THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRS
REPUBLIC OF INDONESIA
Main Building, Ministry of Finance, Jl. Lapangan Banteng Timur No.2-4 Jakarta 10710
Tel: (021) 351-1178 Fax: (021) 351-1186 Website: http://www.ekon.go.id
Trade and Investment News[1], 23 February 2009
Highlights
National
· The US wants Indonesia to become a key partner, US Secretary of State says
· Payments to begin for mudflow victims
Terrorism
· Singapore hosts regional counter-terrorism meet
Security
· Military to get $1.2 billion for arms
· Armed Forces commander calls for Aceh agreement to be respected
Law & order
· Doubts over enforcement of new anti-pornography law
· A businessman is jailed for three years for graft
Health
· Australia, Jakarta sign HIV/AIDS cooperation
Economy
· Per capita income rises to $2,271
· ASEAN+3 moves to cushion financial meltdown
Business briefs
Macroeconomy
· February inflation expected to ease further, says central bank
Investment
· Palm oil plants, oleochemical plants planned for East Kalimantan
· GM likely to postpone $600 million investment
State concerns
· Regulation issued to promote local steel producers
SOEs
· Capital expenditure to be boosted 20% to increase jobs
Private sector
· Qatar Telecom takes ownership in PT Indosat to 65%
Banks
· Bank Indonesia, private banks to set up liquidity fund
· Bank Negara Indonesia looks to 16% loan growth
Power
· Government to offer 15 geothermal fields for tender
Oil & gas
· Government seeks to improve returns from contracts
Mining
· PT Bukit Asam sees 13% boost in coal sales on power station demand
NATIONAL
US eyes Indonesia as key partner
With its giant population and moderate brand of Islam, Indonesia is fast emerging as a cornerstone US partner for President Barack Obama's administration, observers say, following the visit to Indonesia of the top US diplomat, Agence France-Presse reported.
Obama spent four years of his childhood in Jakarta and his secretary of state, Hillary Clinton, took a nearly 6,000-km detour to Jakarta last week between Tokyo and Seoul on her first official visit abroad.
Clinton said the US is committed to building a "comprehensive partnership" with Indonesia.
"Certainly Indonesia, being the largest Muslim nation in the world, the third-largest democracy, will play a leading role in the promotion of that shared future," Clinton said in Jakarta.
In November, President Susilo Bambang Yudhoyono also appealed during a visit to Washington for a "strategic relationship" with the United States.
Jonah Blank, the chief policy adviser on South and Southeast Asia for the Senate Foreign Relations Committee, said Obama had a "golden opportunity" to make Indonesia a pivotal US partner.
"I think there is greater optimism now than I think we've had at any other point since the founding of Indonesia as a modern nation-state," Blank said.
Lt. Col. Desmond Walton, who handles Southeast Asia policy at the Pentagon, said the US relationship with Indonesia was "underdeveloped" considering the archipelago's vast size and economic potential.
The US is not the only country to heap more importance on relations with Indonesia.
Prosperous Switzerland said last week it had chosen Indonesia as one of the priority countries in Asia for development of a new partnership, The Jakarta Post reported.
Bakrie to begin paying mudflow victims
The Bakrie family has said that it will begin the distribution of monthly Rp15 million payments to victims of the Sidoarjo mudflow disaster this week after lengthy discussions with the victims and Social Minister Bachtiar Chamsyah, The Jakarta Post reported.
Nirwan Bakrie told tempointeraktif.com on Friday that his family would transfer the allotment to each family each month via Bank Rakyat Indonesia (BRI).
"We ask for the victims to start opening new accounts at the bank as we will transfer the money next week. We'll also accelerate the construction of houses for the victims so that they can move immediately," he said, adding that his family would monitor the distribution of the money closely.
TERRORISM
Counter-terrorism conference looks at closer cooperation
Officials from the State Intelligence Agency (BIN) were in Singapore last week for the second Asia-Pacific Intelligence Chiefs Conference (APICC), Defense News reported.
The conference was co-hosted by the Singapore Armed Forces (SAF) and the US military’s Pacific Command and is an informal forum for military intelligence chiefs from the Asia-Pacific region to discuss intelligence challenges.
The theme for this year's conference is "Sharing Expertise in Managing Transnational Security Issues," a press release said. The first conference was held in 2007 in Kuala Lumpur, Malaysia.
The conference focused on "enhanced information-sharing among the Asia-Pacific nations on counter-terrorism, maritime security and humanitarian assistance and disaster relief."
Intelligence officials included representatives from Indonesia, Bangladesh, China, Japan, Singapore, the UK and the US.
Singapore Defense Minister Teo Chee Hean said "intelligence and information sharing is an important aspect of international cooperation" and emphasized that by sharing diverse perspectives and experiences.
“Such exchanges help to build understanding and lay the foundation for our countries and armed forces to work together in response to any future crises," he said.
He pointed to the Mumbai attacks as a latest example of a "string of terrorist attacks" and a "grim reminder that terrorism remains a common and persistent threat."
Police, TNI talk on counter-terrorism procedures
The National Police on Tuesday began talks with the Armed Forces (TNI) in a bid to develop standard operation procedures for counter-terrorism operations, Kompas reported.
“In the future, counter-terrorism operations will involve all state agencies affiliated with counter- terrorism: Health, Social and Foreign Ministries, Immigration, TNI and the Police,” said National Police chief Gen. Bambang Hendarso Danuri.
According to Danuri, counter-terrorism operations strategy in Indonesia will remain based on a combination of preventive and repressive strategies.
Commenting on the talks in Semarang, Diponegoro military commander overseeing Central Java Maj. Gen. Hariadi Soetanto said he agreed with the police strategy in counter-terrorism operations, saying it had achieved the goal of boosting the alertness of security personnel.
“Following the joint exercise between the National Police and TNI in December 2008, the TNI has learned to be able to locate terrorist suspects without police aid when terror takes place simultaneously in different locations,” said Soetanto.
Meanwhile, the government said it may arrange a visit with alleged Jemaah Islamiyah (JI) terrorist mastermind Hambali, who has been jailed for the past six years by the US at Guantanamo Bay, Cuba, Antara reported.
"If there is a possibility to send representatives from the Indonesian government to visit Hambali, we will consider it," Foreign Minister Hassan Wirajuda said Wednesday.
"We have not received a full report on where the detainees will go once the Obama administration shuts Guantanamo Bay down," Wirajuda said, adding “whether they will be transferred to jails in the US or they will be transferred to their home countries is still unclear.”
Hambali has been imprisoned at Guantanamo Bay since 2003 after he was arrested in Thailand for his alleged involvement in a number of bombings carried out by JI, including the 2002 Bali bombing which killed 202 people.
The US has said it will likely hold on to a handful of high-priority detainees, which allegedly including Hambali.
SECURITY
Govt. extends credit to military amid shortage
The government has decided to accelerate the spending of 2004-09 state credit funds of about $1.2 billion on new weapons and equipment, The Jakarta Globe reported.
Defense Minister Juwono Sudarsono said Tuesday that he had discussed the plan with the head of the National Development Planning Board (Bappenas), Paskah Suzetta, Finance Minister Sri Mulyani Indrawati and Military Chief Gen. Djoko Santoso.
"Bappenas said the expenditure is urgently needed to accelerate the export-credit process," Sudarsonso said.
He added that the funds would be used to buy a variety of equipment including armored vehicles, aircraft and missiles for the Air Force and a submarine. However, the government had also decided to review the procurement plans, particularly those related to weapons.
For example, it was likely to buy only 40 armored vehicles, jointly produced by French company Renault and local manufacturer PT Pindad, though it had previously intended to buy 150. "We are also reviewing the plan to buy a submarine from Russia, because now we also have offers from South Korea and Germany," Sudarsono said.
Indonesia had earlier planned to buy Russian military equipment, including two submarines, on a $1 billion credit line extended by the Russians.
Respect Helsinki peace accord: TNI chief
All parties inside or outside Indonesia must respect the peace agreement between the government and the Free Aceh Movement (GAM) signed in Helsinki on August 15, 2005, Armed Forces (TNI) chief Gen. Djoko Santoso said on Thursday, Antara reported.
Santoso’s statement was made ahead of a visit by the framer of the Helsinki Accord, former Finnish Prime Minister Marti Ahtisaari, from February 21 to 24. Ahtisaari is scheduled to meet Vice President Jusuf Kalla to discuss the accord’s progress and implementation.
Santoso said security in Aceh remains conducive but conceded that certain parties in Aceh remain unsatisfied and disagree with the Helsinki Accord. He added that such sentiments are “natural.” Despite this, Santoso said, all groups in Aceh should come together in creating a peaceful and prosperous Aceh.
LAW & ORDER
Unclear porn law 'can't be enforced'
Enforcement of the controversial anti-pornography law passed by the House of Representatives in October last year would be almost impossible, law enforcers said, The Jakarta Globe reported.
Prosecutors, the heads of the South Jakarta and Central Jakarta district courts, police and experts from the Constitutional Court all agreed that poor public acceptance, unclear terminology and contradictory articles were hindering enforcement of the law, and that more government regulations were needed to clarify exactly what it meant.
"It is difficult to prove any breach of the law," said Nicolas A. Lilipaly, who heads the Jakarta Police's detectives unit charged with combating pornography.
"We cannot implement the law, with its contradictory content. We prefer to wait until the government issues regulations to clarify the legislation," he said.
Businessman jailed three years for graft
A businessman was sentenced to three years in jail after his conviction for corruption in a closely watched trial that analysts say underscores Indonesia's commitment to stamping out graft, The Straits Times reported.
Billy Sindoro, a senior executive of the Lippo Group, was also ordered to pay Rp200 million fine for trying to bribe Mohammad Iqbal, a key official at the Business Supervision Commission (KPPU), last September. Iqbal is facing a separate trial. The sentences delivered by Judge Moefri were lower than the four-year jail term and Rp250 million fine demanded by government prosecutors.
Bankers and analysts say the conviction demonstrates the major strides the government has made in its fight against graft, which in recent months has netted several high-profile personalities. “This is a good signal because it shows that there is no let-up in the anti-corruption campaign,” said the chief executive of a state-controlled Indonesian bank.
Sindoro was charged in September with making a Rp500 million payment to Iqbal after the KPPU forced Malaysian-controlled satellite-television company Astro to continue broadcasting sport and other programs through Lippo's Direct Vision. In another case on Friday, the Supreme Court rejected an appeal by businesswoman Artalyta Suryani and upheld a lower court conviction of five years in jail and fines of Rp250 million for bribery, Kompas reported.
“The sentence of five years imprisonment has been upheld,” said Supreme Court judge Artidjo Alkostar.
The Corruption Court in July proved Suryani guilty of bribing Urip Tri Gunawan, a senior prosecutor at the Attorney General’s Office, with $660,000 to drop his investigation into tycoon Sjamsul Nursalim, who is accused of embezzling around $3 billion of Bank Indonesia Liquidity Assistance funds during the 1998 Asian financial crisis.
HEALTH
Australia, Jakarta sign HIV/AIDS cooperation agreement
Australian Ambassador to Indonesia Bill Farmer and Fauzi Bowo, governor of Jakarta, on Thursday signed a memorandum of understanding to expand HIV/AIDS prevention and treatment at 30 community health centers in the city, The Jakarta Post reported.
The agreement "represents another step forward for HIV prevention and treatment in Indonesia," Farmer said, adding that Australia is "proud to be assisting Indonesia in its commitment to combat the spread of HIV and support those already living with the virus."
The agreement will increase access to HIV education, counseling and testing; clean needles; drug treatment, including methadone programs; basic health care; and education on antiretroviral treatment.
According to the Post, the agreement also will create two new methadone programs in Jakarta
The provinces of Banten, Central Java, East Java and Yogyakarta are expected to be involved in similar agreements that will provide HIV services to about 100 community health centers.
ECONOMY
Low resources prices depress growth
Poor prices for minerals and agricultural products depressed growth during the fourth quarter, when growth was recorded at 5.4%, while full-year 2008 came in at 6.1%, the Central Bureau of Statistics (BPS) reported last week.
The mining industry was the poorest performer during 2008, contributing only 0.5% of the overall growth.
In the fourth quarter, construction, transport and communications, financial ownership and business services and services showed growth, while other sectors showed decline, with agriculture, livestock, forestry and fisheries contracting by 22.9% as prices for commodities such as crude palm oil fell.
The most positive growth during 2008 came from transport and communications, at 16.7% for the full year, followed by electricity, gas and water supply with growth of 10.9%. All other sectors saw single-digit growth.
In terms of the overall structure of the economy, household consumption continued to dominate with 61% of activity, down from 63.8% in 2007, with exports in second place at 29.8%.
Looking ahead, the trade minister said on Saturday that export volumes for non-oil and gas items are set to fall this year from 2008 as global trade slows, Reuters reported.
Earlier this month, Trade Minister Mari Pangestu said Indonesia's non-oil and gas export growth target had been revised to below 4.3% for 2009. On Saturday she told reporters the outlook was worse.