Indonesia Economy Forum

[Nike]

KAI’s Jonan Put Forward as New Minister in Jokowi’s Cabinet
On the Right Track: Dahlan Iskan proposes state railway boss Ignasius Jonan as his replacement in Joko’s government

By Jakarta Globe on 12:25 am Aug 06, 2014

Kereta Api Indonesia president Ignasius Jonan during a press conference in Semarang, Central Java. (JG Photo/Dhana Kencan)

Jakarta. Ignasius Jonan, president director of state railway company Kereta Api Indonesia, or KAI, is among scores of people who have been favored to fill President-Elect Joko Widodo’s cabinet.

Jonan has been recommended as either the new state-owned enterprises minister to replace his current boss Dahlan Iskan, or as transportation minister to replace E.E. Mangindaan.

Dahlan praised Jonan for his bravery, reliability and integrity.

“Jonan is a reliable person. I will pray that he becomes a minister, for whatever [position],” Dahlan was quoted as saying by Antara during an Idul Fitri gathering with around 300 directors and commissioners of state-owned enterprises in Jakarta on Monday.

He said the country’s next state-owned enterprises minister must protect state firms from political intervention and also from entrepreneurs and other people who want to turn these firms into their personal cash cows.

“Jonan is a brave person who cannot be bribed or influenced by anyone,” he said.

Dahlan said Jonan was able to turn KAI into a public transportation triumph during this year’s Idul Fitri exodus, as evident with the fact that all train tickets were sold out long before the holiday period.

Dahlan also texted Jonan to express his satisfaction with KAI’s performance this year. “I’m proud to see KAI became the travelers’ main choice this year,” Dahlan said in the message.

Dahlan said he received a snapshot of an exhausted Jonan falling asleep on an economy class train after days working in the field to ensure that everything went smoothly during the Idul Fitri exodus.

Dahlan said KAI has achieved progress in various sectors. The railway company operated three new trains, which it bought from train car manufacturer Industri Kereta Api (INKA) during the Idul Fitri holiday to carry the surging number of holiday travelers.

Dahlan also urged INKA president director Agus Purnomo to often take train rides to discover any flaws in the company’s products.

“Physically, I’m quite proud of [the train cars’] appearance and fine finishing. But he [Agus] needs to often ride the train and feel for himself how it feels to be a passenger for long-distance trips to find invisible [flaws]. I will keep asking him how many times has he taken the train and to what destinations,” Dahlan said.

Dahlan said Jonan has helped INKA get out of its financial problem by purchasing three trains after the Transportation Ministry abruptly canceled its order because of a failed budget approval.

Dahlan said INKA should repay KAI’s generosity to rescue it by providing good products and services so that KAI would continue to buy trains from the manufacturer.

The minister also expressed his joy to see KAI becoming a reliable transportation option for cargo, especially during Idul Fitri when trucks were banned from traveling long distances.

He said KAI’s role in the transportation of cargo will become more vital in future once the Surabaya to Jakarta double track railway line is completed, adding that KAI has also ordered hundreds of lorries from INKA for cargo transport.

Jonan, when asked to comment on the recommendation that he should become a minister in the next government, refused to express his feelings.

“Who asked [me to become a minister]? It’s the president that needs to ask. So, it’s just a recommendation? Well, send the recommendation to the president,” Jonan said in Semarang, Central Java, when asked about his readiness to become a minister.

Jonan said it was the next president’s prerogative to appoint ministers.

“I’ll answer it later because it wasn’t the president who asked. So, why should I answer,” he said.

Transportation Minister Mangindaan meanwhile said he wanted his successor to continue the government’s programs.

“Continue infrastructure development on land, sea, air and also trains. If I may ask, continue [the programs] because we have made a grand design that runs from 2009 to 2014,” he said.

Mangindaan will end his term as the at the end of September because he will be inaugurated as a lawmaker in October.

The minister said Jonan had shown good performance.

“[Jonan] has been successful in handling [the issue of] the trains,” Mangindaan said.

Meanwhile, Dahlan said he would not ask Joko and Vice President- elect Jusuf Kalla to pick him as a minister in their administration.

“I choose not to offer my self, I will not compete [with others], or show my face so that I will get appointed for a position in the cabinet,” Dahlan was quoted as saying by news portal JPPN.

Dahlan said many people are vying for a cabinet seat in the next government.

“I fully realize that many people were rewarded a ministerial post after throwing in their support. Many people had made contributions to support Jokowi,” he said.

Dahlan said he didn’t support Joko from the beginning and that he only threw his support behind the president-elect in the last minute and he would not compete with others to win Joko’s support for the position for that reason.

Several lists of potential cabinet lineups for Joko’s administration already went viral on the Internet, including figures from the political parties that supported Joko, such as Surya Paloh, Muhaimin Iskandar, as well as members of the Indonesian Democratic Party of Struggle (PDI-P).

Non-political figures such as Dahlan, Coordinating Minister for Economics Chairul Tanjung and economist Faisal Basri have been recommended as coordinating minister for economics.

Dahlan, along with Jonan, has also been recommended to become state-owned enterprises minister.

Papua candidates

Meanwhile, the Papua chapter of Barisan Merah Putih (BMP), a nationalist group, has recommended six Papuan natives whom it said were qualified to join Joko’s cabinet.

BMP Papua chairman Ramses Ohee put forward the name of Barnabas Suebu, the former Indonesian ambassador to Mexico and also a former Papua governor, as the new home affairs minister.

“We think Barnabas Suebu deserves to be the home affairs minister because he once served as ambassador in Mexico and as a governor,” he said.

Ramses emphasized that based on his experience, Barnabas should be considered as a minister due to his understanding of governance.

“Suebu has had the experience as Papua governor. He understands bureaucracy and governing,” he said.

Aside from Barnabas, the BMP has also recommended National Commission for Human Rights (Komnas HAM) commissioner Natalius Pigai as the transportation minister, former Sarmi district head Eduard Fonataba as minister for disadvantaged regions, Yansen Monim as youth and sports minister, John Karobana as energy and mineral resources minister and Jems Modow as a director general at the National Ministry of Education.

“These six names are Papua’s best sons who are qualified to serve as ministers just like figures from other regions. We hope President-elect Jokowi would listen to our aspirations,” he said.

Separately, Vicky Aibadat of the United Papua Forum, said aside from Barnabas, the Papuan politician Yorrys Raweyai was also qualified as a minister.

“I think that these two figures [Barnabas and Yorrys] are very qualified as ministers,” Vicky said.

KAI’s Jonan Put Forward as New Minister in Jokowi's Cabinet | The Jakarta Globe

 

[MarveL]

Ignatius Jonan, a former Citibanker who were brought in as CEO since 2009 by Sofyan Djalil, then the State Enterprises Minister. Of course, what more interesting to know is what Jonan and his management team have done differently. Indonesian railway maybe not the best in the south-east Asia region, but as an Indonesian and as a customer I have been impressed by KAI (Kereta Api Indonesia- the state owned railway company) transformation in the last five years.

In the past decade, KAI has managed to become one of the public transportation companies that has revolutionized its approach and shown its maturity in providing services to society. Not only have train stations become more comfortable, they also have more sufficient seating, environmentally-friendly toilets,e-tickets, efficient call centers, while also removing third-party ticket sellers.

 

[Nike]

Ignatius Jonan, a former Citibanker who were brought in as CEO since 2009 by Sofyan Djalil, then the State Enterprises Minister. Of course, what more interesting to know is what Jonan and his management team have done differently. Indonesian railway maybe not the best in the south-east Asia region, but as an Indonesian and as a customer I have been impressed by KAI (Kereta Api Indonesia- the state owned railway company) transformation in the last five years.

In the past decade, KAI has managed to become one of the public transportation companies that has revolutionized its approach and shown its maturity in providing services to society. Not only have train stations become more comfortable, they also have more sufficient seating, environmentally-friendly toilets,e-tickets, efficient call centers, while also removing third-party ticket sellers.

and less or nil hawker vendor in Train too

Rise of Fashion E-Commerce in Indonesia
Indonesian retail pioneers in exploring the new world of the online market

By Anka Idris on 12:05 am Aug 07, 2014

Soon, luxurious boutiques may have to deal with the challenge of keeping in-store revenue. More and more high-end online stores are popping up and Indonesians can now shop online to get designer items. (Globe Asia Photo/Moh. Defrizal)

Jakarta. Taking note of sartorial leaders in the United States and Europe, the Indonesian fashion industry is starting to realize the opportunities of e-commerce in high-end design and ready-to-wear retail.

Though the new shopping territory is still largely uncharted in Indonesia, a few product pioneers are already testing out the Internet market.

Their customer base, however, is still several steps behind. Shopping online, from the comfort of home, is not yet seen as an upgrade — or even as an alternative — to shopping in a store.

“In Indonesia, it’s a bit different. People love going to the mall. They like to be seen carrying shopping bags,” said Jo Elaine, editor-in-chief of bobobobo.com. “They like talking to [sales representatives], they like asking questions.”

While fashion e-commerce in the United States uses services such as live chat to communicate with customers, applications such as Blackberry Messenger, Line, and WhatsApp are more commonly used to provide customer service to the Indonesian market.

Five months ago, thedresscodes.com was ready to open its designer dress rental services — online only. But as founder Cindy Mulyasasmita soon realized, her customers preferred to try on and rent the dresses in person, even though the whole process can be done with the click of a mouse.

“I think the biggest challenge is to educate and let people know that shopping online is very convenient,” Cindy said.

As it turned out, a detailed description accompanying product photos from several angles was still not enough for consumers who are used to discovering items for themselves.

Indonesian consumers tend to feel more comfortable talking one-on-one with sales representatives instead of reading ready-written information.

To overcome this obstacle, the pioneers are approaching the new market with a more familiar online vehicle: social media.

Instagram and Facebook are the two most common social media outlets used to reach Indonesian consumers.

Frequently posting on social media is a strategy used by Ethnicity.co.id to gain consumer attention and increase brand recognition. Launched less than a month ago, Ethnicity takes traditional Indonesian patterns and reprints them on modern silhouettes, such as sleeveless tops and light outerwear.

“Our goal is to create simple and practical everyday wear with a touch of Indonesian culture,” Ethnicity’s art director Syarifah Dwi Rahma said.

Ethnicity also uses Indonesian female celebrities as brand representatives to showcase their products to a large following on Instagram.

Cotton Ink, an independent Indonesian womenswear brand — launched in 2008 and considered the first fashion e-commerce producer in Indonesia — takes advantage of all the social networking tools used by their target market.

“Cotton Ink’s customers are avid users of social media and networking sites, and are therefore very tech savvy,” assistant director Elisa Kuswari said .

“We use all means of social media, including Instagram, Blog, Twitter, Facebook and Pinterest,” she added.

Each social media outlet is strategized to deliver a different message to followers and customers.

Cotton Ink shares pictures of their products and of people wearing their clothing and accessories on Instagram — but uses Facebook and Twitter to share new product releases and to announce upcoming events.

Andra Alodita, an Indonesian blogger and fashion enthusiast, discovered bobobobo.com, which features Indonesian designers and artisans who produce limited, unique products, through Instagram.

“I saw a friend post about Bobobobo and I followed them, and then I started browsing,” Andra said.

Jo noticed a difference in Bobobobo’s customers on Facebook and their customers on Instagram. The former tend to buy more affordable items, while the latter seek out more expensive specialty items. Jo is therefore not hesitant to present items with a higher price tag.

“You kind of assume that the market is relatively sophisticated,” Jo said.

Using a credit card for online purchases is a practice that still makes many Indonesians feel uncomfortable.

Most customers would rather go to the store to and use their credit card in person instead of typing in the info online.

As Andra explained on her blog, she chose to make her purchase at Bobobobo by bank transfer because it made her feel safer than using a card.

As for shipping, JNE has proven to be a reliable courier for delivery in Indonesia as Bobobobo, Dresscodes, Ethnicity, and Cotton Ink all use their services.

Andra received her purchases less than 24 hours after placing her order on Bobobobo because the warehouse is in the same city as her home.

This convenience, along with high quality products and sustainable packaging, made her want to continue shopping online at Bobobobo.

She finds the user-friendly website of Bobobobo to be attractive and exclusive.

“I feel like I’m shopping in a boutique — only, it’s online,” Andra said.

“There should be more high-end fashion e-commerce like Bobobobo,” Andra continued, adding, “I’m honestly too lazy to shop in stores. E-commerce puts me more at ease because there aren’t any distractions.”

Although Bobobobo doesn’t target an international market, orders are nevertheless coming in from abroad.

The nature of e-commerce renders distance a non-issue, so people overseas can find and purchase Indonesian products just as easily as domestic customers.

That is one of the reasons that Ethnicity decided to go into e-commerce prior to developing a brick-and-mortar storefront.

In addition to the aim of a smaller investment, the newly launched brand also has the overarching goal of reaching a global market.

“I want people around the world to wear ethnic Indonesian clothes on a daily basis,” Syarifah said, “going to the mall or traveling, without consciously realizing that they’re wearing a part of Indonesia’s culture.”

Although the online Indonesian retail is still new enough that Ethnicity, Bobobobo, Cotton Ink, and Dresscodes have a corner on the market, the competition is starting to pick up.

“We are constantly challenged by the birth and growth of more online fashion brands in Indonesia,” Elisa said.

“The more players there are, the more the customers and audience realize that this is something they should pay attention to,” Jo said.

http://www.thejakartaglobe.com/features/rise-fashion-e-commerce-indonesia/

 

[MarveL]

August 6, 2014 6:15 am
Indonesia pushes Central Java as Asian low-cost manufacturing hub

By Ben Bland in Boyolali, Central Java

The sleepy province of Central Java, which has long been the heartland of a Javanese culture that frowned on aggressive profit-seeking, is trying to position itself as Asia’s latest low-cost manufacturing hub.

As wages continue to rise sharply in manufacturing centres in China, Vietnam and the Indonesian capital of Jakarta, a growing number of investors see an opportunity to tap the large, cheap workforce in this province of 33m people – a population higher than that of Malaysia.

The plans to develop an export manufacturing base in Central Java are crucial to the government’s ambitions to wean southeast Asia’s biggest economy off its reliance on natural resource exploitation and domestic consumption.

Success will be determined by the government's ability to revamp the province’s infrastructure and simplify investment procedures – key commitments by president-elect Joko Widodo, who started his career as a furniture exporter and then mayor in Solo, Central Java.

But these are big challenges, as demonstrated by power outages, delays to infrastructure projects caused by wrangling over land acquisition and rain-submerged ports.

Labour is an easier sell. “There are a lot of people in Central Java, the wages are much lower than China or Jakarta and the government is supporting us,” says Kurniasaputra, a factory manager in Boyolali district for Pan Brothers, an Indonesian garment manufacturer whose customers include Uniqlo, Adidas and Nike.

In a joint venture with Mitsubishi, the Japanese trading house, Pan Brothers is investing $60m to build seven factories in Central Java over the next two years, increasing its capacity by more than 70 per cent.

Much of the expanded output is destined for Uniqlo, which is growing rapidly as owner Fast Retailing aims to become one of the world’s biggest apparel sellers.

Other garment manufacturers, such as Japan’s Aoyama Trading and Taiwan’s Makalot Industrial, have been shifting production to Central Java as they try to reduce their reliance on an increasingly expensive China.

Sembcorp, a Singaporean industrial group, is hoping to capitalise on the trend by building an integrated port and industrial estate – spanning 860 hectares, equivalent to about 1,200 football pitches – just east of Semarang, the provincial capital, which is two hours’ flight from Singapore.

With profit margins in labour-intensive industries such as garments notoriously thin, the main attractions in Central Java are low wages and a ready workforce.

While the average monthly wage for unskilled workers is about $328 in China, $240 in Jakarta and $140 in Vietnam, it is just $120 in this province, according to Pan Brothers.

Manufacturing executives say they are also encouraged by the relatively harmonious state of labour relations in Central Java, which stands in sharp contrast to the increasingly militant trade union movement in the country’s main industrial estates around Jakarta.

“The most important factor here is the character of the central Javanese people, who are very polite,” says Irwan Hidayat, president director of Sido Muncul, Indonesia’s biggest herbal medicine producer, which employs 4,000 people at its factory outside Semarang.

Ganjar Pranowo, the smooth-talking governor of Central Java and a rising star on the national political stage, says he wants to support investors by cutting red tape and simplifying byzantine permit procedures.

He is also trying to accelerate big infrastructure projects, including a toll road from Solo, near Boyolali, to Semarang, the expansion of Semarang’s international port and a revamp of Semarang’s rundown international airport.

But he says the main hurdle facing the government – and private projects such as Sembcorp’s industrial estate – is land acquisition.

He cites the example of the Japanese-backed Central Java Power Plant, a $4bn project to build one of Asia’s biggest coal-fired power stations, which has been put on hold indefinitely because of protracted land negotiations with residents.

“There’s always a land mafia,” says Mr Pranowo. “Many people find out about the big projects and while the government is slow, the speculators are quick to move in.”

At Semarang’s small but busy Tanjung Emas port, the importance of this power plant and other infrastructure projects becomes clear.

Edy Sulaksono, the operations manager, says electricity outages hold up the ship-loading process once a week and tidal seawater encroachment cuts off the main road to the port once a day.

During heavy rains in January, the whole port was inaccessible for a week, disrupting manufacturers that need to ship to international customers on tight schedules.

But with container traffic increasing by about 9 per cent annually over the past three years, it is apparent that investors are still betting on the future of Central Java.

“In Jakarta it’s hard to find workers at the right price,” says Mr Pranowo, who adds that he has been talking to potential investors from Australia, Japan and South Korea. “I’m sure that if we can build the infrastructure quickly, even more manufacturers will come here.”

Indonesia pushes Central Java as Asian low-cost manufacturing hub - FT.com

 

[Nike]

Perinus to use new fish-catching technology

Khoirul Amin, The Jakarta Post, Jakarta | Business | Fri, August 08 2014, 11:32 AM

State-owned fishery firm PT Perikanan Nusantara (Perinus) will use new technologies and expand operations in eastern regions in an effort to boost the company’s yearly revenues to about Rp 1 trillion (US$84.9 million) next year, a fivefold increase from this year’s target of Rp 210.7 billion.

Perinus president director Abdussalam Konstituanto said after a meeting with State-Owned Enterprises Minister Dahlan Iskan on Thursday that his firm would utilize remote-sensor technology to detect and catch fish in the sea, as well as nanotechnology for fish storage.

“We expect that our revenue will leapfrog to around Rp 1 trillion once the technologies are implemented,” he said.

Abdussalam added that his firm would invest some Rp 7.5 billion on the remote-sensor technology and between Rp 5 billion and Rp 7 billion on the nanotechnology.

He added that Perinus would collaborate with the Indonesian Institute of Sciences (LIPI) and other domestic institutions to develop both types of new technologies — research that Perinus was prepared to fund — in return for obtaining intellectual property rights for the technologies.

Abdussalam added that by utilizing the remote-sensing technology, his firm would be able to pinpoint the precise location of fish.

“The technology will combine the use of satellites and hydro-acoustics so that it can report the locations of the fish in real-time,” he said.

The nanotechnology, which would be used at fish storage facilities, would keep fish fresh for longer, and extend the time in which they could be sold at high rates, he added.

Abdussalam said that he expected Perinus to begin installing 12 units of the nanotechnology at fish storage facilities at several of its 16 ships over the next three months.

Dahlan said that besides preparing implementation schemes for the new technologies, Perinus would also expand operations into Bacan Island, Maluku.

“Perinus currently operates in four areas: Bitung, North Sulawesi; Sorong, West Papua; Ambon, Maluku and Tanjung Benoa, Bali,” he said.

Dahlan added that Perinus planned to make Bacan its fishery center for the eastern region.

Perinus, which was established in 2005 through a merger of four state-owned firms, suffered financial difficulties during its early years of operation.

Perinus financial director Nurhadi Cahyono said that Perinus began recording good financial performances beginning in 2011.

The firm booked Rp 12.78 billion in the first half this year, a 10.6 percent increase from last year’s profit of Rp 11.56 billion.

Nurhadi said that by utilizing the new technologies, Perinus also aimed to increase the volume of its catch to more than 10,000 tons by 2015, with 30 percent designated for export.

As of the first half this year, Perinus’ total catch stood at 4,000 tons. 1,000 tons have been exported abroad to countries like Japan, South Korea, Hong Kong, the US and the European Union (EU).

Perinus operational director Max F. Najoan said that his firm would also aim to export a percentage of its catch to the Middle East next year.

Perinus to use new fish-catching technology | The Jakarta Post

 

[Nike]

Analysis: Boosting the
development of Indonesia’s
eastern regions
Romauli Panggabean | Business | Wed, July 16 2014, 2:06 PM

In the past four years, Indonesia has shown steady economic growth, despite our domestic structural problems and global economic turmoil. Last year Indonesia suffered from a US$4.1 billion trade deficit, a 3.3 percent of gross domestic product (GDP) current-account deficit and the rupiah depreciated to approximately 12,300 per US dollar at the end of 2013 due mainly to the US Federal Reserve’s tapering off policy.

This brought a strong combination of difficulties, which tended to put downward pressure on the Indonesian economy. Responsive policy adjustments from the Indonesian government, however, have successfully provided a good cushion for the economy and despite the unfavorable global economic conditions, it may still have grown 5.8 percent in 2013.

In contrast with the relatively stable economic growth at the national level, growth at the regional level has more diverse figures. Indonesian economic growth was not distributed equally among its seven economic corridors, namely Sumatra, Java, Bali and Nusa Tenggara, Sulawesi, Maluku and Papua.

Based on the Herfindahl Hirschman Index, ranging from 0 to 1, we discovered that the index increased from 0.4 (2011) to 0.404 (2013), which indicates greater inequality in economic distribution. The index results show the imbalanced GDP contribution of Indonesia’s west (i.e. Java and Sumatra) versus east (i.e. Kalimantan, Bali, Nusa Tenggara, Sulawesi and Papua).

The graph shows that since 2011, economic contributions from the western regions gradually increased, while they steadily fell in the east. It also shows that more than 80 percent of the Indonesian economy is concentrated in the western regions.

Furthermore, this condition has remained more or less the same for a decade, recalling that in 2003 the west already contributed 82.3 percent of Indonesia’s GDP. To wrap up, the Indonesian macroeconomic condition represents largely the western regions.

Nonetheless, if we narrow it to the regional level, provinces in the east are the winners in terms of economic growth. Although it is clear that the low economic level of the eastern regions means they have more room to grown, enable them to reach high economic growth, but their growth is still a noteworthy accomplishment.

In 2013, the top 10 provinces, with the exception of Jambi, with the highest economic growth were located in the east. Those provinces are Papua (14.8 percent), Central Sulawesi (9.4 percent), West Papua (9.3 percent), Jambi (7.9 percent), Gorontalo (7.8 percent), South Sulawesi (7.7 percent), North Sulawesi (7.5 percent), Central Kalimantan (7.4 percent), Southeast Sulawesi (7.3 percent) and West Sulawesi (7.16 percent).

The economic growth gap with that of the national level is also significant. For example, Papua posted approximately 1.5 times greater growth than the national average. Noticeably, mining was the dominant sector in Papua as the engine of growth for the province. North Sulawesi, with trading partners in the US and Europe, enjoys a higher export rate for their agricultural products as the outcome of the global economic recovery. Hence, this implicitly brings the notion that maximize the region’s primary sectors will lead to higher national economic growth.

The discrepancy of high economic growth in the east and relatively low growth at the national level arises due to structural economic differences. At the national level, industries like manufacturing, hotels, trade and restaurants are key sectors, which contribute to almost 45 percent of Indonesian GDP.

Manufacturing, which is concentrated in Java, alone contributes nearly 23.7 percent.

The other corridors, mostly in the east, are still highly dependent on extractive industries, such as agriculture and mining, which add little value. The commodity boom in the early 2000s supported the eastern regions and did not motivate development of manufacturing.

For sure, in order to augment the contribution of the eastern regions, they need to develop manufacturing. A survey of medium and large manufacturing industries shows sluggish growth of manufacturing outside Java.

Over the last 13 years, only 17-19 percent of manufacturers build plants outside Java. In 2001, the proportion of medium and large manufacturers outside Java was roughly 19 percent, but in 2013 the number shrunk to a mere 17 percent.

This is not surprising since manufacturers outside Java only grow by 0.3 percent annually, as opposed to 1 percent in Java. Therefore, more incentives should be given to promote manufacturing in the east.

Infrastructure is a main driver for the private sector to expand operations to the east. Infrastructure development will give the largest positive externalities to the whole economy. Thus, incentives may not only come from, for example, a direct reduction in a form of tax holiday, but also from cheaper logistics costs due to infrastructure readiness.

In the short to medium term, the east needs immediate infrastructure to provide access to ports for distributing mining and agriculture products. Furthermore, in the long term the development of energy infrastructure is needed to help the east transform from an exporter of raw materials to an exporter of manufactured goods.

Nevertheless, from 2011 to the first quarter of 2014, 68.7 percent of the infrastructure groundbreaking realization in the government’s Master Plan for the Acceleration and Expansion of the Indonesian Economy (MP3EI) was actually in the western regions. Moreover, in 2013 the government spending for infrastructure, goods and services was higher in the west than in the east, with 48 percent and 43 percent, respectively.

Although it is right to say that infrastructure in the western regions is important, if the focus of development does not change the east will be left even further behind.

Another indirect incentive is abundant natural resources in the east. These natural resources, however, lack the support of manufacturing industries. With a lack of processing facilities, most of these resources are exported as raw materials.

Some examples of those main export products are rubber, palm oil, coconut oil, coal, nickel and iron ore. Related to this, products with revealed comparative advantage (RCA) index higher than 1, or those considered competitive, are dominated by raw materials. Thus, the government policy to stop nickel exports in order to enforce the building of smelters is one way to try to develop eastern manufacturing.

Given rich iron supplies, the east should develop integrated steel manufacturing. The steel industry is the mother of industry and a good parameter to evaluate manufacturing development in the region.

The need for infrastructure in the east will support the development of the steel industry and vice versa. Moreover, the majority of iron ore reserves are in eastern regions. Nevertheless, the development of integrated steel industries will need a large amount of investment and have a high demand for electricity.

However, there is one more essential manufacturing industry that offers high value added from its development: the food industry.

With the rising middle class in Indonesia, the food industry will be the star among manufacturing industries for many years ahead. Furthermore, compared to all other medium and large industries in Indonesia, the food and beverage industry has the highest value added, with approximately Rp 222 trillion ($18.9 billion) last year.

The development of the food industry in the easy might give immediate impact to the region and allow it to contribute more to the Indonesian economy. In addition, the food industry will absorb a large amount of workers, thus creating a big multiplier effect.

In the short to medium term, connectivity infrastructure is a priority followed by energy infrastructure in the long term. Additionally, low development of manufacturing industries also leads to lower eastern contribution to the Indonesian economy.

_____________________________

The writer is a regional analyst at Bank Mandiri

Analysis: Boosting the development of Indonesia’s eastern regions | The Jakarta Post

 

[Nike]

Garuda CEO ready to step
down soon

The Jakarta Post, Jakarta | Business | Fri, August 08 2014, 9:22 PM

At the end of his tenure, flag carrier Garuda Indonesia president director Emirsyah Satar says that he is ready to be replaced by anyone.

Emirsyah said that he had asked the State-Owned Enterprises Ministry to prepare a new person to be installed as Garuda CEO by the end of this year.

"I have met with the company's major shareholders [the government] saying that my tenure is going to end soon. I want my successor to be someone who understands the problems in Garuda," he told reporters at the airline headquarters at Soekarno-Hatta International Airport in Cengkareng, Banten, on Friday as quoted by kontan.co.id.

Previously, State-Owned Enterprises Minister Dahlan Iskan said that he would replace Emirsyah in September.

Emirsyah declined to comment when reporters asked him about the person who best fit the position.

"It would be better if my successor was someone who works in Garuda so that he or she will understand the problems in the airline and knows how to resolve them. But, the decision is in the hands of the shareholders," he continued. (nfo)

Garuda CEO ready to step down soon | The Jakarta Post

Emirsyah Satar is one of the best talented business person in Indonesia, his golden touch surely will be needed to reform another BUMN company in Indonesia. Emirsyah Satar, Ignatius Jonan, Sofyan Basir, and others has give a huge contribution success for Indonesian economy this day, i hope this trend will be continued for a long time in future.

LG readies $1.3 billion for petrochemical plant in Papua

Tama Salim, The Jakarta Post, Jakarta | Business | Sat, August 09 2014, 11:50 AM

LG International will allocate up to US$13 billion to build and operate a petrochemical complex in the Bintuni industrial area in West Papua, the South Korean conglomerate’s representative said.

Speaking to reporters following a meeting with Industry Minister MS Hidayat in Jakarta on Friday, LG senior executive Jee Hoon-Kang said the petrochemical plant would have the capacity to produce one billion tons of methanol a year.

However, he said LG would need a guarantee from the government to get enough supply of gas before starting the project.

“This is going to be a very good opportunity for us if we get gas allocation. With it, we can start to develop the [Bintuni] project with the Industry Ministry,” Kang told reporters.

Before the three-year construction of the facility commences, Kang said that the company would require at least one year for “deeper study”, to decide on the appropriate licensing and to locate natural gas supply.

The conversion of 2,300 hectares (ha) of conservation land for the Bintuni complex is currently awaiting approval from the Forestry Ministry.

During Friday’s meeting with the minister, Kang was informed about the plan to designate a 200 ha site as a shared facility for companies operating within Bintuni. “This is the first time we discussed the matter and I wish to discuss this with our partners [...] There are strong and weak points. [But] it is a good plan,” he said.

The ministry’s manufacturing industry director, Harjanto, who was present in the meeting, said the common facility would be shared by LG, German petrochemical company Ferrostaal Industrial Projects and state-owned fertilizer company PT Pupuk Indonesia in order to cut infrastructure costs.

“Building infrastructure is costly, so we see this as an opportunity for integration and optimization of investments among the companies,” Harjanto said.

“If everyone builds their own power plants, it would take up all the land. If one power plant is shared among companies, it will be more efficient. The idea is to integrate the petrochemical and fertilizer industries so their byproducts can also be shared among them.”

Responding to questions regarding Bintuni’s projected time frame, Harjanto said that it depended on the availability of gas.

“Genting Oil’s Kasowari well [in Papua] could be one of the sources for this industry. So once the natural gas is available, then the project will start,” he added.

To support its operations, Harjanto said that LG would need 91 million standard cubic feet per day (MMSCFD) of natural gas, which would bring the total gas consumption of Bintuni up to approximately 202 MMSCFD. There are about 48 trillion cubic feet of gas reserves that have already been identified in the area.

He also said that the ministry would soon be signing a memorandum of understanding (MoU) with LG that would clarify the terms of their partnership, including those related to gas allocation.

“This is a milestone in the partnership forged [with LG] for the development of the petrochemical industry in Bintuni,” he said.

The integrated petrochemical complex in Bintuni would produce urea and ammonia-based fertilizers and a wide array of petrochemical products, including methanol, polypropylene and polyethylene.

Bintuni is located near the Tangguh liquefied natural gas (LNG) field in West Papua, which is one of the biggest contributors in Indonesia’s overseas gas contracts.

LG readies $1.3 billion for petrochemical plant in Papua | The Jakarta Post

Kalbe Farma to start producing
cancer drugs

Tassia Sipahutar, The Jakarta Post | Business | Sat, August 09 2014, 3:34 PM

The country’s largest pharmaceutical company Kalbe Farma (KLBF) is looking to start the production and sale of cancer drugs in the third quarter of this year in a move that should help reduce imports.

Kalbe finance director and corporate secretary Vidjongtius said that the cancer drugs would be in injectable form and would initially be marketed in Indonesia.

“We are going to phase out our imports of cancer drugs once production begins in the third quarter,” he told reporters on Friday.

The cancer drugs will be produced at its Rp 250-billion (US$21.15 million) factory in Pulogadung, East Jakarta. The factory has a production capacity of 3 to 5 million units per year, but only 20 to 30 percent of the capacity will be used in the first year.

Vidjongtius said Kalbe would produce three types of injectable drug in the third quarter and another two types in the fourth quarter.

“They are part of chemotherapy treatment and will be able to be used to treat most cancers,” he added.

As of now, the imported cancer drugs, part of Kalbe’s prescribed drugs division, make up only a small portion of its business. It expects cancer drugs to contribute significantly to its business within the next five years with an annual average growth of 20 to 25 percent.

The company hopes later to export them to Southeast Asian countries as well, especially when the ASEAN Economic Community framework is implemented in 2015.

According to Vidjongtius, publicly listed Kalbe is also preparing to sell its Diabetasol milk and Fitbar energy bar in the Philippines in the coming months to grab a wider market and complement its existing sales of Extra Joss in the country.

Kalbe currently exports a few of its products to ASEAN countries, namely Woods’ cough syrup to Malaysia and Singapore, Zee milk to Myanmar and Hydro Coco coconut water to Vietnam.

Kalbe is upbeat that it will reap better results next year, after reducing its business growth target for this year, supported by higher production capacity — provided by new factories — and the expected wider coverage of the nationalhealth insurance (JKN) program.

Among the new factories that Kalbe is looking to operate is a powdered-milk factory in Cikampek, Karawang, West Java.

As for the JKN, Kalbe is optimistic that the government-run program will cover a higher number of Indonesians and thus boost the usage of Kalbe’s drugs. “About 12 percent of our prescribed drug sales were made in the JKN program. We hope to see the figure grow continuously over the years,” he said.

According to Kalbe’s latest financial results, the company booked Rp 2.13 trillion in total prescribed-drug sales in the first half, meaning the JKN program contributed around Rp 255 billion.

As previously reported, Kalbe has decided to reduce its 2014 business growth target to 11 to 13 percent, down from the initial target of 14 to 16 percent.

The revision was mainly triggered by a slower growth of sales booked in the first half, especially from sales generated by non-Kalbe products.

Kalbe’s share price remained unchanged at Rp 1,630 on Friday.

The company, which has a Rp 76-trillion market capitalization, has seen its stocks surge 30.4 percent so far this year, outperforming the broader Jakarta Composite Index’s (JCI) 18.2 percent gain.

Kalbe Farma to start producing cancer drugs | The Jakarta Post

 

[Nike]

Indocement allocates up
to $150m to build two plants
Anggi M. Lubis, The Jakarta Post, Jakarta | Business | Sat, August 09 2014, 3:18 PM

Major cement producer Indocement Tunggal Prakarsa is readying up US$150 million to finance the construction of two greenfield plants, which are expected to boost the company’s production by 2018 as it is faced with dwindling market share.

Indocement president director Christian Kartawijaya said Friday that his company was currently carrying out a feasibility study to establish two new plants that will be located in North Sumatra and in Pati, Central Java. Each is designed to have an annual production capacity of 2.5 million tons.

“Constructing a greenfield plant usually costs us around $200 to $300 per ton of capacity,” Christian explained, which means total investment for the two plants will stand between $100 million and $150 million.

Indocement aimed to boost its production capacity by about 45 percent to 30 million tons per year in 2018 when the two greenfield plants were expected to have begun operations, he said. Currently, the company produces 20.6 million tons of cement a year.

The two greenfield plants, as well as a brownfield facility currently under construction, are hoped to enable Indocement to maintain its share in the country’s cement market at around 31 percent after seeing reduced market share recently due to the expansion of its competitors, such as Semen Indonesia.

Christian said that Indocement would source the funds needed to establish the two greenfield plants from the company’s own cash.

“We hope the study can be concluded this year so we can start building the two factories next year. It usually takes around three years to establish a greenfield plant,” he explained.

Indocement is currently in the middle of an ambitious business expansion, having allocated Rp 4.5 trillion ($382.67 million) in capital expenditure (capex) this year mostly to finance the company in boosting its production output.

In October last year, the company launched construction of its 14th brownfield plant, with investment amounting to Rp 6.5 trillion. The plant will have a production capacity of 4.4 million tons of cement per year when it starts operations in the fourth quarter of next year.

Indocement, the country’s second-largest cement producer, recorded a drop in its market share from 32 percent in 2012 to 30.4 percent last year, mainly because it had no additional output last year to supply the market while its main competitor, Semen Indonesia, was ahead in building new plants.

In comparison, state-run Semen Indonesia, the country’s largest cement producer, saw its market share rise to 44 percent in 2013, compared to 41 percent in the previous year.

Indocement marketed 8.97 million tons of cement in the first half of the year, a 2.7 percent increase from 8.73 million tons in the first half of 2013.

The company’s exports rose by 5.88 percent year-on-year to 36,000 tons during the period, as the company strived to mitigate oversupply and slumping demand in the country’s cement market due to the slowdown in construction and property sectors.

Indocement registered stagnant financial performance growth during the first half of the year, with its revenue rising 6.5 percent year-on-year to Rp 9.5 trillion and net profit growing by 3.76 percent to Rp 2.51 trillion, hauled by rising electricity costs and flat sales.

Indocement allocates up to $150m to build two plants | The Jakarta Post

 

[Nike]

Garuda mulls seeking capital
injection
Tassia Sipahutar, The Jakarta Post | Business | Sat, August 09 2014, 11:57 AM

National flag carrier Garuda Indonesia is considering asking for additional capital from the airline’s shareholders to improve the company’s financial structure which has weakened due to its aggressive expansion.

Garuda finance director Handrito Hardjono said several major expansions carried out by the company in the past few years had inevitably squeezed its capital.

“We still have sufficient funds until the end of the year, but if we continue to go on in a similarly expansive pace, we will have to ask shareholders to inject additional capital next year,” he said during a media briefing on Friday.

The tight state of Garuda’s finances is reflected by its high debt-to-equity ratio (DER). With US$2.05 billion in total liabilities and $1.28 billion in shareholder equity at the end of June, Garuda’s DER is 1.6, which is relatively high.

Currently the government controls a majority stake in Garuda with 60.5 percent, followed by Credit Suisse AG Singapore TC AR CL PT Trans Airways — a group of companies — with 24.6 percent and other minority shareholders holding the remaining 14.9 percent.

Tycoon Chairul Tanjung, who is the coordinating economic minister, is one of the shareholders through Trans Airways.

The additional capital may be generated from the issuance of new shares or the sale of non-productive assets among other things, according to Handrito. “But we have not officially informed the shareholders about this and we have not come up with a specific amount [of requested capital]”, he added.

Garuda president director Emirsyah Satar, whose term ends later this year, said that continuous expansion was needed, even though the company had been in the red for the past two quarters.

“The market is growing and we need to expand to serve more customers,” he said, dismissing concerns that he would leave a poor financial legacy for the airline.

Emirsyah insisted that time lags and the economic situation prevented the airline from immediately generating returns from its investments. “We usually need 18 to 24 months to generate returns, but it also depends on the market,” he said.

Its financial reports reveal that Garuda recorded $163.85 million in net losses in the first three months of this year and the figure climbed $47.88 million in the second quarter, amounting to net losses of $211.73 million for the first half of 2014.

It also suffered a huge setback last year, when its net profits dropped 90 percent to $11.04 million.

Garuda has often attributed the decline to soaring fuel costs and the weaker rupiah. According to Handrito, every Rp 100 depreciation in the currency squeezes its operating profits by $10 million to $12 million every year.

However, it has maintained its plan to purchase a total of 83 aircraft between 2013 and 2015 to bring its total fleet to 189 in 2015.

By then, it expects to be able to achieve 63.5 billion in available seat kilometers, which is the measurement of an airline’s passenger-carrying capacity.

Garuda’s shares, traded under the “GIAA” code on the Indonesian Stock Exchange, closed at Rp 419 on Friday, down 0.2 percent from a day before.

—JP/Tassia Sipahutar

Garuda mulls seeking capital injection | The Jakarta Post

 

[Nike]

Oil Output to Fall Short of Target

By Tito Summa Siahaan on 08:17 pm Aug 07, 2014

Jakarta. Aging oil fields and an unexpected snag in the development of East Java’s Ketapang block mean Indonesia will miss its oil output target as set in the 2014 state budget, according to oil and gas upstream regulator SKKMigas.

That may, in turn, hurt state revenue, which has been under pressure due to a slump in commodity prices. “Average oil output by the end of the year may reach just 98 percent of the targeted 818,000 barrels of oil per day,” said Muliawam, a director for operations at SKKMigas on Thursday.

Output for the first six months this year averaged 797,000 barrels per day, Muliawan said. Every 10,000 barrel shortfall causes the state budget deficit to widen by around Rp 1.9 trillion ($161 million), according to Finance Ministry calculations.

The state budget contains an assumption that the deficit will be reduced to Rp 242 trillion this year, or 2.4 percent of gross domestic product. The budget also contains a target of $29.7 billion in oil and gas revenue this year, a revision from earlier estimates of $30 billion.

Muliawan said the development of the Ketapang block’s Bukit Tua field was delayed after the operator was forced to move its platform due to geographical circumstances.

“The field will go on steam in March next year,” said Muliawan, adding that the initial schedule was for November.

Muliawan said that the field was expected to boost Indonesia’s oil output by 20,000 barrels per day.

Output in the second half of the year depends heavily on the Cepu block in East Java, which is operated by ExxonMobil Indonesia. Muliawan said output from Cepu will reach 80,000 bpd by the end of the year before it reaches its peak of 165,000 bpd in the second half of 2015.

The country is also trying to arrest a natural decline at aging oil fields.

“We will get another 10,000 barrels per day from Pertamina’s enhanced oil recovery [EOR] projects next year,” Muliawan said.

EOR is a method of extending dwindling resources by injecting water and chemicals into oil-bearing rock formations.

Adriansyah, president director of Pertamina EP, one of Pertamina’s usptream subsidiaries, said that the company may also miss its 128,000-bpd output target for this year. Adriansyah said that the company he helms, one of the largest oil producers in the country, may only reach 124,000 bpd this year.

Adriansyah explained that Pertamina EP had seen delays in its flagship Sangasanga project in East Kalimantan, which he blamed on disruption from coal mining. “Mining activities hurt the land. Because of that, we need to flatten the land first which costs us time,” he said.

Adriansyah revealed plans to scale back EOR projects next year. “Currently, we have around eight to 10 EOR projects. This has led us to lose focus. In 2015, we will focus on only two EOR projects, in Rantau and Jirak fields in South Sumatra,” he added.

Pertamina’s lack of expertise in managing EOR projects has previously been cited as an argument against handing the state-owned company the Mahakam block, which is currently managed by French company Total under a contract due to expire in 2017.

Oil Output to Fall Short of Target | The Jakarta Globe

 

[Nike]

Indonesia’s Baha’i Community Grateful for Long-Awaited State Recognition
By Jakarta Globe on 11:30 pm Aug 07, 2014


@lukmansaifuddin, Lukman tweeted last month that “Baha’i is a religion, not a sect,” in response to a letter sent by the Home Affairs Ministry requesting clarification about the 200-year-old faith.

The ministry is currently reviewing the suggestion of officially allowing the religious option of Baha’i on Indonesian KTP, or identity card.

Citizens are required to state their religion on their KTP, which they acquire at the age of 17. At present, only six government recognized religions can legally appear on an ID card, namely Islam, Protestant, Catholic, Buddhist, Hindu and Confucianist.

“I told [the ministry] that Baha’i is a religion protected by articles 28E and 29 in the Constitution,” Lukman tweeted on July 24.

Not long after, however, the Indonesian media began accusing the minister of promoting a new religion.

“That’s a distortion [of my previous statements],” he said in response, adding that he was not authorized to make any such endorsements.

“A number of online media sites have made misleading comments regarding my tweets, saying that I’ve inaugurated a new religion,” Lukman said.

Lukman further emphasized that Baha’is — whether or not they can put their religious identity on their ID cards — deserve equal public services from the government, including those concerning population and legal issues.

Nevertheless, the Baha’i assembly in its Thursday’s press statement, said it wanted the people of Indonesia to learn about the religion from a credible source.

“Baha’i is an independent religion, neither a traditional belief nor a sect deviating from another faith,” the statement says.

“The core of Baha’i teachings is the oneness of God; the oneness of mankind and the spiritual basis of every religion,” the assembly explained.

Indonesia’s Baha’i Community Grateful for Long-Awaited State Recognition | The Jakarta Globe

 

[Nike]

Indonesia’s Foreign Exchange Reserves Are on the Rise

By Muhamad Al Azhari on 08:33 pm Aug 08, 2014

Jakarta. Indonesia’s foreign exchange reserves increased by $2.8 billion in July to an almost two-year high, thanks to a surge in capital inflows, successful Euro Bonds sale by the government and higher income from oil and gas, data from the central bank showed on Friday.

Bank Indonesia data showed reserves rose to $110.5 billion at the end of July from $107.7 billion at the end of June. It was the highest level since December 2012.

Bank Indonesia attributed the rise, partly due to capital inflows from the success of Indonesia’s debut sale of Euro bonds, in which the government raised €1 billion in proceeds. Indonesia turned to Europe to take advantage of lower borrowing costs to raise funds to help plug budget deficit.

Indonesia also managed to post higher revenue from the oil and gas sector, in which the amount was higher than the amount of the government’s foreign denominated debt that had to be paid within that month.

General capital inflows from investors seeking to invest in portfolio investment also contributed to the rise in reserves.

“That current forex position can pay imports and foreign debts of the government for 6.2 months,” Bank Indonesia said.

It added that the increase in reserves helped strengthen the country’s monetary position, cushioning it from any external instability, especially from fluctuation in the financial markets.

Still, the rupiah lost 0.5 percent to trade at 11,822 against the dollar on Friday from 11,766 the previous day.

The currency lost 2 percent during the week, based on data from Bank Indonesia. Analysts have said the central bank is letting the rupiah weaken and does not interfere much in the currency markets, in a bid to support exports and reduce imports, which ultimately will help narrow the country’s current account deficit.

The current account reflects the widest measurement of trade, including the flow of goods, services and money in and out of the country.

The central bank has targeted a current account deficit at below 3 percent this of gross domestic product year.

Indonesia’s current account deficit stood at 2.12 percent of GDP, or equivalent to $4.3 billion in the first quarter of this year.

The central bank is expected to release data on the current account in mid-August. Finance Minister M. Chatib Basri said in June that the deficit in the second quarter is likely to be higher than 4.4 percent of GDP as seen in the same period last year.

Indonesia's Foreign Exchange Reserves Are on the Rise | The Jakarta Globe

 

[Daniel808]

Indonesia’s economy grows at slowest rate since 2009.

Mining exports fell significantly because of rules banning shipments of mineral ore
Jakarta: Indonesia’s economy unexpectedly failed to gain traction in the second quarter, growing at the slowest annual pace since the last three months of 2009.

The statistics bureau said the growth rate was 5.12 per cent, compared with the median forecast of 5.30 per cent in a Reuters poll and the previous quarter’s pace of 5.21 per cent.

Indonesian growth has been trending down in the past two years. One factor has been weak exports. This year, mining exports have fallen significantly because of Indonesian rules banning shipments of mineral ore.

In the latest quarter, there was a trade deficit of $2.20 billion (Dh8.08 billion) in April-June, following a surplus of $1.07 billion in the first three months of the year

Leo Putra Rinaldy, economist with Mandiri Sekuritas in Jakarta, said the slowdown in the second quarter appeared to be “mainly caused by slowing investment. Political conditions in the second quarter may have caused some businesses to hold their investments and tightening in monetary policy by the central bank is also starting to materialise, especially in the property sector.”

The second quarter included the campaign to elect Indonesia’s new president. Some economists thought campaign spending would add enough to domestic consumption to lift the quarter’s growth pace about that of January-March.

Getting the economic growth rate higher is one of many challenges that will face President-elect Joko Widodo, who is due to take office on October 20.

Domestic consumption, which accounts for more than half of GDP, has remained solid even though inflation soared last year after fuel prices were hiked.

The central bank has maintained its tight monetary policy since last year to aid the rupiah, cool inflation and contain the country’s large current account deficit.

Between June and November 2013, Bank Indonesia raised the benchmark interest rate by 175 basis points to 7.5 per cent. The rate has been on hold since then, and most economists expect it to remain on hold the rest of this year.

The central bank’s next policy meeting is August 14.

Indonesia’s economy grows at slowest rate since 2009 | GulfNews.com


'Mining exports fell significantly because of rules banning shipments of mineral ore'

Maybe banning shipments of mineral ore will hurt for know, But I Really Support that for Long-Term.

 

[MarveL]

Kishida, Indonesia’s Jokowi seek enhanced security, economic ties
Meeting is first since Indonesian president-elect won campaign

RI-Japan diplomacy: Indonesian President-elect Joko Widodo (right) gestures to Japan's Foreign Minister Fumio Kishida (left) prior to their meeting in Jakarta on Tuesday. Kishida, who's on a two-day visit, held the meeting with Indonesia's president-elect to boost their relationship on economic and security issues. (AFP/Adek Berry)

JAKARTA – Foreign Minister Fumio Kishida held talks Tuesday with Indonesian President-elect Joko “Jokowi” Widodo and discussed boosting security and economic ties.

Speaking to reporters after the talks, Jokowi, who was elected July 9, said they mainly covered maritime security, Japanese investment in infrastructure and Indonesia’s controversial law on coal and mineral resources.

Jokowi said Japan wants to strengthen its cooperation with Indonesia in terms of maritime security and promoting observance of related international rules and laws.

He said he told Kishida that he expects more investment from Japan but wants more of it focused on infrastructure development, such as construction of deep seaports.

“There must be deep seaports on all islands,” he said.

Jokowi said Kishida also raised the issue of Indonesia’s ban on the export of raw ores such as nickel and bauxite, which went into effect Jan. 12 under a law that stipulates that raw ores must be processed at smelters in Indonesia before being exported.

“He wants some more discussions regarding this issue, but I told him that I (will) stick to our law and our constitution mandates that our natural resources shall be used for the people’s welfare,” Jokowi said.

Mandated by the 2009 Mining Law, the export ban is aimed at adding value to mineral exports and developing the downstream industry by forcing local processing.

Japan, which is home to some of the world’s biggest stainless steel producers, relies extensively on Indonesian nickel, which accounts for 44 percent of its total needs. Although Japanese smelters can survive off their stockpiles, their reserves may not last long.

For that reason, Japan wants Indonesia to exclude it from the ban. It is also considering bringing the case to the World Trade Organization if consultations with Indonesia over the ban fail to reach a settlement.

In an interview Monday, Jokowi promised to hold talks with all stakeholders regarding the issue, but cautioned against high expectations, saying the issue is not one that can be easily resolved to every party’s satisfaction.

Jokowi also told reporters Kishida handed him a letter from Prime Minister Shinzo Abe inviting him to visit Japan soon after he takes office, which is expected to happen in October.

Kishida, who arrived in Jakarta late Monday for a two-day visit, was also scheduled to hold talks Tuesday with his Indonesian counterpart, Marty Natalegawa.

Kishida, Indonesia's Jokowi seek enhanced security, economic ties | The Japan Times

@Nihonjin1051

 

[Nike]

Taiwan to boost investment
in RI
The Jakarta Post, Jakarta | Business | Tue, August 12 2014, 6:01 PM

A delegation of Taiwanese investors expressed interest in investingfurther in the electronics and chemical industries in Indonesia during a meeting with Industry Ministry officials in Jakarta on Tuesday.

"They are interested in investing in a number of sectors in Indonesia, particularly the solar cell, electronics and petrochemical industries," Industry Deputy Minister Alex Retraubun told reporters in Jakarta after the meeting as quoted by kompas.com on Tuesday.

In the solar cell sector, Alex said the ministry would facilitate a discussion between Taiwan and officials of state-owned electronics component maker PT Lembaga Elektronika Nasional (LEN) Industri.

Meanwhile in the electronics industry, he said the government was waiting for the realization of Foxconn investment in Indonesia.

Foxconn, which is also known as Hon Hai Precision Industry Ltd., produces electronics components for various brands, including Apple, Acer, Cisco, Dell, Hewlett-Packard and Intel.

In February, Foxconn signed a letter of intent with the Jakarta administration, agreeing to invest around US$1 billion in the country over three to five years.

Retraubun refused to give details of the potential amount of new investment from Taiwan. "It is being discussed. We will intensify discussions in the future," he said. (nfo)

Taiwan to boost investment in RI | The Jakarta Post