ASEAN Affairs Forum

[Reashot Xigwin]

Government ‘must end cheap wages policy’ to compete globally
Ridwan Max Sijabat, The Jakarta Post | Reportage | Tue, December 11 2012, 11:26 AM

Tofu heaven: Several workers make tofu at a factory in Duren Tiga, South Jakarta. Many tofu producers are categorized as small and medium enterprises (SMEs), but so far they are not exempt from having to pay the newly increased minimum wages. All companies are permitted to file a request to postpone paying the higher wages in certain conditions.JP/Nurhayati Tofu heaven: Several workers make tofu at a factory in Duren Tiga, South Jakarta. Many tofu producers are categorized as small and medium enterprises (SMEs), but so far they are not exempt from having to pay the newly increased minimum wages. All companies are permitted to file a request to postpone paying the higher wages in certain conditions.JP/Nurhayati

While executives have complained that recently approved wage hikes smell of populism and capitulation to unions, several economists say that the increases reflect a needed update of the cheap labor policy of previous decades.

Cheap wages are no longer suitable with global standards, according to economist Payaman Simanjuntak, a professor at Krisnadwipayana University in Jakarta.

Indonesia, one of a few countries recording growth of 6 percent or more, must meet industrial and labor standards set by the International Labor Organization (ILO) and other world financial institutions to maintain its economic performance and to compete with other developing countries, Simanjuntak said.

“Decent work and decent pay are prerequisites, because its economic performance will be considered unreal if ISO standards in management and human resources development are not fulfilled,” Simanjuntak said.

Indonesia’s neighbors are also being pressured to pay workers higher, including Vietnam, which employers often refer to as a more competitive place to invest compared to Indonesia. In early December, its government agreed to an increase by 16 to 18 percent, or between US$79 to $113 a month.

The ILO and institutions such as the International Monetary Fund (IMF), the World Bank and the Asian Development Bank (ADB), will continue to watch the details of the nation’s economic development, he told The Jakarta Post recently. Among other things, the ADB has warned Asian nations of the need to reduce growing income gaps to avoid social and political troubles.

Simanjuntak, who also served as director general of industrial relations and labor standards at the Manpower Ministry from 1993 to 1995, hailed the local decisions to raise the minimum wage as significant.

He said the increases were a starting point for ending the nation’s cheap labor policy and to implement ILO Convention No. 131/1970 on the minimum wage and other basic conventions, such as those covering overtime compensation, equal treatment, decent work and pay.

Simanjuntak said the cheap labor policy was inherited from the New Order, when Soeharto and his authoritarian regime attempted to court foreign investment to speed development and ease
unemployment.

“In a fierce competition with China, South Korea, Vietnam, Thailand and Malaysia, the New Order government offered investors various facilities such as tax incentives, tax holidays and cheap labor,” Simanjuntak said. To implement the pro-investment policy, the manpower minister was given full authority to set the minimum wage across regions and investors were allowed to call on the military and police to “settle” industrial disputes and strikes, leading to many protests from national and international labor and human rights bodies.

“During the 32-year New Order era, foreign investment generated millions of job opportunities and domestic investors also enjoyed a pro-investment development policy,” Simanjuntak said. However, the global community is currently more sensitive to human rights and democratization, he added.

Simanjuntak acknowledged that regents, mayors and governors have used the minimum wage issue for their personal political gains, with some resorting to setting much higher levels for the minimum wage for 2013 than was recommended by local commissions comprised of workers and business representatives that were tasked with advising the leaders.

Under the New Order, Soeharto also set sectoral minimum wages to support workers employed in growing sectors, such as mining, manufacturing and services.

Irianto Simbolon, the director general of industrial relations and social security affairs at the Manpower and Transmigration Ministry, said that the minimum wage, first implemented in 1963 under Sukarno, was aimed at providing a social safety net. It was necessary to avoid abuse, with too many unemployed people ready to fill the jobs of complaining workers.

“In the reform era, the government can no longer continue to spoil investors by maintaining its cheap labor policy and giving away various facilities and incentives.”

Irianto and Simanjuntak separately said that the government should reform its wage policy for civil servants in accordance with the minimum wage policy.

They said that the government was also violating the 2003 Labor Law and the minimum wage policy, as most civil servants holding senior high school and university diplomas had been paid far below the minimum wages.

“Civil servants with an S-1 [university diploma] and zero job experience are paid only Rp 1.8 million [US$186.92] per month, while high school graduates working in private companies in Jakarta will be paid Rp 2.2 million in minimum per month,” Simanjuntak said.

Annual schedule of setting minimum wages

Agustus-September: Pre-surveys of basic commodity prices

Early October: Survey of 60 wage components in local markets
(revised Ministerial Decree No. 17/2005)

Mid October: Provincial tripartite wage committees start discussing wage hikes based on survey results, inflation, economic growth and employers’ financial capability; committees then submit recommendations to provincial governments.

November:
1. Governors issue decrees on provincial minimum wages and sectoral minimum wages
2. Governors with provinces hosting industrial estates usually agree to recommendations from regencies and municipalities
3. Employers can submit official objection to the provincial minimum wages
(Ministerial Decree No 231/2003)

December:
1. Tripartite wage committee in regencies and municipalities discuss market survey results, and factor in inflation, economic growth and companies’ average financial capability. They then submit recommendations on wage hikes in the regions.
2. Governors officiate wage hikes in regencies and municipalities
3. Employers can submit official objection to regional minimum wages

January in following year:
1. Provincial or regental/municipal minimum wages takes into effect
2. Government accepts or rejects employers’ objection to wage hikes


Source: Ministry of Manpower and Transmigration

Workers greet new wages
Ridwan Max Sijabat, The Jakarta Post | Reportage | Tue, December 11 2012, 11:18 AM

Palace protest: Workers rally in front of the Presidential Palace. The strike on Nov. 21 was part of a series of rallies on labor welfare ahead of when the new minimum wage takes effect on New Year’s Day. JP/Ricky YudhistiraPalace protest: Workers rally in front of the Presidential Palace. The strike on Nov. 21 was part of a series of rallies on labor welfare ahead of when the new minimum wage takes effect on New Year’s Day. JP/Ricky Yudhistira

Ongoing pressure to increase the minimum wage will be a disadvantage to everybody in the long run, employers say — while workers have greeted the new decisions on the new minimum wages, to be effective in the New Year.
The Jakarta Post’s Ridwan Max Sijabat looks at the controversy in the following reports.

Workers in industrial estates in Riau Islands, West Java and Jakarta hailed the significant raises in wage as a starting point to live decently — like other people, workers said they can now save a little and have a bit of recreation.

Enny Chorifah, 19, who works at an electronic spare parts manufacturer in Muka Kuning industrial estate in Batam, said if her labor contract was extended she might be able to save, or to shop a little more, with the wage increase by 46 percent to Rp 2.04 million (US$220) from the current Rp 1.4 million.

“Unlike those living in rented bedrooms outside the industrial estates, we stay at the company’s dormitory, so I can go shopping at least once in two weeks for groceries or other things,” she told The Jakarta Post by telephone.

Enny, a senior high school graduate from Magelang, Central Java, has been employed for six months on a contractual basis, with monthly pay of Rp 1.4 million. She and her fellow workers get meals but do not receive any transportation allowance in compensation for the dormitory.

“With the wage going up to Rp 2.04 million from January and with overtime payments, I could earn around Rp 3 million per month and put aside around Rp 500,000, or send it to my parents in my village,” she said.

The Batam mayor has approved the increase in the minimum wage from the current Rp 1.4 million to Rp 2.04 million.

Winda Salmona, 20, a garment worker in Pulogadung industrial estate, East Jakarta, said she appreciated the first-ever significant increase from the current Rp 1.5 million to Rp 2.2 million 43 percent.

With an expected promotion to permanent status in December, thanks to the newly issued Ministerial Decree No. 19/2012 on outsourcing, as many as 300 contract-based workers in the garment factory will be promoted to permanent workers with a basic salary of Rp 2.2 million, she said. With transportation and meal allowances, “we can take home a total of Rp 3 million each month while workers will be registered with the Jamsostek social security programs,” she said.

Winda’s friend Danny Wirastati, a fellow high-school graduate from Indramayu, West Java, said with the real wage increase, they would be able to rent a larger room outside the industrial estate, purchase higher quality belongings, enjoy recreation centers at least once a month and save.

The two workers appreciated new Jakarta Governor Joko Widodo. “Despite the soaring price of basic commodities in the city, low-wage workers will survive and enjoy economic progress,” said Danny, secretary of the textile and garment unit of the Confederation of Indonesian Prosperous Labor Union (KSBSI) in the company.

Danny thanked the Jakarta administration, which considered not only basic prices, but also economic growth, companies’ financial capacity and the inflation rate to uphold social justice.

Manpower and Transmigration Minister Muhaimin Iskandar appreciated the decision made by regional heads to endorse the significant increases in provincial, regental and municipal minimum wages.

He said they would improve workers’ purchasing power and stimulate national economic growth through more consumption.

“We could no longer maintain the cheap labor policy, which in the end has created vulnerable groups with no access to good nutrition, better education, better health care and social justice. If the poor condition continues, we will be creating an uneducated, unhealthy and underdeveloped society,” he said, citing the higher minimum wage in neighboring Malaysia.

The minister said the minimum wages were the minimum salary level in regions allowed by the labor law for a single worker without any considerations of competence, job experience and productivity.

“The minimum wage is a social safety net for individuals to allow them to meet their basic needs, and to live as individual human beings,” the minister said. Employers paying below the minimum level were exploiting their workers, he said.

You guys don't know How Happy I am right now. At last the Indonesian laborer is finally treated like a human being. I'm from a family of upper middle class, but during a college field trip I work as a laborer and proud of it. I know the hardship of the working class because I experienced it & finally they have taken the first step toward it

 

[nufix]

You guys don't know How Happy I am right now. At last the Indonesian laborer is finally treated like a human being. I'm from a family of upper middle class, but during a college field trip I work as a laborer and proud of it. I know the hardship of the working class because I experienced it & finally they have taken the first step toward it

Personally, The first I heard the government agree to elevate the minimum wage for laborers, I was afraid that the companies, foreign companies to be precise, will leave Indonesia immediately to find another source of cheap labor force in countries without strict work regulations, namely Cambodia, Laos, or maybe Vietnam, the same thing happened during the end of Soeharto's era that kicked our butt down to the poorest countries in the region. But then I realized that nowadays, foreign companies share in Indonesia's stock market are declining fast down to minority stake holders , and Indonesian local companies hold almost half of total shares in the market, now I am sure that the government have done the right thing, because those local companies will not going anywhere but Indonesia and will be encouraged to produce more goods because its consumers now have more money to be spent, and more more potential costumer from the new members of middle income class.

 

[Reashot Xigwin]

Personally, The first I heard the government agree to elevate the minimum wage for laborers, I was afraid that the companies, foreign companies to be precise, will leave Indonesia immediately to find another source of cheap labor force in countries without strict work regulations, namely Cambodia, Laos, or maybe Vietnam, the same thing happened during the end of Soeharto's era that kicked our butt down to the poorest countries in the region. But then I realized that nowadays, foreign companies share in Indonesia's stock market are declining fast down to minority stake holders , and Indonesian local companies hold almost half of total shares in the market, now I am sure that the government have done the right thing, because those local companies will not going anywhere but Indonesia and will be encouraged to produce more goods because its consumers now have more money to be spent, and more more potential costumer from the new members of middle income class.

What haven't you heard the news the same thing happen everywhere in SEA, even in Singapore.

 

[nufix]

What haven't you heard the news the same thing happen everywhere in SEA, even in Singapore.

Yes I have, and that what made me think that the government was making a good decision for the laborers and the workforce.

 

[ahfatzia]

Death toll from Typhoon Bopha tops 1,000 in the Philippines



Residents gather their belongings after their house was destroyed by strong winds brought about by Typhoon Bophal earlier this month.


(CNN) -- The grim toll from a typhoon that devastated southern Philippines earlier this month continues to climb, with 1,020 reported dead as of Sunday morning, authorities said.

Officials fear the toll from the December 4 storm will rise further. Because while rescue crews continue searching, the chances of finding people alive dim with each passing day.

With 844 still missing and 1.2 million families displaced, Bopha is the strongest and deadliest storm to hit the Philippines this year, according to the country's emergency management agency.

Among the missing are hundreds of fishermen who went to sea before the storm hit. Officials hope that they could yet be found sheltering on small islands out at sea.

If the death toll continues to rise, Bopha could eventually prove deadlier than Tropical Storm Washi, which killed 1,268 people a year ago.

But its toll would still remain far below that of Tropical Storm Thelma, the country's most lethal storm on record that left more than 5,000 people dead in 1991.

The worst of the death and destruction from Bopha took place on the southern island of Mindanao, where the storm hit first and hardest with gusts as strong as 220 kph (138 mph).

The storm, known locally as Pablo, was the most powerful typhoon to hit Mindanao in decades. It set off flash floods and landslides that engulfed people sheltering in their rickety houses in remote, unprepared regions of the island.

Death toll from Typhoon Bopha tops 1,000 in the Philippines - CNN.com


More contributions by ASEAN nations are needed. Poor souls, RIP for the dead and fast recoveries for the livings.

 

[Zero_wing]

Death toll from Typhoon Bopha tops 1,000 in the Philippines

Residents gather their belongings after their house was destroyed by strong winds brought about by Typhoon Bophal earlier this month.


(CNN) -- The grim toll from a typhoon that devastated southern Philippines earlier this month continues to climb, with 1,020 reported dead as of Sunday morning, authorities said.

Officials fear the toll from the December 4 storm will rise further. Because while rescue crews continue searching, the chances of finding people alive dim with each passing day.

With 844 still missing and 1.2 million families displaced, Bopha is the strongest and deadliest storm to hit the Philippines this year, according to the country's emergency management agency.

Among the missing are hundreds of fishermen who went to sea before the storm hit. Officials hope that they could yet be found sheltering on small islands out at sea.

If the death toll continues to rise, Bopha could eventually prove deadlier than Tropical Storm Washi, which killed 1,268 people a year ago.

But its toll would still remain far below that of Tropical Storm Thelma, the country's most lethal storm on record that left more than 5,000 people dead in 1991.

The worst of the death and destruction from Bopha took place on the southern island of Mindanao, where the storm hit first and hardest with gusts as strong as 220 kph (138 mph).

The storm, known locally as Pablo, was the most powerful typhoon to hit Mindanao in decades. It set off flash floods and landslides that engulfed people sheltering in their rickety houses in remote, unprepared regions of the island.

Death toll from Typhoon Bopha tops 1,000 in the Philippines - CNN.com


More contributions by ASEAN nations are needed. Poor souls, RIP for the dead and fast recoveries for the livings.

They will be fine they will rebuild they will start all over again

 

[Viet]

PH, Vietnam set to hold joint bilateral cooperation meeting next year
By Fat Reyes - INQUIRER.net
6:59 pm | Friday, December 14th, 2012

Vietnamese Deputy Foreign Minister Pham Quang Vinh

Erlinda Basilio INQUIRER PHOTO


MANILA, Philippines – Officials from the Philippines and Vietnam met on Friday and talked about preparations for the 7th Joint Commission Bilateral Cooperation (JCBC) to be held next year, which would involve discussions on defense cooperation and maritime issues, among others.

In a statement, the Department of Foreign Affairs (DFA) said that Foreign Affairs Undersecretary for Policy and newly-delegated Philippine ambassador to China Erlinda Basilio met with Vietnam’s Vice Foreign Affairs Minister Pham Quang Vinh in Manila to talk about the preparations.

“The JCBC will discuss the implementation of the Philippines-Vietnam Action Plan 2011-2016, which covers cooperation on political, defense, security, economic, fisheries, agriculture, forestry, environment, science and technology, energy, education, cultural and tourism, social welfare and development, and maritime and ocean concerns and issues,” it said.

DFA spokesperson Assistant Secretary Raul Hernandez said that issues on the West Philippine Sea (WPS) were always tackled in the context of maritime cooperation.

Hernandez noted that on maritime cooperation, the meeting discussed the establishment of hotline communication channels between the coast guards of the two countries, a memorandum of agreement in search and rescue at sea, and another memorandum of agreement in oil spill preparedness and response.

Hernandez also stressed that the meeting was only in preparation for the JCBC, which he said was being conducted regularly by the two countries to discuss and review their bilateral relations.

China claims nearly the entire West Philippine Sea (South China Sea), believed to be rich in oil and gas resources, while the Philippines, Brunei, Malaysia, Taiwan and Vietnam, have overlapping claims to some or all of those same areas. Recent weeks have seen a rise in tensions in the sea disputes, with the Philippines asking China to clarify media reports saying Chinese authorities had authorized its forces to interdict ships entering what Beijing considers its territorial waters.

Both the Philippines and Vietnam have also refused to stamp Chinese electronic passports bearing the image of a map of its nine-dash sea claims as part of their protests to China’s sovereignty claims to nearly the entire West Philippine Sea (South China Sea).

 

[Viet]

Death toll from Typhoon Bopha tops 1,000 in the Philippines
More contributions by ASEAN nations are needed. Poor souls, RIP for the dead and fast recoveries for the livings.

Indeed ASEAN nations shall think of establishing of emergency funds and rescue wrokers for such cases.

 

[Zero_wing]

Indeed ASEAN nations shall think of establishing of emergency funds and rescue wrokers for such cases.

Well we do the Emergency system of ASEAN and we been getting help from every expect china hahahaha

 

[nufix]

Indonesia's state oil company Pertamina to acquire ConocoPhillips’ Algeria unit.

Amahl S. Azwar, The Jakarta Post, Jakarta | Business | Tue, December 18 2012, 9:51 PM

State-owned oil and gas firm PT Pertamina announced on Tuesday that it had signed the sales and purchase agreement (SPA) to acquire the Algerian unit of the Texas-based energy company ConocoPhillips.

Pertamina president director Karen Agustiawan said in a statement made available to The Jakarta Post that the acquisition would allow the firm to take over North ConocoPhillips Algeria Ltd’s stake in Block 405A in the North African country.

Block 405A comprises of three main oil fields: Menzel Lejmat North, Ourhoud and EMK.

North ConocoPhillips Algeria currently has a 65 percent participating interest in Menzel, of which the firm is also the operator. The company, a subsidiary of ConocoPhillips, owns a 3.7 percent and 16.9 percent stake in the Ourhoud and EMK fields respectively.

This year, Block 405A has produced 35,000 barrels of crude oil per day, of which 23,000 barrels of oil per day go to ConocoPhillips.

“The acquisition is expected to boost Pertamina’s oil output significantly from 23,000 barrels of crude oil per day to 35,000 barrels of oil per day in 2013 as the EMK field is projected to begin its production,” she said.

Karen declined to reveal the total investment for the plan as negotiations were ongoing.

Pertamina, who also has the chance to increase its reserves by 100 million barrels of oil from the purchase, expects the acquisition process to be finished in the first half of 2013.

Currently, the planned acquisition is still dependent on the Algerian government-owned oil company Sonatrach, which is the partner of ConocoPhillips at the block, and has the first right of buying stakes.

In addition, Pertamina is also waiting for the agreement of the Algerian government before finalizing the planned acquisition.

“We are ready to form a strong, close partnership with Sonatrach in a bid to maximize the output from the oil block,” Karen said. (lfr)

Pertamina to acquire ConocoPhillips

Surely Pertamina has awaken from its long sleep after 1998 crisis and started to acquire more oil companies.

 

[nufix]

Analysis: Yet another record-setting jump in (Indonesian) consumer confidence

Debnath Guharoy, Roy Morgan | Business | Tue, December 18 2012, 11:15 AM

The KADIN-Roy Morgan Consumer Confidence index jumped up, yet again, in the month of November. Touching 154.5, the rating climbed by 3.9 points to another new record high since surveying began in 2005. Confidence is now 9.3 points higher than it was a year ago in November 2011 when it stood at 145.2.

This month’s gain was driven by two major indicators. The first, increasing confidence in future economic conditions in Indonesia. The second, increasing confidence that now is a “good time to buy” major household items.

A large and increasing majority of Indonesians, now 92 percent up 4 points, expect Indonesia will have “good times” economically over the next five years. This is now at the highest level ever recorded, compared to only 8 percent, down 4 points, who expect “bad times” economically.

In terms of the short term economy, 82 percent up 2 points, expect Indonesia will have “good times” financially during the next 12 months. This compares most favorably to the 17 percent down 3 points who think we have “bad times” ahead of us.

Today, 61 percent of Indonesians say “now is a good time to buy” major household items. Up by another 3 points over the previous month, this too is a new record high. In contrast, 34 percent down 2 points, believe “now is a bad time to buy” major household items. This is the lowest level for over seven years, ever since June 2005. Coincidentally, but not surprisingly, the number for “main income earners” who earn less than Rp 1 million (US$103.73) each month as a percentage of all principal breadwinners, is exactly 34 percent. Spare a thought for them, Indonesia’s under-privileged, who continue to do it tough each month. These are the extended families, with multiple earners helping several generations under the same roof eke out an existence. For them, it is never a good time to buy a big-ticket item for the home.

But some of them also believe their lot will improve. That’s because 67 percent of Indonesians, up 1 point, expect their family to be “better off” financially this time next year. In comparison, only 2 percent down 2 points, expect to be “worse off” financially. As for the here and now, a robust 42 percent down 2 points, continue to say their family is “better off” financially than a year ago. A mere 10 percent of the population down 1 point, feel their family is “worse off” financially than a year ago. Most of them hail from the poorest sections of our society. The good news is that this measurement is also at the lowest level ever recorded. For the rest, about half the population, the situation today is neither better nor worse. That’s the perception. More often than not, perception is reality.

Commenting on the latest KADIN-Roy Morgan Consumer Confidence results, KADIN chairman Suryo Sulisto said yesterday: “Exports are down. Commodity prices are down. But Indonesia’s consumer economy keeps on pushing forward. The local consumer continues to behave as if the global financial crisis is an alien, foreign, anything-but-Indonesian problem. It is this kind of confidence, this kind of spending that puts Indonesia’s consumer economy in a class of its own. Where else would anybody want to invest?”

That is a good question for many prospective investors, both local and foreign, to mull over. Those who read yesterday’s supplement on Indonesia’s economic outlook published by this newspaper would also conclude there isn’t another marketplace quite like Indonesia.

Investors came in droves during 2012. Foreign Direct Investments were at record levels, at pace with consumer confidence. Much of those investments were in new factories, assembly lines and offices for consumer goods and services. This year’s history looks set to repeat itself next year. If it does, we can expect these good times to keep on rolling at least for Indonesia. That will make the slogan “Remarkable Indonesia” ring true again. On the world stage, Indonesia’s consumer economy will be one of very few exceptions. Among G20 nations, it is the exception. Everywhere you look, there is opportunity.

Even Indonesia’s problems are opportunities, more so because they are not insurmountable. The country’s central bank, Bank Indonesia, has kept a firm hand on the till and moving it in the right direction as and when required. The military has conducted itself with grace, silent in the barracks, lending a helping hand when called upon to assist the people. The media has kept a watchful eye on the goings-on, exposing the rich and powerful. If the judiciary, the legislature, the police and the provincial bureaucracies did their jobs to similar standards, the nation would be in better shape. If infrastructure development and the fight against corruption get the attention they deserve, the results would put Indonesia at the top of the heap of major developing economies. These are all big “ifs” but the wish-list is neither long nor daunting. Democracy has taken root firmly in Indonesia. Lamentably, it has brought with it all of its systemic evils.

The monthly KADIN-Roy Morgan Indonesian Consumer Confidence Rating is based on 2,069 face-to-face interviews conducted throughout Indonesia, not just a handful of cities. The survey includes the Top 21 cities, smaller cities and towns as well as many more villages in the rural hinterland, reflecting all of Indonesia. Men and women aged 14 and over were randomly selected during the month of November 2012.

The writer can be contacted at Debnath.Guharoy@roymorgan.com

Analysis: Yet another record-setting jump in consumer confidence | The Jakarta Post

Indonesia's economic development relies on its own people, global financial crisis seems to have a little impact to Indonesia's export sector but that doesn't harm Indonesia's growing percentage as Indonesians consume what are produced in Indonesia, the money is circling inside the country will not be affected by the global money which is financially worsening day by day.

 

[nufix]

Indonesia's Waskita Karya to begin road, bridge projects in Timor Leste

Tassia Sipahutar, The Jakarta Post, Jakarta | Business | Thu, December 20 2012, 10:31 AM

State construction firm PT Waskita Karya will expand its operations to Timor Leste in 2013. It has entered into talks with the Timor Leste government on carrying out several projects in the country, the company announced in Jakarta on Wednesday.

This would be Waskita’s first foray into Timor Leste since the latter’s secession from Indonesia, according to Waskita president director Mohammad Choliq. “We have a historical and emotional connection with Timor Leste because we undertook much construction work there in the past. Now, we are planning to commence new operations in the country,” he said.

The planned works, which will connect the capital Dili to neighboring districts, will include the construction of a 20-kilometer road, a steel-framed bridge and a 15-kilometer medium voltage transmission line.

It expects to begin the Rp 500 billion (US$51.82 million) projects in the second half of 2013. Unlike its other foreign construction work, Waskita will act as the main contractor in Timor Leste.

The company began expanding its operations overseas in 2006. So far, it has carried out projects in Saudi Arabia and the United Arab Emirates (UAE), which include a financial center in Abu Dhabi and an apartment tower in Dubai.

In those two countries, it always acted as a subcontractor to construction firm the Saudi Binladin Group due to Waskita’s limited foreign contacts, Choliq said, adding that it considered its overseas projects to be a training ground.

Waskita’s finance director, Tunggul Rajagukguk, said that between January and November 2012, overseas projects contributed Rp 500 billion to the company’s total revenues, which amounted to Rp 7 trillion.

The company has also secured two new projects for next year in Saudi Arabia. It will build an office and apartment complex, and a parking area in Riyadh. Each project will cost around Rp 120 billion and will take up to 12 months to complete.

Waskita expects its revenue to grow by 26.4 percent to Rp 11.5 trillion by the end of 2013, excluding income from the Timor Leste work.

On Wednesday, the newly publicly listed Waskita saw its share price climb 10.5 percent on its first day of trading at the Indonesia Stock Exchange (IDX). The price then rose to Rp 490 apiece, a 28.9 percent increase from the Rp 380 initial public offering (IPO) price.

The shares, traded as “WSKT” closed at Rp 445 apiece on Wednesday, 17.1 percent higher than its IPO price. Waskita became the 23rd and final company to be listed on the IDX this year. It is also the 18th formerly state-owned enterprise that has gone public.

The company gained Rp 1.17 trillion by selling 3.08 billion, or 32 percent, of its enlarged shares to the public. About 75 percent of the shares’ buyers were local investors.

As previously reported, Waskita plans to use 60 percent of the IPO funds as working capital and the remaining 40 percent to finance its business expansion. Of the planned business expansion funds, it will allocate 15 percent to the development of its precast concrete factory in Benoa, Bali; 15 percent for its realty business; and 10 percent for toll road investment.

By November 2012, Waskita’s total assets stood at Rp 7 trillion, while its liabilities and equities reached Rp 6.2 trillion and Rp 800 billion, respectively.

Waskita Karya to begin road, bridge projects in Timor Leste | The Jakarta Post

 

[EastSea]

India, ASEAN Upgrade Strategic Partnership

NEW DELHI — India and the Association of Southeast Asian Nations have decided to elevate both their economic and strategic relationship at a two-day meeting in the Indian capital to mark 20 years of ties. As tensions rise in the South China Sea, India and Southeast Asian countries have also called for closer maritime security cooperation.

Setting their sights on more than doubling trade over the next decade, India and the 10 ASEAN-member countries have reached a free trade agreement in services and investments. This will facilitate movement of business people and professionals between India and the economically vibrant Southeast Asian countries.

Indian Prime Minister Manmohan Singh called the agreement “transformational.” He points out that India and ASEAN's 1.8 billion people are nearly a quarter of the world’s population, and the region has a combined gross domestic product of $ 3.8 trillion.

“I am optimistic that our trade will exceed $100 billion U.S. by 2015 and we should aim for the milestone of $200 billion U.S. 10 years from now,” Singh said.

To achieve this target, several Southeast Asian leaders stressed the need to improve air and road links between India and ASEAN countries. Prime Minister Singh echoed the call as he greeted a car rally that reached New Delhi Friday after winding its way through Southeast Asian countries.

“Our future will be driven by the bonds of connectivity we build in the coming years, the prime minister said. "These physical bonds will be strengthened by digital links which will help our younger generations to network better. Together this web of linkages will help unleash the vast economic potential of our region, accelerate development and deepen our strategic partnership.”

India and ASEAN also decided to intensify “maritime security cooperation” and underlined the need for freedom of navigation. This has become a contentious issue due to competing claims between China and other countries - like ASEAN member Vietnam - over parts of the South China Sea.

Southeast Asian countries said that it is important to protect vital sea routes in the Indian and Pacific Oceans as the global economy shifts eastward.

However, Indian Foreign Minister, Salman Khurshid has said that issues of sovereignty needs to be resolved by the countries concerned and India’s intervention is not required.

In a vision statement, India and ASEAN also spoke of a new strategic partnership that would bring closer security and political cooperation.

India launched a “Look East” policy 20 years ago to push trade links with the 10 countries of Southeast Asia and to counterbalance China’s dominant role in the region. The two-day meeting, which was attended by heads of nine ASEAN countries, underscored that India’s profile is rising in the dynamic region.

 

[Reashot Xigwin]

From China To ASEAN: Rebalancing India’s Trade
Posted on Wednesday, December 19, 2012 by 2point6billion.com

New Delhi has actively worked with Beijing to address its massive bilateral trade deficit. However, it has another option. India can seek greater economic integration with ASEAN and substitute its imports from China with that of ASEAN. The India-ASEAN Summit on December 20 would be a good place to start.

By Spike Nowak & Daniel Jacobius Morgan

Dec. 19 – In August 2012, at the ninth meeting of the India-China Joint Group on Economic Relations, Trade, Science and Technology in New Delhi, the main point of concern for India’s Minister of Commerce and Industry, Anand Sharma, was the widening trade deficit between the two countries – $40 billion for the year ending in March 2012. India’s trade deficit with China has increased by a massive 4,000% in the last 10 years.

At the meeting, the Indian and Chinese commerce ministers agreed to set up a joint working group to address trade issues, including the trade deficit. However, India has another option. Instead of relying on the working group to fix India’s trade woes, New Delhi can actively seek greater economic integration with the Association of Southeast Asian Nations (ASEAN). It is important for India to pursue this option at the next ASEAN-India Summit scheduled to be held in New Delhi on December 20-21.

Nearly all the goods that India imports from China could potentially be imported from ASEAN countries. Substituting Chinese imports with ASEAN imports will not decrease India’s absolute trade deficit, but it will reduce the enormous bilateral trade deficit with China. This will result in a more equal trading relationship. UN data indicates that currently more than 50% of India’s imports in 36 product categories come from China. For trade security and diversification, it is important for India to find more sources for some of these products.

In addition to the financial imbalances created by the trade deficit, there is another major problem with the current trading relationship between India and China. According to the United Nations Conference on Trade and Development, the main products that India exports to China are primary commodities, which are subject to greater price fluctuations and are low on the value chain. In 2011, iron ore alone accounted for 41% of India’s $23 billion worth of exports to China, while cotton and copper accounted for 11.5% and 9% respectively.

According to UN data, China exported more than $7 billion worth of telecommunications equipment and $2 billion in computers to India in 2011, which represents 55% of total imports in these two product categories. Huawei and ZTE, two of the largest Chinese telecommunications companies and major exporters to India, are at the centre of a recent report by the Intelligence Committee of the U.S. House of Representatives that highlights the potential security risks to the U.S. of equipment imported from the two firms. These risks might be overestimated, but it is in India’s interests to be cautious. To reduce its reliance on Chinese equipment, India can look to ASEAN nations, which exported telecommunications equipment worth $25 billion and $33 billion in computers across the world in 2011.

India also heavily reliant on chemical imports from China, which are essential to make fertilisers. In 2011, more than 50% of Indian imports of four product categories that include chemicals like nitrogen compounds, heterocyclic compounds, and metallic salts came from China. This reliance on a single source can eventually impact food security in India. ASEAN countries export more than enough of the chemicals in these categories for India to begin diversifying its import sources to ASEAN.

A similar situation exists in other high-value product categories such as electrical machinery, boilers, and medicinal and pharmaceutical products – each of which represents over a billion dollars in imports a year from China.

In April 2002, the Indian government’s overtures resulted in the Comprehensive Economic Cooperation Agreement (CECA) with Singapore, followed by a Framework Agreement on Free Trade Areas with Thailand in October 2003. However, even after a raft of trade negotiations, culminating in the 2009 India-ASEAN Free Trade Agreement (FTA) in Goods and infrastructure projects to increase connectivity, trade between India and ASEAN remains moribund.

Despite its enormous market, India is still only the ninth largest export destination for ASEAN, purchasing just 3% of ASEAN’s total exports. Meanwhile, China has become India’s number one source of imports after China’s entry into the World Trade Organisation in 2001 and due to the sheer size of the Chinese export market relative to other countries.

But there are signs that things are changing – in addition to Singapore and Thailand, New Delhi now has bilateral arrangements with other Asian countries including Myanmar, Sri Lanka, Bangladesh, Japan and Malaysia. Evidence suggests that such trade agreements have had a positive, sometimes dramatic, impact on trade.

For example, after the Delhi Declaration in 2005 and the Riyadh Declaration in 2010, bilateral trade between Saudi Arabia and India rose from $13 billion in 2006 to $32 billion in 2011 (though this was partly driven by India’s increasing demand for oil). Following the Singapore-India CECA deal in 2004, bilateral trade grew from $7.5 billion in 2004 to $13 billion in 2007. After the 1999 Sri Lanka-India trade deal bilateral trade rose from just over $400 million in 1999 to $2.5 billion in 2006.

For now, the Indian government has focused on FTA for services, rather than goods, because it sees this is as a strong export area. Although increasing exports is important, reducing India’s reliance on Chinese imports is also important. To achieve this, India will have to massively boost its infrastructure to reduce the cost and ease with which goods from ASEAN can be imported. Myanmar and Thailand, for example, have recently signed an agreement to develop an $8.6 billion port facility at Dawei – 155 miles from Bangkok – which will allow ASEAN shipping to avoid the congested Malacca straits.

India can also cultivate private investment to construct and expand existing port facilities, especially to supplement the terminals at Chennai and Haldia. India will also require sustained investment in road transport infrastructure; in the short term India can construct roads linking the poorly-connected North East with Myanmar and the rest of India. This will provide an important land route to the ASEAN economies. In addition, industry groups like the Federation of Indian Chambers of Commerce and Industry (FICCI) can play a role in making FTAs more transparent to Indian businesses, especially small and medium enterprises (SMEs), which are usually less likely than multinationals to take advantage of India’s trade agreements.

The India-ASEAN FTA in Services, which is likely to be signed on December 20 at the India-ASEAN Commemorative Summit, could be a huge fillip for trade in commercial services. But if India is serious about increasing trade with ASEAN, it needs to do more than sign trade agreements.

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[Reashot Xigwin]

RI, S’pore coordinate hunt for Djoko Tjandra
The Jakarta Post | National | Sat, December 22 2012, 7:48 AM

Indonesian authorities will coordinate with their counterparts in Singapore to track down graft fugitive Djoko Tjandra and a formal letter on the issue will be sent as soon as possible.

“Soon there will be a joint effort with the Singaporean government,” Deputy Attorney General Darmono, leading the team formed to hunt down the fugitive, said on Friday.

In February of this year, Djoko was reported to be living in Papua New Guinea after being granted citizenship there. However, after the Indonesian authorities contacted the Papua New Guinea government and made efforts to repatriate Djoko from the country, the fugitive has reportedly fled to Singapore.

“We don’t know when the official letter will reach the Singaporean government, but the joint efforts will begin soon,” Darmono was quoted by Antara news agency.

International law expert Hikmahanto Juwana said the Indonesian government should urge the Singaporean government to help repatriate Djoko, who is responsible for Rp 546 billion (US$56.5 million) in state losses.

Meanwhile, the Papua New Guinea government has agreed to establish an extradition treaty with Indonesia, expected to come into effect next month.