Indonesia Economy Forum

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Exports Seen Rising to $190b in 2014 on Potential Products Focus
By Jakarta Globe on 9:39 am January 9, 2014.
Category Business, Economy
Tags: Indonesia exports, Indonesia Trade Ministry

The Trade Ministry has set a target for the country’s exports to reach $190 billion this year, banking on the aggressive promotion of several manufacturing products such as leather goods, medical equipment and building material.

“We expect for [the export value] to stand at $190 billion this year, a [more than] 5 percent increase from last year. This will be supported by improvements in the capacity and competitiveness of Indonesian exporters,” said Nuzulia Ishak, the Trade Ministry’s director general for national exports development.

The government has yet to release its official export figures for last year, but Nuzulia said that exports could amount to $179 billion in 2013.

His estimation sees Indonesia’s projected export value for 2013 falling by 5.7 percent from 2012’s amount of $190 billion while also missing the government’s target of $200 billion.

Exports stood at $165.5 billion in the first 11 months of 2013, according to data from the Central Statistics Agency (BPS).

Nuzulia said the Trade Ministry will conduct around 179 exports facilitation programs in order to boost the country’s exports. “Around 55 percent of our programs will be performed in our traditional export markets and 45 percent in our non-traditional markets.”

The Trade Ministry has identified 10 potential commodities to boost exports which together accounts for around 8 percent of Indonesia’s export value, according to Nuzulia. These commodities include leather and leather products, medical equipment, essential oils, process food and building materials.

Nuzulia said that producers of these 10 commodities will get preferential treatment to participate in the government’s trade expo overseas. “We will exempt them from taxes when sending materials and samples for the exhibition. We will also provide free stands on which to display their products.

Nuzulia said the government expects to see a 3 percent to 5 percent export growth from the 10 commodities.

The government will also conduct a special program in which international buyers will be invited to Indonesia and meet directly with local producers, according to Nuzulia.

“[The buyers will come from] 10 countries from which we expect to see a total transaction of $120 million,” he added.

The government blamed the increase in oil imports — resulting from the country’s rising energy consumption — for the country’s trade deficit, which stood at $5.6 billion in the first 11 months last year.

Exports have been declining since reaching a record high of $203.6 billion in 2011, partly due to the slow recovery in the global economy.

Exports Seen Rising to $190b in 2014 on Potential Products Focus - The Jakarta Globe

 

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Indonesian mineral ban may permanently push up prices of minerals
By Karon Snowdon for Asia Pacific

Indonesia has pushed through a controversial law to ban nickel and bauxite exports.
Indonesia has banned the export of some minerals in the hope of building up its processing industries.

The controversial law came into effect this week putting the future of hundreds of companies at risk, with the biggest impact to be felt by nickel and bauxite miners.

The law was made in 2009 and but was only signed by Indonesian President Susilo Bambang Yudhoyono last weekend.

It immediately places a ban on the shipment of some raw commodities from Indonesia, one of the world's largest resource producers.
Audio: David Lennox speaks to Asia Pacific (ABC News)


A resource analyst with Fat Prophets, David Lennox, told Radio Australia's Asia Pacific program the immediate impact of the ban will be higher prices.

"What we actually did see was a lift in the nickel price as a result of what Indonesia was proposing to do," he said.

Nickel prices jumped 6 per cent across two days once the ban kicked in.

Indonesia produces about 16 per cent, or 320,000 tonnes, of the world's two million tonnes of nickel.

"For Australian nickel producers, it is difficult for them to actually turn on the tap really quickly," Mr Lennox said.

Bauxite used in aluminium production is the other major target of the ban.

China is a major importer of both commodities, having the largest steel production capacity, but Mr Lennox believes they have large stockpiles of both.

"We would think they would be watching very closely what is happening in Indonesia, and they would probably be trying to work with the Indonesian government to ensure their steel processing and the price of nickel is not affected significantly by what Indonesia is trying to do," he said.

The ban was initially meant to be more wide-ranging, but lobbying from US mining giants Freeport McMoRan and Newmont earned reprieves for coal, copper, gold and other products.

Such companies have the means to build or extend their processing or refining operations.

However, the Indonesian press is reporting the loss of 30,000 mining jobs already as smaller miners cut back production, while an industry association intends to lodge a legal challenge to the ban.

Despite a long-range warning of the ban hanging over the industry's head, there appears to have been little preparation for it.

David Lennox says details remain sketchy and the goal of increased local processing might not be easily realised.

"You would have miners that would now have to go and find significant capital to actually put into place a secondary refining step that before they wouldn't have to," he said.

Honda Opens Second Factory in Indonesia

Honda opened its second Indonesian factory on Jan. 15, 2013

Karawang, West Java. Honda Prospect Motor (HPM), Japanese automaker Honda’s local unit, on Wednesday inaugurated its second factory in Indonesia, which is expected double the company’s local production capacity.

“The establishment of the new factory makes up part of our efforts to meet consumers’ increasing demand for Honda products,” Tomoki Uchida, president director of HPM, said at the Wednesday launch ceremony.

The plant — located in the West Java town of Karawang, which also hosts the company’s first factory — is set to produce 120,000 automobiles per year, which should increase HPM’s output from 80,000 to 200,000 annual units.

The new factory will manufacture the Honda Mobilio, a multipurpose vehicle (MPV), the company said.

“We began trials in December, but only today does the mass production for the Honda Mobilio start,” said Marketing and Aftersales Director Jonfis Fandy. “And starting on January 25, we’ll begin delivering [them] to customers.”

He said that the newly launched Mobilio model was designed specifically for the Indonesian market and was assembled locally, with local components making up 86 percent of the vehicle.

Jonfis said the company hoped to sell 80,000 Mobilio units in 2014 — nearly a half of the company‘s total sales target of 170,000 units.

HPM invested Rp 3.1 trillion ($262 million) in the new factory. Construction began in June 2013.

The company’s initial factory employed 3,600 workers and the second would employ 3,900, bringing the total to 7,500, Uchida said.

The initial factory will continue producing the Honda Jazz, Honda CR-V and Honda Freed, as well various auto components. Some of the products have been exported to other countries in Southeast Asia, including Thailand, Malaysia and Singapore.

Indonesia recorded 1.1 million auto sales during the January-November period of 2013, according to the latest data from the Association of Indonesian Automotive Manufacturers (Gaikindo). Said sales were set to top 1.2 million by the end of the year — an approximate 10 percent increase from 2012, according to Gaikindo.

Last year, Honda represented 7.5 percent of Indonesia’s auto sales, which were dominated by Japanese competitor Toyota.

“We predict that national [automobile] sales this year will reach 1.2 million units,” Jonfis said, echoing Gaikindo. “With our sales target of 170,000 units, we’re targeting a market share of 14 percent.

 

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Indonesia Auto Sales Rise 9.20% in 2013

By Reuters on 3:59 pm January 16, 2014.
Category Business, Economy
Tags: Indonesia auto sales, Indonesian Automotive Industry Association (Gaikindo)

Indonesia’s auto sales grew at a faster annual pace in December than the two previous months, data from industry association Gaikindo showed on Thursday.

For 2013, a total of 1.2 million vehicles were sold in Southeast Asia’s largest economy, 100,000 more than the previous year.

December sales were 9.20 percent higher than a year earlier, even though Indonesian interest rates rose sharply during 2013. December sales were led by Toyota, Daihatsu and Suzuki.

During December, overall month-on-month sales fell 12.65 percent.

Auto sales are a key indicator of domestic consumption, which accounts for around half of the economy’s gross domestic product.
Indonesia Auto Sales Rise 9.20% in 2013 - The Jakarta Globe

Rupiah to Push Ahead of Region in 2014: Lloyds
By Lilian Karunungan & Yumi Teso on 12:30 pm January 16, 2014.
Category Business, Featured
Tags: Indonesian Rupiah




Bank employees transport billions of Indonesian rupiah notes at a national bank outlet in Jakarta. (EPA Photo)



The rupiah will go from worst to first among Asian currencies this year as Indonesia’s resilient economy and a shrinking current-account deficit draw funds to the nation’s assets, the most accurate forecaster says.

The currency will rally 6.8 percent in 2014 to 11,400 per dollar, recouping a third of last year’s 21 percent plunge, according to Lloyds Banking Group Plc, which had the closest estimates in the last four quarters as measured by Bloomberg Rankings. Societe Generale SA, the fifth-best, sees the rupiah at 10,250 by year-end, compared with the 12,200 median estimate of 23 analysts surveyed by Bloomberg. Among Asia’s 10 biggest economies, only China is expanding faster than Indonesia.

The Southeast Asian nation’s current-account deficit swelled to a record in the second quarter of 2013, denting investor confidence just as the Federal Reserve signaled plans to curb stimulus that fueled demand for emerging-market assets. Last year’s slide in the rupiah battered imports, driving the trade surplus to a 20-month high in November and paving the way for a rebound in the currency.

“We think the rupiah is undervalued at this level given its growth dynamics,” Jeavon Lolay, director of global research at Lloyds, said in a telephone interview from London yesterday. “The recent trade numbers have been positive. We have a more positive outlook on global growth as well, which should help the export recovery in the second half.”

The Indonesian currency, which touched a five-year low of 12,285 per dollar on Jan. 7, has gained 0.7 percent this month to 12,085, prices from local banks show. That’s the best peformance among the 11 most-traded Asian exchange rates after Japan’s yen. Lolay sees India (GIND10YR)’s rupee and Malaysia’s ringgit as the next best in Asia this year, both rallying 3 percent.

The International Monetary Fund predicts Southeast Asia’s largest economy will grow 5.5 percent in 2014, compared with an average 5.1 percent expansion for emerging nations and 2 percent for advanced economies, estimates released in October show. Indonesia’s gross domestic product increased 5.62 percent in the three months through September from a year earlier, slowing for a fifth quarter.

Overseas investors have bought $239 million more Indonesian shares than they sold this year and pumped a net 2.08 trillion rupiah ($172 million) into local-currency debt, according to official data. The revival in confidence was highlighted by the nation selling $4 billion of dollar bonds last week, with four times as many bids. That came after a domestic dollar sale in November failed to reach its target.

Some of the highest yields in Asia are luring foreign funds to the country after the central bank raised its benchmark interest rate by 1.75 percentage points last year. Indonesia’s 10-year government bonds yield 8.58 percent, more than double similar-maturity rates of 4.16 percent in Malaysia and 4.28 percent in the Philippines. Among the region’s emerging markets, only India’s 8.64 percent is higher.

“I am bullish on high-yielding cheap currencies and the Indonesian rupiah is probably the best example of that category across the whole emerging-market FX universe,” Benoit Anne, London-based head of emerging-market strategy at Societe Generale, wrote in e-mailed comments on Jan. 7.

Indonesia posted a trade surplus of $777 million in November as imports fell 11 percent, the most in four years. That was the third excess in four months, following a 10-month run in which only one surplus was achieved. If the trend continues, it will reduce pressure on the nation’s current account deficit, which ballooned to a record 4.4 percent of GDP in the second quarter of last year before narrowing to a 3.8 percent shortfall in the following three months.

The full-year deficit was probably be 3.5 percent in 2013 and the gap will stay below 3 percent this year, Bank Indonesia estimated Jan. 9. Inflation is also expected to slow after exceeding 8 percent in each of the six months through December. Consumer prices will increase 6.5 percent in 2014, according to the median estimate of 21 economists surveyed by Bloomberg.

“We expect inflation to fall to close to 5 percent and Indonesia’s current-account deficit to improve by about $8 billion by year-end,” Ray Farris, the global head of currency strategy at Credit Suisse Group AG in Singapore, wrote in an e-mailed reply to questions on Jan. 8. “We think emerging-market currencies are likely to be weak and volatile in general over the next few months.”

The lender, the most accurate forecaster for the rupiah in the fourth quarter of last year, expects the currency to be at 12,350 per dollar by year-end.

Indonesia’s partial ban on mineral ore exports, which came into effect Jan. 12, is expected to reduce shipments in the short term and have a negative impact on the country’s current account. The prohibition, which wasn’t as strict as what was initially proposed, will widen the deficit in the broadest measure of trade by 0.3 percent of GDP this year, David Sumual, chief economist at PT Bank Central Asia in Jakarta, said in an interview last week.

“We remain concerned about Indonesia” because of its large current-account deficit against the backdrop of lackluster commodity exports, Taimur Baig, chief economist for Asia at Deutsche Bank AG, the world’s largest currency trader, said at a media briefing in Singapore on Jan. 8.

Fed Chairman Ben S. Bernanke said Dec. 18 the central bank would trim its $85 billion of monthly stimulus to $75 billion from January and would gradually reduce bond purchases this year if inflation and the job market continued improving. The Fed will taper stimulus in $10 billion increments over the next seven meetings before ending them in December, according to a Bloomberg survey on Jan. 10.

Indonesia will open up its seaports and airports to 95 percent and 49 percent foreign ownership, respectively, from 49 percent and zero percent, the Investment Coordinating Board said last month. The country will also ease restrictions for power plants and pharmaceutical businesses.

Voters will go to the polls in April and July for parliamentary and presidential elections and President Susilo Bambang Yudhoyono is prohibited from running for a third five-year term. Lloyd’s Lolay expects the incoming government will continue with reforms to attract investment as the Fed unwinds its stimulus.

“I wouldn’t expect anybody to come in and not do anything,” Lolay said. The Fed’s announcement last month had also given investors more certainty and will support investment in emerging-market assets, he said.

Bloomberg

Rupiah to Push Ahead of Region in 2014: Lloyds - The Jakarta Globe

 

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Real Leadership Needed Through Elections, Speakers Say at Summit
By Bhimanto Suwastoyo on 10:30 am January 16, 2014.
Category Business
Tags: Indonesia Summit 2014, The Economist

As Indonesia enters a hectic electoral year, one of the things most expected from the country’s new leaders is real leadership, business practitioners and academics said on Wednesday.

At the first panel discussion of the Indonesia Summit 2014, organized by The Economist, participants all pointed out that despite shortcomings, Indonesia continues to grow at a respectable pace. What it needs is leadership to unleash the country’s full potential.

Natalia Soebagjo, executive director of the Center for the Study of Governance at the University of Indonesia, told the conference that despite the obvious difficulties in managing a country like Indonesia, the basis for economic growth is there.

Indonesia’s $900 billion economy is forecast to expand by 6 percent this year from an estimated 5.7 percent in 2013, according to state budget documents.

Natalia said that it was implementation of policy that was weak, and that there was also a need for more thoroughness in the creation of policy.

She said that for many, there seemed to be a sense of lost opportunity for the country — of having lost momentum — but she added that it was not yet too late.

Natalia said that the next president did not need to reinvent the wheel and start anew with new policies and regulations.

“We do not want a president that needs to learn from zero again, but we need someone who will implement [what has already been decided],” Natalia said.

Speaking at a later session, James Castle, founder and chief executive of CastleAsia, said what he observed as the country was moving into election mode was “a hunger for new leadership.”

Shoeb K. Zainuddin, group chief editor of BeritaSatu Media Holdings, said the country knew what needed to be done — such as boosting manufacturing, adding value to exports and products, and so on — but noted that “it needs leadership.”

Raoul Oberman, McKinsey &Company chairman for Indonesia, said the leadership issue was not only for the public sector but also for the private one.

“This country has been going through waves of transformation,” he said.

“It is all about building skills, Leadership skills.”

“We have got everything in place,” University of Indonesia’s Natalia said, citing an efficient, transparent bureaucracy.

“Now what we need is leadership … to orchestrate every piece.”

Real Leadership Needed Through Elections, Speakers Say at Summit - The Jakarta Globe

‘Don’t Rule Out’ Subsidy Reforms This Year, Finance Minister Says
By Muhamad Al Azhari & Tito Summa Siahaan on 2:30 pm January 15, 2014.
Category Business, Economy
Tags: economy subsidized fuel budget deficit

[Updated 11:40 p.m.]

Indonesia should not rule out additional reforms on subsidies this year, the nation’s finance minister said on Wednesday, as the government seeks to plug a ballooning budget deficit.

“Don’t rule out the possibility of subsidy reforms, even this year,” Finance Minister M. Chatib Basri said, addressing Indonesia Summit 2014 in Jakarta, organized by The Economist magazine. He didn’t provide details.

Southeast Asia’s biggest economy has been struggling to cut subsidy costs, of which the bulk is energy subsidies.

In June, the government raised subsidized fuel prices by an average 33 percent in a bid to reduce expenses and narrow the current account deficit in a deeply unpopular move that fueled inflation.

The fuel subsidy, which contributes the bulk of total subsidies, is set at Rp 211 trillion ($17 billion), or approximately 13 percent, of the 2014 state budget, compared with Rp 210 trillion last year.

Chatib said that with the looming presidential elections, there was a possibility that fuel prices could be raised later this year.

“Don’t forget, after the election all the possibilities can come, because the next government will expect this current government to adjust the fuel price. But the current government cannot adjust the fuel price before [the change in presidency],” he said.

Chatib was talking at an event attended by a wide-ranging audience of political leaders, policy makers, academics and senior business executives.

Chatib told Jakarta Globe in an interview last month that as part of the additional policy reform, the subsidy could be capped for one year. If global oil prices increased, then the subsidized fuel price will be raised accordingly, and vice versa.

Bambang P.S. Brodjonegoro, deputy finance minister, said the government will adjust the fuel subsidy “when the timing is right.” He did not elaborate.

He said that the Finance Ministry will link the subsidy reform with budget sustainability, consumers’ purchasing power as well as the political environment.

“As long as the three conditions are met, we will do it,” he said.

Bambang said a fixed subsidy per liter is one of the options the ministry is studying.

On the electricity subsidy, state electricity company Perusahaan Listrik Negara had announced plans to allow the power tariff on rich people and corporations to be adjusted according to the global energy price and the rupiah exchange rate.

That would be applied to customers with installed capacity of up to 6,600 volt-ampere of electricity capacity.

Benny Marbun, head of PLN’s commercial division, said on Monday that the proposed plan is pending government approval. Benny said that should it be approved, it could reduce subsidy costs by up to Rp 2.1 trillion this year.

Satya Yudha, a lawmaker from Golkar Party on House Commission VII, which oversees energy affairs, said that such a move was not recommended. “It is not a wise policy,” he said.

Satya called on the government to provide subsidies directly to targeted recipients such as fisherman, farmers and companies that run public transportation.

“The subsidy must be transformed from price subsidy into direct subsidy.” Satya said.

Cahtib said that 90 percent of subsidized fuel is used by owners of private vehicles, while only 10 percent goes to public transportation.

Despite such challenges, Indonesia would have the potential to become an economic powerhouse in the next few decades if it can address some of the short and medium term obstacles.

McKinsey & Company projected that Indonesia may rise to become the world’s seventh-largest economy by 2030 and create a $1.8 trillion business opportunity in energy and consumer goods sector. In addition, the firm estimated that during that period around 90 million Indonesians would join the country’s middle-class.

Raoul Oberman, chairman of McKinsey Indonesia, said the business community must focus on the country’s long-term potential rather than on short-term gains.

“Indonesia is a place for grown-ups,” said Oberman.

Chatib affirmed the government’s forward-looking stance that Indonesia in the future cannot just rely on natural resources and the country has seen an end of the natural resources boom that has fueled economic growth strongly in 2010-11.

Donald Kanak, chairman of Prudential Corporation Asia, said that “by and large, the foreign business community sees Indonesia in the long-term and realistic outlook with a tremendous potential.

“Between 2010-2020, there will be 15 million more people over the age of 60. There’s this period of time that Indonesia has this extraordinary opportunity of the demographic, but it starts to change relatively quickly,” said Kanak.

Still, concerns remain looking forward in the nation of 250 million people

James Castle, chairman of Castle Asia, highlighted the risk of the increasing role of the state in the economy. “Increasingly we see the state taking the lead. The private sector’s share is getting smaller and smaller.”

The private sector exists only to respond to the policy initiative of the government, he said. “It is not seen by this government as an independent engine of growth.”

Castle went on to predict that in the next five years the condition for the private sector would become more restrictive.

“We have not moved very far from the command and control economy of the Suharto era. We’re just drifting it into a new direction under democracy.”

Additional reporting by Retno Ayuningtyas

'Don't Rule Out' Subsidy Reforms This Year, Finance Minister Says - The Jakarta Globe

PLN to Have Additional 3,520 Megawatt Power This Year
By Reno Ayuningtyas on 10:40 am January 15, 2014.
Category Business, Corporate News
Tags: electricity, Perusahaan Listrik Negara PLN

State utility firm Perushaan Listrik Negara aims to increase power capacity in the country this year to bring electricity to more of Indonesia, a director of the company said.

Nasri Sebayang, director for construction and renewable energy at PLN, said on Sunday that the company aims to add some 3,520 megawatts of power capacity in 2014. That would be part of a massive plan to add 10,000 MW within five years, under a fast-track program.

Nasri said some power projects of 1,415 MW were in the final stage and around 2,105 MW were still under construction.

“Hopefully, we will have this additional capacity this year,” Nasri said.

PLN, responsible for providing power to Indonesia’s vast population of 250 million people, currently has a generating capacity of 30,000 MW, meaning only 70 percent of the country’s homes have access to power.

The government had asked the company to supply an additional 55,500 MW nationwide in the decade to 2019 and increase the electrification rate to 90 percent by 2020. PLN said last month that it would need $90 billion over 10 years to meet this target.

Announcement for the additional power supply plans are still dampened by frequent blackouts in the country, which in many cases caused companies and consumers to suffer the direct consequences.

Earlier this month, blackouts were reported in a number of areas in Jakarta. Among the parts of the capital affected by blackouts were Menteng in Central Jakarta, Jatinegara, Pondok Gede and Kramat Jati in East Jakarta, Bulungan and Lenteng Agung in South Jakarta, and Kebon Jeruk and Cengkarang in West Jakarta.

PLN has 11 subsidiaries, including Indonesia Power and Pembangkit Jawa Bali, as well as a unit in Batam, Riau Islands.

PLN to Have Additional 3,520 Megawatt Power This Year - The Jakarta Globe

 

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RI`s trade balance to see $785 million surplus in December
Wed, January 15 2014 23:44 | 458 Views


Related News

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Jakarta (ANTARA News) - Bank Indonesia (BI) has forecast the countrys balance of trade to record a surplus of US$785 million in December 2013, up from US$776.8 million the month before.

"Based on the data, the surplus will be US$785 million in December 2013 as compared to US$776.8 million in November 2013," Bank Indonesia Deputy Governor Perry Warjiyo stated at the group discussion forum with the media here on Wednesday.

Meanwhile, the non-oil/non-gas trade is expected to see a surplus of US$2.2 billion in December 2013 as compared to US$1.96 billion a month earlier, he noted.

"The balance of trade will record a higher surplus in December and a similar trend is expected in the non-oil/non-gas trade," he remarked.

The results of a research conducted by the central bank suggested that the balance of trade was forecast to reach a surplus of US$1.6 billion in the fourth quarter of 2013, he claimed.

Meanwhile, the non-oil/non-gas trade was expected to enjoy a surplus of US$5 billion in the fourth quarter.

"This is very favorable when compared to the surplus of the non-oil/non-gas trade in the third quarter of 2013, which reached US$1 billion," he noted.

The improving trade balance is intrinsically linked to the rising commodity prices in the global market during the past few weeks, he pointed out. (*)
Editor: Heru

COPYRIGHT © 2014
RI`s trade balance to see $785 million surplus in December - ANTARA News

Borobudur temple confident of achieving tourist target in 2014
Wed, January 15 2014 15:32 | 429 Views

Magelang, C Java (ANTARA News) - The management of Borobudur Temple is optimistic that the worlds largest Buddhist temple will meet the 3,531,900 tourist arrival target for 2014.

Deputy Head of Operation I Borobudur Temple Tourism Park Aryanto Hendro said here on Wednesday that the target accounted for 3,263,500 domestic tourists and 268,400 international tourists.

"The tourist arrival target is 18 percent higher than 2013s target," Aryanto Hendro remarked.

Borobudur Temple in 2013 attracted a total of 3,362,061 tourists: 3,145,846 domestic and 216,215 international tourists.

The figure had exceeded 2013s target of 2.99 million visitors.

However, the management had failed to meet the 2013 international tourist arrival target, which had been set at 263,400 visitors, Hendro noted.

International visitors have become the main target for the managing company of Borobudur Temple, which is being promoted as a UNESCO World Heritage site.

The peak season for tourist visits to the temple located in Magelang District, Central Java---about one hour from Yogyakarta---usually occurs during the Islamic Eid al-Fitr holiday, school holidays, and the Christmas holiday.

"Tourists from the Netherlands, Japan and Malaysia are the most common international visitors to Borobudur Temple," he said.

Borobudur was built around 750 AD during the Syailendra Dynasty.

The temple was rediscovered by Englishman Sir Stamford Raffles in 1814, who commenced a preliminary clean-up operation one year later.

The Indonesian government, fully supported by UNESCO, has commenced work to raise funds for the temple restoration based on research from 1983 to 1986.

Borobudur Temple was declared a UNESCO World Heritage site in 1991.

Reporting by Heru Suyitno
EDITED BY INE
(A059/KR-BSR/O001)
Editor: Jafar M Sidik

COPYRIGHT © 2014

Borobudur temple confident of achieving tourist target in 2014 - ANTARA News

 

[MarveL]

Business
Indonesia gears up for subsidy reform

Indonesia is gearing up for further economic reforms which could narrow its current account deficit and reduce the need to raise interest rates. The finance minister foreshadowed adjustments to expensive subsidies that have been a big contributor to the country's struggles.

JAKARTA: Indonesia is gearing up for further economic reforms which could narrow its current account deficit and reduce the need to raise interest rates.

In a veiled concession to the media this week, the finance minister foreshadowed adjustments to expensive subsidies that have been a big contributor to the country's struggles.

Finance Minister Chatib Basri said: "Don't rule out the possibility of subsidy reform even this year. Subsidy reforms mean electricity and fuel. Don't rule out this possibility. I always believe that bad times make good policy."

Plans are underway for a fixed subsidy for fuel sales this year.

Currently, the higher the market price, the higher the government subsidy.

Right now, subsidised premium gasoline is set at 55 US cents a litre while market price is around 76 cents.

The difference is paid for by the government, at great expense and at some vulnerability to exchange rate and oil price fluctuations.

Under the finance minister’s proposed fixed energy subsidy system, the government would fix fuel subsidies at a certain amount.

This will allow the price of subsidised fuel to automatically change when fuel market price soars or declines significantly.

However, with subsidies being so sensitive among the voting public, the fixed price regime is unlikely to be introduced until the next government.

Electricity subsidies are also on the reform agenda.

The Ministry of Energy and Mineral Resources plans to increase power prices for two types of industries by an average of 65 percent.

The policy will affect 70 large-scale companies.

Susilo Siswoutomo, deputy minister for energy and mineral resources, said: "It won't affect small-scale businesses that use 450 to 900 watts. Electricity prices will go up for big companies such as malls. Why should we subsidise electricity for malls? It is better that the money is used for national development."

Parliament's Budgetary Board has agreed to reduce electricity subsidies by 9 to 18 percent and set this year's electricity subsidies at an estimated US$6.8 billion.

- CNA/xq

Indonesia gears up for subsidy reform - Channel NewsAsia

 

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Auto Part Makers Plan to Invest $1.5 Billion in 2014, Official Says
By Harso Kurniawan on 5:43 pm January 17, 2014.
Category Business, Corporate News
Tags: Indonesia auto industry

Several large auto parts makers are expected to spend a combined $1.5 billion in total investment to manufacture automotive products in Indonesia, a high level official at the Industry Ministry said on Wednesday.

“The components industry is likely to also receive big investment, following recent investment in [automotive] assembling,” said Budi Darmadi, director general for high-technology industries at the ministry. He said around 20-30 automotive component makers may invest in the country this year, but did not provide the names of any specific companies.

Budi was speaking on the sidelines of an inauguration ceremony for Honda Prospect Motor’s second factory in Karawang, West Java.

HPM, the sole distributor of Japanese Honda cars in Indonesia, is expecting the new plant to boost production of Honda cars to 200,000 units per year from around 80,000 units currently.

The factory — which saw an investment of Rp 3.1 trillion ($257 million) — will manufacture the Honda Mobilio, a multipurpose vehicle, the company said.

Karawang, around 75 kilometers east of Jakarta, is home to many manufacturers, including Astra Otoparts, the spare parts unit of the Indonesia’s largest automotive distributor — Astra International.

Astra Otoparts and MetalArt of Japan have signed a deal to set up a joint venture that will manufacture auto parts. The partners will spend around $45.3 million and build the plant on 3.2 hectares area in Karawang International Industrial City.

Astra Otoparts, which employs over 36,000 people in Indonesia, has been exporting its products to more than 30 countries in regions including Europe, America, Middle East, Asia Oceania and Africa.

Indonesia continued to enjoy strong car sales last year, despite a higher interest rate environment and accelerating inflation. Car sales stood at 1.2 million in 2013, up around 9 percent.

Car sales in the country were dominated by big Japanese carmakers, with the top spot occupied by Toyota Motor, followed by Daihatsu Motor and Suzuki Motor.

Indonesia Auto Part Makers Plan to Invest $1.5 Billion in 2014, Official Says - The Jakarta Globe

Hankook to Spend $358m on W. Java Plant Expansion
By Francezka Nangoy on 2:55 pm January 18, 2014.
Category Business, Corporate News
Tags: Hankook Tire




South Korea’s Hankook Tire aims to make 6 million tired per year at its West Java plant. (JG Photo/Yudhi Sukma Wijaya)



South Korea’s Hankook Tire is making an additional investment of 380.18 billion won, or $358 million, into its Indonesian plant as it seeks to continue its expansion in Southeast Asia’s largest economy.

In a filing to the Korea Exchange (KRX) on Friday, the company said it would invest the sum with Hankook Tire Indonesia, its local unit in the country.

The investment will be made throughout the course of the next two years, and will be used for “facility improvement,” the statement said.

Hankook Tire Indonesia inaugurated its factory in Cikarang, West Java, in September last year with an initial investment of $353 million. The plant was built on a 60-hectare area of land where the company plans to reach production capacity of six million tires a year.

According to Hankook’s statement in September, some 30 percent of production from Cikarang will be fed to the domestic market. The remaining 70 percent will be exported to other emerging markets in Southeast Asia, North America and the Middle East. The plant will produce tires for passenger vehicles and light trucks, among others.

Seung Hwa Suh, Hankook’s vice chairman and chief executive, said at the plant’s inauguration that the company planned to invest up to $1.1 billion in Indonesia through 2018.

Hankook is not the only company that is banking on Indonesia’s solid demand for automotive-related products.

Astra Otoparts, a unit of Astra International, formed a joint venture with Italy’s Pirelli Tyres last year called Evoluzione Tyre. The newly formed company has invested Rp 1.3 trillion ($107.9 million) in the development of a new tire plant in Subang, West Java, which is scheduled to start production by the end of this year.

The plant will initially produce two million motorcycle tires per year before eventually reaching seven million units a year upon full operation. Sixty percent of its output will be exported, according a statement by Astra Otoparts.

Car sales in Indonesia rose to 1.23 million units in 2013, up 10 percent from 2012, according to data from the Association of Indonesian Automotive Manufacturers (Gaikindo). This year, the association expects roughly the same volume of car sales.

Motorcycle sales were also up in 2013 to 7.77 million units, an increase of 8.8 percent from the previous year, according to the Indonesian Motorcycle Manufacturers Association (AISI), which expects 2014 sales to slow amid high interest rates and production costs.

Hankook to Spend $358m on W. Java Plant Expansion - The Jakarta Globe

Petrokimia Gresik to Open East Java Phosphoric Acid Plant in Q2
By ID/Rozi Amrozi on 10:24 am January 2, 2014.
Category Business, Corporate News
Tags: fertilizer, Petrokimia Gresik, phosphoric acid

Gresik, East Java. Petrokimia Gresik, a sate-run fertilizer company, plans to open a new phosphoric acid plant in East Java in the second quarter of 2014, a company executive said on Tuesday.

“The new phosphoric acid plant, which is a joint venture with [Jordan Phosphate Mines], will be able to contribute to an increase in our revenues in 2014,” said Hidayat Nyakman, the company’s president director.

Jordan Phosphate Mines (JMPC) is a mining company based in phosphate-rich Jordan. Phosphoric acid is an essential component in many commercial fertilizers.

The $200 million plant, which has been under construction since the end of 2010, is expected to produce 200,000 tons of phosphoric acid per year for use in fertilizers on the domestic and foreign markets.

Hidayat said the plant would increase the company’s production capacity and end the need to import raw materials to make fertilizers.

Each company is to take a 50 percent stake in the joint venture, as per a January 2010 agreement.

Petrokimia Gresik also plans to spend $160 million revamping is preexisting plant so that it too can produce 200,000 tons of phosphoric acid per year, and to expand the plant’s industrial compound to include a sulfuric acid plant with a capacity of 600,000 tons per year and a gypsum purification plant with a similar capacity.

“The expansion of this phosphoric acid plant will assure a supply of phosphoric acid and therefore save foreign exchange for the state,” Hidayat said.

The company said it required 600,000 tons of phosphoric acid to produce 2.8 million tons of NPK fertilizer a year, while its current phosphoric acid facility only produced one third that amount.

Nugrohon Purwanto, Petrokimia Gresik’s commercial director, said that the weakening of the Rupiah had significantly impacted the cost of phosphoric acid imports.

“With the operation of the phosphoric acid plant that is a joint venture with JPMC, our efforts to save production costs, which will enhance our competitiveness in the free market in the future, can be improved,” Nugroho said.

The plant will require some 770,000 tons of phosphate and 200,000 tons of sulfur a year to meet its production goals.

The company also plans to complete an upgrade of its water processing installation in Gunung Sari, Surabaya, Hidayat said, increasing its capacity from 720 cubic meters to 3,800 cubic meters per hour.

Govt Seeks to Raise Rp 10t From Bond Sale
By Jakarta Globe on 3:03 pm January 18, 2014.
Category Business
Tags: Indonesia bonds, Rupiah currency

The government is hoping to raise Rp 10 trillion ($833 million) from the sale of rupiah-denominated bonds with various tenors on Tuesday as part of its efforts to plug the country’s budget deficit.

The government plans to sell one, five, 10 and 15-year bonds, the Finance Ministry’s debt management office said in a statement posted on its website on Thursday, in what will be its second rupiah-denominated bond sale this year.

Southeast Asia’s largest economy raised Rp 10 trillion from selling similar notes on Jan. 7, the first bond sale for this year. Next week’s sale will contribute to a plan to raise Rp 75 trillion from the sale of rupiah-denominated bonds in the first quarter.

Investors have placed Rp 29.6 trillion for bonds on offer, indicating strong demand and suggesting a recovery of foreign investor confidence in the country.

Indonesia wants to raise a record Rp 357 trillion from international and local debt markets this year, it said in a statement early this month.

The country, which has been selling bonds for the past decade, is grappling with a budget deficit amid a depreciating rupiah. Record trade and current account deficits last year partly prompted the central bank to raise its benchmark interest rate to 7.5 percent.

The country’s budget shortfall is forecast to reach Rp 175 trillion, or 1.7 percent of gross domestic product, this year.

The government raised $4 billion from the sale of dollar-denominated bonds on Jan. 8, with $2 billion of notes due in 10 years to yield 5.95 percent and $2 billion of debt maturing in 30 years at 6.85 percent, DMO said in a statement published in Jakarta last week.

The country raised Rp 54 trillion from the sale of rupiah-denominated bonds in the first quarter last year, according to a document from the DMO.

Yields on government five-year notes fell to 7.9807 percent on Friday from 8.0505 percent the previous day while the yield of 10-year notes declined to 8.5596 percent on Friday from 8.5669 percent on Thursday, according to data from the Indonesia Bond Pricing Agency.

Govt Seeks to Raise Rp 10t From Rupiah-Denominated Bonds Sale

Antam Aims to Raise $200m from Bonds in 2014 to Expand Pomalaa Mine
By Efi Nurfiyasari on 9:54 pm December 2, 2013.
Category Business
Tags: Antam

State-controlled mining company Aneka Tambang is considering the sale of $200 million of dollar-denominated bonds in the second half of 2014 to fund the expansion of its nickel mine in Pomalaa, Southeast Sulawesi.

Tato Miraza, president director of Aneka Tambang, also known as Antam, said the notes would be issued in the second half of next year.

He did not disclose the terms including the tenor and yield of the bonds.

Antam seeks to increase ferronickel production from its nickel ore mine.

“The Pomalaa project is one of our focuses to increase production capacity,” Tato said.

Antam’s investment in the mine’s expansion is estimated to reach $573 million. At the moment, the company is still short of $200 million.

Antam last month scrapped its Rp 1 trillion ($85 million) bond issuance — the last part of a Rp 4 trillion bond issuance — as it saw that debt market conditions were conducive for selling the notes.

Once the expansion project has been completed, Antam’s ferronickel production capacity will rise to 27,000 metric tons per year from the current 18,000 tons.

Antam has also allocated Rp 2.9 trillion for its capital expenditure budget in 2014. Most of these funds will be used to expand the Pomalaa project. The capex excludes acquisition costs the company may incur, as it plans to acquire gold-mining companies in order to raise its production of the precious metal.

Antam posted a 44.6-percent decline in net income to Rp 348 billion in the first nine months of this year compared to the same period a year ago.

The company is one of several local firms planning to sell bonds next year.

Mobile communications infrastructure builder Tower Bersama Infrastructure plans to raise between Rp 500 billion and Rp 1 trillion in a bond sale next week. The debt sale is part of a larger plan to raise Rp 4 trillion from bonds issues within two years.

Antam currently operates nickel mines in Pomalaa and Tapunopaka in Southeast Sulawesi, and Tanjung Buli and Pulau Pakal in North Maluku. It has 825.3 wet metric tons of nickel reserves and resources.

Antam’s major projects include development of a $1.6 billion ferronickel project in East Halmahera, North Maluku and a $350 million to $400 million nickel pig-iron project in Mandiodo, Southeast Sulawesi.

The company is also developing a $450 million chemical grade alumina plant with an annual capacity of 300,000 tons in Tayan, West Kalimantan.

Antam Aims to Raise $200m from Bonds in 2014 to Expand Pomalaa Mine - The Jakarta Globe

Jakarta Flooded Again After Night of Heavy Rain
By Jakarta Globe on 2:19 pm January 19, 2014.
Category Featured, Jakarta, News
Tags: Indonesia floods, Jakarta floods flooding




Jalan KH Abdullah Syafii in South Jakarta in inundated by flood on Jan. 19, 2013. (Photo via @TMCPoldaMetro)



Heavy rains in Greater Jakarta left areas of the capital flooded on Sunday, displacing more than 10,000 residents as water levels reached critical levels at area flood gates last night.

Floods were reported in Daan Mogot and Grogol, in West Jakarta; Gunung Sahari and Karet Tengsin, in Central Jakarta; Jatinegara and Kampung Melayu, in East Jakarta; and Cawang, Kalibata, and Tebet, in South Jakarta, according to the Jakarta Police traffic corps. The worst floods were reported in North Jakarta neighborhoods, with Kelapa Gading, Pluit and Penjaringan under water.

“Heavy rains, especially in northern part of Jakarta, have increased water levels at rivers,” Sutopo Purwo Nugroho, the spokesman of the National Disaster Mitigation Agency (BNPB), said in a press statement on Sunday. “The condition is causing worse flooding in northern part of Jakarta.”

Jakarta’s flood gates reached critical levels Saturday night as heavy rains fell for hours, raising the water level at the capital’s already high rivers. By Sunday the “Siaga I,” alert remained for the Karet and Angke Hulu floodgates, but was lowered to “Siaga II,” for the Manggarai flood gate.

TransJakarta suspended operations along two corridors, Corridor III (from Kalideres to Harmoni) and Corridor XII (from Pluit to Tanjung Priok), while service along half of the transit line’s other routes were delayed, according to @BLUTransJakarta.

Several subdistricts in Tangerang and Bekasi were also inundated by floodwaters.

Heavy rains began to fall early last week in Bogor, West Java, a satellite city upstream from the capital. Flood waters claimed seven lives by Saturday, the Jakarta office of the Disaster Mitigation Agency (BNPB) said. The rains are expected to continue through the coming week, with the heaviest rainfall predicted for Sunday and Thursday nights, the Meteorology, Climatology and Geophysics Agency (BMKG) said.

“The peak of the rain [season] is predicted to last until early February 2014,” the BMKG said.

So far rain levels are less than last year, when widespread flooding affected much of the capital, killing 20 and displacing more than 30,000.

“Rains that have been falling since the beginning of this year are not as heavy as in 2013,” Achmad Zukri, the head of extreme weather early warning division at BMKG, said. “The rains have been falling in installments since New Year’s Eve. This is unlike last year, when high-intensity rain fell non-stop for several consecutive days.”

Jakarta Flooded Again After Night of Heavy Rain - The Jakarta Globe

 

[Wahhab2701]

Hopefully, this year we can perform better.
Indonesia Growth Falls Below 6% as Risks to Economy Increase - Bloomberg

Here is the thread about Indonesian economy development bro @al-Hasani

 

[nufix]

Hopefully, this year we can perform better.
Indonesia Growth Falls Below 6% as Risks to Economy Increase - Bloomberg

Here is the thread about Indonesian economy development bro @al-Hasani

It was in 2013 and It was safe to keep the growth rate in between 5.9 and 6.1, the govt. was and is putting out fuel subsidies and tightening exports and investments, putting local industries in a safer position.

 

[haidian]

WeChat overtakes Facebook in Indonesian market
Staff Reporter
2014-01-29
11:02 (GMT+8)

Chinese smartphone messaging app WeChat has become one of the four major instant messaging tools widely used in Indonesia, reports Shanghai's China Business News, citing Andi Ardiansyah, an Indonesian representative based in Guangzhou.

As of the third quarter of 2013, the number of active users of the Chinese and global version of WeChat touched 271.9 million, surging by 124%. Internet giant Tencent, which developed the popular app, said the growth has been aided by strengthening international marketing campaigns.

Ardiansyah stated that many Indonesian entrepreneurs like using WeChat for its reliability. The growing proximity between China and Indonesia's political and business circles has also helped boost its popularity.

"I use WeChat because many of my Chinese friends use it," said Ardiansyah.

In addition to forging closer ties between the two countries, Tencent has been operating in the Southeast Asian country and has entered a joint venture with MNC, a subsidiary of Indonesia's largest media group PT Global Mediacom, which has sped up the expansion of WeChat in the social media market.

MNC said it was mainly broadcasting advertisements or hosting events to promote the app.

Before WeChat entered the Indonesian market, Facebook was the largest social media network in the country. WeChat now has an edge given the flourishing development of mobile internet in Indonesia.

Market observers said that an outstanding marketing strategy was the key to WeChat's success in the country as the app has captured considerable market share in a short period of time through advertising.

In addition to MNC, WeChat broadcasts different television advertisements in Thailand, Indonesia, Malaysia, Singapore and Mexico by cooperating with local tech or media firms. WeChat also collaborated with Google to promote its services in the United States last week, the paper said. WeChat faces a number of obstacles in the mature European and US market, however.

Ma Huateng or Pony Ma, founder and CEO of Tencent, is now placing great emphasis on the internationalization of WeChat. He said China used to copy the models adopted by the US market in the internet arena but the mobile internet's development has been faster in China compared to Western countries, which presents Chinese firms with a rare opportunity.

 

[cirr]

WeChat is simply great！

 

[Nike]

doesn't know it, i am not using smart phone until now

 

[BoQ77]

You are safe, madokafc

 

[Daniel808]

Standard Chartered Bank: Indonesian Economy Expands 5.8% in 2014


The Standard Chartered Bank expects Indonesia's economy to expand 5.8 percent in 2014, followed by a 6 percentage growth in 2015 as an improving global economy has a positive effect on emerging economies, including Indonesia. The world economy is estimated to grow between 3.2 and 3.5 percent this year and expected to accelerate to 3.8 percent in 2015. David Mann, the regional Head of Research at the Standard Chartered Bank in Asia, said that Indonesia's economic performance in 2013 was negatively influenced by external factors.

Indonesia's official GDP growth figure for 2013 still needs to be released but it is expected that the outcome will be between 5.7 and 5.8 percent. Despite the global slowdown in recent years, Indonesia's economy is still able to post growth of over 5 percent. According to Mann, this indicates a strong economic fundament, and with a positive outlook for global economic growth ahead, he expects that Indonesia's economic expansion will accelerate due to improving exports in Southeast Asia's largest economy.

Mann further stated that Indonesia contains good economic potential due to the country's large and young population in combination with a rapidly expanding middle class, thus giving rise to a huge consumer force. Indonesia now has more than 240 million people, of which about 75 million are categorized as belonging to the country's middle class. Amid solid macroeconomic growth about seven million people per year are added to this middle class group. According to research firms the Boston Consulting Group (BCG) and McKinsey, the country's middle class will grow to between 130 and 140 million people by the period 2020 to 2030.

However, infrastructure and the general quality of regulations will need to be improved in order to maximize this growth potential. The lack of quality and quantity of infrastructure causes Indonesia's logistic costs to rise and thus hollows investors' confidence.

Fauzi Ichsan, Managing Director and Senior Economist at Standard Chartered Bank, agrees that Indonesia's economic expansion in 2014 will be approximately 5.8 percent. One important factor that blocks Indonesia from growing at a faster pace, according to him, is America's shale gas policy. This new policy leads to the closing of many coal-fired power stations in the USA and thus will curtail the global coal price. Indonesia, one of the world's largest coal exporters, will feel this impact.

The legislative and presidential elections, on the other hand, can provide an extra 0.25 percentage growth to total GDP growth in 2014. The legislative election is scheduled for 9 April 2014, while the presidential election will be held on 9 July 2014.

Standard Chartered Bank: Indonesian Economy Expands 5.8% in 2014 | Indonesia Investments

 

[Daniel808]

yes, We Chat is Great. I used this app too, besides Line, Kakao Talk and Blackberry messenger