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Indonesia Economy Forum

SBY Sets Expansive 2015 Budget, Shifts Subsidy Issue to Jokowi
By Vanesha Manuturi & Basten Gokkon on 08:52 pm Aug 15, 2014

Jakarta. President Susilo Bambang Yudhoyono, set to step down in October after serving almost a decade in office, is laying out wide budget plans for next year to boost the country’s economy.

Still, the outgoing president, speaking in his last state of the nation address, was reluctant to make an effort to end the nation’s fixation on subsidized fuel. That would leave President-Elect Joko Widodo with the uphill battle of dealing with the subsidy issue in an opposition-dominated legislature to secure funding for his own program.

The government plans to spend a total of Rp 2,020 trillion ($173 billion) in 2015, Yudhoyono said in a speech on Friday. That target is up 7.8 percent from this year’s goal. He delivered the 2015 state budget proposal to the House of Representatives, in an annual ritual before Independence Day, which is on Sunday.

Gross domestic product is forecast to expand 5.6 percent in 2015, from this year’s target of 5.5 percent, Yudhoyono said. The economy grew 5.1 percent in the second quarter, which was the slowest pace in about five years. Revenue is targeted at Rp 1,762 trillion, compared to Rp 1,635 trillion this year.

As a result, this year’s budget deficit would be at Rp 258 trillion, or 2.3 percent of the country’s GDP, narrowing from 2.4 percent of GDP in the 2014 revised budget.

Indonesia is set to allocate up to Rp 433.5 trillion toward all kinds of subsidies in 2015, up 7.6 percent from this year’s revised budget of Rp 403 trillion.

Yudhoyono maintained the energy subsidies — which many economists suggest should be reduced to make room for funding on more critical infrastructure development — saying that cutting the subsidy “is not a popular policy.”

“We realize that the distribution of the fuel subsidy, which is supposed to be enjoyed by lower income-class citizens, has been taken advantaged by people who are economically able. Tackling this, we call for an improvement in efficiency through actions, such as controlling the consumption of subsidized fuel and utilizing population statistics to deliver more effectively,” Yudhoyono said.

Government is set to allocate up to Rp 363.5 trillion in fuel and electricity subsidies, a 4 percent increase from this year.

The figure triples the amount it allocates for infrastructure development in the Public Works and Transportation Ministries.

“The baseline scenario in the budget is giving the incoming government small room for flexibility,” said Purbaya Yudhi Sadewa, head of economic research at Danareksa Research Institute.

“If the deficit is at 2.3 percent [of GDP], there’s barely any room for the incoming government without completely restructuring the budget,” he said, referring to the legal limit that the deficit cannot exceed 3 percent of GDP.

Purbaya also said that the Joko administration’s only option would be to raise the price of subsidized fuel if he wanted to make room for developing infrastructure.

“The current government is washing their hands on the issue and is giving the decision entirely to the next government,” he said.

The Coordinating Minister for the Economy, Chairul Tanjung, said that the draft state budget does not come with specific programs.

“We did that so that the incoming administration will have more room to change and make corrections, in line with their vision and mission,” Chairul said.

Finance Minister M. Chatib Basri said that the incoming administration can be involved in the stipulation of the state budget by pushing for initiatives through their respective factions in the House.

Joko thinks that the allocation for the subsidy budget in the 2015 state budget draft is still too high and needs to be gradually reduced.

“Later [in the next government] of course it will be discussed with all factions. But that’s after the lawsuit process at MK [Constitutional Court] h as been completed. Then, we will deal with it,” Joko said on Friday. The court is set on Aug. 22 to make a decision on rival candidate Prabowo Subianto’s challenge to the presidential election result.

Still, businesses are left unsatisfied with the 2015 budget plan.

“How do you reach 5.6 percent growth when currently you’re at 5.1 percent, and you’re not putting the sufficient investment? For businesses, it’s just still a bit unrealistic,” said Sofjan Wanandi, chairman of the Indonesian Employers Association (Apindo).

“If the subsidy is not trimmed, the budget for development is already lost. How can the budget for subsidy even be bigger than infrastructure? We’re just burying a hole by digging another hole here,” Sofjan said.

Markets reacted negatively to the announcement. The Jakarta Composite Index fell 0.1 percent to 5,148.96 on Friday, with foreign investors selling Rp 1.9 trillion more in shares than they bought. The rupiah weakened to 11,693 per US dollar on Friday from 11,667 on Thursday, Bank Indonesia data show.

Still, the yield on the government’s 10-year bonds slipped to 8.3102 percent on Friday from 8.3185 percent the day before, according to data from the Indonesia Bond Pricing Agency.

Additional reporting by Markus Junianto Sihaloho & Tito Summa Siahaan

SBY Sets Expansive 2015 Budget, Shifts Subsidy Issue to Joko | The Jakarta Globe
 
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Indonesia's Independence Day


John Kerry
Secretary of State
Washington, DC
August 15, 2014

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On behalf of President Obama and the people of the United States, I am delighted to send best wishes to the Indonesian people on the 69th anniversary of your independence this August 17.

Indonesia’s thriving democracy and dynamic regional and global leadership are critical to the Asia Pacific and the world. Our Comprehensive Partnership, inaugurated four years ago when President Obama traveled to Indonesia, has produced opportunities for closer cooperation on a wide-range of issues, such as education, security, climate change, energy, and trade. During my last two trips to Indonesia I saw this cooperation first hand, with our two governments and people working together to solve some of the world’s most intractable challenges.

I look forward to building even closer ties between our governments, civil society and people, and continuing our important work together promoting peace, prosperity, and democracy around the world.

I wish all Indonesians a safe and joyous celebration.

Indonesia's Independence Day
 
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Govt confirms Samsung to open factory in Indonesia
Tama Salim, The Jakarta Post, Jakarta | Business | Sat, August 16 2014, 12:27 PM

Industry Minister MS Hidayat has confirmed that South Korean electronics giant Samsung will open a cellphone factory in Indonesia contradicting the company’s previous statement that it would open the factory in another country.

“Samsung is planning to come in this year. I’ve been asked not to reveal too many details, but they are definitely coming,” Hidayat said in Jakarta on Friday.

Speaking to reporters on the sidelines of President Susilo Bambang Yudhoyono’s annual State of the Nation address at the House of Representatives, Hidayat said the South Korean company could build its factory before Foxconn did.

Foxconn, the Taiwanese technology company which supplies Apple Inc’s iPhones and iPads, announced last year it planned to build production facilities in Indonesia with an investment of up to US$1 billion. But, no progress has been made until now.

The Industry Ministry is also currently in talks with Foxconn’s representatives to discuss resolving problems which could impede the Taiwanese company’s investment plan.

Despite the good news, Hidayat was unable to divulge the value of Samsung’s investment, as the South Koreans were still mulling over incentives with the directorate general for taxation.

It is thought that the investment will be on a par with Samsung’s projects in Vietnam.

Samsung currently has two major mobile-phone factories in Vietnam: one in Bac Ninh province worth $ 2.5 billion, and another in Thai Nguyen worth $ 1.2 billion.

On Wednesday morning, president-elect Joko “Jokowi” Widodo met with South Korean Ambassador to Indonesia Cho Tai-young at City Hall, with the aim of boosting bilateral relations between the countries during his administration.

Jokowi said that he and Cho talked about business, including a discussion about Samsung’s investment plans in Indonesia.

“During the meeting, Mr. Ambassador talked about Samsung’s expansion plan in Indonesia. In December [Samsung] will start the construction of its cellular phone plant,” Jokowi said, declining to elaborate further.

Samsung Electronics Indonesia’s senior executive Lee Kang Hyun said the company could not unveil much information about the plan.

“[The expansion plan] is currently being processed by the government. We can’t say the exact month,” Lee told The Jakarta Post’s in a telephone interview, without confirming nor rejecting Hidayat’s and Jokowi’s claims when asked.

Samsung’s plans to build a phone-manufacturing facility in Indonesia have previously been in doubt.

Samsung had said that it would build a mobile-phone factory in Indonesia, but later it said it had withdrawn the plan because the government refused to provide the fiscal incentives required by the company.

Coordinating Economic Minister Chairul Tanjung later said the government would provide incentives to the phone manufacturer.

However, Samsung went ahead with its investments in Vietnam, making that country its production hub in Southeast Asia.

One of the reasons Samsung chose Vietnam over Indonesia was because the Vietnamese government offered a 30-year tax holiday, longer than the 10 years provided by Indonesia.

Govt confirms Samsung to open factory in Indonesia | The Jakarta Post
 
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Thailands Company Joins Pertamina to Develop Petrochemical Area

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JAKARTA – PT Pertamina established a joint venture with a Thailand-based company PTT Global Chemical Public Company Limited (PTTGC) to develop petrochemical area in Balongan, West Java.

The joint venture, with the name PT Indo Thai Trading (ITT), was born under the cooperation between both companies signed at end of 2013. According to the plan, ITT will supply the demand from Indonesian polymer market.

Director of Marketing and Commercial of PT Pertamina Hanung Budya Yuktyanta said the petrochemical market in Indonesia was very promising. In 2025, Indonesia’s petrochemical market value may reach US$24 billion-US$30 billion.

According to him, the petrochemical area will be operated in 2019 to produce polyethylene and polypropylene with the production capacity of 1.2 million tons per year. “Other petrochemical derivative products are MEG, Butadiene, while the production capacity of Pygas reaches almost 1 million tons per year,” he said, Thursday (8/14/2014).

Thailands Company Joins Pertamina to Develop Petrochemical Area | Business - Bisnis.com
 
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TransJakarta to Spend Rp 400 Billion on 100 Double-Decker Buses
By Lenny Tristia Tambun on 05:55 pm Aug 16, 2014

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Jakarta. City-wide bus operator TransJakarta will soon spend Rp 400 billion ($34 million) on 100 double-decker buses to serve on the capital’s free tour route, a company executive said on Saturday.

The current Central Jakarta route is currently served by only five buses, but TransJakarta has been handed an additional Rp 700 billion rupiah of government funding through a transport bylaw enacted this year.

“We have capital of Rp 700 billion. We will allocate Rp 400 billion of that amount to purchase 100 double-decker buses to be used by Jakarta residents for free,” said Antonius Kosasih, a TransJakarta executive director. “The rest, Rp 300 billion, will be used to develop TransJakarta.”

Kosasih said the new buses will only serve short routes across the capital and will not utilize the city’s busway lanes.

He said the buses will operate on the following routes: Semanggi – Gatot Subroto – Senayan – Asia Afrika – Senayan City – Sudirman – Semanggi, as well as Casablanca – Sampoerna Strategic – Semanggi – Gatot Subroto – Rasuna Said – Casablanca.

“But these routes may change. The most important thing is that these routes must accommodate users of private vehicles affected by the new ERP system. They can use the free double-decker buses,” Kosasih said.

The Jakarta government is still in the trial phase of introducing electronic road pricing in the city center. The scheme, when fully rolled out, will be similar to the system used in Singapore to cut congestion and increase revenue for spending on public transport.

TransJakarta to Spend Rp 400 Billion on 100 Double-Decker Buses | The Jakarta Globe
 
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LPG PRICE
Pertamina awaits govt approval for LPG price
Minggu, 17 Agustus 2014 | 09:45 WIB

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JAKARTA. State-owned oil and gas company PT Pertamina spokesman Hanung Budya Yukyanta said that his company had yet to increase the price of non-subsidized 12-kilogram canisters of liquefied petroleum gas (LPG) because it was waiting for the government’s approval.

Pertamina previously announced it planned to increase the price of the 12-kilogram LPG canisters from Rp 1,000 (8.56 US cents) to Rp 6,944 per kilogram by Aug. 15 in a bid to prevent potential losses. However, the government has yet to approve the plan.

“We are still awaiting the government’s decision,” he said on Saturday, as quoted by Antara news agency.

He said that Pertamina would follow the government’s instructions because it had received an official letter from the Coordinating Economic Ministry instructing the state-owned company to wait for a president-led ministerial meeting to take place, during which the price of non-subsidized LPG would be discussed.

Moreover, Energy and Mineral Resources Minister Jero Wacik previously said that Pertamina should consult with the House of Representatives before increasing the price of non-subsidized LPG because such an increase would have a huge impact on consumers. (alz)

Pertamina Awaits Govt Approval For LPG Price - Kontan Online
 
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SINARMAS LAND Acquires A Property in London for US$96.91 Million


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SINGAPORE-Sinarmas Land Limited’s wholly-owned subsidiary, SML Great Pte Ltd. has entered into a sale and purchase agreement with GE Real Estate GPS Limited to acquire a freehold property known as Warwick House in London for a total of S$120 million or US$96.91 million.

The Warwick House which occupies a prime location in Soho, London's most vibrant office sub-market, with significant frontages to two of Soho's best known streets, Great Pulteney Street and Lexington Street to the rear, provides 44,116 sq. feet of Grade A office and a self-contained five-unit residential block of 2,928 sq. feet.

The property, according to information disclosure published on SGX’s site on Friday (08/15/2014), is currently fully tenanted.

SML Great is newly incorporated in Jersey with two ordinary shares of no par value. Its principal activity is that of property investment and development.

The Board of Directors of SML is of the view that this proposed acquisition will strengthen the Group's portfolio of investment properties in London and further diversify its income streams which are derived principally from Indonesia.

“The purchase price, submitted through a bidding exercise, was determined taking into account various factors, including prices of comparable assets in West End London. A 10% cash deposit was paid upon signing of the Agreement, with the balance payable on completion which is expected to take place in early September 2014,” said SML’s Director Robin Ng Cheng Jiet on the disclosure.

The Sinarmas Land also intends to use internal sources of funds to finance the proposed acquisition of the property.

SINARMAS LAND Acquires A Property in London for US$96.91 Million | Market And Corporate - Bisnis.com
 
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Monday, August 18 2014, 3:21 PM
Investment in 2015 Predicted to Grow by 15%-18%

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JAKARTA – Investment Coordinating Board predicts investment next year may grow by 15%-18%.

Yet, it needs higher growth figure if the new government wants economic growth to reach above 5.6% as it is predicted in Draft of State Budget and Expenditure 2015.

Chair of the Board, Mahendra Siregar, stated this after attending Celebration of 69th Independence Day in State Palace, Sunday (08/17/2014).

he said investment growth by 15%-18% is quite good and can be maintained. But it needs higher investment growth to boost economic growth.

“As for higher economic growth, it certainly needs higher investment growth. Surely if there are more strategic policies, the acceleration will be faster but for now it remains this way,” he said.

Investment in 2015 Predicted to Grow by 15%-18% | Economy - Bisnis.com
 
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After Sri Mulyani Indrawati, our female finance minister left for World Bank as Managing Director.

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Now, Karen Agustiawan, 1st female CEO of Pertamina, resigns to pursue teaching career at Harvard

Pertamina Chief to Step Down for Teaching Post at Harvard
By Jakarta Globe on 05:19 pm Aug 18, 2014


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Jakarta. Karen Agustiawan will step down as president director of state-controlled energy company Pertamina to pursue a new career in education.

State-Owned Enterprises Minister Dahlan Iskan said on Monday that Karen will leave her post on Oct. 1 for a teaching position at Harvard University. Karen had submitted her resignation many times before but he had refused to accept it until now, said Dahlan, whose ministry oversees Pertamina.

Karen did not return requests for comment.

Her resignation has left some government officials and executives surprised. She had been leading Pertamina for the past five years.

Lukman Mahfoedz, president director at Medco Energi Internasional, which explores for crude oil and natural gas, said that Medco and Pertamina have had a good partnership and that Karen’s departure caught him off guard.

“I was surprised when I heard it because Pertamina has worked together with Medco a lot, and she is one of the important executives in accelerating projects,” Lukman said.

Dahlan denied that Karen resignation was related to Pertamina’s proposal to increase the price of non-subsidized 12-kilogram tanks of liquefied petroleum gas, Tempo.co reported.

Karen was appointed Pertamina’s president director in February 2009, replacing Ari Soemarno.

Faisal Basri, an economist at the University of Indonesia, said he thought that Karen had resigned because she couldn’t handle the pressure at the company.

“I know she’s very professional, maybe [she] just can’t handle the pressure [because] the company keeps on demanding to increase profit, while the government itself is not firm enough in implementing its policies,” Faisal said on Monday in Jakarta.

Others said now is the time for Karen to take a bow.

“Ibu Karen worked [at Pertamina] for over five years as a director. She has made a lot of achievements and is a hard worker,” Maizar Rahman, a former commissioner at Pertamina, said on Monday.

Under Karen, Pertamina has expanded abroad with several oil field acquisitions, including in Algeria and Iraq. Karen also oversaw the joint development of the floating liquefied petroleum gas station with state utility Perusahaan Listrik Negara.

Pertamina Chief to Step Down for Teaching Post at Harvard | The Jakarta Globe
 
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Faisal Basri is such an asshole he is not an economist, he is a politician and a dirty one
 
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KAI
KAI to expand restaurant business
Selasa, 19 Agustus 2014 | 12:43 WIB

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Telah dibaca sebanyak 57 kali
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JAKARTA. PT Reska Multi Usaha, a subsidiary of state-owned train operator PT Kereta Api Indonesia (KAI), hopes to expand its restaurant business through new restaurant outlets that are expected to boost the sector’s contribution to the company’s overall revenue.

Currently, the company manages four restaurants, having recently opened new outlets at Gubeng Station in Surabaya, East Java, and Tugu Station in Yogyakarta in the first half of the year.

Its fifth restaurant is expected to open in the second half of this year. “We want to open a new restaurant on Jl. Bengawan near Bandung Station in West Java,” Reska spokesman Suyono Syam said as quoted by kontan.co.id on Monday.

The firm expected that the expansion would increase revenue from its restaurant and catering businesses to Rp 55.45 billion (US$4.71 million) this year, from Rp 48.55 billion last year. “We were able to boost our daily revenue from Rp 204 million to Rp 230 million last month, especially during the Idul Fitri holiday,” Suyono said, adding that reviewing menus and adding more traditional dishes at cheaper prices had helped in boosting the daily revenue.

Reska expected that its restaurants would be able to contribute Rp 60.78 billion, or 21.63 percent, to its consolidated revenue target of Rp 281 billion this year, which increased 32 percent compared to Rp 212 billion last year. In 2013, the company’s restaurants contributed Rp 56.39 billion to its total revenue.

The company secured Rp 28 billion in capital from its holding company, PT KAI, in the second half of 2014 to upgrade its kitchens, restaurants and parking lots.

KAI To Expand Restaurant Business - Kontan Online
 
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LAND PROCUREMENT
No more land acquisition problems next year
Rabu, 20 Agustus 2014 | 11:42 WIB

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JAKARTA. The government is hoping that the implementation of a law on land procurement for public infrastructure next year will be able to ease land acquisition problems that have delayed major infrastructure projects, including the US$4-billion Batang power plant in Central Java.

Deputy Public Works Minister Hermanto Dardak said in Jakarta on Tuesday that he hoped there would be no resistance from the public because the implementation of Law No. 2/2012 on land procurement for public infrastructure would give certainty not only to land owners but also to investors of infrastructure projects.

“The law gives certainty to private firms willing to invest in the country’s infrastructure projects,” he said, adding that the law would be fully enforced in January 2015.

Under the new law, people will be forced to sell their property if it is necessary for public infrastructure projects. However, the law guarantees that people whose property is affected by such projects will receive fair compensation.

The law, for example, would create a more democratic process by providing a 60-day public consultation period before acquisition takes place. If members of the public did not wish to sell their land, they would be able to appeal at the State Administrative Court (PTUN), which would issue a ruling in 30 days.

Should the public remain dissatisfied with the ruling, they will be given a 14-day period to appeal to the Supreme Court, which should issue a ruling within 30 days.

The government has thus far continued to use the obsolete land law (Law No. 5/1960) for most infrastructure projects because it has not issued the implementation ruling for the land acquisition law.

Law No. 5/1960 does not take a firm stance on land acquisition for the public interest, unlike the new law.

Hermanto said that the government had failed to meet its five-year target for infrastructure investment of Rp 1,920 trillion (US$ 164,40 billion) due to lingering land acquisition issues. According to him, during the five-year period, investment for infrastructure development only reached about Rp 1,800 trillion.

“We have found that the government’s spending on infrastructure is actually on the rise and the investment from state-owned enterprises is relatively stable. However, the uncertainty in acquiring land has stopped a number of private firms from taking part in the country’s infrastructure projects,” he said.

Hermanto added that the central government had spent Rp 825 trillion on infrastructure projects in 2014, a increase from the initial projection of Rp 560 trillion. Infrastructure spending from the regional budget (APBD) also jumped to Rp 455 trillion from the Rp 355 trillion initially planned.

The investment from state-owned enterprises was in line with the prediction of Rp 340 trillion, while investment from private firms only reached Rp 250 trillion, below its target of Rp 300 trillion, he added.

Many infrastructure projects, including the $4-billion coal-fired power plant to be built in Batang, have been delayed due to land acquisition problems.

Local residents in Batang refused to give up their land for the power plant, which is estimated to cost around Rp 40 trillion. The project requires a total of 226 hectares of land occupying three subdistricts in Ponowareng, Ujungnegoro and Karanggeneng, with some 15 percent hanging in the balance due to objections from locals. (Khoirul Amin)

No More Land Acquisition Problems Next Year - Kontan Online
 
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Sure we need an iron hand to solve those issue, land mafia is everywhere
 
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we really neeed Batang power plant in Central Java to be operational in 2016, is that possible?

impossible, construction phase alone will take at least two year (if you compare another projects at the same scale) and the land issue for Batang power plant is not entirely has been solved today. And you can't generate power production at full capacity in the first year of since operational.
 
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