Update News October 17, 2017





In The News






New Jakarta Governor Anies Promises to Unite the Divided City
TEMPO.CO 17 October 2017

TEMPO.CO, Jakarta - New Jakarta Governor Anies Baswedan has promised to unite the divided city after a heated election.

“We will ensure that Jakarta Governor is the governor for all, the governor for those who voted for him and those who did not vote for him,” Anies said yesterday at the Presidential Palace.

Tension rose in Jakarta election back on February 15 between the supporters of Anies Baswedan-Sandiaga Uno ticket and Basuki Tjahaja Purnama-Djarot Saiful Hidayat ticket.

Anies said that it is his duty to unite Jakartans because the Governor has been given the mandate to lead all residents instead of a particular group.

“We want a fair Jakarta, for all. Jakarta is not a place for a certain group only, not for the rich only, but also for those who want a better live. Jakarta is a city for all,” he said.

Anies Baswedan and Sandiaga Uno were inaugurated as Jakarta Governor and Deputy Governor yesterday after winning the regional election against Basuki Tjahaja Purnama-Djarot Saiful Hidayat pair.

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Bank Indonesia Releases Rules to Boost Local Currency Use for Trade in Asean
Jakarta Globe 17 October 2017

Jakarta. Bank Indonesia, the country's central bank, released a regulation on Monday (16/10) that will allow banks to facilitate Indonesian traders conducting transactions with foreign counterparts in their respective currencies instead of the US dollar to reduce a reliance on the greenback and mitigate impacts from a volatile global market.

The regulation followed a memorandum of understanding between Bank Indonesia, Bank Negara Malaysia and Bank of Thailand that was signed last December and which established a framework to promote settlements of bilateral trade and direct investment in the Malaysian ringgit and the Thai baht.

At the time, all three banks said the agreements would pave the way for wider use of local currencies in the Asean Economic Community.

"The new regulation is also hoped to reduce the cost of foreign exchange transactions on the rupiah with a direct quotation," said Arbonas Hutabara, director of the communications department at Bank Indonesia.

Previously, bilateral trade between Indonesian traders and foreign associates used the US dollar, which added unnecessary costs to each transaction.

According to Arbonas, direct quotation between the rupiah and other currencies can develop foreign exchange markets in the region and make it easier for businesses to pay their dues in local currencies.

The regulation offers a mechanism to conduct local currency settlement involving Indonesian lenders. Bank Indonesia and its counterparts — central banks or other monetary authorities in partner countries — have the power to appoint Indonesian commercial banks as the Bank Appointed Cross Currency Dealer (ACCD) that can process spot transactions, forward and swap with ACCD banks in other countries, importers, exporters, Indonesian non-bank ACCD or foreign non-bank ACCD.

Before becoming an ACCD, a bank will be assessed on its health, ability to facilitate trades, ability to conduct business relationships with other banks in partner countries and the size of its office network in the home country.

Once an Indonesian bank becomes an ACCD, it can create a special rupiah-denominated account for the foreign ACCD bank as well as open a local currency-denominated account at the foreign ACCD.

The bank can also open a special foreign-denominated account for Indonesian exporters or importers. Once the account has been opened, ACCD banks can offer to finance trades and make fund transfers and investments.

The regulation will come into force on Jan. 2, 2018. The full regulation in Bahasa Indonesia can be found here.

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Industry Minister to Meet Japanese Investors
TEMPO.CO 17 October 2017

TEMPO.CO, Jakarta - Industry Minister Airlangga Hartarto will meet Japanese investors during his visit to Japan on October 16-21.

Airlangga said that he will hold talks with Fujitrans Corporation, Mitsubishi Motors, JFE Steel, and Sango Corporation, as well as delegates of Japan Indonesia Economic Committee, The Japan External Trade Organization, Nagoya Chamber of Commerce and Industry, and the governments of Aichi and Ogawa. The Minister will also attend the Indonesia Investment and Business Forum.

"Ahead of the 60th anniversary of Indonesia-Japan diplomatic relations in 2018, we want to advance the economy for the prosperity of the people," he said in a written statement received yesterday by Tempo.

Airlangga elaborated that in almost six decades, Indonesia and Japan have become strategic partners in building the economy. Therefore, both need to strengthen bilateral relations, including by developing the industry sector.

He is hopeful that the meeting with businesses will result in agreements to improve the manufacturing sector through investment and market expansion.

Airlangga is confident that Indonesia will see greater investment in the industry sector, particularly from Japanese investors. The ministry reports that total foreign direct investment stood at USD16.68 billion in 2016. Japan investment in Indonesia reached USD5.4 billion in the same year, representing 86 percent year-on-year increase totaling USD2.9 billion.

Indonesia is home to 1,750 Japanese companies engaging in the manufacture, infrastructure and services. The most notable investments have been seen in the automotive, metal, machinery and electronics industry.

“Thanks to supporting facilities, including deregulation…, infrastructure and industrial area development, as well as incentives in the form of tax allowance and tax holiday,” Airlangga said.

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Pupuk Indonesia Demands for Gas Price Cut  
TEMPO.CO 17 October 2017

TEMPO.CO, Jakarta - State fertilizer company Pupuk Indonesia made another request to the government to lower gas prices for fertilizer production. The company said that international prices are less than US$3 per ton, much cheaper than in Indonesia, which is more than US$6 per ton.

"We have submitted [the request] to the State-owned Enterprises Ministry and the Industry Ministry," Pupuk Indonesia president director Aas Asikin Idat in Jakarta, Monday.

Aas said gas is the largest production component in the fertilizer industry, accounting for 70 percent of total production costs. Fertilizer producers, he said, still have to pay for gas even if they don’t use them, because the commodity can only be purchased with a take-or-pay system.

"We still have to pay because the contract says that 85 percent must be used," he said.

Aas said the biggest challenge of Indonesian fertilizer producers is to compete with international sales prices, which is around US$200 per ton. Meanwhile, the sales price of Indonesian fertilizers can reach up to US$ 260 per ton due to high production cost.

The SOE Ministry's deputy of agro and pharmaceutical industries Wahyu Kuncoro said that the state fertilizer industry's asset is around Rp130 trillion, "the biggest compared to other industries in the agro and pharmaceutical sectors".

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Govt Offers Rp39tn Tourism Investment  
TEMPO.CO 17 October 2017

TEMPO.CO, Padang - The Investment Coordinating Board (BKPM) offers US$2.9 billion or Rp39 trillion worth of tourism projects during the Regional Investment Forum (RIF) held in Padang, yesterday.

There are three priority tourist destinations offered as investments, namely North Sumatra's Lake Toba, Central Java's Borobudur Temple, and Bangka Belitung Islands' Tanjung Kelayang. There are also two additional destinations in West Sumatra; the Integrated Tourism Area of ​​Mount Padang and the Maritime Tourism Area of Mandeh.

"The three destinations have projects that are ready to offer," BKPM chief Thomas Lembong said in Padang, October 16.

According to Thomas, investments in the tourism sector could grow by 35 to 40 percent; far above the national investment growth rate of 12 to 14 percent.

"The contribution to gross domestic product will be great if the sector continues to grow significantly," he said.

According to BKPM's records, tourism investment in 2014 reached US$602 million, accounting for 1.45 percent of the total national investment. As of the first half of this year, the sector has accounted for 3.67 percent of the national investment, with a value of US$929 million.

Tourism Minister Arief Yahya said the foreign exchange potential from the tourism sector reaches Rp260 trillion. He believes this sector can be the largest foreign exchange earner.

Meanwhile, West Sumatra Governor Irwan Prayitno said his province needs more hotels to support tourism development, especially in areas outside the city of Padang.

In 2016, the number of hotels in West Sumatra was 347, comprised of 58 star hotels and 316 non-star hotels. "This is just a third of the number of hotels in West Nusa Tenggara or in Bali which are some 2,000 hotels," he said.

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Retail Industry Growth Stands at 3.7 Percent: Aprindo
TEMPO.CO 17 October 2017

TEMPO.CO, Jakarta - Indonesia’s retail industry growth stood at 3.7 percent as of the end of the first half of 2017, said the Indonesia Retail Business Association (Aprindo) chairman Roy Nicholas Mandey. He predicts that the full-year figure will hit 7.5 to 8 percent.

“It’s lower than the first half of 2016 that grew 9 percent,” Mandey told Tempo yesterday in Jakarta.

He is hopeful that the growth will hit 9 percent just like last year. “But the reality is it will grow though slowing down,” Roy said.

Roy said that lower growth was caused by several factors, including stagnating commodity prices, middle-wage segment and a shift in spending patterns.

Consumer spending pattern has shifted from large baskets to small ones as delivery order services grow.

Roy said that people rarely go to stores anymore. Instead, they shop online or use online transportation service.

Data shows that online shop transactions make up 1.4 percent of total offline payments in retail industry last year, according to Roy. He added that out of 97.3 internet users, only 8.7 of them make online transactions.

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Indonesia important for China's economy
ANTARA News 17 October 2017

Jakarta (ANTARA News) - Indonesia is considered important for Chinas economy since the Belt and Road Initiative (BRI) established by Chinese President Xi Jinping in 2013.

In order to promote this strategy of regional economy integration, Chinese local governments and companies are encouraged to build more intensive relations with their international partners.

Such mission led three city governments of Beijing, Nanjing, and Changsha to invite journalists from ASEAN countries, including Antara, to visit China and learn more on how the BRI would benefit not only China but also the world development.

"The initiative is very broad, it is indeed a great vision so every province or city needs to focus on its own strength to push our passion of going global," Deputy Director of Foreign and Overseas Chinese Affairs Office of Changsha Municipal Peoples Government, Miao Hua, told Antara last September.

During a ten-day visit consisted of company visits, a seminar and tourism activities, a total of ten journalists from Indonesia, Thailand, Malaysia and the Philippines are invited to observe Chinese strong industries and how they develop cooperation with other countries.

The ten companies and three local governments that Antara had talks with, have been establishing cooperation or eying Indonesia to expand their businesses.

Among the biggest are companies from Jiangsu Province which are currently running 24 businesses in the archipelago with the total investment of some projects reaching US$32 billion.

"Jiangsus overseas projects in Indonesia is the largest compared to other Asian countries," Hang YouFei, Deputy Director of Foreign Investment and Foreign Affairs Division at the Development and Reform Commission of Jiangsu Province said in the capital of Nanjing.

Several major projects that have been running include nickel and iron mines worth US$995 million, a US$ 350 million cement industry and a $310 million industrial estate development for rubber, agriculture and oil refineries.

One of the companies in Jiangsu also financed the development of an industrial park in East Kalimantan, which integrates the agricultural and industrial sectors.

The economic zone that began operating actively since 2013 run by eight companies worth a total of US$1.1 billion. Revenue on sales of various products generated from the industrial estates is expected to reach US$2 billion by 2019.

The export value of Indonesian products to Jiangsu also recorded a significant increase of 54.8 percent in the first half of 2017.

It indicates, according to YouFei, that the province located on Chinas eastern coast has promising trade links with Indonesia as well as other countries in Southeast Asia.

"This means that Jiangsus foreign trade has great potential for further growth in the future," he said.

With a value of US$1.7 billion, Indonesia exported commodities in 2016 consist of agricultural products such as rubber, rice, and palm oil; mineral products such as steel and iron; as well as textile products.

Meanwhile, Jiangsus export value to Indonesia in the first half of 2017 reached 2.61 billion US dollars, an increase of 8.9 percent over the same period last year. Jiangsus export commodities to Indonesia are dominated by mechanical and electrical products.

In addition to Jiangsu, China Communications Construction Company Ltd. (CCCC) is eying more than 10 projects in Indonesia including construction of toll roads, ports, industrial zones and real estates.

"Our current projects in Indonesia worth about US$1.2 billion especially in infrastructure and real estates," Vice President of CCCC International Pen Dapeng told Antara.

One of the biggest project carried out by Beijing-headquartered company is the US$300 million of Solo-Kertosono toll road which construction has started in 2016.

CCCC has also completed feasibility study reports for infrastructure projects in western Indonesia namely ring road in Java Island, port of Kuala Tanjung in North Sumatera, industrial zone of Bitung in North Sulawesi as well as a real estate in Jakarta.

However, the construction phase of those projects is still awaiting approval from the Indonesian government.

Challenges
Supported by a large area and population, Indonesia is continuously attractive to Chinese investors for business development.

The archipelago has become increasingly compelling also for investment and business expansion since the Indonesian government under President Joko Widodo launched various national infrastructure projects to support its connectivity and economic growth.

The Investment Coordinating Board (BKPM) recorded that China is still included in the three major investors of Indonesia. In the first quarter of 2017, foreign direct investment from China reached US$0.6 billion or 8.2 percent of the total FDI.

Head of BKPM Thomas Trikasih Lembong said that the record is reasonable concerning that China continues to grow as the worlds second largest economy.

China has helped building some megaprojects in Indonesia namely Suramadu bridge that connects Java and Madura island, Jatigede dam in West Java, coal power plants, palm oil industry as well as the ongoing construction of Jakarta-Bandung high-speed train.

However, the high interest of Chinese to do business in Indonesia must be supported with the resolution of some business challenges.

Land acquisition, government funding and rapid changing positions of authorities are among challenges that Chinese businessmen should face while doing business in the country.

Vice President of CRRC Zhuzhou Locomotive Co. Ltd. Luo Chongfu said that the progress of the three target projects in Indonesia is not quite good due to the governments constraints.

The Indonesian government, according to him, has a long-time project planning that range from 3-4 years and uncertainty in terms of funding.

"For transportation projects around the world, the funding will be governments responsibility. We find it is quite difficult to work on a project that uses the PPP scheme such as in Indonesia," he noted.

Indonesian government and companies must also make sure that Chinese massive business expansion and investment will not create new problem to the nation, such as the flow of thousands of Chinese illegal workers entering the country that became serious issue a few months ago.

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Niger invites Wika to carry out infrastructure projects
ANTARA News 17 October 2017

Jakarta (ANTARA News) - The government of the Republic of Niger is exploring cooperation with state-owned construction company PT Wijaya Karya to build infrastructure in that country.

In its press release here on Monday, PT Wika said that the talk on cooperation was done during the visit of Nigers President Mahamadou Issoufou with his ministers and leaders of Niger government institutions at Wika Building.

Also present at the meeting were director for Africa of the Ministry of Foreign Affairs, Tumpal Simanjuntak, and Indonesian Ambassador to Niger Harry Purwanto.

Niger is a landlocked country in the west part of Africa bordering Nigeria and Benin in the south, Mali in the west, Alheria and Libya in the north and Chad in the east.

Wika president director Bintang Perbowo said the visit of the president of Niger and delegation was aimed at developing cooperation with Wika in infrastructure projects in Africa and the biggest country in West Africa.

"Wika is well known in international markets especially in Southeast Asia, the Middle East and Africa. After successfully completed its first project which is the 400 km of the 1,260 km East West Motorway Project in Slegria in 2007 now Niger as Algerias neighbour wishes to know more about Wika," he said.

When receiving President Mahamadou Issoufou and delegation at the palace earlier in the day, Indonesian President Joko Widodo said he supported Wika to see potential infrastructure projects in Niger such as airport, highway and public housing.

"Wika is ready to carry out the mandate of the Indonesian government as a state-owned company experienced in carrying out infrastructure development projects abroad especially Africa," he said.

Wika is ready to become a symbol of superiority of Indonesian infrastructure and a company that could compete in the international market.

According to data, Wikas projects abroad besides in Algeria are found in Libya, United Arab Emirates, Papua New Guinea, Brunei Darussalam, Myanmar, the Philippines, Timor Leste and others.

Bintang hoped the visit would boost bilateral relations between Indonesia and Niger through involvement of Wika in infrastructure projects in Niger.

"This visit offers an opportunity for Indonesia, Niger and Wika to support infrastructure development projects in Niger and it is hoped cooperation that is being explored could increase portfolio, revenues and competitiveness of Wika in the international market," he said.(*)

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Dutch expertise contributes to promising future for heritage railways
The Jakarta Post  17 October  2017

The B 2503 rack-and-pinion locomotive, a product of Germany’s Esslingen engineering works, groans and creaks into motion.

The drive rods sigh and the air is black with smoke. At Ambarawa Railway Museum in Ambarawa, Central Java, visitors are transported back to the past.

The most delightful attraction is a ride in a wooden carriage, drawn by a century-old steam locomotive, with stops along the way for a snack, a selfie or a spot of souvenir shopping at the picturesque railway stations of Bedono and Jambu.

Along with Ambarawa, these stations are located on a route that branches off from the main line that runs from Solo to Yogyakarta, also known as the Vorstenlanden line.

In the past eight years, Indonesian Railways have breathed new life into their heritage railways and stations.

The focal point of this renewed attention has been the Ambarawa railway museum with its remarkable collection of locomotives, carriages and coaches. Much of this vintage rolling stock was made in the Netherlands. Due to this historical connection, Indonesia asked the Dutch Cultural Heritage Agency to contribute its expertise and advice.

Indonesia’s first railways were built in the second half of the 19th century. In 1860, King William III of the Netherlands ordered a feasibility study on the construction of a railway in what was then the colony of the Dutch East Indies.

This initiative led to the founding of the privately run Dutch East Indies Railway Company, which gave the go-ahead for the building of the first railway line on the island of Java. The first section was opened 150 years ago on Aug. 10, 1867, a railway that ran from the port of Semarang to Tanggung, 25 kilometers inland.

In 1873, this was followed up with a branch line to the garrison town of Ambarawa, a route primarily intended for military transport to Fort Willem I in Ambarawa.

In addition, rail transport played a vital role in opening up access to areas where sugar cane, coffee, tobacco and rice were grown, enabling these products to be efficiently transported to Semarang, which is now the capital of central Java, for shipment to Europe.

Indonesia’s age of steam did not end until 1976. A few years later, Ambarawa Station was converted into a museum. Despite the presence of dozens of steam locomotives and an operational rack-and-pinion railway, visitor numbers to the museum were disappointing.

This was mainly due to its old-fashioned style of presentation and its poorly organized outdoor areas. Since its opening in the late 1970s, investment had been minimal.

In 2009, a special heritage division of the Indonesian Railways (PT Kereta Api Indonesia) decided it was time for a change.

As owner of the historical rolling stock, it contacted the Cultural Heritage Agency with a request to organize a training program in cooperation with Indonesian partners.

Interested parties from museums, universities, tourism organizations, governments, heritage institutions, project developers and railway enthusiasts participated in a succession of workshops. With these local partners and with several Dutch partners, like TiMe Amsterdam, a firm foundation was laid for a new heritage policy and an improved collection management.

An initial inventory of Indonesia’s railway heritage produced immediate and impressive results, not least an Indonesian publication featuring twenty of the country’s most beautiful stations. This selection included Ambarawa, a station which still has its original roof spanning 22 meters.

Dutch architects and engineers built no less than 700 station buildings, about 450 of which are still in operation.

A select few even became listed buildings and were subsequently earmarked for substantial renovations.

Alongside basic painting and maintenance work, unsightly advertisements and air-conditioning units were removed to show off the building’s architectural features to their fullest effect.

At the request of Indonesian Railways, the Cultural Heritage Agency organized workshops with the aim of encouraging local support and promoting storytelling in relation to heritage.

Tourism organizations, project developers and government agencies discussed the value of historical rolling stock in Indonesia and the reasons underlying its appreciation. Heritage primarily draws its significance from the values accorded to it in the present day.

In 2015 another intensive training course on collection management for historical rolling stock was set up.

The participants learned about the current state of affairs as regards conservation, management and collection development. They carried out practical assignments in the railway museum and laid the foundation for a practical collection plan and a comprehensive database.

A number of workshops took place in Lawang Sewu, the former headquarters of the Dutch East Indies Railway Company in Semarang.

This impressive listed building, designed in the early 1900s, has recently been restored to its former glory and now attracts tens of thousands of architectural enthusiasts, tourists and young people eager to snap a selfie in the glow of the stained glass windows.

Museological improvements have not only given more depth to the narrative on and around the heritage railways, but have also boosted support and involvement and created a sense of belonging among the local population.

The local community will only embrace a museum — or another aspect of heritage — if there are local benefits.

Partnerships between public and private parties can heighten an area’s attractiveness in terms of cultural tourism.

Many tangible traces of a rich local history can be found in and around Ambarawa; from the Hindu-Buddhist temples of Gedong Songo to monuments that recall the struggle for independence, from plantation houses and hill stations to monumental bridges and tunnels.

Organizing heritage routes for tourists, for example in collaboration with local plantation owners, presents an attractive prospect for the railway museum’s directors.

The historical rolling-stock project has now been completed and was awarded a prize in 2016 for the best project in the field of conservation and revitalization by the Indonesian Federation of Architects.

The railway museum has undergone a successful makeover.

For example, a new entrance pavilion has been built and a better routing for visitors has been developed and a story wall has been created in a half-open gallery, echoing Indonesia’s tradition of wall art. This richly illustrated bilingual exhibit gives a fascinating account of the long history of Indonesia’s railways.

The open-air presentation of the dozens of old steam locomotives has also been improved. Manufactured by Esslingen, Beyer Peacock, Hanomag, Hartmann and Werkspoor between 1890 and 1930, these locomotives are under cover at last, sheltered from the merciless tropical climate.

Moreover, the historical railway line to Tuntang and Kedungjati has been revitalized and soon the line to Secang will be extended to give passengers a day trip to the famous Borobudur Temple.

These positive developments represent a strong impetus for regional train tourism.

Other developments — from smart marketing campaigns and good educational materials to a museum shop, a playground and catering and hotel facilities — are still in the starting blocks. The museum still has some way to go, but its future certainly looks promising.

***

Ben de Vries (MA) is a historian and is working at the Cultural Heritage Agency of the Netherlands, part of the Dutch Ministry of Education, Culture and Science. He is author of the report: Identification mission historical rolling stock in Indonesia ( 2015 ), which is online as a pdf: https://cultureelerfgoed.nl/publicaties/identification-mission-historica...

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27 Parties Register for 2019 Election
TEMPO.CO 17 October 2017

TEMPO.CO, Jakarta - As many as 27 political parties registered to participate in the 2019 general election during the registration period from October 3-16.

The General Election Commission (KPU) reports that only 31 out of 73 political parties listed at the Justice and Human Rights Ministry database filed for a username and password to input their data into the political party information system (Sispol).

Out of the 31 parties, only 27 did register with the KPU.

As of October 16, ten out of 27 parties that registered at the KPU have had their paper works examined and declared complete.

The remaining 17 parties had only registered for the election and still need to complete their documents.

The KPU had said that it would examine the registration requirements until 12 pm on October 16.

The parties that registered with the KPU in the two-week long registration period are Perindo, PSI, PDIP, Hanura, Nasdem, Partai Berkarya, PAN, PKS, Partai Republik, Gerindra, PPP, Golkar, Partai Garuda, PBI, PKB, Partai Rakyat, Partai Demokrat Partai Pemersatu Bangsa, Partai Idaman, PKPI, PBB, Partai Indonesia Kerja (PIKA), Partai Reformasi, Partai Pengusaha dan Pekerja Indonesia (PPPI), Partai Republik Nusantara (Republikan), Partai Swara Rakyat Indonesia (Parsindo), and Partai Nasional Indonesia Marhaenisme.

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