Uphdate News January, 19 2018


In The News

Anies launches first housing project with zero down payment
The Jakarta Post, 19 January 2018


The Jakarta administration has launched a Rp 0 down payment housing program in Pondok Kelapa, East Jakarta, on Thursday, to provide affordable housing for low-income families. 
Jakarta Governor Anies Baswedan assured that the houses would be made available for those with salaries under Rp 7 million (US$524) per month. 
"We are happy that we can fulfill one of our campaign promises today.

This is dedicated to the poor," Anies said in his speech at the groundbreaking ceremony.
The first project to be built under the key program of the new governor is comprised of two apartment towers.

In the next year and a half, the administration, through its developer PD Pembangunan Sarana Jaya and partner developer PT Totalindo Eka Persada Tbk, plans to establish one tower first, consisting of 703 apartments. 
As many as 513 of those will be two-bedroom apartments priced around Rp 320 million, while the remaining 190 will be one-bedroom apartments around Rp 185 million. 

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Alternative financing important for infrastructure development: Minister
Antara News, 19 January 2018

Jakarta (ANTARA News) - Alternative funding schemes, such as the Non-Government Budget Investment Financing (PINA), are essential to meet infrastructure development needs, a cabinet minister said.

"If Indonesia wants to become a developed county sooner, there should be creative and alternative financing for infrastructure development. 

This is what we want to facilitate through PINA," National Development Planning Minister/Head of National Development Planning Agency (Bappenas) Bambang Brodjonegoro said at the "PINA Day 2018" event in Jakarta on Thursday.

Brodjonegoro noted that a financing scheme, such as PINA, is needed to reduce the backwardness of Indonesia in the provision of infrastructure and reduce the burden on the state budget, which has been limited so far, to encourage development.

He remarked that the financing scheme, launched by the government since early 2017, has been used by other countries, such as China, Canada, and Australia, for infrastructure investment.

For that, Brodjonegoro expects the involvement of long-term funds in PINA, such as pension funds, life insurance, and haj funds, for the effective management and utilization of infrastructure financing.

Through the PINA scheme, the government has prepared various facilities for the project, including the guarantee of licensing process as well as the provision of land and the high return on investment, to attract private sectors.

"Pension fund should provide maximum benefit for participants, with maximum return on investment; but there is still a lot of pension fund investment in deposits, state debentures (SUN), and shares. Pension funds invested in the infrastructure is still small," Bambang revealed.

Various financial instruments to support the PINA scheme are also being prepared, such as Perpetual Bonds with a very long tenure, which is not only beneficial to support infrastructure development but also to increase interest in the capital market.

The number of planned infrastructure projects using the PINA scheme had reached 34 projects by December 2017, totaling Rp348.2 trillion, or US$25.8 billion, including 19 toll road projects, four aviation projects, 10 power generation and transmission projects, and one tourism project.

A number of PINA`s projects have reached financial close. They included 15 Waskita toll roads, worth Rp3.5 trillion; Kertajati International Airport, worth Rp932 billion; and Palapa Ring Fiber Optic Network, worth Rp174 billion.  

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China seeks to invest in construction of Kuala Tanjung Port
Antara News, 19 January 2018

Medan, N Sumatra (ANTARA News) - Chinese state-owned enterprises have expressed interest to invest in the construction of stage II of the Kuala Tanjung Port, an official stated here on Thursday. 

"Several foreign investors have expressed willingness to be involved in the (construction) project, but Chinese enterprises appear to be more aggressive than others," Bambang Eka Cahyana, the president director of state-owned port management company PT Pelindo I, stated in Medan. 

Before China, some Dutch companies had expressed interest to invest in the project. 
However, Cahyana explained that negotiations with Dutch companies had been sluggish, as two parties have yet to reach an agreement on the profit-sharing scheme. 

"The (Dutch) companies are seeking a 15 percent return, but we only get 11 percent (of the profit), which means the tariff (when the port becomes operational) should be higher (than the standard rate). We are currently still negotiating with the (Dutch) companies," Cahyana noted. 

According to Cahyana, the Indonesian port operator is planning to seek a six percent investment of the total cost from the Dutch companies. 

"If we share a 11 percent return (on this project), the investors will double their profits, as all cash is calculated in dollars. The problem is that the (foreign) companies appear to assume that they can leave whenever the situation becomes unfavorable for them," he remarked. 

Hence, Cahyana stressed that PT Pelindo I will keep its doors open to other investors interested in funding the port construction project. 
"We will welcome any investors who are not seeking an unreasonable amount of return," he emphasized. 

Apart from the Dutch, Cahyana said that some foreign companies are currently still adopting a wait and watch approach with regard to the Indonesian government`s commitment to ensuring the construction of several crucial infrastructure, such as highways, railroads, electricity, as well as power plants. 

"Constructing ports or highways and railroads is not too problematic, as the investors actually look for certainty on the government`s commitment (on this construction project)," he remarked. 
Hence, port operator PT Pelindo I will build an industrial park to increase the trade volume at the Kuala Tanjung Port, which will be designated as an international hub for exports and imports. 

"However, our real challenge is to downstream the products. Hence, at the onset, we are seeking to build an industrial park near the port area in order to accommodate the cargo," he stated. 
Cahyana explained that the port had set a target that once it became operational, for the next five years, the Kuala Tanjung international port would handle some one million Twenty-foot Equivalent Units of cargo. 

The construction of stage II of Kuala Tanjung Port is spread across a three thousand-hectare plot of land, and the project is worth Rp30 trillion. 
Transportation Minister Budi Karya Sumadi had earlier stated that the government will open its doors to foreign investors, including Chinese state-owned enterprises. 
"They all may invest in this (construction) project. We just open the possibilities for other countries to get involved," Sumadi noted.

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Bank Indonesia announces more stimulus relaxing banking liquidity management
Antara News, 19 January 2018

Jakarta (ANTARA News) - Bank Indonesia has given more stimulus - relaxing banking liquidity management by increasing the portion of average calculation to 2 percent from earlier 1.5 percent for Minimum Reserve Requirement Primary (GWM-P averaging) for rupiah denomination amid the central bank`s target to recover credit expansion to 10-12 percent in 2018.

Assistant Governor Head of the Department of Economic and Monetary Policy of Bank Indonesia Dody Budi Waluyo said the portion of average calculation of "GWM-P Averaging" became 2 percent of the total GWM-P, which is 6.5 percent effective as from July 16, 2018. 

"This is a follow up of reform in monetary policy operation to increase the effectiveness of monetary policy transmission, to support flexibility of bank liquidity management and to speed up the process of deepening financial market," Dody told reporters here on Thursday night. 

The ratio of GWM-Primary is the minimum rupiah or foreign exchange deposit of bank in Bank Indonesia giro. With the concept of "GWM-P Averaging", the central bank will calculate the funds of banks they are required to keep in Bank Indonesia giro on the average per period. 

The portion , which is calculated on the average is 2 percent of the total GWM-P Averaging of 6.5 percent.
Bank Indonesia hopes that with the relaxation, banks would have greater room in managing their liquidity which will cut their cost of fund and increase acceleration of credit distribution.

In 2018, the central bank seems very hopeful that bank intermediacy function would increase sharply in 2018 as there is less risk of non performing loan expected with improvement in macro economy.

"Banks, therefore, would have room for better management. This also will help give signals to banking intermediacy," he said.
Dody said banks also could invest their excess in liquidity as a result of the relaxation in bonds thereby contributing brisker financial market. 

Apart from rupiah GWM-P, Bank Indonesia also adopts average calculation of "GWM Averaging" 2 percent of third party fund (DPK) of the total GWM-P 8 percent. For independent sharia banks and sharia business units from the total rupiah GWM-P 5 percent of DPK, the portion of GWM Averaging starts with 2 percent of DPK.

"Implementation of GWM averaging in foreign exchange of conventional banks and GWM averaging in rupiah sharia banks will start on 1 October 2018," Dody said. 

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Bank Indonesia again maintains reference rate at 4.25 pct
Antara News, 19 January 2018

Jakarta (ANTARA News) - Bank Indonesia again decided to maintain its reference rate at 4.25 percent on Thursday in view of economic stability and acceleration in growth recovery in the midst of increasing inflation pressure caused by food price.

The central bank also maintained its deposit facility and lending facility rates at 3.5 percent and 5.0 percent respectively.

"They will be effective as of January 19 in line with macro-economic condition and financial system stability," BI`s assistant governor/head of monetary and economic policy, Dody Budi Waluyo said at a press conference.

Early in January this year the bank saw inflation pressure which was caused by food price. Dody said the bank and the government would strive to maintain supply and production of food commodities to reduce the pressure.

"Besides that oil price has indeed continued to rise but while the pressure is still tolerable we still see inflation to be still within the target of 3.5 percent plus and minus one percent this year," he said.

With regard to domestic economic growth, Bank Indonesia has seen that economy would recover faster due to increasing domestic demand.The cause of increasing domestic demand is hike of investment, household consumption and fiscal stimulus. 

Exports have also risen because commodity prices are still high. In all economic growth in 2018 is predicted to increase at 5.1 to 5.5 percent, he said.In terms of global economy the central bank saw that improving economic condition in advanced countries would boost domestic economy.
In addition to that, the referecnce rate of the US Federal Reserve is predictef to also increase after up by 25 basis point to 1.25 to 1.15 percent in 

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Pelindo IV to release bonds worth Rp5 trillion
Antara News, 18 January 2018

Jakarta (ANTARA News) - State-owned port operator PT Pelabuhan Indonesia IV (Pelindo IV) plans to issue bonds, amounting to Rp5 trillion, to finance the acceleration of Makassar New Port project development.

"The bond issuance plan is a follow-up to the visit of Minister of State-Owned Enterprises (SOE) Rini Soemarno to the location of Makassar New Port (MNP) on Monday (Jan 15, 2018)," Pelindo IV President Director, Doso Agung, stated in a written statement received in Jakarta on Wednesday.

During her visit, Soemarno appreciated the progress of MNP development, which has now reached 58 percent, and called for the acceleration in its development.
"MNP is one of the national strategic projects of Jokowi`s flagship government in eastern Indonesia, in accordance with the schedule," she noted.
Nevertheless, Agung remarked that the minister of SOE, after reviewing the performance of Pelindo IV in 2017, has sought to accelerate the overall settlement of MNP.

Pelindo IV recorded growth in trading volume in 2017, through containers of 1.9 million TEU`s, or an increase of 4.2 percent, compared to last year and Makassar Container Terminal, which began to overwhelm in handling the volume of existing containers,

During 2017, Pelindo IV recorded positive growth. "The profit of Pelindo IV in 2017 is predicted to increase approximately Rp600 billion or 1.4 times compared to the previous period," Agung revealed.

Pelindo IV has even planned the construction of a one-kilometer pier at once, from which it was originally built in stages. "For that, we are preparing Rp5 trillion fund, through the issuance of bonds in 2018," he explained.

In addition to Makassar New Port, Pelindo IV is also known to increase the capacity of Bitung Container Terminal, as an international hub port, and Kendari New Port.The development undertaken by Pelindo IV also aims to support Direct Call and Direct Export in Eastern Indonesia Region.

In addition, the corporate condition strongly supports the acceleration effort, among them EBITDA (Earning Before Interest, Taxes, Depreciation, and Amortization) of Rp1 trillion, and the leverage is still very loose.

"Makassar New Port is planning to use modern container-loading tools that can serve Panamax post-size ships, and in the end, Pelindo IV wants to increase its value to service users and lower logistics costs at ports," he pointed out. 

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AirAsia’s international flights to move to Terminal 3 of Soekarno-Hatta
The Jakarta Post, 18 January 2018

State-owned airport operator PT Angkasa Pura II (AP II) has announced that departures and arrivals of AirAsia’s planes for international flights will move to Terminal 3 of Soekarno-Hatta International Airport in Tangerang, Banten, from Terminal 2E of the airport.

The relocation of AirAsia’s international flights will start on Jan. 22 at 3 a.m.

“AirAsia is now preparing for the relocation to Terminal 3. We fully support the relocation,” said AP II’s branch communication manager of Soekarno-Hatta International Airport Haerul Anwar in a statement on Thursday.

He added that the check-in counters would be located at D13 to 18 at the terminal.Haerul stressed that AirAsia’s domestic flights would still depart from Terminal 2F of the airport.

AirAsia will join other airlines that have moved their international flights to Terminal 3, like Garuda Indonesia, Saudi Arabian Airlines, Vietnam Airlines, Korean Airlines, Xiamen Airlines, China Airlines and China Southern.

The airport operator will gradually move all international flights at Soekarno-Hatta International Airport to Terminal 3, while Terminals 1 and 2 will only be used for domestic flights. (bbn) 

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Jakarta designates lane for motorcycles
The Jakarta Post, 18 January 2018

The Jakarta administration has designated a lane for motorcycles on Jl. MH Thamrin and Jl. Medan Merdeka Barat following the Supreme Court’s decision in November to revoke a ban prohibiting the two-wheeled vehicles from entering the capital’s thoroughfares.

In addition to the lane, which is indicated with yellow markings, the administration has installed boards and banners reminding motorcyclists to remain on the left side of the road.
However, according to observations from Kompas, many motorcycles were still seen ignoring the lane.

Jakarta Governor Anies Baswedan has lauded the Supreme Court’s ruling, which is in line with his plan to open the thoroughfares to motorcycles to provide motorists with equal access to the city’s main roads.

Several parties, including the Greater Jakarta Transportation Management Agency (BPTJ), have expressed their disagreement over the ruling, arguing that pulling the band would exacerbate traffic jams and discourage commuters from using public transportation. (cal)

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West Java govt, AP II to ink deal on new airport
The Jakarta Post, 19 January 2018

The West Java provincial government will sign an agreement with state-owned airport operator PT Angkasa Pura II (AP II) on the operation of Kertajati International Airport, which is scheduled to open in July.

"Hopefully we can sign a memorandum of understanding (MoU) on Feb. 10," West Java Governor Ahmad Heryawan said on Thursday at the Presidential Palace in Jakarta.

Under the agreement, AP II will manage the airport's operation. Kertajati airport is currently being developed by PT Bandara Internasional Jawa Barat (BIJB), which is owned by the West Java government.

Separately, Heryawan said the West Java administration would maintain 51 percent ownership in BIJB, while the other 49 percent would be sold. The turnover from the shares sale would be used to develop the airport in Majalengka regency. “We want to keep majority shares in the BIJB," he said. 

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Sale of islands prohibited, says official
The Jakarta Post, 18 January 2018

The Maritime Affairs and Fisheries Ministry has stressed that selling islands is illegal, according to Indonesian regulations.The ministry’s deputy for maritime sovereignty, Arif Havas Oegroseno, said in Jakarta on Wednesday that putting an island up for sale violates Government Regulation No. 62/2010 on the utilization of small and outer islands.

“What can be sold are plots of land on islands,” Havas said at the ministry as quoted by tempo.co.
Havas’ statement was in response to an advertisement on privateislandsonline.com that offers Islet Ajap near Bintan in Riau islands province.
The islet is offered at Rp 44 billion (US$3.08 million).

The regulation states that the maximum area of land that can be sold is 70 percent of the total land area of the island, while the other 30 percent should be allocated for public interests, Havas added.

Havas said the people who controlled the island territory had no authority to exploit resources on the seabed surrounding the island.
Meanwhile, Minister Luhut Binsar Panjaitan was reluctant to comment on the sale of the island by the website, which is based in Ontario, Canada. He said he needed to check the information before commenting on it. 

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