Update News January 31, 2017

In The News

Arun Lhokseumawe In Aceh To Be New Growth Center
The Jakarta Post, 31/01/2017

Coordinating Economic Minister Darmin Nasution has made assurances that Arun Lhokseumawe in Aceh is ready to become a special economic zone (KEK) within the next 10 years with a total investment of US$3.8 billion.

“Arun Lhokseumawe has met the requirements to become a special economic zone. We will propose it to President Joko “Jokowi” Widodo,” said Darmin after chairing a coordination meeting of economic ministers in Jakarta on Monday night as reported by tempo.co.

The consortium of several state-owned enterprises – energy company PT Pertamina, fertilizer company PT Pupuk Iskandar Muda and seaport operator PT Pelindo I, as well as companies owned by the Aceh administration – have expressed interest in investing in the area, he added.

President Jokowi would establish the 2,622-hectare economic zone through a government regulation. It is expected to create some 40,000 jobs.

Among the industries to be developed in the area include a plant for the regasification of liquified natural gas (LNG), an LNG trading hub, an LNG plant, environmentally friendly power plants, a petrochemical cluster and an agro-industry and its related products .

Darmin said the government would develop infrastructure, particularly an international-standard seaport, to support the development of industries in the area.

Darmin said the people at the meeting also discussed the development of other special economic zones, like those on Galang Batang Island, Bintan Island, Asam Island and Karimun Island, but Darmin added that the areas have not yet been proposed to the President because there were still several administrative problems to be solved.

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Sri Mulyani Provides Incentives for SMEs
Tempo, 31/01/2017

The Directorate General of Customs and Excise has decided to facilitate capital goods and raw material imports for small-medium enterprises (SMEs). The initiative is expected to reduce production costs and at the same time, increase cash flow. The new regulation is also hoped to improve businesses activities in the domestic and international market.

"Import and export process will be facilitated [by providing] simple import procedure, selective physical examination, postponing import restrictions, and simplifying imports through a special app," said Finance Minister Sri Mulyani on Monday, January 30, 2017.

The Directorate General of Customs and Excise has decided to exempt SMEs from import duties, value-added tax, and luxury goods tax. Sri hoped that the incentive could rejuvenate exports, absorb more workers, and encourage the creation of SME-based tourism.

The Central Statistics Agency (BPS) recorded that the micro, small, and medium enterprises sector are able to absorb 97 percent of manpower from the total employment rate. The number is considerably larger than the level of employment absorption from major corporations. SMEs also contributed to 61,41 percent of Indonesia's gross domestic product.

Director General of Customs and Excise Heru Pambudi said that SME business owners must own an industrial permit in order to obtain these incentives. In addition, owners are also required to operate a customs module specifically created for KITE (Export Purposes Facility), and have at least settled in a certain business location for two years.

Meanwhile, administrative requirements for the incentives include owning a Taxpayer Identification Number (NPWP), SPT (tax return), production plan, and a public notary statement letter.
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Traditional Markets Should Not Lose Out To Modern Markets: President Jokowi
Antara News, 31/01/2017

President Joko Widodo (Jokowi) emphasized that he did not want traditional markets in the country to lose out to malls, supermarkets, and hypermarkets.

"Do not let our (traditional) markets lose out to supermarkets and malls," he stated while inaugurating the Sambi Market in Sambi Sub-district, Boyolali District, Central Java, on Monday.

The Sambi Market is among the five thousand scattered across the country that the government will renovate in the next five years. Hence, he called on the traders to manage the Sambi Market after its construction is completed.

"The market has been renovated. After it has been inaugurated, all traders should manage it collectively, so that the number of buyers visiting it will increase," he emphasized.

Traditional markets are unclean and have no parking lots, he pointed out. The government is aiming to renovate five thousand markets from Sabang in Aceh Province to Merauke in Papua Province in the course of the next five years. Unless thetarget is achieved, the traditional markets will lose out to modern markets, including malls and supermarkets, he noted. For its part, traders should keep the traditional markets neat and clean.

"If they are not maintained well, they will lose out to modern markets, such as supermarkets, mini markets, and hypermarkets, which are equipped with air conditioners," he remarked.

The Sambi Market was built on 4,959 square meters of land. The market has a total of 572 traders.

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Gov't Encourages SMEs to Fulfill National Standards Requirements  
Tempo, 31/01/2017

Chief of Legal, Organization and Public Relation Division of the National Standardization Agency Nudi Rahardjo said that the Agency will accelerate the implementation of standardization principles for micro, small and medium enterprises (UKM) this year. "The target is that 90 percent of small-medium enterprises can get the Indonesia National Standard [SNI] this year," Budi said in a written statement dated Sunday, january 29, 2017.

Budi said that the Agency is currently encouraging SMEs to create more innovation and focusing on producing high quality and safe goods. One of the SMEs that has managed to achieve SNI standards will take part in a work meeting with the Research, Development, and High Education Ministry on Monday, January 30, 2017.

The SME, CV Harimukti Teknik, will display a domestically-produced laundry machine. Ashari, the company owner, said that the laundry machine is much cheaper compared to imported product.

"Because the raw materials and production process are surced from and takes place domestically, the machine is 30 percent cheaper compared to imported products," Ashari said.

The laundry machine has managed to acquire two SNI certifications, one for the household appliances category, and the other is for the tumble-dry dryer machine category.

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Indonesia Seeks ‘Back Up' Of US Investment: BKPM
The Jakarta Post, 31/01/2017

Indonesia may have to put a little more effort into making itself attractive for United States investors in the wake of a protectionist Donald Trump presidency, Investment Coordinating Board (BKPM) head Thomas "Tom" Lembong said on Monday.

The Indonesian government will also simultaneously try to seek "back up" investors from other countries in case US firms have to abide by policies made by President Trump, Lembong said but did not elaborate.

"There might be pressure on US investors from the government to invest domestically. Consequently, we have to work extra to ensure that Indonesia is attractive to US firms," Lembong said.

Based on data provided by BKPM, the US invested US$1.16 billion on 540 projects in Indonesia throughout 2016.

"Investments from US firms tend to be of high quality, for example in the technology and consumer brands sectors," Lembong said.

In his inaugural speech, Trump stressed that his administration demanded the country’s businesses to invest in their home countries to create jobs. It is part of his America First policy to fulfill his campaign promises.

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Pelindo II Eyes Cooperation with 3 Major Global Shipping Lines
Tempo, 31/01/2017

State-owned port operator PT Pelabuhan Indonesia II (Pelindo II) will join hands with three global shipping lines to support Tanjung Priok Port as an international hub, Pelindo II president director Elvyn G Masassya said yesterday, January 30, 2017.

“We can inform that the costs are lower and shipping lines will be able to reroute [cargo] in Priok transit,” he said.

The company will not make any investment as it will use the existing facilities, such as terminal and cargo loading equipment. “There are three major international shipping lines,” Elvyn said without naming any of them.

Pelindo II president director said that Tanjung Priok Port’s status as an international hub will be effective in the second half of 2017. Tanjung Priok Port will allow shipping lines to push down costs by cargo consolidation service.

For example, the shipping cost of containers destined for Japan from Palembang out of Tanjung Priok will be more efficient compared to transshipment cost through Singapore. The cost reduction could amount to Rp1.5 million per container.

“The most important thing is to lower logistic costs, there will be cargo consolidation service available to allow large ships to pass; in terms of national interest, we can compete with Singapore, particularly in goods transshipment through Indonesia,” he said.

Moreover, Elvyn said that Tanjung Priok Port designation as an international hub based on transportation ministry regulation is temporary.

The Pelindo II president director expressed that the temporary status will not affect Presidential Regulation No. 26/2012 on National Logistic System Blueprint on the status of Kuala Tanjung in North Sumatra as an international hub.

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Kalimantan`s Kijing Port Expected to Operate by 2019
Tempo, 31/01/2017

State-owned port operator PT Pelabuhan Indonesia II (Persero) is targeting the operation of parts of Kijing Port terminal in Mempawah, West Kalimantan, by 2019. The international port will serve the province’s downstream sector, which includes crude palm oil and aluminum.

PT Pelabuhan Indonesia (Pelindo) II official Dani Rusli Utama said that the port project will be carried out in three phases: The first phase is the construction of container and multipurpose terminal. The second phase is the construction of container and liquid bulk cargo terminal. The third phase is the construction of dry and liquid bulk cargo terminal.

“The first phase: container and multipurpose [terminal], with roughly Rp2 trillion investment,” he said. All in all, the three phases of development will cost Rp5 trillion according to Dani.

Pelindo II needs to improve Kijing International Port due to Pontianak Port’s limited capacity of 217,000 TEUs. Meanwhile, Kijing’s container and multipurpose terminal in the first phase of the project is expected to have a capacity of around 500,000 TEUs.

The port, Dani went on, will have a huge potential due to its depth of minus 15m low water spring (LWS), meaning that dredging work will not be required.

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Tanjung Priok Vows To Reduce Container Shipment Cost
The Jakarta Post, 31/01/2017

PT Pelindo II has promised to make shipping containers out of Tanjung Priok more efficient in a bid to underscore the port’s status as an international hub.

The state-owned seaport operator would reduce the cost per container by up to Rp 1.5 million (US$112.49), PT Pelindo II president director Elvyn G. Masassya said on Monday.

“There will be some cargo consolidation. Large ships could stop there, and the logistic costs could compete with Singapore,” said Elvyn on Monday, as reported by tribunnews.com, adding that the cost reduction could amount to between Rp 1 million and Rp 1.5 million.

Previously, exported goods destined for places like Japan or Taiwan would need to pass through Singapore, but in the future, Indonesia want to ship goods directly to such destination countries.

“Because of the hub status, the shipment of goods will be more efficient, particularly for goods from Java and Sumatra,” Elvyn said.

He explained that PT Pelindo II did not need to invest to upgrade Tanjung Priok’s status to that of an international hub, because both the facilities and the capacity already fulfilled hub requirements.

“We already have adequate terminals and equipment. We only need to coordinate with shipping companies to inform them that the cost of transit at Tanjung Priok will be lower,” he added.

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Pertamina to Build Three Oil Refinery Projects in 2017
Tempo, 31/01/2017

State-owned oil and gas firm PT Pertamina hopes it will see the groundbreaking of the development of three oil refinery plants in 2017, notably RDMP RU V Balikpapan, NGRR Tuban and RDMP RU IV Cilacap.

"We hope that the groundbreaking of the refinery plant development in Balikpapan would be done in the quarter I, the Tuban in quarter III and the Cilacap in quarter IV. Hopefully, the activities of all these would be seen in 2017," Pertamina President Director Dwi Soetjipto told a press conference in Jakarta on Monday, January 30.

He said the Refinery Development Master Plan (RDMP) of refinery Balikpapan is now in the process of site preparation and pier development. Pertamina hopes that the construction of the two (RDMP and pier) could be finished in one year so that machinery and heavy equipment of the project could be transported through the pier.

In the meantime, its basic engineering design (BED) will be completed by the end of January 2017 and front-end engineering design (FEED) by the end of July 2017, so that the Balikpapan RDMP will be under construction between 2017 and 2019.

On the same occasion, Management and Petrochemical Megaproject Director, Rachmad Hardadi, stated that the groundbreaking of RDMP Balikpapan will be done by the end of February 2017.

"The president will inaugurate the groundbreaking by the end of February, particularly after its environmental impact analysis (Amdal) is completed on February 18, 2017," he added.

The other projects that will have a groundbreaking ceremony this year are the RDMP RU IV Cilacap and New Grass Root Refinery (NGRR) Tuban. The two are expected to be on stream by the end of 2021.

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Indonesia To Cooperate With World Bank To Develop Tana Toraja
Antara News, 31/01/2017

The Government of Indonesia will cooperate with the World Bank to develop tourism in Tana Toraja, South Sulawesi.

"I have reported to Vice President Jusuf Kalla on tourism development in Tana Toraja, South Sulawesi. I will invite the World Banks representatives and the district head to discuss the tourism development, and we will form integrated service," Coordinating Minister for Maritime Affairs Luhut said, after a meeting with Kalla, here on Monday.

The senior minister remarked that the government would train human resources for tourism players in South Sulawesi, particularly Tana Toraja, because the area was one of the new destinations in 2017. In addition to increasing the human resources, the government would also accelerate the development of Buntu Kuni Airport to attract more tourists to visit Tana Toraja.

Hence, the government would develop other infrastructures, such as roads, transport systems, electricity and hotels. Until January 2017, as many as 182 thousand tourists had visited Tana Toraja.

Kalla earlier chaired a limited meeting at his office here on Monday to discuss the development of tourism in Tana Toraja, South Sulawesi.

Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan, Tourism Minister Arief Yahya, Transportation Minister Budi Karya Sumadi, Public Works and Public Housing Minister Basuki Hadimuljono, South Sulawesi Regional Secretary Abdul Latief, Tana Toraja District Head Nicodemus Biringkanae, and North Toraja District Head Kalatiku Paembonan attended the limited meeting.

Panjaitan stated that one of the main topics of discussion at the limited meeting was the progress on the work at the Buntu Kuni airport in Tana Toraja, projected for completion in 2017.

The Pongtiku airport in Tana Toraja has a runway measuring 1.3 thousand meters suitable for small aircraft, but after the work at the Buntu Kuni airport is completed, its runway will be 2.2 thousand meters in length to accommodate wide-bodied aircraft, such as Boeing.

Panjaitan said the 1.7 trillion funds from the state budget will soon be disbursed for the completion of the work at the Buntu Kuni airport to increase the number of tourist arrivals in Tana Toraja.

According to the minister, the government is optimistic about the tourist arrivals in Tana Toraja reaching 200 thousand in 2017, or a three-fold increase as compared to that in 2016.

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