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], 13 October 2008
Dear friends: we introduce with this issue of Trade and Investment News a new section dedicated to news on the reform process as regulated under Presidential Instruction No. 5/2008, the third package of reforms during the term of the current administration. The section ‘Reform’ within the Business Briefs will provide updated information on implementation of reform initiatives either from sources at the Coordinating Ministry or from other reports.
Highlights
National
· Exiled Aceh rebel leader Hassan di Tiro returns home, praising peace process
· The Ulemas Council asks Indonesians to reconsider the annual exodus to the villages
Politics
· Incumbent President Yudhoyono gains in popularity for a second term, poll finds
Security
· National Police contingent leaves to join UN force in Darfur
Law & order
· China and Indonesia close to signing new treaty on extradition, security
· Attorney General opens door for corruption probe at his office
Economy
· Experts, Vice President agree global crisis impact limited to stock market
Business briefs
Macroeconomy
· Inflation reaches 12.14% year-on-year in September
Investment
· Stock exchange eases rules for buy-backs for companies with share price declines
Reform
· Government introduces tax benefits to attract investment in a range of sectors
· Priorities to be set to accelerate reform process
State concerns
· Plantations company files patent for hybrid, high-yield oil palm seeds
SOEs
· Gas distributor PT PGN first to report move to buy back shares
Private sector
· CPO sales tipped to double to $2 billion in October
· Tea bottler PT Sosro gains $80.5 million loan
Banks
· Bank Indonesia considers raising level of deposit guarantees above Rp100 million
Oil & gas
· Pertamina seeks 10% of shares in operations of Chevron and INPEX
· Pertamina Ari Soemarno to try to unlock Middle East funds
Mining
· PT Aneka Tambang purchase of stake in Martabe mine may be affected by global finance crisis
NATIONAL
Exiled Aceh rebel leader praises peace process
The founder of Aceh's separatist rebel movement returned to Indonesia Saturday after nearly 30 years in exile and after a separatist conflict that killed thousands of people, Agence France-Presse reported.
Free Aceh Movement (GAM) founder Hassan di Tiro, 83, was greeted by thousands of cheering supporters and former guerillas after he arrived in Banda Aceh, the capital of war-torn and tsunami-scarred Aceh.
In comments read to the crowd at the Baiturrahman Mosque in the capital city by former GAM Prime Minister Malik Mahmud, di Tiro called on the people of Aceh to nurture the peace process, Kompas reported.
He expressed appreciation for the goodwill shown by President Susilo Bambang Yudhoyono and Vice President Jusuf Kalla in supporting that process.
Meanwhile, one of the driving forces behind the peace accords, Martti Ahtisaari, was awarded the Nobel Peace Prize on Friday partly for his work in helping resolve the long-running Aceh separatist conflict.
The Indonesian government congratulated Ahtisaari for his achievement, praising the former Finnish president, Agence France-Presse reported.
"President Susilo Bambang Yudhoyono wants to convey his congratulations to Ahtisaari. Ahtisaari is the right choice to receive the Nobel Prize," spokesman Dino Patti Djalal told reporters.
"Ahtisaari is fair, tough and solution-oriented and we keep following his work. The award means this man is a champion of peace," Djalal said.
Ulemas Council blasts Idul Fitri exodus as 'offensive'
The Indonesian Ulemas Council (MUI) has called on Indonesian Muslims to alter their perception of mudik (journeying to one's hometown), citing the many people who died in road accidents during the Idul Fitri holiday, The Jakarta Post reported on Saturday.
The MUI says mudik should no longer be considered sunna (traditional Islamic custom based on the words and deeds of the Prophet Muhammad), but rather makruh (an offensive act).
MUI deputy chairman Amidhan said in Jakarta on Friday that many Indonesian Muslims believe mudik was sunna because it advocated silaturrahim (maintaining ties of friendship and family).
However, Amidhan said the destruction and death that the tradition had sparked meant it could not be considered sacred.
"Islam profoundly respects human life. Any activities that inevitably result in casualties are forbidden; so we perhaps need to redefine the status of mudik," Amidhan said.
"This is for now still only a discourse, but we'll try to discuss the issue in meetings of the MUI's edict commission."
Amidhan said the annual Idul Fitri exodus should be regulated to avoid fatalities, adding that motorcycles should not be allowed to carry more than two people during the occasion to reduce casualties and travelers should be divided into groups, which would be easier to supervise," Amidhan said.
According to the National Police, this year's exodus saw 1,320 traffic accidents, resulting in 616 fatalities, a decline from 1,875 accidents and 798 fatalities last year.
This year, 780 travelers were seriously injured in accidents, while 1,336 suffered minor injuries. In 2007, the figures were 952 and 2,034, respectively.
The bulk of the injured were motorcyclists. This year, an estimated 2.5 million motorcycles were used during the exodus.
POLITICS
SBY leads Megawati by 13 points in latest polls
Popular support for President Susilo Bambang Yudhoyono continues to rise in the lead-up to next year's elections, outstripping the acceptance rate of his toughest contender, former president Megawati Sukarnoputri, a survey says, The Jakarta Post reported.
A joint poll conducted by London-based research firm Taylor Nelson and Sofress (TNS) and the National Leadership Center (NLC) in September found 39% of respondents said they would vote for Yudhoyono in the 2009 elections, compared with 32% in the previous survey in July.
Support for Megawati fell in the two-month period from 28% in July to 26% in September.
"The result shows the different attitudes of the public toward the two candidates," Taufik Bahaudin, NLC chairman, told reporters Thursday.
The survey polled 2,000 respondents from 30 provinces between September 15-26.
A previous survey conducted in July ranked Megawati, the chairwoman of the Indonesian Democratic Party of Struggle (PDI-P), first, above other presidential hopefuls.
The latest survey also showed former commander of the Army Strategic Reserves Command (Kostrad), Prabowo Subianto, stood a good chance of qualifying for the runoff as he remained third on the list.
Prabowo, who founded the Great Indonesia Movement Party (Gerindra), was chosen by 15% of respondents, a 4% increase from the previous survey.
"We didn't ask respondents for the reasoning behind their choices," TNS Research Director Yanti Zen said.
The respondents were asked to choose from presidential candidates Yudhoyono, Megawati, Prabowo, Wiranto, Abdurrahman Wahid, Jusuf Kalla, Sutiyoso, Soetrisno Bachir, Akbar Tandjung, Surya Paloh and Amien Rais.
Zen said Hamengkubowono X, Wiranto, Abdurrahman Wahid and Kalla each won less than 5% of support from respondents.
Kalla: Indonesia’s elections world’s most complicated
Chairman of Golkar party, Vice President Jusuf Kalla, on Friday said general elections in Indonesia are “the most complicated in the world”, Antara reported.
"No general election in any other country is as complicated as those in Indonesia," Kalla said, adding that 38 parties will participate in next year’s general election.
Kalla said the number of candidates is large while the elections are lengthy, covering four stages: district, provincial, regional and national.
In connection with campaigning, Kalla said that every village will likely be full of pictures, posters and billboards. including up to 10,000 pictures of Golkar candidates. "Just multiply them by 38," he said.
Kalla said the difference between the national elections and regional elections is in national elections voters choose parties while at the regional level, voters directly choose the candidate they wish to elect.’
Kalla also suggested a change in the number system for determining candidates. "The change is needed so only candidates who are popular, loved and dedicated to the people, and not those only known by their party, would get elected," he said.
SECURITY
National Police officers depart for Darfur peacekeeping effort
As many as 140 police officers were sent to participate in United Nations (UN) peacekeeping efforts in Darfur, Sudan, which has been ravaged by conflict that has left 200,000 civilians dead and displaced 2.5 million others, Antara reported.
The police task force called "Bhayangkara Garuda Contingent" was officially sent off by National Police Deputy Chief Commissioner Gen. Makbul Padmanegara on Thursday.
The group departed for Sudan aboard a UN plane and is scheduled to remain there for a year.
The task force will join 19,557 other members of the UN peacekeeping forces including 3,772 police officers.
National Police Chief Gen. Bambang Hendarso Danuri in a written address read by Commissioner Gen. Makbul said the task was an honor for Indonesia as well as the National Police force.
"This is the first time for the national police to participate in an international peacekeeping effort and means Indonesia’s National Police will be recognized by the rest of the world," Danuri said.
LAW & ORDER
Govt. close to signing extradition treaty with China
The Indonesian Ambassador to China says Indonesia is closer to signing an extradition treaty and strategic partnership plan with China, Antara reported.
"Hopefully, both the extradition treaty and strategic partnership plan will be signed this year," Ambassador Sudrajat, said in Beijing.
One of the main aims of the extradition treaty, which would serve as a legal ground for a strategic partnership framework, is for both countries to cooperate in corruption eradication efforts, particularly in handling stolen assets and fugitives.
The strategic partnership plan will also provide guidelines and detailed steps for strategic partnerships in politics, law and security, as well as economic and socio-cultural affairs.
The initiative was launched during President Susilo Bambang Yudhoyono's visit to China in 2005, when he signed five agreements on economic affairs, disaster assistance, defense technology and education with Chinese President Hu Jintao.
The signing marked a significant improvement in Chinese-Indonesian relations since the downfall of the Suharto regime in 1998. Suharto, who seized power in 1965, cut diplomatic ties with China in 1967.
"The two countries plan to sign the strategic partnership plan and extradition treaty in Jakarta soon," Sudrajat said.
Supandji allows probe of AGO-BI scandal ties
Attorney General Hendarman Supandji said on Friday the Corruption Eradication Commission (KPK) will be allowed to investigate the Attorney General’s Office (AGO) and its ties to a widening corruption scandal at Bank Indonesia (BI), Koran Tempo reported.
Suspicion of AGO’s ties with the scandal surfaced during a trial on Tuesday when the corruption court heard that at least Rp5 billion in BI funds had been paid to a number of AGO’s officials to save former BI Governor Sudradjad Djiwandono, a suspect in a BI abuse-of-power case in 2002, allegedly causing Rp19 trillion in state losses.
Following the report, Deputy Attorney General for Supervision Darmono was named to examine 10 officials assigned to investigate the case in May 2002 and March 2003.
“They have been authorized to take the necessary measures should they find indications of ethics violations. However, the KPK should step in if there is any indication of bribery because it is their authority,” said Supandji.
Meanwhile KPK spokesman Johan Budi said the KPK is waiting for the current trials involving several former BI officials to develop further before it takes over cases over from the AGO.
“The KPK needs to carefully look at all the evidence in each BI case as it will determine the approach we take,” he said.
ECONOMY
Crisis fall-out limited to stock market: Experts
Indonesia is likely to be saved from the worst effects of the global financial crisis due to its very limited engagement with the world’s financial system, according to a panel of experts quoted by Kompas on Saturday.
The Kompas panel of economists consisted of respected independent analyst Faisal Basri, Bank BNI economist Tony Prasetiantono, banking and financial markets analyst Mirza Adityaswara and business leader Erwin Aksa Makmud, head of the Young Indonesian Businessmen’s Association (HIPMI).
They commented that the nature of the crisis facing Indonesia was vastly different to that the US has to deal with, along with Europe and other developed nations. The crisis in Indonesia was limited only to the stock market, in which only around 1% of Indonesians had an interest.
The very small role of the stock market in Indonesia’s financial system was also believed capable of insulating the latter from any knock-on effect, they agreed.
Separately, Vice President Jusuf Kalla made similar comments. “The difference is that we are very dependent on our domestic market while in the US the influence of the stock market is up to 1.5 times their gross domestic product,” he said. “Here the influence is only 20%.”
The crisis in the Indonesia Stock Exchange was severe enough for it to remain closed on Friday, despite earlier hopes that it could be re-opened. The market was closed on Wednesday morning after falling more than 10% to a two-year low in morning trading.
The Jakarta composite index lost around 20% of its value during the week, closing at 1,451.67 points. The rupiah closed at 9,935 to the dollar Friday after briefly touching 10,000 during the day.
Suherman Santikno from Batavia Prosperindo told Agence France-Presse that the market was set for a rough time when it does reopen.
Indonesian investors will be nervously looking to the US for their lead if markets open as expected Monday, aware that big drops could be in store after a five-day hiatus, he said.
"If the irrational market continues and persists until next week like we've see in the last few days, there will be falls in all sectors across the board," Santikno said.
The fate of Indonesia’s richest family, the Bakries, appeared to be at stake only months after they were reported by GlobeAsia magazine to top the country’s “rich list” with assets worth $9 billion.
Reports suggested they were desperately trying to sell a 35% share in the jewel of their crown, PT Bumi Resources, for around $1.7 billion, in an effort to raise cash to meet debt payments, but the sliding share prices were undercutting the price they hoped to gain.