/2017

The central government is selecting consultants for its Jakarta Sewage System, reinvigorating a project to provide an integrated sanitary system for most parts of the capital city.

The $1.2 billion project has been stuck in the drawing board since 2011 when the Japan International Cooperation Agency (JICA), an independent Japanese government agency, completed a study that concluded the capital needs 14 new zones of waste water service to improve its sewage and sanitary system.

Today, Jakarta's water disposal system is only available for 4 percent of the capital's total area. Its biological oxygen demand level — a measure of organic pollutant level in water — reached a worrying 84 milligrams per liter.

Jakarta's sanitation system is the second worst among other Southeast Asian capital cities, according to the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP).

"I hope the consultant can be appointed by next week," Minister of Public Works and Public Housing Basuki Hadimuljono said on Friday (03/02). The KPPIP's original plan said the project should have commenced construction last year.

The ministry will start off by finishing a waste water processing system in Zone 1 in Pluit, North Jakarta, and in Zone 6 in Duri Kosambi, West Jakarta. Construction in the other zones is being handled by he Jakarta government.

Basuki estimated the Zone 1 waste water system will cost the government Rp 8.1 trillion and Zone 6 will cost Rp 8.7 trillion. The two zones will have a combined capacity of processing 480,000 cubic meters of waste water per day.

The government expects the water disposal project can boost Jakarta's sanitary system's coverage to 75 percent by 2022.  Jakarta, home to 10 million people, now has only one waste water processing facility in Setiabudi, South Jakarta.

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Jakarta To Build 6,000 New Low-Cost Apartments This Year
The Jakarta Post, 06/02/2017

The Jakarta administration plans to build 6,000 new low-cost apartments this year. Jakarta Public Housing and Settlement Agency head Arifin said the new apartments would be developed in five locations: two in Nagrak and Rorotan, North Jakarta; two in Penggilingan and Pulo Gebang, East Jakarta; and one in Pesing, West Jakarta.

Arifin said the call for tenders to find a construction contractor had already begun.“We have readied the locations,” Arifin was quoted by the city’s official website, beritajakarta.com on Saturday.

According to Arifin, the agency will build 24 towers in total. If completed, the new apartments would bring the total number of new apartments to 11,000 by the end of this year.

The administration is currently completing the development of six other low-cost apartment towers initiated last year.
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BPJT to Build Toll Road Connecting Lake Toba
Tempo, 06/02/2017

Head of the Indonesia Toll Road Authority (BPJT) Herry Trisaputra Zuna said BPJT is speeding up the Tebing Tinggi–Parapat toll road project.

The project is part of a series of projects of supporting facilities for Toba Lake."We are accelerating the construction of Tebing Tinggi–Parapat toll road project. Later, we will marge it with Tebing Tinggi–Kuala Tanjung toll road,” Herry said in Jakarta on Friday (3/12).

Herry added that at the end of February, a contract agreement on the project would be signed. He added that the Kuala Tanjung–Tebing Tinggi–Parapat toll road would stretch along 140 kilometers.

The project, he said, will be undertaken by Hutama Karya, which is also tasked by the government to undertake Trans Sumatra toll road project.

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Russian Company to Build Railway in Kalimantan: Minister
Tempo, 06/02/2017

Indonesian Transportation Minister Budi Karya Sumadi stated that a Russian-based company had declared their readiness in constructing a railroad track from East Kalimantan Province to Central Kalimantan.

The company, according to Budi, was actually ready to conduct groundbreaking but was postponed since they are awaiting the confirmation and approval from the Russian embassy.

“The railroad was intended to transport coal. It would be too expensive to transport people. But once the railroad tracks exist, then it can be used for mass people transport,” he said Sunday, February 5, 2017.

Meanwhile, when asked upon the construction of the Puruk Cahu railroad track project from Bangkuang to Batanjung at the Central Kalimantan Province, the Transportation Minister was not too keen on providing any comments; he only highlighted the project’s slow progress.

Minister Budi revealed that the company responsible for the construction, China Railway Group Limited, has yet to meet him.“I will not cancel the construction of the railroad track that is being built by the China Railway Group Limited,” he said.

Budi denies the rumors suggesting that he is suspending the construction of the 425-kilometer railway. The minister even stated that the project had been included in the national strategic plan.

According to Budi, it is the China Railway Group Limited themselves that have not shown their commitment to accelerating the construction of the project.

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INKA to Manufacture Trains for Export to Bangladesh, Sri Lanka
Tempo, 06/02/2017

State-owned train manufacturer PT Industri Kereta Api (INKA) is preparing to manufacture 340 trains to be exported to Bangladesh and Sri Lanka this year.

"We are processing the manufacturing process. All the requirements have been completed. We’re going to import 250 trains to Bangladesh and 90 trains to Sri Lanka," said INKA President Director Agus Purnomo to reporters on Saturday.

According Agus, the contract worth of the manufacturing reaches US$200 million. It is estimated that certainty of import to Bangladesh will be decided around March or April, while certainty for imports to Sri Lanka is expected to be determined by the end of this month.

Last year, PT INKA imported 150 trains worth US$72 million to Bangladesh."Besides, PT INKA has also imported trains to Sri Lanka, Malaysia, Filipina, Thailand, Singapore, or even Australia,” he said.

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Jakarta-Surabaya Special Train May Use Diesel Technology
The Jakarta Post, 06/02/2017

The government discussions regarding the Jakarta-Surabaya special train route are currently deliberating if the route will be served by an electric-based train or a diesel train.

Coordinating Maritime Minister Luhut Binsar Pandjaitan explained during a meeting with state-owned railway operator PT Kereta Api Indonesia (KAI) and the Indonesian Toll Road Authority (BPJT) on Friday, an alternative option was suddenly thrown on the table in terms of a diesel engine train for the route.

Luhut explained that the preliminary estimation for the diesel technology is about Rp 22 trillion (US$1.65 billion), which is far cheaper than the preliminary calculation for an electric train, which is in the area of Rp 82 trillion.“I suppose we will make the decision in about two weeks,” Luhut suggested on Friday. Both technologies for the 150 km per hour Jakarta-Surabaya train route will still likely come from Japan.

Feasibility studies for the special train route will likely take place in March. The studies will be funded by the Indonesian government before combining results with the Japanese study.

Furthermore, the Transportation Ministry’s director general for railways Prasetyo Boeditjahjono explained on Friday that the route will likely be a “normal speed” train rather than a high speed train. It is also still uncertain if the route would involve any elevated tracks. The government is looking at an operational date of 2019.

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Pelindo II Eyes Rp10.5 Trillion Revenue
Tempo, 06/02/2017

State-owned seaport operator PT Pelabuhan Indonesia II or Indonesia Port Corporation (IPC) said the revenues from the operation of seaports in 2017 is projected to reach Rp10.5 trillion, rising by 12.11 percent from the realization in 2016 at Rp9 trillion.

Pelindo President Director IPC Elvyn G Masassya on Friday in Bandung said that from the Rp.10.5 trillion of revenues, the company expects to reap net profit this year worth Rp 3,6 trillion, rising by 17.2 percent from the amount it reaped in 2016 at Rp 3,2 trillion.

She added that the target would be achieved through three strategies, namely applying good corporate governance, adding new working partners or new facilities to boost revenues and carrying out effective spending.

Pelindo II as the biggest seaport operator in Indonesia currently operates 13 seaports in western Indonesia namely Tanjung Priok, Sunda Kelapa, Palembang, Pontianak, Teluk Bayur, Banten, Bengkulu, Panjang, Cirebon, Jambi, Pangkal Balam and Tanjung Pandan.

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Silangit Airport Expansion To Finish In April
The Jakarta Post, 06/02/2017

The expansion of Silangit Airport will finish in April and the construction of new toll roads are expected to boost tourist arrivals to Lake Toba in North Sumatra -- one of the 10 regions being developed to become a main tourist destination.

Currently, the Silangit Airport’s passenger terminal encompasses an area of 500 square meters and will be expanded to 1,700 m2.After the expansion, its passenger capacity will reach 500,000 passengers a year from 15,000 passengers a year.

The airport’s relatively new runways and aircraft apron area will also undergo an overlaying process, said state airport operator PT Angkasa Pura II’s president director Muhammad Awaludin on Friday.“I’m hoping that by April 2017, the newly expanded terminal and the newly overlaid runway will be ready,” Awaludin added.

The development efforts have so far cost about Rp 350 billion (US$26.23 million) for both the terminal expansion and the runway improvement. Awaludin added that after the revamp, aircraft as large as the Boeing 737-800 will be able to land there.

Currently, the largest aircraft that is able to land at Silangit Airport are Boeing 737-500s. Meanwhile, the Indonesian Toll Road Authority (BPJT) head Herry Trisaputra Zuna noted that the Tebingtinggi-Parapat toll route will be combined with the also in progress Tebingtinggi-Kuala Tanjung route, spanning 140 kilometers. The project is to be handled by the BPJT in mid-February.

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PLN To Tap Biomass Energy In Papua
The Jakarta Post, 06/02/2017

The state-owned electricity company PT PLN’s Papua and West Papua Region (WP2B) has been considering biomass-fueled power plants to produce sustainable electricity in Merauke regency, Papua.

The electricity company has signed an agreement with a private partner, PT Merauke Narada Energi, which developed the technology.

“PT Merauke Narada Energi will develop the power plant using biomass, which will be tested this year,” PLN WP2B general manager Yohanes Sukrislismono said in a release made available on Saturday.

He said PT Merauke Narada Energi was currently developing the biomass-fueled power plant with a capacity of 3.5 MW in Wapeko, Merauke. This supply is to be distributed to a special economic zone (KEK) in Salor, Merauke.

With the supply, the electricity in the regency, which has a peak load of 19.1 MW, is expected to be more reliable.

“We have an area of 250,000 hectares producing woodchips,” said Budi Basuki of PT Medco Energi.
He said his company had previously conducted research on the use of woodchips to fuel power plants. “This is just the first step,” Budi said.The plant is the first to develop using forest-based renewable energy in the eastern Indonesian region.

The wood waste used for the plant comes from plantations of acacia, eucalyptus and meulaluca, which will be processed into fuel for the power plant.

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Indonesia, Japan To Continue Cooperation On Disaster Mitigation
Antara News, 06/02/2017

Indonesia and Japan will continue to cooperate on disaster mitigation and post-tsunami reconstruction efforts by improving human resources capacity.

The caretaker for Mayor of Banda Aceh, Hasanuddin Ishak, said here on Saturday that the CoMu project will be continued as it was beneficial for the local people."Our cooperation with Higashi Matsushima City of Japan is very helpful as it increases awareness among the people of Banda Aceh," Ishak said.

The CoMu project gives Banda Aceh people an opportunity to study in Japan for several months.They gain knowledge on improving their handicraft skills and also in the fisheries sector in Japan.Ishak appreciated the CoMu Project committee in continually developing the program.

"Banda Aceh and Higashi Matsushima have experienced tsunami disaster. We learned on how to progress. Japan has been advancing in many ways. Thus, their rehabilitation and reconstruction efforts can also be faster," Ishak added.

Additionally, the member of CoMu Project Committee said that Higashi Matsushima had experienced earthquake and tsunami in 2011. The disaster destructed infrastructures, claimed lives, and caused loss of lives and other casualties.

"Thus, by cooperation, we aim to focus on improving the economic conditions in both the regions by training their skills in various sectors," Omora stated.

Several Acehnese people who have studied in Japan have returned to their hometown. They are also sharing their skills and experiences with other people in Aceh, he noted.

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Tourism Sector Must be Supported with Infrastructure Development
Tempo, 06/02/2017

Chief of the Creative Economy Agency (Barekraf) Triawan Munaf said efforts to build a positive nation brand should not be done through promotions only.

Rather, he said that another important thing to do is by developing infrastructures."We’d better first fix things that we’re going to promote,” he said in Jakarta on Friday.Therefore, Triawan said, focusing on developing infrastructures and improving services is very important.

In terms of tourist destinations, Triawan said the government must prepare more tourist destinations besides Bali."We have to focus on at least 10 main tourist destinations,” Triawan said.

Previously, the Tourism Ministry has designed top 10 tourist destinations, including Lake Toba, Belitung, Tanjung Lesung, Thousand Islands, Borobudur Temple, Mount Bromo, Mandalika Lombok, Komodo island, Wakatobi National Park, and Morotai.

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Indonesian Tourism Industries Support Visa-Free Policy
Antara News, 06/02/2017

Indonesian tourism industries have expressed support to the adoption of visa-free policy by the government so far citing positive impact on the tourism sector.

The general chairman of the Association of Indonesian Tourism Industries (GIPI), Didien Junaedy, said here on Saturday (Feb. 4) that the adoption of the policy is essential to boost tourism in the country.He said that the policy has been proven to significantly increase the arrival of foreign tourists in their countries.

Through Presidential Regulation Number 21, 2016, the Indonesian government has provided visa-free facility to visitors from 169 countries for a short visit.

The regulation was produced in March 2, 2016, and so it is not yet a year old. According to me, the evaluation should be done after two years of its implementation," he said, adding that it would take several months to familiarize.

Junaedy added that tourism industrialists grouped in GIPI have seen and felt the positive impacts of the policy.He stated that consistency in the implementation of the policy would be needed with regard to building public trust in foreign countries.

Supervision on the other hand, however, is also needed to minimize possible violations of the regulation, he noted."GIPI has planned to gather tourism industrialists eight times in the first semester this year to strengthen its support for the implementation of the Presidential Regulation Number 21," he asserted.

Junaedy admitted that there had also been negative excesses coming from the policy, such as visa overstay problem and illegal worker problems.

"Their number however is relatively small compared to millions of foreign tourists visiting Indonesia legally, like in other countries that implement the same policy," he added.

He also said that the negative impacts of the policy must be overcome, and solution to the problems must be found through joint efforts."We must not blame each other over trivial problems but must cooperate to overcome them," he stated.

He said that the visa-free policy has so far been one of the strong factors that has played a major role in meeting the target of foreign tourist arrivals, which was set at 15 million this year and 20 million by 2019.

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