Update News February 21, 2017

In The News

C Java Contributes Significantly To National Growth: BI
Antara News, 21/02/2017

Central Java province contributed significantly to the national economic growth last year, Bank Indonesia (BI) Deputy Governor Sugeng said.

"Under the leadership of Governor Ganjar Pranowo who won Adhikarya Pangan Nusantara awards from President Joko Widodo in 2015 and 2016, Central Javas economy expanded 5.28 percent for all of 2016," he said here on Monday.

The growth is above the national growth of 5.02 percent, he said.

He predicted that household consumption and investment will remain the engine of the provinces economic growth this year.

The high growth of middle class families and the prospect of job opportunities will increase household consumption, he said.

On the investment side, the construction of the section of Trans Java toll road, a thermal power plant in Batang district, and Bener dama, and the expansion of Ahmad Yani Airport in Semarang city will increase investment, he said.

In the face of national and regional challenges, BI expected that it can increase its contribution at a regional level and play its role as a strategic advisor, he said.

"The existing good synergy between BI representative office in Central Java province and the regional government must be maintained and increased," he said.

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RI, Pakistan To Focus On Overcoming PTA Obstacles
Antara News, 21/02/2017

Indonesia and Pakistan have agreed to focus on efforts to overcome barriers in the Indonesia-Pakistan Preferential Trade Agreement (IP-PTA) and to increase the number of products in the agreement.

Director General for International Trade Affairs of the Ministry of Trade Iman Pambagyo said the two sides focused on eliminating constraints in the IP-PTA.

"We are focusing on the existing PTA problems and are likely to increase the number of products in the agreement," Pambagyo said in a short message to ANTARA on Monday.

He added that after benefiting from the PTA cooperation scheme, the two sides will prepare a model to increase the PTA level to Trade in Goods Agreement or even to Comprehensive Economic Partnership Agreement.

Both countries made the efforts to reinforce their trade and investment relations during the second Joint Commission meeting to review the I-P-PTA, which was held on Feb 16 and 17, 2017, in Islamabad, Pakistan. The two delegations discussed two important issues on obtaining bigger benefit from the IP-PTA and cooperation on trade and investment promotion.

Other issues discussed included Kinnow orange market access to Indonesia, disturbance of Indonesian oil palm products to Pakistan, Pakistans interest to supply Indonesia with white rice and Basmati rice, surgery equipment, and beef exports.

Indonesia raised the issue of high tariff on a number of Indonesian export products that it felt was too aggressive. Since the imposition of the PTA in 2012, Indonesias exports to Pakistan increased sharply, while Pakistans exports to Indonesia declined.

Indonesias exports to Pakistan in 2015 stood at US$2 billion, while Pakistans exports to Indonesia were recorded at $174.5 million in the same year, a surplus of $1.8 billion in favor of Indonesia.

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Ciletuh Geopark Becomes Special Economic Zone
Antara News, 21/02/2017

The West Java provincial administration will make Ciletuh Geopark and Pangandaran area become Special Economic Zones in Tourism, West Java governor Ahmad Heryawan said here on Monday.

"Some areas in Pangandaran and most Ciletuh area being proposed to the Ministry of Tourism to become a special tourism zone," the governor said.

He hoped the special area will boost local economic growth.

"I think the economic development via tourism should be enlarged and expanded," he said.

For that, the governor added, the provincial administration will improve infrastructure and build facilities such as communication networks and hotels through cooperation with various parties.

Meanwhile, Nusawiru Airports runway in Pangandaran will be extended to support the economic activities.

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Property Developers Focus on Mid-to-Low Segment
Tempo, 21/02/2017

The residential property market in 2017 is predicted to be dominated by the middle-to-low market segment which will hold back the property sector’s profit margin issues. PT PP Tbk. (PPRO) Director of Finance Indaryanto said that throughout this year PPRO will consistently continue to target the middle-to-low class segment.

Even though the economic condition has recovered, current political atmosphere and the global economics’ uncertainty will potentially continue to hinder society’s investment. PPRO are optimistic in reaching their 45.8 percent marketing sales growth goal in 2017. According to Indaryanto, the company’s strategy in consistently targeting that specific segment will maintain the stability of their revenue. PPRO plans to achieve a total revenue of Rp3.5 trillion from last year’s realization which was at Rp2.4 trillion.

PT Bumi Serpong Damai Tbk. (BSDE) also plans to expand their sales portion in the middle and lower segment, especially at the Rp900 million up to Rp1.3 billion price range. This segment is still considered to be affordable and worthy enough in a location such as BSD City. BSDE will continue to open their market to the upper-class level, although in a smaller portion in this year’s sales target. From the Rp7.2 trillion sales target, they have already obtained Rp250 billion from two of their projects’ pre-sale.

According to Aurellia Setiabudi, Maybank Kim Eng Analyst, only a small number of well-established developers recorded at the stock exchange that is interested in the middle segment market, moreover the lower segment market.

However, she said that in 2017, many developers will get involved in this segment since current government programs are siding with this segment. Meanwhile, the continuously massive infrastructure development will open the opportunity for the middle and lower class segment to grow. Especially in regions where properties are still being sold at an affordable rate.

PT Hanson International Tbk. (MYRX) is one of the many developers that are taking the opportunity to conduct massive scale projects at Maja, Banten, after the government had recently recognized Maja as a new city through Presidential Decree No. 2/2015. MYRX plans to invest 200,000 residential units within 5 years in Maja Region and Serpong. They also plan to conduct a Rp2 trillion residential project expansion by establishing 9,000 middle to low segment houses from the 2 trillion investment they recently issued.

According to Aurellia, the thirteenth economic policy package regarding the issuance of easing the cheap housing permit is potential to increase the growth of this segment. The government issued a Presidential Decree No 64/2016 regarding the housing development for lower income society.

“We think that the small margin will be compensated by the high sales volume which will open the opportunity for the following growth, considering that the middle-to-high class segment is enduring a grim outlook,” she said.

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Komodo Airport Set To Meet International Standard
Antara News, 21/02/2017

Development of the Komodo Airport has been discussed in Jakarta recently by President Joko Widodo (Jokowi), East Nusa Tenggara Governor Frans Lebu Raya, and relevant ministers.

In order to meet the international standard, East Nusa Tenggara Creative Industry and Tourism Office Chief Marius Ardu Jelamu remarked in the provincial city of Kupang on Monday that the runway of Komodo Airport will soon be extended to 2,200 meters.

The extension of the runway of Komodo Airport was constrained by the land acquisition of the local community, but now it has been negotiated with the land owners to extend it to 2,200 meters this year.

"When the runway of Komodo Airport in Labuan Bajo has been extended to make it an international airport, it will automatically serve international flights to ease foreign tourists coming to East Nusa Tenggara," Jelamu said.

The Malaysia-based low cost carrier AirAsias has planned to serve the Kuala Lumpur-Jakarta-Labuan Bajo route starting in 2017, and the turning of Komodo into international airport will have a positive impact on the flow of tourists to East Nusa Tenggara through the entry point of Labuan Bajo. AirAsias new service will facilitate more foreign tourists to visit Labuan Bajo and the leading destinations in the province of East Nusa Tenggara. Among the tourist attractions in tge orivubce, Labuan Bajo remains a leading destination for both local and foreign tourists.

Labuan Bajo on the western tip of Flores Island, which has been named one of the 10 main tourist destinations in Indonesia, is a gateway for foreign tourists to other destinations in NTT. Offering a wide range of tourist facilities, the West Manggarai district town of Labuan Bajo remains a world famous tourist destination in Indonesia. Labuan Bajo is a launch point for both local and international tourists to explore the islands interiors and visit the giant dragons of Komodo on Rinca Island.

In recent years, Labuan Bajo has gradually transformed into a busy spot due to the presence of divers and an increase in the number of visitors to Komodo. In the coming years, the area will continue to be a top tourist destination owing to the wide range of tourism facilities it offers. Based on the results of a poll conducted by the Ministry of Tourism, Labuan Bajo received an award recognizing it as the most preferred international tourist destination. The award was presented by the tourism minister in Jakarta in early December 2016. The winner was selected after a rigorous evaluation process that involved viewing all worldwide tourism records and comparing them with those in Labuan Bajo.

An indicator supporting the award came from a survey conducted by CNN, which stated that Labuan Bajo is the worlds second-best snorkeling site after Raja Ampat in West Papua. Labuan Bajo has several tourist destinations, including Pede Beach, the stone mirrors, Rinca Island and its dragons, and the snake cave, which have always attracted tourists from around the world.

East Nusa Tenggara indeed needs direct international flights to support its plan to boost its tourism industry. Jelamu said no direct international flights are available to and from NTT to facilitate transport of foreign tourists to the province.

"The number of foreign tourists visiting the province last year was much smaller than that of domestic tourists," he noted.

He said that of the 882,395 tourist arrivals in the province in 2016, only 112,433 constituted foreign tourists. According to him, the number of foreign tourists could easily increase if the province can offer two-way direct international flights.

The province, which comprises several small islands, is no less attractive than other tourist destinations in the country or even the world, he said, pointing to Labuan Bajo just across Komodo Island, one of the wonders of the world, with its ancient lizards.

"Bali is crowded with foreign tourists, as visitors to the resort island have access to direct international flights," he stated.

Hence, he called on the provincial administration to continue to coordinate with the central government to open direct international flights to and from any of the potential cities in the province. East Nusa Tenggara is blessed with at least eight natural wonders that must be developed optimally to boost the local economy and tourism.

These natural wonders are Semana Santa in Larantuka, Nihiwatu Beach on Sumba Island, Alor Dive on Alor Island, Nemberalla Beach in Rote Ndao, Komodo Island, the Pink Beach on Padar Island, Taman 17 on Riung Island, and the tricolored lakes of Mount Kelimutu. Tourist attractions in the province have been promoted extensively by the local government, tourism department, relevant agencies, and private parties.

East Nusa Tenggara has high tourism potential and will continue to be promoted intensively, so that both local and foreign tourists visiting the area can witness and enjoy the tourist attractions at various districts in the province. With the extension of Komodo airports runway to sever international flights, Jelamu expressed optimism that the number of tourist arrivals in East Nusa Tenggara will reach more than one million in 2017.

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RI Has Huge Potential For Investment In Renewable Energy
Antara News, 21/02/2017

Indonesia has a huge potential for investment in renewable energy, especially for waste and geothermal energy, according to the Energy and Mineral Resources Ministry.

"There are 13 regions in Indonesia which have geothermal energy potential," the ministrys Director of Geothermal, Yunus Saefulhak said in a discussion held here, Monday.

The regions have the potential to produce 9.6 gigawatt of geothermal energy, with basic cost of production (BPP) lower than the national BPP, making it more economical. The potential regions are East Nusa Tenggara, Aceh, papua, South Kalimantan, South Sulawesi, Maluku, Bangka Belitung, Riau, West Sumatra, and West Nusa Tenggara.

Other renewable energy resources across the country are expected to produce 200 GW of energy, thus the government has prepared a scheme to provide incentives for investors. Currently, some investors have expressed their interest to develop renewable energy in Indonesia. Under the ministerial decree 12/2017, state-run electricity firm PT PLN would have to use renewable energy in a bid to improve efficiency and reduce its price to consumers.

The renewable energy would be bought from power plants under the mechanism of fixed price or direct appointment. PLN would have to operate renewable energy power plants with a capacity of 10 MW.

Yunus said, development of renewable energy would need closer coordination with other ministries and institutions, for instance, to provide its land and environmental impact assessment (Amdal).

The development is expected to improve national competitiveness in energy sector, he said.

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Investors Sought For Green Energy Projects On Sumba Island
The Jakarta Post, 21/02/2017

The government has invited investors and financial firms to build power plants powered by renewable energy in trying to meet the 2020 electrification deadline on Sumba Island in East Nusa Tenggara (NTT).

Energy sources for the power plants for the Sumba Iconic Island (SII) project include solar, wind, hydro and biomass.

“There’s still big gap [between realization and target] so more investment is needed because the state budget is limited,” said Rida Mulyana, director general of new and renewable energy at the Energy and Mineral Resources Ministry during an investment forum on Monday.

The government organized an investment forum hoping to attract US$189.9 million in private investment to reach the 95 percent electrification target, with 65 percent coming from renewable energy, by 2020.

Electrification reached only 42.67 percent last year, only 16.5 percent of which came from clean energy. In 2010, when the project started, the percentage was around 20 percent with less than 10 percent being from renewable energy.

Dozens of private investors, philanthropists and finance firms were invited to the event. They included PT Arya Watala Capital, PT Growth Steel, Wind Energy Solution, Hywind and PACE Indonesia. SII was started in 2010 by Hivos, a Netherlands-based international development company, and is supported by the Energy and Mineral Resources Ministry.

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Qatar Firm Buys 35% Stake in Paiton Energy
Tempo, 21/02/2017

Qatar's state-owned energy company Nebras Power has acquired Paiton Energy Indonesia for US$1.3 billion. Nebras Power bought 35.5 percent stake in Paiton through subsidiary Nebras Power Netherland BV.

The acquisition was revealed during a meeting between the Indonesian Ambassador to Qatar Muhammad Basri Sidehabi with Nebras Power's CEO Khalid Mohammed Jolo and business development director Faisal Obaid Al-Siddiqi in Doha, Sunday.

"We hope this acquisition can turn Nebras into a world-class company," Ambassador Basri said.

Meanwhile, Khalid said that the acquisition is Nebras' long-term strategy to obtain profitable assets.

"We are confident to invest in Indonesia," he said.

Nebras Power also bought 35 percent stake in IPM ASIA, who's in charge of managing and maintaining Paiton's power plants, which have a total capacity of 2,045 MW. Nebras also plans to build a 2x250-MW gas power plant worth US$700 million in Belawan, North Sumatera.

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Freeport Says It Will Continue To Operate In Indonesia
Antara News, 21/02/2017

PT Freeport Indonesias parent company Freeport McMoRan Inc, said it would continue to operate in the country despite disagreement on its contract status with the government of Indonesia.

"We are committed to staying in Indonesia. This is an important resources for Freeport, also an important object for the government of Indonesia and Papua," says President and CEO of Freeport McMoRan Inc Richard C. Adkerson here on Monday.

PT Freeport Indonesia has large copper and gold mines in the countrys easternmost regions of Papua, but now , the company has stopped operation as it is not allowed to continue export its copper concentrate over contract disagreement.

Richard said the U.S. mining giant had invested US$12 billion and is investing US$15 billion in Indonesia providing jobs for 32,000 Indonesians.

The government of Indonesia also had earned 60 percent of financial benefit directly as a result of the operation of Freeport, he told reporters in a news conference.  Taxes, royalty and dividends paid to the government since 1991 have exceeded US$16.5 billion and Freeport McMoRan had received US$108 billion in dividend, he added.

"The taxes, royalty and dividend to be paid to the government in the future until 2041 is estimated to exceed US$40 billion," he said.

Richard said the company has contributed 90 percent to the economy of Mimika, Papua, adding one third of the economy of Papua is sustained by Freeport business .

"In the remaining contract , Indonesia will receive more than US$40 billion . This asset is too big for us to abandon. What we need is to find a solution and we are committed to continuing cooperation with the government of Indonesia," he said.

He said the operation of the company has been affected after the end of the export license on January 12, 2017.

The company even already stopped operation since February 10 as the company had no place to store up concentrate.  The condition was made worse with the strike by the workers of the Gresik smelter which could only process 40 percent of the concentrate from Grasberg.

"We shut down our factory 10 days ago as there is no storage facility for the concentrate, and we could not exports. We could not continue producing goods we could not exports. As a result we slashed production ," he said.

He said Freeport would launched efficiency and cut costs, including by laying off workers.

"We reduce the number of our expatriate workers . This week we will reduce the number of workers of our contractors . Around 12,000 of 32,000 workers are our director workers," he said.
Richard said he felt sad about the problem, adding the company has no intention of seeking to pile up pressure on the government in order to gain from contract negotiation.

"We do this not because of negotiation with the government but how to make business financially work. We hope there would be a way-out soon," he said.

The government through regulation No. 1 of 2017 extended license for the exports of copper concentrate on a certain conditions including agreement to build smelter in five years and agreement to divest up to 51 percent of the share of the contractor to Indonesian investors. In addition the company has to comply with the taxation regulation, which could change from time to time. Under the old system the tax did not change until the contract expires. Freeport, however, refuses to the change in its legal rights it was given in 1991 under contract of work.

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LIPIi To Conduct Bathymetric Mapping In Indian Ocean
Antara News, 21/02/2017

The Indonesian Institute of Science (LIPI) will conduct bathymetric mapping (mapping of sea floor topography) in the Indian Ocean to determine and monitor potential threats of earthquakes in Indonesia.

"LIPI will conduct bathymetric mapping in the Indian Ocean through the 2017 Indonesian Program Initiative on Maritime Observation and Analysis (InaPRIMA). The bathymetric mapping is used as the basic analysis of a fracture pattern that triggers an earthquake," LIPI head Iskandar Zulkarnain said here on Monday.

In addition, the LIPI will conduct an oceanographic research to determine sea characteristics, connectivity, water temperature, and profiles of ocean currents that influence oceanographic conditions.

"The observation of the seafloor is very important," he remarked.

Indonesia is a meeting point of several tectonic plates. It is located between two continental plates, namely the Eurasian Plate (Sunda Plate) and Australian Plate (Sahul Shelf); and between two oceanic plates, namely the Philippine Sea Plate and Pacific Plate.

He pointed out that the number of maritime researches in the Indian Ocean is low as compared to the Pacific Ocean. In fact, Indonesias marine expanse has an abundance of mineral resources and biodiversity, he stated.

The 2017 InaPRIMA is organized by the Meteorology, Climatology and Geophysics Agency (BMKG), the Indonesian Institute of Science (LIPI), and the National Oceanic and Atmospheric Administration (NOAA).  The expedition will take place from Feb 20 to March 16, 2017, in its routes, namely Jakarta, the Indian Ocean, Sabang, Pidie, Malaka Strait, and Jakarta.  The activities will be complemented by exhibitions, and people can visit the ship when it anchors in Sabang.

The activity is dedicated to the recovery of three and deployment of five deep-water ocean moorings as part of the Research Moored Array for African-Asian-Australian Monsoon Analysis and Prediction (RAMA). RAMA is a multi-national effort to improve understanding of the African-Asian-Australian monsoon system and its far-field impacts. It complements a number of other moored arrays in the Atlantic and Pacific Oceans.

The Indonesian research vessel Baruna Jaya includes over 25 Indonesian scientists and researchers, three technicians from NOAAs Pacific Marine Environmental Laboratory, and 23 crews and technicians for a joint research.

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