Update News February 13, 2017

In The News

Mandalika to Become Economic Engine for West Nusa Tenggara
Tempo, 13/02/2017

Indonesia is seeking to make the Mandalika Special Economic Zone (KEK) for tourism in Lombok Tengah District, West Nusa Tenggara, an economic engine for the region.

"The Mandalika KEK must immediately become an engine to drive economic growth and grab a competitive bargain for West Nusa Tenggara and Indonesia, in general," Chief Economic Minister Darmin Nasution stated here on Saturday while inspecting the zone.

Darmin expressed belief that the Mandalika KEK would become an engine of growth for the region.
He also expressed optimism that the operation of the Mandalika KEK would help the local communities, especially the younger generation, to immediately take advantage of the economic activities to be initiated as global competition is growing increasingly stiffer. "We must not remain passive and become mere spectators," he added.

Nasution said the government hoped the economic activities would immediately grow in the Mandalika KEK. "The Mandalika KEK must become our capital to develop entrepreneurship and boost exponential economic growth," he added.

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Ministry to Formulate Policies for Ensuring Economic Equality
Tempo, 13/02/2017

The Coordinating Ministry for Economic Affairs will formulate necessary policies to ensure equitable economic development in Indonesian regions.

"The president has called on the coordinating minister to create policies to address the development gaps in regions," Coordinating Minister for Economic Affairs Darmin Nasution stated during a working visit to the Special Economic Zone (SEZ) of Mandalika in Central Lombok District, West Nusa Tenggara Province, on Saturday.

He said the ministry had begun disseminating information and making necessary efforts to ensure even development across Indonesia's regions.

According to Nasution, one of the aims of the Indonesian government's policies is to combine economic growth and equitable inter-regional development by setting up SEZs or industrial areas.

The development of SEZs is expected to be one of the government's efforts to overcome the economic downturn in Indonesia that has been witnessed since 1998.

One of the efforts being taken is developing SEZs in the tourism sector in several provinces, including the SEZ of Mandalika in Central Lombok District.

The government has continued to focus on developing industries engaged in the management of natural resources in SEZs, such as the palm oil commodity on the island of Sumatra.

"Why (are we focusing on developing) tourism? This is because tourism is not only growing in Jakarta and Java but is also developing throughout the regions based on the local potential," he noted.

Every region needs its own brand and trademark to develop the tourism sector in the SEZs, he noted. Hence, a tourist area needs to be combined with a leading local commodity industry, such as a pearl center at the Mandalika SEZ.

Moreover, the development of tourism areas should cater to the needs of infrastructure, security and comfort, as well as health and cleanliness.

"After meeting the needs of the three main aspects, (the government and community) should then develop a variety of attractions, in the form of art or products that can attract people to visit," he added.

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Economic Growth Will be Higher, VP Believes
Tempo, 13/02/2017

Vice President Jusuf Kalla expressed his optimism that Indonesia’s economic growth this year will be higher than that of last year, which was at 5.02 percent.

Rising prices of commodities in the global market recently is one of the reasons for the optimism of the higher economic growth this year, Kalla said.

"Why do we expect it would be higher? Because in the previous years, 2015 and 2016, we had problems of revenues and growth in the regions. It was all because prices of commodities dropped," Kalla said on Friday.Those commodities that he referred to were coal, palm oil and nickel.

However, Kalla said that since the end of 2016, the prices of those commodities have improved. The price of coal, for example, has reached US$80 per ton from the previous US$50 per ton.  The price of nickel has also improved due to the declining supply in China.

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Gov`t Pushes NTB Province to Develop Gili Mas Seaport
Tempo, 13/02/2017

The government has pushed West Nusa Tenggara (NTB) provincial government to develop Gili Mas seaport located in West Lombok regency.The seaport is expected to boost connectivity to the province.

“This seaport is expected to boost maritime-based economy and maritime tourism in western Lombok,” said Coordinating Minister For the Economy Darmin Nasution on Sunday (12/2).

Darmin also hopes that the operation of the seaport can help transporting commodities and passengers in West Lombok because the existing Lembar seaport is already overcrowded.

Darmin added that a cruise ship terminal and a container terminal would be available at the seaport, which has a capacity of up to 200,000 containers.

In total, the Gili Mas seaport will cover an area of 100 hectare. The first phase of the construction is expected to be completed in 2019, while the second stage is expected to be finished in 2021. The groundbreaking ceremony was done on 17 December 2016.

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Pelindo to Have New Subsidiary in Q2
Tempo, 13/02/2017

State port company Pelabuhan Indonesia (Pelindo) II plans to establish a new subsidiary in the second quarter this year. The new subsidiary is an investment company that will be tasked with managing the Pelindo's finances.

Pelindo II president director Elvyn G. Masassya on Sunday, February 12 said the new subsidiary will be named Pelabuhan Indonesia Investama (PII).

PII will seek funding sources to pay for Pelindo II's projects and consolidate the company's minority shares in other subsidiaries. Elvyn said PII will source funds by issuing debts and borrowing from investors.

According to Elvyn, Pelindo II will allocate an initial capital of Rp200 billion for PII. The new subsidiary is targeted to start operating in the second quarter and expected to manage trillions of funds to be distributed to Pelindo's dozens of subsidiaries.

Pelindo's managing director of subsidiaries Riri Syeried Jetta said the company hopes that PII can serve as a capital market for the port operator's subsidiaries.

"Additionally, we can pursue revenues via the investment company's management. That way, we get profits from left and right, everyone will evolve—the parent company, the subsidiaries, and the PII," Riri said.

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Soekarno-Hatta Airport Third Runway Project to Start in April
Tempo, 13/02/2017

Soekarno-Hatta Airport Third Runway Project to Start in AprilState-owned operator PT Angkasa Pura II (Persero) plans to break ground on the third runway of Soekarno-Hatta International Airport in April.

Angkasa Pura II president director Muhammad Awaluddin said that the runway of 3,000 m in length and 60 m in width will start operations in mid-2018 in a bid to increase the number of aircraft movements to 114 per hour.“An additional runway to anticipate increased [number] of passengers to over 100 million by 2025,” he said yesterday.

Soekarno-Hatta International Airport’s first and second runway can accommodate 72 aircraft movements per hour, heading towards 86 aircraft movements per hour. According to Awaluddin, the third runway will allow additional flight routes.

He said that the project will cost Rp2 trillion. The runway will be built on 216 hectares of land on the north side. The project procurement is currently underway.

Of the total land requirement, Angkasa Pura II has secured 42.85 hectares. The remaining 173.19 hectares will be financed through state capital participation (PMN) amounting to Rp4 trillion.

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Power Firm Launches Mobile Electrical Service Outlet
Antara News, 13/02/2017

State-owned power firm PT PLN, which caters to the Papua and West Papua regions, has launched a mobile service car to provide electrical services to the public.

"This is our prime product in the provinces of Papua and West Papua, which is aimed at further increasing our services to the society," Yohanes Sukrislismono, general manager of the regional power plant, said here, Friday.

The outlet called Mobile Gelis will help customers looking for options to pay electricity bills or other PLN services in the rural areas, he pointed out.

"A customer had once complained, My electricity bill was only Rp50 thousand, while the transport cost to pay it reached Rp100 thousand; well, this is what we want to avoid by launching a Mobile Gelis," Sukrislismono remarked.

The mobile electrical service outlet will cater to requests such as new electrical installations, addition of electrical power and purchase of electricity tokens, besides the payment of electricity bills, Sukrislismono revealed.The mobile car will visit a village, halt for two to three hours there and then move on to the next, he mentioned.

For some time, the regional PLN will be focused on serving the community in Jayapura district because the company only has one mobile car carrying electrical services. "(The community in) the area had complained about the difficulty in performing transactions related to electrical services," he added.

The mobile outlet was launched also with the view to reduce the number of electricity bills arrears, he noted."While we are not targeting it (revenue from the operation of the mobile outlet), in this first year, we still want to multiply the number of Mobile Gelis.

We will soon increase it to two or three units. Whats important now is that our customers get easier access to PLNs services," he maintained.

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World Bank Gives Indonesia $55.25m To Develop Geothermal Power
The Jakarta Post, 13/02/2017

The World Bank’s board of executive directors has approved $55.25 million in grants to support geothermal energy projects in Indonesia with the aim to facilitate investment in geothermal power generation.“Insufficient energy holds back Indonesia’s growth potential and limits the future opportunities of millions of Indonesians.

These grants will help Indonesia develop its abundant geothermal power potential,” World Bank country director for Indonesia Rodrigo Chaves said in a statement.

“The World Bank fully supports the government’s efforts to achieve 100 percent access to modern, reliable electricity as quickly as possible.”

The grant has two components with different objectives. The Clean Technology Fund (CTF) contributes $49 million to support infrastructure development and exploration drilling.

The Global Environment Facility (GEF) contributes an additional $6.25 million to support technical assistance aimed at building capacity in geothermal exploration and due diligence.

Geothermal power is the second-largest renewable energy resource in Indonesia after hydropower and a clean alternative to coal-fired power generation. Some 30 million Indonesians – or 12 percent of the population – lack access to modern and reliable electricity.

Meanwhile, World Bank senior energy specialist Peter Johansen said expanding access more equitably across the vast archipelago was another key objective for the project.

“The project has a special emphasis on the eastern part of Indonesia, where the percentage of families lacking access to modern and reliable electricity remains very high,” said Johansen.

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Freeport Yet to Agree on Switch Over from Contract of Work
Tempo., 13/02/2017

Riza Pratama, spokesman of PT Freeport Indonesia, a local unit of U.S. based mining company Freeport-McMoRan Inc., said that the company has not agreed to switch over from its contract of work (CoW) to temporary special mining permit (IUPK) issued by the government.

“We have yet to agree because there is no assurance of a safe investing environment,” Riza told Tempo yesterday.Freeport has halted its mineral exports due to the lack of agreement on the switchover. Freeport-McMoRan Inc. spokesman Eric Kinneberg told Reuters last weekend that the company has halted concentrate exports since January 12.

The mining company said it will continue to negotiate with the Indonesian government, noting that new mining permit provisions should be equal to that of its current CoW.

Kinneberg said the agreement was critical for Freeport Indonesia’s long-term investment. He said that new mining permit requires Freeport to pay taxes and royalty.

The company is also required to dispose of its 51 percent stake to the Indonesian government, an increase from the previous requirement of 30 percent. Freeport has only divested its 9.36 percent stake so far.

Freeport made the statement shortly after the Energy and Mineral Resources Ministry announced that it has issued temporary IUPK to Freeport, which would allow the mining company to obtain a mineral concentrate export permit. The government has banned Freeport from exporting concentrate before it built a smelting plant.

Freeport said the halt in concentrate exports would reduce the output Grasberg mine in Papua by around 70 million pounds of copper per month. The company had planned to lay off 30,000 workers in mid-February if denied export permit.

Earlier on Friday, director general for mineral and coal, the Energy and Mineral Resources Ministry, Bambang Gatot Ariyono said the ministry had approved requests of Freeport Indonesia and PT Amman Mineral Nusa Tenggara (AMNT) to switch over from CoW to special mining permit for mineral concentrate production.

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Indonesia-Singapore Celebrate 50th Bilateral Relation Anniversary
Tempo, 13/02/2017

Indonesia is seeking to strengthen its relations with Singapore following the visit of Minister of Foreign Affairs Retno Marsudi to Singapore on Friday, marking the 50th anniversary of the two countries bilateral relations this year.

Retno Marsudi met Singapores Minister of Foreign Affairs Vivian Balakrishnan in Singapore on Friday."During my visit, besides launching a series of activities related to the 50th anniversary of Indonesia-Singapore diplomatic relations, I also exchanged the ratification instrument for an agreement between the two countries on sea border determination along the east of Singapore Strait," the Ministry of Foreign Affairs official website quoted Minister Marsudi as having said on Friday.

With the exchange of ratification instrument, only a small part of the maritime border remains to be settled by the two countries.A series of activities such as an interfaith dialogue, a business forum, a music and fashion festival, and a fun run will be held to commemorate the 50th anniversary of Indonesia-Singapore bilateral relations.

Minister Marsudi said the bilateral ties were in a good shape following the intensive economic relationship and good communication between the two countries.

"The economic relations between the two countries are very intensive, though there is still room for improvement, for example through the establishment of the Kendal industry area in November 2016," Marsudi added.

During the meeting, both ministers also discussed ways to follow-up on the several agreements concluded at the Leaders Retreat in Semarang and explored opportunities to improve cooperation in Batam, Bintan and Karimun.

Both the ministers also emphasized the importance of enhancing cooperation in countering terrorism threats, drugs abuse and human trafficking. This year also marks the 50th anniversary of ASEAN.

"Indonesia is committed to making sure that ASEAN continues to contribute towards peace, stability and welfare in the region," Marsudi stressed.
Statistics show that Singapore is the 5th largest trading partner of Indonesia after China, US, Japan and India.

Until October 2016, the trade volume of Indonesia-Singapore had clocked US$20.9 billion while Singapores investment in Indonesia reached US$9.2 billion in 1,932 projects.As for tourism, as many as 1,519,430 Singaporeans had visited Indonesia in 2015.

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