Update News February 08, 2017

In The News

Positive Momentum Of Economic Improvement To Continue In 2017: Minister
Antara News, 08/02/2017

Finance Minister Sri Mulyani Indrawati believed that the national economic performance will continue to improve this year with the same momentum as it did last year.

"We want to maintain the positive momentum in 2017. Hence, the government needs to work harder to address a wide range of fundamental issues," she said here on Tuesday.

One of the efforts to maintain the economic performance in 2017 is to strengthen the national economic fundamentals by using fiscal instruments and policies, she added.

"If the economy has wider foundations, in terms of economic agents and sectors, we will be able to build an economy which is more resistant (to global effects)," she noted.

The government has been making efforts to improve the performance in the investment sector and government consumption, which did not contribute significantly to the 2016 economic growth, she remarked.

She stated that the investment sector, which only grew 4.48 percent last year, will become one of the target areas of improvement, because the government has issued a series of economic policy packages.

The government will also increase its spending, which contracted 0.15 percent, following its decision to adjust its spending last year, she said.

"The adjustment was needed to ensure fiscal continuity without creating a credibility problem. We are trying to prevent the government factor from becoming a factor which creates uncertainty," she pointed out.

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Indonesia Seeks To Enhance Business Opportunities With South Africa
Antara News, 08/02/2017

Indonesia is keen to increase business opportunities with South Africa following the visit of Indonesian Minister of Foreign Affairs Retno L.P. Marsudi to Africas southernmost country.

"Indonesia and South Africa share several historical similarities, and this has served as a strong foundation in developing mutual economic cooperation," Marsudi stated during a visit to South Africa, as quoted in a press statement here on Tuesday.

Minister Marsudi met South African Minister of Foreign Affairs and International Cooperation Maite Nkoana-Mashabane in Cape Town, South Africa.

The two ministers conducted a Joint Commission for Bilateral Cooperation, which was focused on improving economic cooperation between both nations.

Marsudi brought along several representatives of Indonesian state-owned enterprises and businessmen during the visit to South Africa.

The envoys explored business opportunities with their South African counterparts to identify cooperation potentials in several sectors, such as strategic industry, finance, and transportation.

"Indonesia and South Africa have agreed to encourage businessmen to use the wide-open opportunities existing in the two countries," Marsudi affirmed.

Both ministers have also tasked technical teams to complete the 2017-2021 strategic partnership plan of action to serve as reference, especially for economic cooperation.

Moreover, both ministers have inked several cooperation agreements in the areas of marine and fishery, training for diplomats, and free visa agreement for diplomatic and official passport holders. 

Besides highlighting several cooperation and bilateral issues, both ministers also discussed the preparation of the Indian Ocean Rim Association (IORA) Summit to be held in Jakarta in early March.

"With a strong IORA cooperation, countries along the Indian Ocean would be able to contribute more to peace, stability, and welfare in the region and the world," Marsudi stated.

The value of bilateral trade clocked US$860 million during the January-October 2016 period.Indonesias main export commodities to South Africa are motor vehicles, rubber, sandals, tires, and paper.

In 2016, South Africa had invested $981,500 in Indonesia, thereby bringing the total to $2.75 million during the 2011-2016 period, mostly in the hospitality industry.

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Consumer Perception Of The Country`s Economy Improving: BI
Antara New, 08/02/2017

Some 4,600 households perception of the current economic conditions is improving as was indicated by an increase in the current consumer income, job opportunities, and timely purchase of durable goods, according to Bank Indonesia (BI).

In a consumer survey publication, BI had announced on Monday night in Jakarta that the index of current economic conditions (IKE) at the end of January 2017 improved as compared to December 2016 and November 2016.

"The IKE is currently up 1.4 points to reach 104.2 points as compared to December 2016," Executive Director of BIs Department of Communication Tirta Segara stated.

As part of a monthly consumer survey in January 2017, the central bank conducted a study of 4,600 households in 18 cities in Indonesia.

The increased consumer perception was driven by a rise in the current income index, which rose by 0.6 points to reach 118.5 points; the availability of employment, which rose 0.6 points to reach 88.8 points; and the timely purchase of durable goods, which was up 3.3 points to reach 105.4 points, BI noted.BI has recorded that the increase in consumer perception of current economic conditions is the highest in Makassar at 25.5 points.

It is followed by 23.4 points in Ambon. Based on the level of consumption, an increase in perception was observed among consumers, with a spending level of Rp2 to Rp3 million.Nonetheless, consumer expectation for the next six months dropped as compared to that recorded in the December 2016 survey.

The decline in consumer expectation sparked a decrease in the consumer confidence index (CCI) in January 2017 by 0.1 points to reach 115.3 points as compared to 115.4 points recorded in December 2016."Despite the decline, the CCI, which amounted to 115.3 points, still indicates consumer optimism," BI stated.

In the meantime, Finance Minister Sri Mulyani noted that the government had strengthened the domestic economy to anticipate uncertain global conditions in 2017."Based on the situation abroad, the government improves the domestic economy," Mulyani stated.

One of the governments efforts was aimed at improving the investment performance in a bid to provide optimal contributions to the national economic growth.

"Utilizing the sources of economic growth, we will balance investment and consumption growth," the minister stated.

He acknowledged that the investment performance in 2016 was slow. However, the government has continued to make all-out efforts to boost investment performance in the country, including the involvement of state-owned and private enterprises.

The National Development Planning Agency (Bappenas) had earlier forecast that Indonesias economy would grow at 5.1-5.3 percent in 2017.

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

According to Brodjonegoro, the estimate is based on the assumption that the countrys economy will still be dominated by consumption. 
Meanwhile, it is difficult to as yet ascertain the impact of the global economic turmoil on the national economy.

"We cannot as yet predict the impact of the global economic turmoil. One needs to understand that the global economy is not bright," Brodjonegoro pointed out.Nevertheless, the national economy was still able to grow by 5.1 percent in 2016.

He believed this trend indicated that Indonesias economy was still able to survive global economic upheavals. Hence, measures to ensure that the national economy can adapt to global change are important to boost growth.

"Even in the face of uncertain global conditions, we can grow 5.1 percent. It is nice. Hence, if we can predict and control the global conditions, it means that Indonesia can adapt to global change. This will be good for the economy of Indonesia," he added.

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IDB Approves $488 Million In Financing For Indonesia
The Jakarta Post, 08/02/2017

The Jeddah-based Islamic Development Bank (IDB) last weekend approved a financing deal worth US$488 million to support infrastructure development and education in Indonesia.

Of the total, $250 million will be used to develop Java’s southern coastal road (Pansela) to increase its capacity and thereby alleviate congestion on the northern coastal road (Pantura), which is known for often being overcrowded.

The project will include the construction of a 158-kilometer new road as well as bridges in Yogyakarta, Central Java and East Java.“The traffic is expected to grow from 50 to 1,000 vehicles per day within five years of the project’s completion.

This project will promote progress in southern Java and increase the region’s prosperity through improved market access and investment competitiveness,” Ibrahim Shoukry, the IDB’s resident representative in Indonesia, said in a statement.

Meanwhile, the other $238 million will be aimed at the development of six Islamic higher education institutions, namely the State Islamic University (UIN) of Sunan Ampel Surabaya, the State Islamic Institute (IAIN) of Raden Intan Lampung, IAIN of Sultan Thaha Saifuddin Jambi, IAIN of Antasari Banjarmasin, IAIN of Imam Bonjol Padang and IAIN of Sultan Maulana Hasanuddin Banten.

The development of those educational institutions includes the construction of new facilities, the renovation and procurement of new equipment and various training courses, research grants and scholarships, in line with the government’s goal to boost the quality of the country’s workforce.

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Switzerland To Spend Millions On Development Projects In RI
The Jakarta Post, 08/02/2017

Switzerland has allocated 75 million Swiss Franc (US$75.56 million) for various development projects in the 2017-2020 period to enhance bilateral relations with Indonesia.

The funds would be allocated to macroeconomics assistance, private sector development, infrastructure and trade, the head of economic development cooperation at the Embassy of Switzerland in Indonesia, Martin Stottele, said Monday after meeting Industry Minister Airlangga Hartarto.

Swiss Ambassador to Indonesia Yvonne Baumann said Switzerland was particularly keen on developing human resources in Indonesia’s manufacturing sector.

"In the past we've funded some schools and polytechnics here to improve the quality of vocational training. Now we want to do it again in the manufacturing sector, but on a larger scale," she said, declining to disclose details.

One of the ongoing projects is a program to develop tourism called "Wisata," through which Switzerland helps local people develop tourism in Flores in East Nusa Tenggara (NTT), Wakatobi in Southeast Sulawesi and Toraja in South Sulawesi.

At present, Switzerland as a member of the European Free Trade Association (EFTA) is negotiating with Indonesia on a Comprehensive Economic Partnership Agreement (CEPA).

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Gov't to Let Other Investors Fund Jakarta LRT Project
Tempo, 08/02/2017

The government rushes to find new financing options for its light rail transit project in the greater Jakarta area, as it becomes clear the Rp 23 trillion ($1.7 billion) development costs are too expensive to be borne by the state budget only.

Up until today, state contractor Adhi Karya has been covering all expanses with its own internal cash.
Finance Minister Sri Mulyani Indrawati said the government will allow a consortium to invest in the project, while the government will provide a guarantee fund.

"We only want to make sure that the project will be completed on time," Sri Mulyani said. It also means that the government needs to revise a presidential regulation from 2015, which requires the project to by fully state-funded. President Joko "Jokowi Widodo" seeks to showcase the LRT in two years, when Indonesia hosts the 2019 Asian Games.

Transportation Minister Budi Kara Sumadi said the LRT is 12-percent complete, while Adhi Karya is expected to finish the elevated track from Cibubur to Cawang in East Jakarta by December 2018.

After that, around May 2019, state railway operator Kereta Api Indonesia and train manufacturer INKA will install the trains. Another LRT project in Palembang, South Sumatra, is already 35 percent complete and should be ready by June 2018, Budi added.

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Gov't Assures Completion of LRT Project 
Tempo, 08/02/2017

Hambra, Deputy of Business Infrastructure at the State-Owned Enterprises Ministry, believed that the light rapid transit (LRT) project in Jakarta, Bogor, Depok, and Bekasi would be completed as scheduled.

Hambra also expressed optimism that the project would not have the same fate with the monorail project, which was discontinued.

"It's not like [the monorail]. We hold meetings to ensure that the project remains on track," Hambra said at the Maritime Affairs Ministry in Jakarta on Tuesday, February 7, 2017.

Hambra added that the government has prepared financing scheme options for the project, namely the public service obligation (PSO), the government insurance, and cooperation between SOEs or their subsidiaries to finish the project handled by PT Adhi Karya.

"The development is still on going. We’re looking for opportunities, and then the expert team will do their work," Hambra explained.

Hambra revealed that the government would need to adjust Presidential Regulation No. 98/2015 on the acceleration of integrated LRT development in Jakarta, Bogor, Depok, and Bekasi (Jabodebek).

The Jabodebek LRT project will cover 83 kilometers with a total investment of Rp 23 trillion (US$1.7 billion). Routes that will be available for the LRT include Cibubur-Cawang, East Bekasi-Cawang, Cawang-Dukuh Atas, Cibubur-Bogor, Dukuh Atas-Palmerah-Senayan, and Palmerah Grogol.

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North Sumatra Ports Infrastructure to Complete This Year: Pelindo
Tempo, 08/02/2017

Bambang Eka Cahyana, president director of state-owned port operator PT Pelabuhan Indonesia I (Persero), also known as Pelindo I, said that North Sumatra ports will commence operations this year. Improvements to port infrastructure are expected to boost economic growth in the province.

Bambang explained that the company has been stepping up construction of port infrastructure in the past two years.
He is hopeful such improvements would attract more shipping lines, goods owners and investors.

“North Sumatra is the most attractive province for investment. However, its potential remains largely untapped due to sluggish infrastructure development, including ports. This year, we will complete the constructions. North Sumatra will rise,” Bambang said.

Moreover, he went on, Kuala Tanjung Port will begin operations by August. Bambang added that the construction of the port’s multipurpose terminal is 70% complete.

Kuala Tanjung Port will be developed in four phases. The first phase is the construction of a multipurpose terminal. The second phase is the construction of an industrial area on a 3,000 hectare of land, which is expected to complete by 2018.

The third phase is the construction of a dedicated terminal/hub port, which expected to complete by 2019. The fourth phase is the development of an integrated industrial area from 2021 to 2023.

Tanjung Balai Asahan Port will also be revamped. Bambang expects the port to start operations after Eid al-Fitr holiday (in late June). Moreover, Pelindo I is currently developing a container terminal in Sibolga. Construction of Sibolga Port will complete in September at the latest.

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Telkom`s 3S Satellite To Support Tourism Development
Antara News, 08/02/2017

The launch of Indonesian Telkom 3S satellite, scheduled on Feb 15, 2017, at the Guinea Space Center, Kourou, Guinea, France, is viewed to have a positive impact on the countrys economy, notably the tourism sector.

"I appreciate the launch of Telkom 3S satellite, because it becomes the solution to the development of national tourism. Hopefully, the launch will run smoothly," Tourism Minister Arief Yahya said in Jakarta on Tuesday.

According to Yahya, Indonesia is geographically an island country with thousands of islands, which has a tourism potential but cannot be maximally accessed by telecommunications infrastructure and Internet.

"With increasingly wider Internet access across the country, the tourism sector, particularly the development of the 10 primary tourism destinations, could be boosted from now as the fourth biggest foreign exchange contributor to the national economy," noted Yahya.

In the meantime, Telkoms Director of Network and IT Solution, Abdus Somad Arief, said on Monday last week that all the preparations are already on schedule.

"Until now, all the preparations are on schedule," Arief said on the sidelines of the pre-launch at the Telkoms master control station, Bogor, West Java.

According to him, Telkom 3S satellite will occupy an orbital slot of 118 degrees east longitude at above Kalimantan, which is occupied by Telkom 2.

With the active period of the satellite being about 15 years since its launch, Telkom 3S has a capacity of 49 transponders, comprising of 24 transponders of C-Band (24 TPE), 8 transponders extended of C-Band (12 TPE) and 10 Ku-band transponders (13 TPE).

Telkom 3S is manufactured by Thales Alenia Space (TAS) of France, launched with the Ariane 5 ECA rocket VA235 owned by Arianspace Europa."Telkom 3S will replace Telkom 1, which will expire in 2018," Somad noted.

Telkom 3S satellite will be launched with an investment of around US$300 million, which will function to improve and expand the scope of telecommunications services, especially in remote areas that cannot be traversed by the optical cable.

"It provides communication services with higher bit-rate, resulting in better quality of communication. Thus, the television broadcast, mobile communications services and broadband Internet can reach all areas of Indonesia, Southeast Asia and some East Asian states," Somad explained.

He added that with Telkom 3S satellite, the telecommunications company will have three active satellites in orbit, namely Telkom 1, Telkom 2 and Telkom 3S.

Meanwhile, Project Head of Telkom Indonesia, Tonda Priyanto, said the operation of 3S Telkom is expected to reduce dependence on foreign satellites.

According to Tonda, currently, two-thirds of Indonesian areas cannot be reached by terrestrial communication systems, while satellites are helpful to address the disparity of access to information in the country.
Towards the launch, Telkom is inviting 250 students to explore the master control station in Cibinong, Bogor, to learn more about satellites.
The students have an opportunity to conduct studies on aerospace using virtual reality video 360.

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Gov`t Expects Marine Tourism to Generate US$4bn
Tempo, 08/02/2017

Marine tourism is expected to generate up to US$4 billion by 2019, four times higher than its current contribution to overall revenue of tourism.

“We hope that foreign exchange earnings from marine tourism could increase from 1 million US dollars by 2019,” Minister of Tourism Arief Yahya said Tuesday in the signing of cooperation on tourism development with the Ministry of Marine and Fishery in Jakarta.

At present, marine tourism merely contributes 10 percent to overall foreign exchange earnings from tourism of US$10 billion per year.

For comparison, Malaysia’s marine tourism contributes 40 percent to the country’s overall foreign exchange earnings from tourism.The estimate of Malaysia’s foreign exchange earnings from tourism is roughly US$25 billion per year.

Yahya said that the sub-sector is facing regulatory, human resources and service management problems.Boasting 13,466 islands and 5.8 million square kilometers of water, Indonesia remains unable to untap its marine tourism’s full potential.

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