Update News January 30, 2017

In The News


Gov`t to Build New Economic Centers
Tempo, 30/01/2017

The government announced that it would continue building new economic centers in several regions, particularly in eastern Indonesia.

"The sea toll program is already under way. We can feel the impacts already. Prices of commodities in eastern Indonesia have dropped and will further drop with new economic centers,” said Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan on Saturday (28/1/2017).

Luhut added new economic centers to be built are among others in Sumbawa, West Nusa Tenggara.
According to Luhut, Sumbawa is an island with potentials because it is has Mount Tambora so the island can be a center of corn, sugar and husbandry.

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OJK, Ombudsman Team Up To Improve Financial Sector Services
The Jakarta Post, 30/01/2017

The Financial Services Authority (OJK) and the Indonesian Ombudsman have agreed to work together to prevent potential disputes in the financial sector as people’s awareness of the industry continues to rapidly rise.

In a speech during the signing of the cooperation agreement on Friday, Ombudsman chairman Amzulian Rifai said the cooperation was important as the Ombudsman had seen an increasing number of complaints regarding public services in the financial sector, something that should be handled first by the OJK if the cases could still be resolved within the financial authority’s domain.

“We sometimes think that some cases [from the financial sector] could still be resolved by the OJK without the need for consumers to report them to the Ombudsman,” he said.

“The Ombudsman can only receive reports if there is no resolution from internal mechanisms in banks and financial companies.”

Under the cooperation, the Ombudsman will be responsible for monitoring public services provided by state institutions, state-owned enterprises (SOEs) as well as private bodies and individuals appointed to serve the public.

Throughout 2016, the Ombudsman received 9,069 complaints regarding public services in the financial sector, higher than the 6,859 recorded in 2015. Last year, the agency received 163 complaints regarding services provided by state-owned banks, 48 of which were related to procedural breaches.

OJK chairman Muliaman D. Hadad said the agreement with the Ombudsman would be enhanced into a further technical partnership since one of the authority’s responsibilities was to provide consumer education and protection.

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Three-Hour License Service For Energy Sector Launched
The Jakarta Post, 30/01/2017

The Investment Coordinating Board (BKPM) has launched a three-hour service for obtaining nine licenses connected to energy and mineral resources.

The government is encouraging large investments in the energy and mineral resources sectors this year, said BKPM head Thomas Lembong.

"Exports are still sluggish. Our consumption is strong, but we cannot encourage more or we would become an over-consumptive country. Investment [in the energy and mineral resources sectors] is the one thing we can boost," he said during the launch on Monday.

The new service would be applied to nine licenses related to infrastructure. When done through the BKPM's regular service, the process can take between 20 and 40 days. Company directors seeking the three-hour service merely need to submit the required documents at a one-stop integrated service (PTSP) agency.

The licenses will be issued if the firm has met all administrative and technical requirements stipulated in Energy and Mineral Resources Ministerial Decree No. 15/2016 on the three-hour licensing service for infrastructure in the energy and mineral resources sectors.

Meanwhile, Energy and Mineral Resources Minister Ignasius Jonan said that his ministry was also trying to reduce the total number of permits needed in the energy and mineral sectors to only 20 by March in order to encourage more investments.

"We want to make it simpler, but also to ensure that it complies with existing regulations," he said. (bbn)

The following is the list of licenses to be issued through the three-hour service:
1. Temporary business license for electricity,
2. Temporary business license for oil/fuel/liquefied petroleum gas (LPG),
3. Temporary business license for storage of processed products/compressed natural gas (CNG),
4. Temporary business license for liquefied natural gas (LNG) storage,
5. Temporary business license for oil refinery,
6. Temporary business license for processing oil residue industry,
7. Temporary business license for natural gas processing,
8. Temporary business license for general trade of oil/fuel,
9. Temporary business license for general trade of processed products.

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BI to Maintain Benchmark Rate at 4.75 Percent: Analyst
Tempo, 30/01/2017

Chief economist of state-owned lender PT Bank Mandiri (Persero) Tbk, Anton Hermanto Gunawan, expects Bank Indonesia (BI) to maintain benchmark rate at 4.75 percent this year. Throughout 2016, the central bank slashed interest rates up to 150 basis points.

“Core inflation rate is expected to be under 4 percent as private consumption is predicted to stagnate,” Anton said in his research titled ‘Outlook and Strategy 2017 Another Year of Fiscal Consolidation’, as quoted yesterday, January 29.

Moreover, Anton foresees rupiah exchange rate to remain flat in 2017, or similar to that of 2016. During the last year, the average exchange rate of rupiah was Rp13,400 per dollar.

U.S. government policies have caused global uncertainty and The Fed’s policy normalization may result in financial sector volatility this year. “Current account deficit is expected to be maintained at -2.2 percent of the gross domestic product [GDP],” he said.

According to Anton, commodity prices remain the major risk to Indonesia’s economic. He predicts that the average prices of crude oil, coal and crude palm oil (CPO) in 2017 to be at US$56 per barrel, US$70 per metric ton, and US$670 per metric ton, respectively. An unexpected decrease in coal and CPO prices may pose the biggest risk to the Indonesia’s GDP.

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Gov’t Turns to RCEP as US Scraps TPP
Tempo, 30/01/2017

The government will focus on discussing the Regional Comprehensive Economic Partnership (RCEP) after US President Donald Trump scrapped a plan to join the Trans-Pacific Partnership.

Rizal Affandi Lukman, deputy of international economic cooperation at the Coordinating Economic Minister, said that the government will also focus on discussing the Comprehensive Economic Partnership Agreement (CEPA) with the European Union.

"TPP member countries are also members of the RCEP. However, the scope of the RCEP is not as wide as the TPP. Perhaps, it would be better for Indonesia to Join the RCEP," Rizal said in Jakarta on Friday, January 27, 2017.

Rizal explained that the government will also strengthen bilateral cooperation with other countries. In a bid to improve exports, the government is currently looking at non-traditional markets, such as Iran, Nigeria, South Africa and Morocco.

"For Iran, President Joko 'Jokowi' Widodo will give a special attention. Therefore, we will not focus on a single forum," Rizal added. Earlier, President Trump delivered his promise made during his presidential campaign by ordering his cabinet to withdraw from the TPP.

The RCEP consists of 10 Southeast Asian countries and six countries who signed free trade agreements with ASEAN countries. The US is not a part of the RCEP, while Japan and Australia are RCEP member countries. Should all members sign the RCEP agreement, it would be the largest free-trade zone in the world.

Included in RCEP member countries are South Korea, Japan, China, India, Vietnam, Laos, Thailand, Brunei Darussalam, Philippine, Indonesia, Myanmar, Cambodia, Malaysia, Singapore, Australia, and New Zealand.

RCEP member countries made up 46 percent of the world's population and contribute 24 percent of the global gross domestic product. However, the agreement has been criticized to lack protections for labors, human rights and environment.

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Bogor, World Bank Launch Snapa App
Tempo, 30/01/2017

Bogor city government and the World Bank have launched ‘Snapa’, an app that helps the city government to formulate policies related to poverty and social gap.

"World Bank is set to launch the Snappa app on 9 March 2017,” said Head of Bogor Development Planning Board (Bappeda) on Friday (27/1).

Rudi added that Bogor, along with Jakarta, was chosen by the World Bank to implement this pilot project.

Rudiyana added that the app would make it easier for the local government to formulate policies on poverty and social gap because it provides an accurate database.

“If it’s successfully implemented in Bogor, it is planned that the app will be introduced to the Indonesian Government and will be applied all over Indonesia,” he added.

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Semanggi Road Access to be Built Next Month
Tempo, 30/01/2017

A road access (missing link) connecting Jalan Garnisun with Jalan Gatot Subroto is set to be built next month.

The road is expected to ease traffic around Semanggi, South Jakarta.

South Jakarta Mayor Tri Kurniadi said the road would be built by a number of developers who build buildings around Semanggi.

"This is an obligation of those six developers to build a road,” he said on Saturday (28/1).

The developers have to build a road as written as an obligation for each developers in line with the he land-use permit (SIPPT).

"I have told them to immediately build the road. The construction must begin early February,” he said, adding that the construction process is expected to take one to two months.

The road will be build next to Plaza Semanggi or adjacent to Mangkuluhur City apartment.

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Jakarta to Build Sidewalks in 47 Locations; Rp40 Billion Prepared
Tempo, 30/01/2017

The Jakarta provincial government is set to build sidewalks in 42 districts and five locations this year.

Head of Bina Marga Agency, which is in charge of roads, Yusmada Faizal said the sidewalks in those 47 places would be build around stations, markets or TransJakarta bus stops.

Yusmada added that the total budget for the project is Rp400 billion, while the total length of sidewalks to be built is equal to 50-60 kilometer.

The revamping of sidewalks in Jakarta, however, Yusmada added, is still far from being finished. He added that the total sidewalks to be revamped are 2,600 kilometer.

Last year, the Agency finished building sidewalks stretching 48 kilometer.

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AP II Books Operating Income of Rp2.3 Trillion
Tempo, 30/01/2017

State-owned airport operator PT Angkasa Pura II (Persero) booked net operating income in 2016. It sees an increase from 2015 unaudited net operating income of Rp2.066 trillion to Rp2.359 trillion in 2016. In 2015, the company’s retained earnings were Rp1.687 trillion.

The increase in the company’s net operating income last year was due to 18 percent hike in revenue compared to 2015, from Rp5.64 trillion to Rp6.65 trillion.

The major contributors of the revenue were aeronautical businesses, namely airline passenger services, plane landing and the use of air bridges that amounted to Rp4.03 trillion. Meanwhile, non-aeronautical businesses, e.g. concessions, rents, billboards, and cargos, generated Rp2.62 trillion.

Angkasa Pura II president director Muhammad Awaluddin said that the company saw a significant increase in revenue after the openings of new terminals in 2016, which include Terminal 3 of Soekarno-Hatta International Airport in Tangerang, Husein Sastranegara Airport terminal in Bandung and Sultan Thaha Airport terminal in Jambi. “Efficiency for better effectiveness, particularly in Q4 of 2016, also helped AP II to generate the revenue,” he said yesterday in Jakarta.

According to Awaluddin, the company’s revenue of Rp6.65 trillion last year exceeded the target of Rp6.57 trillion. Increased revenue was in line with higher passenger traffic in 13 airports operated by AP II. In 2015, the AP II only served 84.29 million passengers. Last year, the figure jumped 12 percent to 94.63 million passengers.

Despite its heavy reliance on revenues generated from aeronautical businesses, the company has started to boost revenues from non-aeronautical businesses. To achieve it, it has established new subsidiaries PT Angkasa Pura Propertindo (APP) and PT Angkasa Pura Kargo (APK).

“The establishment of Angkasa Pura Propertindo and Angkasa Pura Kargo is expected to [boost] non-aeronautical businesses’ contribution by 50 percent or more to the company’s total revenue by 2018,” Awaluddin said.

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Bali Enterprise Believes Gov't Subsidies Needed to Combat Plastic Pollution
The Jakarta Globe, 30/01/2017

As Bali continues its plight against plastic pollution, Avani Eco is setting the standard for completely sustainable and eco-friendly products.

The social enterprise housed in Bali aims to provide eco-friendly alternatives to products used daily by locals and tourists including takeaway containers, straws and coffee cups.Avani Eco cofounder and chief green officer, Kevin Kumala, said Bali is only the tip of the iceberg but the perfect starting point in promoting fully sustainable products.

"When you talk about Bali, of course you talk about its beaches," Kevin said.

"It's happening in front of our very eyes how terrible the plastic epidemic taking place in our beaches has become."

From January to October 2016, Avani Eco successfully replaced over 130 metric tons of hazardous materials with eco-friendly alternatives.However, Kevin said this is not enough with more than 3,500 tons of plastic waste thrown away daily in Bali.

"In a perfect utopia, the government needs to do something about this."

"The Indonesian government needs to be educated in terms of the availability of technology in reducing plastic waste," he said.

One of Avani’s most popular inventions is an eco-bag made from cassava root, which can be completely dissolved in boiling water — and still safe to drink. The bag is a sustainable alternative to classic "degradable" bags which hugely contribute to plastic pollution through a phenomenon called micro-plastic pollution.

"These degradable plastic bags will eventually become one to two millimeter fragments which … then have the potential to go into your water sources or inadvertently be eaten up by livestock which in turn will be consumed by humans as we sit on top of the pyramid of food chain," Kevin said.

As the second biggest marine pollutant in the world, Indonesia is yet to implement government subsidies for sustainable products.

Kevin said he believes education and increased awareness on the issue combined with government subsidies for sustainable products would help in combating plastic pollution throughout Indonesia.

Indonesia has been the world's second largest plastic garbage sea polluter after China, according to US-based Jambeck Research Group. In 2015, the group calculated Indonesia threw at least 187.5 million tons of plastic waste into the sea, while China threw at least 263 million tons. The Ministry of Environment and Forestry predicted there are one million plastic bags being used every minute, and half of them are used only once. Only 5 percent end up in a recycle bin.

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