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JOURNAL

“Facilitating Trade & Investment Between Indonesia and Britain”

MARCH /APRIL 2013

INFRASTRUCTURE INFRASTRUCTURE Baroness Margaret Thatcher 1925 - 2013 Apersonal account of her visits to Indonesia - page 44

Infrastructure Update- BritCham's Infrastructure Sector Group page 30

HE Mark Canning's Annual Address at BritCham's AGM page 4

THE NEED FOR MORE AND SOONER

Without Infrastructure, Economic Growth Rests on Feet of Clay - KADIN page 32

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TABLE OF CONTENTS

08 EVENTS 4 8 9 10 12 13 14 15 16 17 18

Message from HE Mark Canning, British Ambassador - As spoken at BritCham's AGM Professional Women's Group Being the Change: Women Empowerment Luncheon with Iain Wright MP and all Party Parliamentary Group for Trade & Investment Highlights of the Foreign Secretary's speech at the BCC AGM - William Hague European Business Partners Professional Women's Group March - Your Professional Image & Spirit of Entrepreneurship Business & Social Gathering - March Young Professional's Group Unleashing Indonesia's Potential, McKinsey Global Institute Early Afternoon Briefing Flight or Mediate? BritCham's Annual General Meeting BritCham's 'Giving Kids a Sporting Chance'- In partnership with OBI, TOPI & Cricket Indonesia

10 SECTOR GROUPS

30 Infrastructure Update - contributed by Dr. Scott Younger / Glendale Partners

THIS MONTH'S FEATURES

32 Without Infrastructure, Economic Growth Rests On Feet Of Clay contributed by KADIN 34 Infrastructure Spending- contributed by KPMG 36 Managing Infrastructure Investment Risk In A Shifting Lending Environment - contributed by Aziz Adam Sattar 38 Cement Consumption - A Good Indicator Of Growth - contributed by Malcolm Llewellyn 40 Planning For A Disaster - Data Backup And Recovery - contributed by Poonam Sagar

11 LIFESTYLE & HEALTH

41 Summer Camps For Teenagers - Attending The School Of Life contributed by Outward Bound Indonesia 42 Ovarian Cancer - The Silent Killer contributed by Raffles Hospital 44 How I Was Handbagged; Wet Feet and Other Memories of Baroness Thatcher - contributed by John Arnold 46 The Pillars Of The Earth, Ken Follet Book Review 47 This Month In History 48 May Day History & Folklore - Myth

MEMBER'S ANNOUNCEMENTS

49 Etihad Airways & Outward Bound Indonesia 50 New Members

Our patron:

INDONESIAN BUSINESS NEWS

20 The Language Compliance Conundrum Continues - contributed by Makarim & Taira S. 22 A Legal Primer On Joint Venture Agreements In Indonesia - contributed by SSEK 24 Introduction And Regional Optimisation Of The OJK - contributed by BritCham's Young professionals Goup

Proudly sustained by:

The Executive Offce is kindly sponsored by:

Airline partner of the year 2013/2014:

BANKING & FINANCE

26 Indonesian Manufacturing PMI contributed by HSBC 28 Is There Any Safe Place For Our Savings? - contributed by PPi

This publication is not for sale. It is distributed free to members of the British Chamber of Commerce in Indonesia (BritCham). The articles selected for this publication represent a range of views on significant current issues in Indonesia. The views expressed in this journal cannot be assumed to represent the official views of BritCham as a whole nor of its Board of Management and Executive Office. Any errors of fact that occur in the articles are the responsibility of the contributing author or publisher. The articles are not intended as formal advice and should not be relied upon as such.

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FORTHCOMING EVENTS

For further information or to make a reservation, please contact events@britcham.or.id or call DHINI at +62 21 522 9453 For Associate sponsorship, please contact salesmkt@britcham.or.id

SAT U R DAY

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SPORTS GALA NIGHT in aid of 'Giving Kids a Sporting Chance'

MAY

T HU R SDAY

MAY

30 MAY

T HURS DAY

30 27

TH URSD AY

BUSINESS & SOCIAL GATHERING

JUNE

British Chamber of Commerce in Cambodia (britchamcambodia.org)

PROFESSIONAL WOMEN’S GROUP TBA | 16.00 – 18.00

British Chamber of Commerce in Malaysia (www.bmcc.org.my)

SATURDAY

1

Great British Tea Party

WE DNE SDAY

4

JUNE

Annual Charity Rugby Dinner

JUNE TUESDAY

13 JUNE

Business Breakfast – 'Bestinvest

THURSDAY

6

Subsea Asia Conference

JUNE

British Chamber of Commerce in Thailand (members.bccthai.com) British Chamber of Commerce in Philippines (www.bccphil.com)

FRIDAY

7

JUNE

Eastern Seaboard Networking Evening WE DNE SDAY

15

THURSDAY

20

The Great British Golf Challenge

MAY

Networking Evening

JUNE

WE DNE SDAY

British Chamber of Commerce in Singapore (britcham.org.sg)

WEDNESDAY

5

JUNE

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BritCham Rugby Dinner

MARCH/APRIL 2013

10 APRIL

Leveraging on the correct Financial Tools for your business


CHAIRMAN'S MESSAGE

Haslam Preeston he passing of Lady Thatcher has been a catalyst for a great deal of worldwide debate and discussion on her legacy. Interestingly, by far the majority of negative comment emanated from the UK, where emotions are still raw amongst those who felt wronged by her policies. Some of the worst examples of this outpouring of hatred, have been several well publicised (though poorly attended) street parties, held to celebrate her death. As is the nature of media and human nature, there has perhaps been a disproportionate amount of coverage given to such negative views. Certainly, she was a divisive figure in many ways, but history (and intelligent opinion) will likely judge in her favour.

T For those of us who were not in the UK back then, or are too young to remember, it may be hard to understand just why views are so polarized. However, we must judge her actions in the context of the situation of the time; high unemployment, high inflation, large state-owned enterprises operating at the expense of private enterprise, powerful unions and deep sympathy for both socialist and market interventionist policies. Today’s Labour party is unrecognisable. In such an environment, it was no wonder the economy was in a mess and the Argentine military junta felt able to take advantage of an enfeebled British government. Sound familiar? I have heard on several occasions, commentators such as Jim Castle noting how we may be heading down the same path here. As Indonesia lurches towards an election next year, we are seeing unions ever more ready to take on a government they perceive as vulnerable, whether over fuel subsidies or the minimum wage. Though part and parcel of this vibrant democracy, these actions create difficulties for businesses, both in terms of unbudgeted increases

in wage costs, increasingly rigid labour regulations and disruptive union practices. At the same time, government ministries are rolling out well-meaning, though protectionist policies, whilst interfering ever more deeply in areas formerly left to the private sector. Thus, Indonesia’s economic policies seem to be following the Beijing Consensus, with a dirigiste preference for state capitalism, protection of domestic markets and heavy regulation of foreign enterprises. However, private sector investment in infrastructure is being crowded out by the state sector, whilst investment in oil & gas exploration and production is declining. The latter is especially worrying, as Indonesian oil production is now at its lowest in many years (though due to a number of factors), whilst there is a paucity of investment. This exacerbates the fuel subsidy problem, as Indonesia is a net importer of oil and needs to make up for this through purchasing on the open market. Meanwhile, inflation is beginning to tick upwards. Ben Bland of the Financial Times recently published an amusing piece

Wisma Metropolitan I, 15th Floor Jl. Jend. Sudirman Kav. 29-31 Jakarta 12920 – Indonesia PHONE +62 21 522 9453 FAX +62 21 527 9135 EMAIL bisnis@britcham.or.id www.britcham.or.id

on protectionist measures for nearly non-existent garlic producers (96% of the 400,000 tonne annual demand is imported) which resulted in a 30% increase in prices as well as garlic shortages – good for vampires but bad for consumers. We have seen other shortages for mundane items such as beef, lemons and so on. Price inflation for basic necessities creates upwards pressure on the minimum wage, which in turn discourages employers from hiring and hitting the poor disproportionately. But, to steal another line from Jim Castle (though he freely confesses he was not the author!), the fact remains that the pain of not being in Indonesia still outweighs the pain of being here. Put another way, Indonesia is still a great market to invest in. We are all committed to making our businesses work here, confident the there are increasing numbers of able technocrats at senior levels guiding the economy. But whilst I don’t think we will be seeing an Indonesian Margaret Thatcher at the helm any time soon, we hope the government remains mindful that the private sector, not the state sector, should be paramount.

OFFICERS CHAIRMAN Haslam Preeston VICE CHAIRMAN Maxi Gunawan HONORARY SECRETARY ACTING James Bryson HONORARY TREASURER Daniel Hankinson SECTOR GROUPS CHAIRMAN OF ENERGY SECTOR David Braithwaite MBE CHAIRMAN OF HUMAN RESOURCES David Knowles CHAIRMAN OF INFRASTRUCTURE Scott Younger OBE CHAIRMAN OF FOOD, FORESTRY, FISHERIES & AGRICULTURE Roger Pinder SECTOR COMMITTEES CHAIRMAN OF MEMBERSHIP SECTOR COMMITTEE Aziz Adam Sattar CHAIRMAN OF SME SECTOR COMMITTEE Cynthia Wihardja CHAIRMAN OF YOUNG PROFESSIONALS GROUP Jay Singgih CHAIRMAN OF PROFESSIONAL WOMEN

COMMITTEE Juliette Williams BOARD MEMBERS Tom Aaker, John Arnold OBE (Former Chairman), James Bryson, David Burke, Rob Daniel, John Galvin, Colin Harvey, Malcolm Llewellyn OBE (Former Chairman), Tonny Pranatadjaja, Harun Reksodiputro, John Slack, Darwin Silalahi, Adrian Short, Juliette Williams, Aziz Adam Sattar EX OFFICIO Debbie Clarke – Director of UKTI, Keith Davies OBE – Director of British Council, Heru Dewanto – IABA (CORRESPONDENCE FOR BOARD MEMBERS may be addressed to: info@britcham. or.id EXECUTIVE OFFICE EXECUTIVE DIRECTOR Chris Wren (chriswren@britcham.or.id) EXECUTIVE ASST Irawati Nataadidjaja (administration@britcham.or.id) SALES & MARKETING COORDINATOR Shinta Permatasari (salesmkt@britcham.or.id) EVENT COORDINATOR Dhini Puspitasari (events@britcham.or.id) FINANCE OFFICER Daliana Tiono (finance@britcham.or.id) PUBLICATIONS Robbie Stone (publications@britcham.or.id) BUSINESS DEVELOPMENT Hans Mohammad (busdev@britcham.or.id)

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AMBASSADOR'S ADDRESS

HE Mark Canning’s address at BritCham’s AGM The past year has been an important one for relations between Britain and Indonesia. David Cameron’s government made the very deliberate strategic decision to prioritise the relationship with this country - one of growing importance on the international stage - and this is now really starting to make itself felt.

BRITAIN AND INDONESIA Since I last spoke to you, we have seen a significant picking up in the pace of high level contacts, most recently the visit to Indonesia by the Defence and Development Secretaries. But the highlights of course were the Prime Minister’s visit to Jakarta last April – the first at that level since 2006 - and the State Visit of President Yudhoyono to London in October. These were about ceremony and symbolism, but first and foremost they were about taking a hard look at the relationship and identifying those areas on which we are going to place real emphasis in the years ahead. At the heart of this is the trade and investment relationship. Both leaders have committed themselves to doubling trade volumes by 2015. They also committed the two sides to expanding defence links, cooperation in education, joint working in areas of foreign and security policy and to confronting the challenge of climate change. There are many other important areas of cooperation but these are where we are going to focus most carefully. The State Visit was a powerful mix of ceremony and business. It was the highest honour that the British Government can bestow on a foreign head of state and was designed to fulfil two objectives.

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First, to signal our admiration for what this country has achieved in just over a decade, in which it has moved from autocracy to word’s third largest democracy and from economic basket case to member of the G20, and the important role the President has played in this transformation: second, to demonstrate our intent to develop the relationship - to the benefit of both nations - in the coming years. There is a sense, both in London and Jakarta that relations – while good – have tended to underperform over the past decade, and a determination to put that right. So in addition to the magnificent spectacle of the horse-drawn procession down the Mall, the Buckingham Palace and Guildhall banquets, there was a singleminded focus on the direction we are going to take relations in the years ahead. A GROWING RELATIONSHIP So let’s look at some of the highlights of the year in terms of practical outcomes. I’ll come back to trade and investment at the end. In defence, we saw the rebuilding of a relationship that suffered some damage in the late 90s, at the time of the violence in East Timor. The UK is now providing support for Indonesia’s growing role in international peacekeeping, is advising on procurement and other important policy areas, and is starting now to pick up some defence sales business. Education was a real highlight. We’ve seen: • A 22% increase in the number of student visas issued (from 1016 to 1243 in 2012) - the highest increase in percentage terms among the SE Asia countries • 15 new MOUs concluded between UK and Indonesia education institutions, plus two formal agreements between our respective governments on Higher Education Co-operation • We’ve reached an agreement with the Ministry of Education, which will see them send up to 150 academics a year to the UK over the next 5 years to study

PhDs (and some Masters) programmes • We saw 41 UK institutions participate in the Education UK Exhibition in March 2013, the biggest number in the last 10 years. We were delighted to welcome more than 3000 visitors over the two days of the event and literally millions were reached by TV advertising. We also had a strong UK showing at the European Education exhibition in November. • Representatives of UK universities are visiting in ever-greater numbers. We had several here last month with a parliamentary mission and we welcome another training and education group towards the end of this month. In foreign and security policy, we have seen a real pick-up in the collaboration: • The Prime Minister and the President, as well as the President of Liberia, are heading the global effort to devise the successor to the UN’s Millennium Development Goals, the benchmarks which the world will use in the coming decades to judge progress in key areas such as poverty reduction, maternal and child mortality, access to health and education. • Our two countries are co-chairing the Open Government Partnership, which aims to open-up and demystify government processes around the world. We are working closely together in the G20 and in the Panel on Aid effectiveness. William Hague will be visiting Jakarta soon to review with his counterpart progress in the areas we have highlighted. • We’ve seen a continued focus in our collaboration with Indonesia in the important area of combating radicalism, a struggle in which they continue to register notable successes, but where we cannot afford to relax. In the area of climate change, we are: • Providing advice to the Ministry of Finance on ways to adapt the fiscal framework in such a way as to encourage sustainable economic policies. We are closely involved in the programme to


ensure the certification for legality of all timber exports from this country. • We have launched a fund to support Public-Private Partnerships (PPPs) into alternative energy projects, for example the new waste to energy project in Yogyakarta. In partnership with the French Development Agency, we are accelerating the mobilisation of investment in low carbon projects and unlocking the flow of finance through state-owned banks to the private sector. • We’re working with the provincial authorities in Papua to help preserve the rich forest reserves there and encourage the private sector to pursue low carbon development opportunities in the province. But trade and investment has been at the centre of the effort. With the economic challenges to our own economy mounting, and the Eurozone still in trouble, it is vital that we expand and develop our trading relationship with dynamic economies such as this. Our strategy is to support – with your strong help – British companies coming into this market but also to address what we see as the barriers to entry. The past year has seen many notable successes. Let me share a few with you. • The visit of David Cameron saw the signing of a major deal for 11 Airbus A330s, the UK content of which was around 20% • Rolls-Royce announced in July 2012 that these aircraft will carry their Trent 700 engines. • There has been a subsequent order for 200 A320s (value around $24 Billion) from Lion Air. • During the visit of the President to London, BP announced a $12 billion expansion for their investment in Papua. We saw a range of companies establish, or extend their presence: • New Look’s brand launch took place on 31 May last year. The company now has a number of stores in Jakarta and Bandung. • Arup re-opened its Jakarta office in September 2012 • Diageo opened their representative office last month. • Prudential launched its asset management business, Eastspring Investments, in Jakarta in October 2012. • Green Fuels Ltd announced in January of this year that the installation of its

biodiesel processors in Bali’s first biodiesel plant • We are working with a range of other British companies, in sectors as diverse as aerospace, financial services and ICT, which I hope I shall soon be able to tell you more about. • Overall, we’re seeing broad-based interest among British exporters including all the consumer driven sectors: retail, food and drink and education, for example. But also in the supply of goods and services to Indonesian airlines and airports, and the number of British architectural firms winning commissions here continues to grow. But at the same time we have also been working to address the sort of obstacles and challenges that were highlighted so clearly in BritCham’s recent member attitudes survey. We have now instituted regular rounds of bilateral trade talks (the second in the margins of the State Visit), which is a way systematically to address market entry issues. We have takenup many of these with the government direct. We have launched a series of energy dialogues too, and are working with partners here and around the region to help combat corruption. We have had some successes, but there is a great deal more to do. So overall – and despite the poor global environment - it’s been a strong year for companies entering the market. But doubling trade - to which the President and Prime Minister have committed themselves - is going to be a tall order. The Prime Minister has therefore also appointed, Richard Graham MP as his Trade Envoy for Indonesia. Richard, who knows Indonesia well, and has worked here, has hit the ground running, and will be back again in Jakarta this month to ensure that we are focused as well as we can be on the major opportunities. We have also proposed to the Indonesians the formation of what we call a Vision Group, of senior business figures on both sides to provide strategic input to this task. THE YEAR AHEAD This has given you a flavour of the broad front on which we have been engaged since the last AGM, particularly on the trade front. Much has been achieved, but there is an awful lot to be done. Knowledge of the opportunities this country presents remains low in the UK. The global trading

environment, including for this country, is difficult. And with elections approaching next year we can expect the climate for foreign investors here to become more challenging. But the priority the British government is placing on the relationship with Indonesia is not a passing fad. It is a long-term strategic bet on the future of this nation, and it is one that I – and indeed I’m sure all of you – believe to be well placed. So you will find us in the coming year, pushing our trade, investment and other interests hard, and looking beyond the challenges that may well appear in our path. Indeed in the next few weeks we will be launching a major campaign to promote the Great in Great Britain. It’s a huge drive to promote Britain abroad as a place to visit and do business. It will focus on everything the UK has to offer – including our technology, education, heritage, innovation, sport, fashion and design. It will allow Britain to speak with one voice about the opportunities to invest in the UK and to promote British goods and services. It’s a campaign that we want to involve as many of you as we can. And with Garuda set to soon start direct flights to and from the UK it’s ideally timed. We look forward to continuing our work with you, and with the Chamber, as we take all this forward. IN CONCLUSION I have expressed on many occasions, and do so again, my gratitude and admiration for all BritCham has achieved. Indeed so effective has been the collaboration between us, that we are now working with the Board to extend it in a significant way, which will see BritCham gradually taking on the provision of a range of services to UK companies in this market. This is a long-term project, but it is one that carries real benefits: in allowing the Chamber to develop a new stream of business: in allowing British companies to benefit from your insights: and in allowing our own trade team to focus on major project opportunities. I conclude by thanking the Board and members for their help and support over the past year. We look forward to working with you in 2013 and beyond.

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EXECUTIVE UPDATE

Chris Wren EXECUTIVE DIRECTOR

In this issue, I am giving up my overview to provide members with the new Board listings as below. For more detailed information about each Board member, please go to www.britcham.or.id/aboutbritcham (About BritCham)

CURRENT BRITCHAM BOARD MEMBERS

Haslam Preeston, Jakarta Land Chairman

Maxi Gunawan, James Bryson, HB Daniel Hankinson, KADIN Komite Inggris Capital HSBC & Eropa Barat Honorary Secretary Honorary Treasurer Vice Chairman

David Burke Wellington Capital

Colin Harvey PT. Hero Indonesia Tbk.

Harun Reksodiputro John Arnold Ginting & Arghajata Reksodiputro Consulting

Juliette Williams CastleAsia

Adrian Short Rolls-Royce Indonesia

John Galvin Diageo Indonesia

Darwin Silalahi Shell Indonesia

Aziz Adam Sattar PT. Marsh Indonesia

Malcolm Llewellyn Nusa Prima Persada

John Slack Jakarta Setiabudi International

EX-OFFICIO

Richard Michael Indonesia Infrastructure Finance

Rob Daniel PricewaterhouseCoopers

Tom Aaker Standard Chartered

A.A. Pranatadjaja Protocol One

Debbie Clarke UKTI

Heru Dewanto Indika Energy

Keith Davies British Council

EDITORIAL TEAM The Executive OďŹƒce: Chris Wren (chriswren@britcham.or.id), Robbie Stone (publications@britcham.or.id) DESIGN, LAYOUT AND PRINTING PT. PHOENIX Communications. Jl. Benda Raya No. 98 A-B Cilandak 12560 T:+62-21 781 3212 | F: +62-21 781 2476 | E: creativeservice@phoenix.co.id | www.phoenix.co.id/csd UP.DATE is published by BritCham (British Chamber of Commerce in Indonesia). This publication may not, in whole or part, be lent, copied, photocopied, reproduced, translated or

reduced to any electronic medium or machine readable form without the express written permission of the publisher.

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Poonam Sagar

Certified Project Management Professional, Technology and Online Media Consultant at PT Infotech Solutions (www.infotech.co.id) an international IT firm empowering media broadcasters, content providers and distributors to optimize business processes with integrated, scalable and optimized IT solutions.

Being the Change: Women Empowerment March 8th is International Women’s Day, and it was fitting that we took this opportunity to focus on women’s leadership for our February 28th Professional Women's Group event. "Women in Leadership - how to be a leader and excel in the job that you do." was presented by Corine Tap, Director of Sales and Business Development for Danone Asia. A case study on the training methodology implemented at her company for their female executives and management team to be more effective leaders in their roles. It provided a framework for women executives on how to be your best self - no matter what you do - by having the right mind-set and keeping up with the changing business trends. The presentation touched upon the obstacles in the professional world faced by women, including gender discrimination and sexual harassment. Too few workplaces offer the flexibility and access to child care and parental leave that are necessary for pursuing a career while raising children. Men have an easier time finding the mentors and sponsors who are invaluable for career progression. Plus, women have to prove themselves to a far greater extent than men do. A 2011 McKinsey report noted that men are promoted based on potential, while women are promoted based on past accomplishments. Taking a cue from Mahatma Gandhi’s quote "We have to be the change that we want to see in the world” Corine has together with a few other senior women in Danone Indonesia, WWW (Women with Wings) Indonesia, developed a network of women to increase talent development and retention of women in the organisation. Corine had a slide with a large Crocodile Mouth as a symbol of the career graph of both genders from recruitment of 50-50 women and men at the entry level. This graph then looks like a crocodile mouth as women drop out from careers. Secondly, she also shared that gender balance in top teams correlates with the high performance group of fortune 500 companies with the highest % of women in the top. These companies have 35% higher ROE and TRS (Catalyst 2004).

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Some of the reasons for this could be, as Sheryl Sandberg, COO at Facebook, explains in her book Lean In: ‘In addition to the external barriers erected by society, women are hindered by barriers that exist within ourselves. We hold ourselves back in ways both big and small, by lacking self-confidence, by not raising our hands, and by pulling back when we should be leaning in. We internalise the negative messages we get throughout our lives—the messages that say it’s wrong to be outspoken, aggressive, more powerful than men. We lower our own expectations of what we can achieve. We continue to do the majority of the housework and child care. We compromise our career goals to make room for partners and children who may not even exist yet. Compared to our male colleagues, fewer of us aspire to senior positions.

Corine and her colleagues’ experience with the Danone WWW program points to some key actions that empower women executives: • Get clarity and develop your career path • Communicate with your network • Align your support network • Look for role models and be one yourself

It’s all about being a leader and supporting and encouraging women in your organisations to dream big, forge a path through the obstacles, and achieve their full potential.


Haslam Preeston (BritCham Chairman), Introducing Iain Wright MP to the audience

Ian wright MP delivering his remarks to the audience

Guests enjoying the chance to talk with Debbie Clarke (UKTI) left, Iain Wright MP, third from left and Haslam Preeston (BritCham Chairman) fourth from left.

Luncheon with Iain Wright MP and UK All Party Parliamentary Group for Trade & Investment Wednesday, 13th March 2013 | 12.00 – 14.00 | Shangri-La | Kalimantan & Maluku (1st Floor) The delegation was sponsored by :

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William Hague UK Foreign Secretary. Highlights of the Foreign Secretary’s speech at the British Chambers of Commerce AGM, London, March 13th 2013.

T

he Government is equipping Britain to succeed in the global economic race.

...“Your campaign theme this year is ‘business is good for Britain’. And our Government could not agree more strongly. Business is not only good for Britain, it is part of what makes our country great. “And when British companies succeed, Britain prospers. And it will be the enterprise, the ingenuity and the innovation of companies like yours here today that help to power our country out of difficult economic times. “Now as a Government we are exerting every sinew at home and abroad to create the conditions for that success. “First and foremost this means, as you know, having the political courage to tackle our country’s problems head-on. That’s the only way to lay the foundations for real growth, not a mirage of growth. “That mirage was the idea that growth can be built on consumption fuelled by debt and on government spending built on debt, and together with problems in our financial sector it dragged our country to the brink. “Sustainable growth will only come from our country expanding its trade with the world, and being a magnet for inward investment from across the globe. “At home, we have to strengthen the ability of UK business to compete by dealing with

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debts to safeguard low interest rates, rebalance our economy, cut business taxes and burdensome regulation, reform education so we turn out the brightest graduates and school leavers, reform welfare so it pays to work, and implement a modern industrial strategy to get behind the high growth industries of the future. We have to do all of that at home. “But overseas, we have to equip business to take full advantage of these reforms by connecting them and the British people with the fastest-growing parts of the world: opening new Embassies, striking new relationships beyond our traditional alliances, seeking ambitious Free Trade Agreements that unlock billions of pounds of new commerce. We have to fight protectionism, we have to press for international regulation that is fair and evenly applied, and we have to tackle immense threats to our competitiveness such as those stemming from cyberspace. In all these areas our diplomats and staff are working as hard to support the British economy, they work as hard to do that as they do to defend Britain’s security in a turbulent world. “Today I want to emphasise the areas where this government is equipping and strengthening Britain to succeed in the 21st century: building stability, increasing UK competitiveness, boosting trade and investment, fighting for a global market that is fair and open, and investing in international security, including for business.

“Ensuring stability is a necessary precondition to growth and competing in the global race. That stability comes from international confidence in our country’s ability to pay its way in the world. “Of course, the scale of the global economic challenges that we face means that the task is more difficult than we thought. But the Moody’s downgrade was a stark reminder that we have to stay the course. By dealing decisively with our debt problem, we will increase overseas confidence in the UK economy and attract greater foreign investment to our shores. “Second to this, we need to make Britain fit to thrive in a far more competitive international marketplace. ...That is why we have cut small business taxes to encourage future entrepreneurs and support existing companies by reducing the burden of taxation. ...We’ve cut the main rate of corporation tax from 28 per cent to 24 per cent, and it is set to fall further to 21 per cent in 2014 – the lowest rate of any major western economy. “And as Foreign Secretary I see repeatedly in meetings with business communities abroad just how important they are to perceptions of this country as a place to start a business and to invest. “That increased competitiveness is shown in the result of the recent KPMG survey, where in just two years the UK has gone from near the bottom to one of the most competitive corporate tax systems in the


world; as well as the World Economic Forum competitiveness rankings, where we are up from 12th to 8th since 2010.

set to double to US$100bn by 2015, and is growing faster than our EU competitors, at 40 per cent a year over the past 2 years.

“Third, we need to convert this increased competitiveness into actual results by increasing our exports and overseas trade and taking advantage of immense opportunities in new markets.

“So, we are moving in the right direction on these things, but we have a great deal more to do.

“Of the $20 trillion of growth that the IMF forecasts in the world economy over the next five years, almost $13 trillion will be in emerging markets. And while long term forecasts are often wrong, as we all know, in a generation, China’s middle class is on course to be over three times the size of Western Europe’s, and by 2030, on current trends Central and Latin America’s middle class will be as big as North America’s. “By 2015 we will have opened up to 20 new Embassies, consulates and trade offices, and deployed 300 extra staff in more than 20 countries, particularly in Asia, Latin America and parts of Africa, so that Britain is linked up to the world’s fastest growing economies. “We have increased training in economics and commercial diplomacy for Foreign Office staff, and are using programme fund investments to build stronger ties with government and societies in emerging markets, so that we strengthen our influence where it really counts. “This changing culture in the Foreign Office is helping to achieve results for British companies. Our engagement with Brazil on the back-to-back London and Rio Olympics, and their hosting of the 2014 FIFA World Cup, has already helped UK companies to win Olympics and World Cup contracts worth over £100 million; and successful lobbying from Foreign Office Ministers and officials led to Russia lifting – and I was celebrating this yesterday with the Russian Foreign Minister - a 17-year ban on imports of British beef, lamb and mutton. “Our goods exports to the major emerging economies have also doubled since 2009 and, for the first time since the UK joined the Common Market in the 1970s, we now export more goods to countries outside the European Union than to countries inside it. Our bilateral trade with China is

“British SMEs are currently less likely to export than their European competitors. Our ambition is to see as many as 100,000 more exporters by the year 2020. But we know that this will not happen unless SMEs have greater support from government, as well as from business organisations. That is why Lord Green is leading a new Chambers Initiative to increase that support significantly in 20 high growth and emerging markets. A stronger domestic network of business support organisations, matched by an effective overseas network working closely with our Embassies, will offer UK business a genuinely attractive mechanism for increasing export led growth in our economy. “In addition to this, we need to work constantly to ensure an open international environment that supports increased and more transparent trade. This starts in Europe, where we are working hard in the EU to complete the single market, address the crisis in competitiveness, and conclude ambitious Free Trade Agreements with the US, Japan, Canada and India that will bring billions of pounds and millions of jobs potentially into the European economy. “The Single Market is the core of the EU, but when it remains incomplete in services, energy and digital – the very sectors that are the engines of a modern economy – it is only half the success it could be. So we are pressing for completion of that, as well as urging the EU as a whole to address excessive and unnecessary regulation that holds back innovation. “And our diplomatic network will continue to fight other barriers to trade such as corruption, disregard for intellectual property rights, and creeping protectionism, all of which threaten investment. We have to promote a rules-based system so that our companies can compete in foreign markets on an equal basis, and not with one arm tied behind their backs.

“That is why we are also using our G8 presidency to fight for freer trade, fairer taxes and greater transparency. We want the G8 to accelerate progress on fighting the evasion and aggressive avoidance of taxes that deprives governments of the revenue they need to provide public services, to ensure the rule of law, and stimulate investment and private sector growth. We also want the G8 to agree to ambitious new transparency standards for business, so that all companies play by the same rules. “Finally, we are investing in international security to help combat threats to security which undermine trade and commerce, including terrorism, piracy and conflict. ...Our diplomatic efforts to support a politically open and economically prospering Middle East and North Africa, to head off threats to security – particularly business security - in cyberspace, and to combat terrorism from Asia to the Sahel, all underpin a more secure environment for business and trade. “So we are tackling our problems at home and using foreign policy to seek out new economic opportunity for our country. “We have all the attributes for success as a nation. The openness, the inventiveness and the daring that is hard-wired into us in Britain helps to explain why we are still the sixth largest economy in the world when we only make up 1 per cent of its population. “And as Lord Green often reminds the Government, we export cheese to France, sushi to Japan, caviar to Russia, sand to Saudi Arabia and potato chips to America. Now this requires enormous ingenuity on behalf of British businesses involved. “It will be talented and hardworking British people and companies who propel our country towards a prosperous future, and our government – as you can gather from what I have briefly described - will give them every support and assistance. We welcome your ideas: challenge us, criticise us and tell us how we can do more.” All the latest news is available on the Foreign Office page of the gov.uk website at: www.gov.uk/fco

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European Business Partners Thursday, 14th March 2013 | 18.30 – 21.00 | Intercontinental Midplaza Jakarta Sponsored by:

Haslam Preeston (BritCham Chairman), Tiku Menon (Endress + Hauser)

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Haslam Preeston (BritCham Chairman), Jan RĂśnnfeld (Managing Director, Ekonid), Elmar Bouma (Director, INA), Tiku Menon (Endress + Hauser), Setiadi Partadiredja (BNP Paribas)


Sony Jethnani

Life Coach - Mindfulness, Values & Well-being www.sonyjethnani wordpress.com Email: sonyjethnani@gmail.com

Professional Women's Group March 26th, 2013 event Around forty women participated in The Professional Women's Group third event for 2013 on Tuesday, March 26th at Hotel Mandarin Oriental Jakarta to listen to editors from two of Indonesia’s leading women magazines.

“Your Professional Image” by Ivana Atmojo

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vana Atmojo, editor in chief of OK! Magazine and style director for Metro TV, is well known as a professional image consultant for both personal and corporate clients. Ivana led us through an exercise of answering a series of questions that revealed our fashion personality type. There are seven style personalities : Romantic, Eclectic, Classic Elegant, Urban Cool, Foxy, Maverick and Glamorous. The key to looking ravishing and feeling confident begins with identifying our style personality and we can then tap into our instincts and natural choices to cultivate and develop our personal and distinct fashion sense and signature style. The interactive exercise was great fun and many of the participants expressed how enjoyable it was to do a fashion and style personality test.

Ivana Atmojo (OK! Magazine)

“Spirit of Entrepreneurship” by Petty S Fatimah

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etty S Fatimah is chief editor of Femina Magazine, the largest women magazine in Indonesia and she is leading Femina’s Women Entrepreneurial initiative drive. Through conducting a survey, Femina identified the four issues faced by women entrepreneurs : - lack of confidence & knowledge - network between entrepreneurs - lack of support from family & friends - access to funding Femina then launched a series of Women Entrepreneurial Initiative drives and organised networking events targeting nine different women communities to help women overcome these issues by learning and sharing. As of end 2012, Femina had reached out to and engaged over 13,000 women in 13 cities around Indonesia, inspired 22.5 million people through multiplatform medias (print, online, digital & social) and presented 220 women with

Petty Fatimah (Femina)

Juliette Williams (Castle Asia), Petty Fatimah (Femina), Sonny Jethnani (JAC)

entrepreneurs awards. The three mantras Femina has adopted and is spreading to all women through these communities and drives are : 1. To Play - we are most enthusiastic and engaged when we are playing. 2. To Participate - it is more fun to learn new ideas and engage in activities when we participate in a group or network. 3. To Pass On - By finding our PASSION and sharing it with others through playing and participation, we are able to inspire, motivate, share and PASS ON our knowledge and experience with others.

"pay it forward" by sharing their knowledge and experience with others. Femina's mantras are what I believe all of us at Britcham Professional Women's Group - the committee, members, participants and guests - are practicing each month when we get together for our networking events. Learning becomes fun and easy through group encouragement. Women communities are our "energy, source of information and support", as we know we are not alone in our journey and everything we do is much more valuable when we have the intention of sharing with others.

This is a truly effective method for women empowerment and training as the women who choose to learn by joining these communities are encouraged to

Please join our Facebook page : http:// www.facebook.com/pages/ProfessionalWomen-at-BritCham/168739736491714.

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M.T. Rajah (Kellys Express), guest, Ian McGlashan (Spirax Sarco), Chris Wren (BritCham Executive Director)

Heykal (The Government of Riau Islands), Debbie Clarke (UKTI / BritCham Board Member), James Bryson (HB Capital / BritCham Board Member), Mugi S (The Government of Riau Islands)

Mugi S (The Government of Riau Islands), Haslam Preeston (BritCham Chairman)

Business & SOCIAL GATHERING Tuesday, 26th March 2013 |Mandarin Oriental Jakarta

Chris Benz (Kemana Services), Mugi S (The Government of Riau Islands), Chris Wren (BritCham Executive Director), Haslam Preeston (BritCham Chairman)

Sponsored by :

DOOR PRIZES 1. One voucher from Maroush 2. One voucher from Front Page 3. One voucher from Anatolia 4. One voucher from Anatolia 5. One Wine 6. One voucher for Brunch at Lyon – Mandarin Oriental Jakarta 7. 2 goodie bags from The Government of Riau Islands

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1. Kresna Panggabean – Susandarini & Partners 2. Christopher Benz – Kemana Services 3. Paul Bravin – PT Endura Indonesia 4. Elin Murakami – Goemon 5. Sonja Tomasowa – Intercontinental Midplaza 6. Ursinus Tampubolon – Intercontinental Midplaza 7. Yasmin Alves – Oxford Business Group 8. Frida Hasbullah – Paint Art

Chris Wren (BritCham Executive Director), Mugi S (The Government of Riau Islands), Haslam Preeston (BritCham Chairman)


Jay Singgih

Director at Stellar Capital, Head of Business Development & Strategic Investments at Bumi Laut Group, Vice Chairman of Permanent Committee on Venture Capital & Alternative Financing at Indonesian Chamber of Commerce & Industry (KADIN Indonesia), Chairman of Young Professionals Group at British Chamber of Commerce in Indonesia (BritCham Indonesia), Chairman of Department for Europe & US Relations at Indonesia Young Entrepreneurs Association Jakarta (HIPMI Jaya).

BritCham’s Young Professionals Group “McKinsey Global Institute – McKinsey & Company Indonesia The Archipelago Economy: Unleashing Indonesia’s Potential” Wednesday, 27th March 2013 | 18.30 – 20.30 |Financial Club Jakarta, 27th Floor

Jay Singgih presenting a certifacte of appreciation to Raoul Oberman

Raoul Oberman, Chairman of McKinsey & Company Indonesia, delivering his presentation.

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n 27th March 2013, the BritCham Young Professionals Group launched the Group’s first event of the year. BritCham YPG discussed the theme from the above Report by the business and economics research arm of McKinsey & Company, the McKinsey Global Institute (MGI). This Report was also presented to the President and the Government of the Republic of Indonesia, with the theme of “The Archipelago Economy: Unleashing Indonesia’s Potential”. The above Report was led by Raoul Oberman, the Chairman of McKinsey & Company Indonesia, Richard Dobbs, a Director of MGI, Arief Budiman, a Partner and the President Director of McKinsey & Company Jakarta Office, and Fraser Thompson, a Senior MGI Fellow.

The Keynote Speaker for the event was Raoul Oberman. Raoul gave a thorough and in-depth presentation on the MGI Report which was followed by an interactive Q&A session, both of which were moderated by Chris Wren, Executive Director of BritCham. By leading this Report, McKinsey & Company Indonesia really sees the potential and opportunities in Indonesia despite its challenges, which really makes this country a land of limitless opportunities. In the Report, MGI discusses the recent record of the Indonesian economy, looks at its future prospects, suggests priorities for government and businesses that might best maintain the economy’s momentum, and discusses the potential size of the

private business opportunities in Indonesia up to 2030. BritCham YPG would like to convey thanks and appreciation to Raoul Oberman and McKinsey & Company for the very insightful presentation. We would also like to thank Haslam Preeston the Chairman of BritCham, the BritCham Board of Management, Chris Wren the Excutive Director of BritCham, and friends of BritCham's YPG for the continuous support, and we very much look forward to welcoming you at our next event. For further information on BritCham's Young Professionals Group Please visit: www.britcham.or.id

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Early Afternoon Briefing

Fight or Mediate? Mediation As An Alternative To Lawsuits Monday, 8th April 2013| Me Mercantile Athletic Club Sponsored by :

Danny McFadden (Managing Director, CEDR Asia pacific), Raymond Lee (Pusat Mediasi Nasional)

Danny McFadden (Managing Director, CEDR Asia pacific), Chris Wren (BritCham Executive Director)

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Danny McFadden (Managing Director, CEDR Asia pacific)

Danny McFadden (Managing Director, CEDR Asia pacific), Chris Wren (BritCham Executive Director)


H.E Mark Canning CMG (British Ambassador)

Chris Wren (BritCham Executive Director)

James Bryson (HB Capital / BritCham Board Member), Haslam Preeston (Jakarta Land / BritCham Chairman), Daniel Hankinson (HSBC / BritCham Hon. Treasurer), Chris Wren (BritCham Executive Director)

Suresh Marcandan (PT. People Power International), Stephen Chambers (AGS Four Winds), Cowan Finch (Synergy Carbon), Tonny Pranatadjaja (Protocol One / BritCham Board Member), Juliette Williams (CastleAsia / BritCham Board Member)

James Bryson (HB Capital / BritCham Board Member), David Burke (Wellington Capital Advisory Service / BritCham Board Member)

Edmund Edwards McKinnon, Alistair Speirs (Phoenix Communications), Aziz Adam Sattar (Marsh / BritCham Board Member)

Rob Daniel (PricewaterhouseCoopers Indonesia / BritCham Chairman), Chris Wren (BritCham Executive Director)

Richard Michael (PT. Indonesia Infrastructure Finance / New BritCham Board Member)

Kim Ulrich (PT. Serasi Shipping Indonesia), Adrian Short (Rolls-Royce), Rob Carmichael (RBS)

THE BRITCHAM ANNUAL GENERAL MEETING Tuesday, April 9th2013| Ballroom of the Ritz Carlton hotel.

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t a full house 2013 AGM, BritCham thanked and said farewell to retiring Board member, David Braithwaite. Although David has stepped down, he will continue to head up the Chamber’s Energy & Natural Resource sector group.

H.E Mark Canning CMG (British Ambassador)

H.E Mark Canning CMG (British Ambassador), Haslam Preeston (BritCham Chairman)

Under the BritCham Indonesia by-laws, incumbent Board members, Tom Aaker, James Bryson, Colin Harvey, Malcolm Llewellyn, Harun Reksodiputro, Aziz Adam Sattar and Juliette Williams were reelected for a further 2-year term. Members voted to accept the new Board nominations of Adrian Short of Rolls-Royce and Richard Michael of Indonesia Infrastructure Finance.

Haslam Preeston (BritCham Chairman)

Herwidyatmo (Permata Bank), Haslam Preeston (BritCham Chairman), Rob Carmichael (RBS)

H.E Mark Canning CMG (British Ambassador) , Haslam Preeston (Jakarta Land / BritCham Chairman)

Adrian Short (Rolls-Royce / BritCham Board Member)

The AGM and lunch was topped by the annual review of Chairman, Haslam Preeston together with a financial statement by Honorary Treasurer, Daniel Hankinson. The lunch was tailed by a stake of the UK address from British Ambassador, Mark Canning. (see page 4) www.britcham.or.id | 17


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Saturday, 13th April 2013 Bumi Perkemahan Dan Graha Wisata Pramuka, Cibubur.

April 13th kick-started this years 'Giving Kids a Sporting Chance' activities. The BritCham team were joined by TOPI and Cricket Indonesia for an 'Introduction to Cricket" and Outward Bound Indonesia for 'Team Building Games'. All was in aid of offering underprivileged children the chance to turn their hand at organised sports. 90 children attended the Saturday morning affairs and 90 very red, but smiley faces left with souvenirs, in the form of educational books on the Human body, to take home and share with friends. This is one of a handful of events planned for the year. For more details, please visit www.britcham.or.id/community

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INDONESIAN BUSINESS NEWS

Richard Cornwallis

is a Foreign Legal Consultant with the law firm Makarim & Taira S. He has lived in Indonesia for 20 years and is a former member of Britcham’s. richard.cornwallis@makarim.com

THE LANGUAGE COMPLIANCE CONUNDRUM CONTINUES This article is an update on the situation regarding Law No. 24 of 2009 on the National Flag, Language, Emblem and Anthem (Law No. 24/2009) which is an implementation of an article of the Indonesian Constitution which states that provisions on the national flag, language, emblem and anthem are to be regulated in a law.

The following provisions in Law No. 24/2009 on the use of the Indonesian language will likely be of most relevance to foreign and local businesses which are still using foreign language documents and contracts: • Indonesian must be used in a memorandum of understanding or an agreement which involves a state or government institution, a private Indonesian entity or Indonesian citizen. If such contracts involve foreign parties, they shall also be drafted in the language of the foreign parties and/or English. Note the use of the word “shall” and not “may”! • Indonesian must be used in government or private working environments as the official language. This includes Indonesian or foreign companies carrying out activities in Indonesia. Moreover, employees who do not speak and/or write in Indonesian are obliged to learn. • Indonesian must also be used for information provided through the mass media and for information regarding local or imported goods and services distributed in Indonesia (although, for

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some purposes, a foreign language can accompany the Indonesian text). Interestingly, Law No. 24/2009 (unlike its draft bill) does not provide any sanctions for violation of the above obligations to use Indonesian. One development back in 2009 was a letter from the Ministry of Law and Human Rights (Letter) in which the Ministry clarified that in their view, at least until the implementing regulation(s) have been issued, contracts in English only should continue to be valid and not void or voidable and that the implementing regulations for Law No. 24/2009, when issued (and like Law No. 24/2009 itself) will not be retroactive. The Ministry did subsequently backtrack somewhat on these views and the Letter would not of course be binding on a court. There is also an argument that failure to use Indonesian in an agreement entered into by an Indonesian party is more a failure to meet the formal aspects of the agreement and therefore should not affect the validity of the agreement as long as the contract satisfies the substantive requirements

for contract validity provided in the Indonesian Civil Code. Also, unless by law an agreement must be in Indonesian, it should still be possible to agree that the English agreement will prevail in a dispute. A clause clearly confirming this should be inserted in the contract. Of course, if a contractual dispute is brought to the Indonesian courts, any foreign language document submitted as evidence will need to be translated into Indonesian. Despite the above arguments and the continuing uncertainties as to implementation (the implementing regulation as to language should have been issued by 9 July 2011), it is only a matter of time before the validity of an agreement to which an Indonesian individual/entity is a party and which is only in English is challenged, if indeed this has not already occurred. Litigators will likely invoke provisions of the Civil Code and/or public policy principles to challenge the agreement’s validity. However, there still appears to be an absence of reported jurisprudence detailing any such cases. Of course, some specific contracts (eg franchise agreements, fixed term


employment contracts, articles of association) must by law or regulation be made in Indonesian. Indeed, an increasing number of laws and regulations are imposing Indonesian language requirements. Under Government Regulation No. 82 of 2012, for

Litigators will likely invoke provisions of the Civil Code and/or public policy principles to challenge the agreement’s validity. However, there still appears to be an absence of reported jurisprudence detailing any such cases. example, “electronic contracts intended for the Indonesian population” must be in Indonesian. So what should you do? The prevailing practice at the moment, so far as this can be determined, appears to be: • In important transactions and/or documents, parties (especially banks and financial institutions) will require agreements to be translated into Indonesian prior to execution whilst, given the uncertainties and potential risks of non-compliance, law firms may well qualify legal opinions and advices if documents are not translated into Indonesian. • Some parties are taking a commercial attitude and will not translate agreements and other documents until more certainty is forthcoming. In such cases, relevant provisions should be inserted into agreements to allow for future translation. • Other parties will make a case-by-case decision on translation taking into account risk management principles, weighing the cost of translation, the contents of the Letter and possible delays in finalizing a transaction against the risks of an unfavourable judgment or a future legal challenge.

• Finally, many international businesses are, quite rightly, translating their standard commercial documentation used in Indonesia, such as terms and conditions of sale (or purchase), invoices, sale (or purchase) orders, warranties and guarantees, permanent employment contracts and such like, into Indonesian. More parties should follow this example. Law No. 24/2009 is just one of a number of laws and regulations which have been introduced but which then create uncertainties and/or confusion as a result of failure of implementation, partial or delayed implementation, subsequent revocation or amendment, not to mention judicial challenge and the common occurrence of the absence of or inadequate enforcement of the law or regulation by the relevant authorities. In addition, full compliance by businesses with certain laws or regulations may be

either almost impossible or commercially impractical – the new labour outsourcing regulation comes to mind here. This can then lead to issues and concerns of corporate governance and compliance. As if the above was not enough, translation itself is an art and not a science and it is very difficult to translate complex English language documents, especially where the vocabulary used is technical, idiomatic or legalistic. Ideally, all translations should be carefully checked to ensure that they are as accurate as possible and that the full meaning of the wording is adequately expressed in the Indonesian version. Indonesian translations can often be at least 25% longer than their corresponding English versions. And finally, those readers who are tired of the language requirements of Law No. 24/2009 detailed above should also be aware of a provision in Law No. 24/2009 regarding the national flag. If you wear the BritCham lapel pin showing both the Union and Indonesian flags, then Article 23 of Law No. 24/2009 requires the pin to be worn only on the left and not on the right side of your chest. You have been warned!

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INDONESIAN BUSINESS NEWS

By Ira Eddymurthy and Douglas Smith

Ira is a founding partner of Soewito Suhardiman Eddymurthy Kardono. She specializes in capital markets and banking law, finance, including project finance, insurance and tax law. She has been recognized as one of the top corporate, commercial and mergers and acquisitions lawyers in Indonesia by Chambers Global, and is acknowledged as a leading capital markets lawyer by the International Financial Law Review, Legal 500, Chambers Asia and Who's Who Legal. Douglas is a foreign advisor at Soewito Suhardiman Eddymurthy Kardono. He has more than 30 years of experience in Asia, North America, Europe and the Middle East. His main areas of practice include corporate law, M&A, private equity, finance, including Shariah-compliant financings, corporate restructurings, joint ventures and other commercial arrangements. He has been recognized for his corporate-commercial and M&A expertise on numerous occasions by Who’s Who Legal and Legal 500.

A Legal Primer on Joint Venture Agreements in Indonesia When forming an Indonesian joint venture the two main statutes for consideration are typically the Indonesian Civil Code and the Indonesian Company Law. By contrast with the Civil Code, which was promulgated in the 19th century by the Dutch East Indies government and was based on the then existing Civil Code in the Netherlands, the Indonesia Company Law (Law 40 of 2007) was promulgated in 2007 and is a relatively modern form of companies’ law, drawing on a variety of contemporary international legislative models. Both laws will impact your structure and organisation in Indonesia and the substance of your joint venture agreement. Basic contract law principles Indonesian law recognises the principle of freedom of contract. This principle is codified in Article 1338 of the Civil Code. Article 1338 provides that parties to a contract are free to include any provisions they wish subject only to mandatory provisions of Indonesian law. There are, however, limitations to this principle. Agreements contrary to good faith or the public order are not valid (Article 1337 of

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the Civil Code). In addition, in order for a contract to be legal under Indonesian law, Article 1320 of the Civil Code stipulates certain requirements must be satisfied: free consent of the parties; legal capacity of the parties to conclude an agreement; a defined object; and a lawful purpose.

be Indonesian law; • provisions regarding waiver and amendment; and • particulars regarding the organisation and management of the joint venture company and, where applicable, its operating subsidiaries.

Within these parameters, Indonesian law gives the contracting parties a great deal of freedom to conclude agreements embodying those terms that suit them and the subject matter of their contracts.

Business and affairs of the company Details concerning the management of the day-to-day business and affairs of the company should be set out in some detail and may include such matters as: • descriptions of the business obligations of the parties, including concerning capital contributions and the ongoing duties of the company; • the constitution and identity of the company’s board of directors and board of commissioners; • a requirement for periodic meetings of the boards; • a requirement for periodic meetings of the shareholders of the company; • the appointment of the president director of the company; • matters requiring special majorities of the directors, commissioners or shareholders such as amendments to the Articles of Association of the company.

Typical provisions of a joint venture agreement In the context of Indonesian joint venture companies, the agreement setting out the respective rights and obligations of the respective shareholders is normally called a ‘joint venture agreement.’ A typical joint venture agreement for an Indonesian joint venture might include the following terms: Interpretation The agreement will contain certain definitions and legal ‘boilerplate’ including such matters as: • the governing law of the contract, which will typically, but may not necessarily,


These are intended as examples only and the types of such clauses that can be inserted are limited only by the creativity of those framing the agreement. Finally, note that the roles of company director and commissioner are not to be taken lightly. By virtue of Articles 97 and 108 of the Company Law, each member of the board may be held personally liable for losses suffered by the company occasioned by negligent errors in management. A director or a commissioner may be excused from this liability where they can prove that the losses were not caused by their mistakes or negligence; that they have managed in good faith in the interests of the company; that there were no direct or indirect conflicts of interest in respect of the act of management causing the losses; and they acted to prevent the said losses from occurring and continuing. Matters relating to shares generally The joint venture agreement should contain basic representations and warranties by the parties, including regarding the ownership of their shares in the capital of the company. There should be a general prohibition on share transfer without the consent of the other parties, subject to the terms of the joint venture agreement. There may be a provision to the effect that an individual shareholder can transfer all or any shares in the capital of the company to an entity controlled by him or her subject to terms, such as prohibitions on future transfers. There should be a general prohibition against pledges or mortgages of or charges upon shares. The agreement should provide that no registration of any transfer of shares will be made unless it is made in accordance with the terms of the shareholders’ agreement. Disposition and acquisition of shares The agreement should specify designated representatives of the shareholders entitled to make offers and receive notices with respect to share transfers and to execute documentation in connection therewith. The agreement may contain a ‘shot-gun’ buy-sell provision and set out its terms. The agreement may also contain

rights of first refusal and set out terms under which a party can compel a sale. Pre-emptive rights Existing shareholders may be given a contractual prior right to purchase new equity in the company. Restrictive covenants The agreement should provide for a requirement for shareholders to refrain from engaging in activities competitive with the business of the company. There should be general confidentiality covenants regarding confidential information received by the parties in their capacity as shareholders. It is also typical for such agreements to provide for so called non-solicitation clauses, prohibiting shareholders from soliciting for their own purposes or enticing away employees or clients of the company. Dispute resolution There are a variety of dispute resolution mechanisms including litigation or arbitration. A reasonable choice for foreign companies with operations in Indonesia, depending upon the circumstances, would be to stipulate for arbitration in a ‘neutral’ arbitration forum such as the Singapore International Arbitration Centre (SIAC), under SIAC Rules or other applicable rules. Indonesia became a signatory party to the New York Convention (the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards) in 1981 and enforcement of such awards can be effected here through the Indonesian courts, subject to public policy concerns.

courts in order to enforce its rights. While a foreign judgement may be introduced in court, at the court’s discretion, it may be of evidentiary value only. Indonesia is not a party to any reciprocal enforcement of judgements treaty with any other country. Termination Typically the parties will wish their agreement to include a waiver of Articles 1266 and 1267 of the Civil Code. This waiver is commonly found in most contracts governed by Indonesian law. Parties traditionally waive these articles to allow termination of their agreement on its existing terms, without intervention by the Indonesian courts. General provisions The joint venture agreement will contain a number of general provisions, including those relating to the binding effect of the agreement upon the parties; an indemnity by the company of its directors and shareholders for certain acts; the term of the agreement; provisions regarding notices and delivery of the same; and similar general contractual terms. Conclusion This is simply an outline of some of the key issues that your joint venture agreement will need to address. There are certain to be additional matters based upon the subject matter of the joint venture and the nature and relation of the parties. Some advance planning and prior discussion with your professional advisors can go a long way toward circumventing or minimising problems as the joint venture proceeds.

There are circumstances under which the parties may wish to forego the arbitration process altogether and have immediate recourse to the courts of Indonesia or another jurisdiction, such as for intellectual property rights disputes or interlocutory seizure. In such a case, the parties should specifically contractually submit to the exclusive or non-exclusive jurisdiction of the courts, again dependent upon the circumstances. In practice it is not possible to have a foreign judgement enforced in Indonesia. A foreign party would find itself having to commence a new and separate action before the Indonesian

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INDONESIAN BUSINESS NEWS

JAY A. SINGGIH, B.A. (Economics)

Head of Business Development & Strategic Investments at Bumi Laut Group, Chairman of Department for Europe & US Relations at Indonesia Young Entrepreneurs Association Jakarta (HIPMI Jakarta), Chairman of Young Professionals Group at British Chamber of Commerce in Indonesia (BritCham), Executive Committee Member at the Indonesian Chamber of Commerce & Industry (KADIN Indonesia), President of Durham University (UK) Indonesia Alumni Association Twitter: @JaySinggih E-Mail: Singgih.Jay@googlemail.com

“Introduction and Regional Optimisation of the Indonesian Financial Services Authority (OJK)” On 9th April 2013, the Indonesian Chamber of Commerce & Industry (KADIN Indonesia) collaborated with the Indonesian Financial Services Authority (OJK) to launch a programme to introduce, socialise as well as optimise the roles and functions of OJK regionally throughout Indonesia. The programme was headed by the Vice Chairman of KADIN Indonesia for Banking and Financial Sectors, Rosan Roeslani, and the Chairman of the Board of Commissioners of OJK, Muliaman Hadad. The OJK will not only be overtaking microprudential regulation on the banking industry from the Central Bank of the Republic of Indonesia (Bank Indonesia or BI), but will mandate the authority and responsibilities to coordinate and supervise the financial services, capital market and non-bank financial industry, making OJK the primary financial supervisory institution. The OJK is an independent institution with the authority to regulate, supervise, examine and investigate the Financial Services sectors in Indonesia with the objective to promote and organise a system of regulations and supervisions that is integrated into the overall activities in the financial services sector. The main functions of OJK are: (1). To ensure that the overall activities within the financial services sector are implemented in an organised, fair, transparent and accountable manner. (2). To promote a financial system that grows in a sustainable and stable manner. (3). To protect the interest of consumers in the financial market. The main regulatory mandates of OJK are: (1). Implementation of OJK Law. (2). Establish rules and regulations on: -Supervision. -Institutional. -Enforcement and Sanctions.

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The main supervisory mandates of OJK are: (1). Institutional and Market Oversight Policy and Supervisory Activities. (2). Governance and Oversight of CEO’s from Banking, Capital Market and Non-Bank Financial Institutions (Pension, Insurance, Finance Companies, Venture Capital, Guarantee Companies, etc). (3). Conduct supervision, inspection, investigation, consumer protection and other supervisory actions. (4). Impose administrative sanctions on any party violating the laws and regulations in the financial services sector. (5). To issue and/or revoke business licenses, individual licenses, effective registration statements, approval of business activities and validation. Institutional governance of OJK: (1). OJK is led by Board of Commissioners. (2). Board of Commissioners is collective and collegial. (3). Board of Commissioners consists of 9 (nine) members and appointed by Presidential Decree. In the coming years, one of the most fundamental challenges of the OJK is to develop an efficient and fully-functioning banking industry which are in compliance with good governance and regulations, which supports the country’s economy

with a stable financial and monetary environment. 2013 is the first year where the OJK will be an active regulatory and supervisory institution, and therefore these coming years are very fundamental for OJK to develop a strong foundation centrally and regionally as well as progress on its impact on the financial sector as well as the Indonesian economy. The OJK and KADIN Indonesia will collaborate further in introducing and socialising OJK regionally throughout Indonesia, and in additional to coordination and cooperation with KADIN Indonesia (Central Board). The OJK will also develop a comprehensive partnership with KADIN Indonesia’s Regional Boards, in its efforts to supervise regional financial institutions, especially during these initial years of transition period/transfer of authority to the OJK, where the OJK really has to strengthen coordination and cooperation with their partner government institutions and the private sectors. This is with specific attention to the financial sectors, so as to develop a more cohesive and comprehensive supervisory framework. For further information on Indonesian Chamber of Commerce & Industry (KADIN) Please visit: www.kadin-indonesia.or.id For further information on the Indonesian Financial Services Authority (OJK) Please visit: www.ojk.go.id


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BANKING & FINANCE

HSBC Purchasing Managers’ Index™ 2013

HSBC Indonesia Manufacturing PMI™ Output increases for first time since December 2012 Key findings: • Growth in total new orders fastest in four months • New export orders expand slightly • Solid rise in purchasing activity March data signalled an improvement in operating conditions across the Indonesian manufacturing sector. Underpinning this was a faster expansion in new orders, which in turn supported a slight rise in production. Export business and input buying both rose, while stocks of purchases were broadly unchanged from February. The headline HSBC Purchasing Managers’ Index™ (PMI™) is a composite indicator designed to give a single-figure snapshot of operating conditions in the manufacturing economy. The seasonally adjusted index remained above the no-change mark of 50.0 during March, posting 51.3 (up from 50.5 in February). The latest reading indicated only a slight improvement in business conditions, but was the highest posting in four months. Incoming new work placed with Indonesian manufacturers rose for a tenth consecutive month in March. Furthermore, the rate of expansion was solid and accelerated to the fastest since last November. New business growth was supported by stronger domestic and foreign demand. This was highlighted by a rise in new export orders, albeit only slight.

The rise in new work resulted in a further accumulation in the level of outstanding business at Indonesian manufacturers during March. Backlogs of work increased for the fourth successive month, but the rate of accumulation was only slight and weaker than that seen in February. Stronger demand for Indonesian manufactured goods encouraged firms to increase their post-production inventories. However, with 15% of panellists indicating an accumulation in their stocks of finished goods and 12% reporting a fall, the overall rate of increase was only slight. Manufacturers signalled falling employment levels during March, the fifth consecutive monthly decline registered. Some panel members reported that the rise in the minimum wage had discouraged them from hiring, following staff resignations and retirement.

The quantity of inputs bought by Indonesian manufacturers rose solidly in March, and at the sharpest rate since November 2012. Nevertheless, stocks of raw materials held by firms were broadly unchanged from the previous month. Meanwhile, average delivery times from suppliers lengthened further, but at the slowest pace in the current threemonth sequence of worsening vendor performance. Input costs continued to rise sharply in March, although the rate of inflation was broadly unchanged since June. Panel members reported higher prices paid for raw materials in general and unfavourable exchange rates. Manufacturers passed on to clients part of the cost inflation burden by increasing charges. Although solid, the rate of output price inflation was weaker than that recorded in February.

HSBC Indonesia Purchasing Managers’ Index™ (PMI™) 50.0 = no change on previous month

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The HSBC Indonesian Purchasing Managers’ Index™ (PMI™) is a composite indicator designed to provide an overall view of activity in the manufacturing sector and acts as a leading indicator for the whole economy. The indicator is derived from individual diffusion indices which measure changes in output, new orders, employment, suppliers’ delivery times and stocks of goods purchased. A reading of the PMI™ below 50.0 indicates that the manufacturing economy is generally declining; above 50.0, that it is generally expanding. A reading of 50.0 signals no change. The greater the divergence from 50.0, the greater the rate of change signalled by the index. Purchasing Managers’ Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under licence. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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Output Index Q. Please compare your production/output this month with the situation one month ago. 50.0 = no change on previous month

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March data signalled increasing output in the Indonesian manufacturing sector. The seasonally adjusted Output Index posted above the 50.0 no-change mark for the first time since December last year, but indicated that production expanded only slightly. Approximately 21% of survey respondents reported higher output, citing increased order book volumes. New Orders Index Q. Please compare the level of new orders received (Indonesia and export) this month with the situation one month ago. 50.0 = no change on previous month

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New orders at manufacturing companies in Indonesia rose during March, extending the current sequence of growth to ten months. The overall rate of expansion was solid and the quickest since November last year. Just over one-fifth of firms reported higher volumes of incoming new work, while 14% saw a fall. Anecdotal evidence suggested that demand from both domestic and export clients had strengthened over the month. New Export Orders Index Q. Please compare the level of new export orders received this month with the situation of one month ago.

Notes on the Data and Method of Presentation The Purchasing Managers’ Index™ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 manufacturing companies. The panel is stratified by Standard Industrial Classification (SIC) group and company size, based on industry contribution to Indonesian manufacturing value added. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/ worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’. The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

Warning

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In contrast to a decrease registered in February, new export orders expanded during March. That said, total export business rose only slightly as indicated by the seasonally adjusted New Export Orders Index. Where a rise in foreign sales was reported, this was frequently attributed by panel members to new contract wins in Asian countries. Backlogs of Work Index Q. Please compare the level of outstanding business in your company this month with the situation one month ago.

The intellectual property rights to the HSBC Indonesian Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers’ Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under licence. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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Companies operating in the Indonesian manufacturing sector signalled higher levels of unfinished business during March, mentioning lower payroll numbers and increased new business. Backlogs of work were accumulated for the fourth consecutive month, but the rate of increase was only slight and eased to a three-month low.

All Intellectual Property Rights owned by Markit www.britcham.or.id | 27


BANGKING & FINANCE

Indonesia

Colin Bloodworth

has worked as a financial consultant in Indonesia since 1992. He is Director of PPI Indonesia and can be contacted at colin.bloodworth@ppi-advisory.com or +62 21 3004 8024

PERSONAL FINANCE

IS THERE ANY SAFE PLACE FOR OUR SAVINGS? We were always taught that banks were the safest place for our savings. Admittedly we had to accept that in the long term our savings would be eroded by inflation, but at least the cash would always be there. Such illusions have now been shattered by events in Cyprus where thousands of people who entrusted their savings to banks have been told they will lose between 30% and 60% of their deposits and may have further difficulty in accessing the remainder. This was the price they had to pay to ensure the banks received bailout funds from Europe. The alternative would have been bankruptcy for the banks and for the country. But how can a bank, with all its vast resources go bankrupt? - Very easily if it is not properly managed. Deposits taken from customers are for the short term, ranging from immediate access to up to a year. The bank then makes money by lending out the money for longer terms. Housing loans constitute a large part of their loan business. This is fine provided that income is sufficient to meet depositors’ interest payments and any withdrawals. But when loans start to default and a large number of depositors want access to their cash the bank can suddenly find it is running out of money and becomes technically insolvent. Prior to the financial meltdown of 2008 if such a situation arose at a single bank,

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the situation could have been resolved by the bank borrowing from other banks. But when property values collapse by up to 50%, as in parts of Europe, and when all banks find they are in the same boat the problem shifts to government. And when the government doesn’t have the resources to prop up the banks, it means the country is broke and it either goes into bankruptcy itself, as in the case of Iceland a few years ago or, if it’s lucky as with Cyprus, it gets bailout funds from other countries. But such bailouts come at a price and it is the bank account holders who have paid the price in the latest instance. This is a worrying precedent; in previous cases of bank failures in Europe and elsewhere the taxpayer has usually footed the bill.

Could the same thing happen in Indonesia? There do not appear to be any immediate threats although there is a housing boom, much of it fuelled by relatively easy loans. Cars and motorcycles are also pouring onto the roads at an alarming rate, again fuelled by easy loans and aggressive sales. While house prices are rising and the economy is strong the banking sector should remain healthy. But if there were a sudden and serious economic downturn, there will always be the possibility of a repeat of the banking crisis of 1997, although in that instance it was brought about by dubious loans not related to the retail housing market.

Since 1997, the government has put a number of safeguards in place including stricter controls on loans and a requirement to hold higher capital reserves. The banking sector is now much stronger than it was in the 1990’s when deregulation led to a free-for-all. But if lending gets out of hand it would be the depositors who suffer.

But aren’t bank deposits guaranteed? Yes, they are up to certain limits but the guarantee, as with any guarantee, is only as good as the strength of the ultimate organisation behind it, in this case, the respective governments. As the 2008 banking crisis unfolded in Europe the Irish government tried to stabilise the outflow of funds by announcing a blanket guarantee covering all bank deposits. It then had to issue a swift disclaimer qualifying the guarantee. Caution should be exercised by depositors in Indonesia as anywhere else. While the level of deposit guaranteed is quite generous, there are conditions. Banks have to keep interest rates for depositors for example within approved limits. Failure to do so could compromise the government guarantee. Many other financial products come with ‘guarantees’ or ‘capital protection’. Structured Notes are a good example. These are products that ‘guarantee’ the


as has been the case many times in history, the pension scheme risks becoming underfunded. The bonds may lose their purchasing value as inflation bites but that is not their concern. return after a number of years of the original investment plus a possible additional return usually linked to a stock market index. The additional return is invariably inferior to any actual rise in the index but it does offer the comfort of the guarantee. It is important to understand that these products also are only as safe as the institution providing the guarantee. As Benjamin Franklin, one of the Founding Fathers of the United States said: “The only things certain in life are death and taxes.”

So where can we safely put our money? Under the mattress is not a good option. What about bonds? Government bonds are generally considered safe because a government can always print money to meet its obligations. That is, unless it is a country within the Eurozone since only the European Central Bank has that right. Consequently there is a huge variance in bond yields in Europe as weak countries have to offer higher rates of interest to combat the higher risk of default. In the UK, gilts as they are called there have a huge market as they constitute a large portion of pension schemes. The scheme managers have to meet their obligations to pensioners. Stocks could make more money than bonds but should they fall,

Corporate bonds are relatively safe but even these could become worthless if the company that issues them should go under. A number of investments pay relatively high regular returns with little risk of any negative years. Examples are assetbacked lending, property funds, student accommodation funds and so on. These are very popular during periods when stock markets are doing badly. After all, people are still paying their rents irrespective of what is happening in the markets. The funds can work well but problems arise when a lot of people want to exit at the same time. Since the bulk of the fund is invested in long term assets, it is not possible to raise cash in a hurry and so the fund has to shut its door to redemptions until it becomes liquid again. There have been a number of such cases recently. So while the returns may be good you may have a long wait for your money.

So what is the best strategy? Since financial disasters can surprise us at any time, the best defense is to diversify. If you have significant cash holdings, it would be wise to distribute your savings across a number of banks and in different jurisdictions. Where cash is concerned, don’t be easily influenced by higher interest rates. They are likely to be a reflection of higher risk.

don’t be easily influenced by higher interest rates. They are likely to be a reflection of higher risk. It would also be wise to hold more than one currency. The accepted wisdom is to hold most of your money in the currency you expect to spend, particularly where retirement is concerned. If you plan to retire in Indonesia, it would be advisable to hold plenty of dollars or pounds as they are more likely to hold their value over time against the Rupiah. This may be less noticeable in the short term but the historical figures are compelling. When I first came to Indonesia in 1983 the exchange rate was Rp600 to the US Dollar. Today it is approaching Rp10,000. Where will it be in another 30 years? Who knows, but my guess is it will be much higher than 10,000!

So is there a safe place for your savings? Not for absolute certain, although some places are safer than others. Despite all the guarantees that may be in place, no investment is entirely risk-free. Even not investing is a risk due to the loss in real value of cash over time. But since there is no 100% safe home for your money the only sensible strategy is to spread your eggs around as many baskets as you can afford. With a bit of luck some of your baskets will prosper and make up for the odd one two that fall. And be prepared to see the odd one fall; remember there is no gain without pain!

www.britcham.or.id | 29


SECTOR GROUP- Infrastructure

Dr Scott Younger OBE Dr Scott Younger is currently a partner at Glendale Partners and serves as the Chairman of BritCham's Infrastructure Sector Group

Infrastructure UPDATE While the pace of infrastructure development remains slow and there is continuing pressure to try to accelerate the necessary build out, the last year has seen some movement towards how some of this may be achieved, although the promotion of PPP as a means of improved delivery of projects has effectively stalled and needs stimulation and a revised direction. Within the city of Jakarta itself the appointment in 2012 of a new governor, Bp Joko Widodo, has raised some anticipation that an effort is going to be made to try to alleviate some of the city’s horrendous transportation problems, while the greater conurbation reached the position of being the second largest in the world with a population of 27.2 million and growing. MP3EI In May 2011 the Government launched a framework document for the development of the country, the MP3EI, based on 6 economic growth corridors from Sumatra in the west (Corridor 1) to Maluku/Papua (Corridor 6) in the east. The document recognises the different characteristics and population distribution of each area and specifies 22 areas (e g agriculture, education, mining, tourism and infrastructure) where effort and investment will be required to ensure sustainable and equitable economic growth. Not surprisingly one of the most important areas emphasised for investment is infrastructure, with the continued recognition of the need for the private sector to be fully engaged in the delivery of key projects. There is a growing realisation also that delivery of necessary infrastructure across the country will very significantly depend on each of the regional governments taking a leading role in identifying and prioritising projects, ensuring fair and workable terms and conditions where the private sector is to be involved, and having projects professionally set out to attract funding. This will be difficult since the human skills capacity level currently available countrywide is, in overall terms, not in place and can be seen as a brake

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on the rate of development required. Hence, apart from the capital needed for hard infrastructure development, there is a parallel requirement for funding to be made available, whether from direct government budget or supplemented through aid packages, for upgrading the skills and competence in the regions to allow successful implementation of the necessary projects, even where the approach means these to be totally outsourced to the private sector. Internal and ASEAN regional connectivity is highlighted in planning agendas. Apart from telecommunication links, there is a

shortage of suitable and good quality land links and ports and airports. Along with lack of electrical power in many areas, this overall lack of hard infrastructure has been measured as causing a national underperformance in GDP terms of some 3-4% with more than half of this attributable to the shortage of good quality roads and ports.

SECTORS Most road infrastructure, over 90%, falls under the jurisdiction of local governments, primarily regencies. While there is still a very large shortfall in overall


sponsored high speed line to Bandung and coal railway links in Kalimantan. A general overhaul and upgrading of the sector is also required. In the electricity field, apart from projects for large coal fired power stations, e.g. expansion at Paiton, some movement towards setting up encouraging feed-in tariffs for solar projects took place, but legislation was still awaited at time of writing. Improved terms for geothermal investors were also under discussion and are urgently required. The country’s investment in geothermal generated power still lags well behind the country’s potential; Indonesia holds some 40% of world resources.

JAKARTA network capacity, the other concern relates to the quality of the existing links, with some 50% of the network in poor or worse condition, this despite many local governments having adequate funding available for improvement. A closer look is now being taken seriously at central government level at the construction factors in this regard with performancebased contracts receiving increasing attention. For more than two decades investment in Indonesian ports was neglected. The impact of this has been increasingly brought to bear in the past decade as the economy recovered from the 1998 Asian Economic Crisis and, in particular, to take advantage of the fast-moving changes in containerisation. It is encouraging that positive steps have been taken over the past two years to upgrade Indonesia’s prime port of Tanjung Priok to try to meet the country’s main container shipping needs in the years ahead, before new facilities can be brought on line. The first new container terminal was recently awarded with construction geared to commence in the fairly near future, and the next two terminals are expected to be awarded to successful bidders in the near

future. Other main port developments, e.g. Sorong, Batam, Cilamaya, are also in development stages as pressure grows to provide for fast-expanding domestic as well as regional/international sea-trade. Domestic and international air traffic has been exhibiting double digit growth for the past several years, such that airport capacity has fallen well behind demand. The government has identified more than 200 locations across the country for upgrading existing or putting in new basic facilities. Even new airports, such as Makassar which was opened in 2008, have already reached capacity long before the design date. Extensions to capcaity are ongoing for Jakarta and Bali, but these can only be seen as short-term albeit necessary measures. New airports are required. In terms of private sector involvement the parameters of passenger demand and return on investment indicate that only a relatively few of the the overall number of airport locations will be attractive to funding from this source. But demand for expansion is strong. In the rail sector the airport connection remains a high priority as well as other Jakarta urban connections, a Japanese

Although the immediate attention to flooding and the short to long term improvements to water supply issues have to be addressed, Jakarta’s traffic problems continue to dominate the main headlines at this time. Considerable progress towards activating the longstalled MRT and monorail projects has been made since the turn of the year and it is expected that work on these projects will become manifest during the course of 2013. The signing with the new investor for the monorail is expected in May 2013. In the not-so-longer run, Jakarta will have to address the defence of the city with an offshore dyke and preserve the many billions of dollars of assets that the city entails. Cities and megacities such as Jakarta, in particular, need to pay more serious attention to developing a long-term plan for supply of water to its residents, including adoption of modern practices towards water re-use, several viable applications for which have been evolving in the past decade. As the second largest conurbation worldwide, Greater Jakarta has much to do to make the city into one fit for the 21st century. The challenge is there, but it can be done.

www.brit www. www.britcham.or.id britcham.or.id cham.or.id | 31


BUSINESS THIS MONTH'S & ECONOMICS FEATURES

Lena Herliana

KADIN Indonesia, Project Manager of the EU-funded ACTIVE Program

Without Infrastructure, Economic Growth Rests on Feet of Clay How sad it is watching the children form Muncang village, West Java, because of the poor local infrastructure. (as being quote by detik.com, August 30, 2012). The children have to cross a river which is more than 100 meters wide in order to reach their closest school. Muncang village is situated in the Tasikmalaya region, an area belonging to Java - the island at the centre of Indonesia’s economic development. One might ask ‘if this is happening in Java, what is the situation like elsewhere?’ Infrastructure was once again the ‘sector in focus’ during the EU-Indonesia Business Dialogue 2012 in Bali. The European-Indonesian business community recommended on that the Government of Indonesia should intensify its efforts towards addressing sectoral distortions, such as those arising from corruption. It should ensure that proposed projects/ tenders are transparent from the very beginning and based on effective regulations, enforcing implementation. These also need to be backed up by allocating sufficient funds from the GDP for infrastructure - at least 5% of GDP. Domestic infrastructure is deemed to deteriorate continuously. A number of

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factors have contributed to this trend: the ratio of infrastructure spending to GDP continues to fall; the funds that do exist are often poorly allocated to peripheral services rather than physical infrastructure; disbursement of funds through many related departments is slow in any budgetary year, and the regulations that control the quality of infrastructure built are not always enforced. The importance of infrastructure has been underlined recently again by the Vice Chairman of KADIN Indonesia (Division Infrastructure), Bapak Rachmat Gobel: “Infrastructure sufficiency is the key to efficiency. A strong infrastructure will raise a country’s competitiveness”, during the National Assembly of his Division several weeks ago. Yet Indonesia’s infrastructure remains largely undeveloped. According to international surveys, namely the Global Competitiveness Index (GCI) and

the Logistics Performance Index (LPI), Indonesia’s infrastructure is indeed among the most obvious shortcomings in Indonesia: The GCI 2012-2013 ranked the country 78th out of 144 countries for infrastructure competitiveness, a drop compared to the last survey which ranked Indonesia 76th. Moreover, the LPI 2012 also revealed that Indonesia ranked 55th out of 155 countries which is no improvement compared to the previous year. Indonesia’s performance is only better compared to other lower middle income countries, but remains lagging behind its ASEAN peers such as Vietnam, Malaysia, and Thailand. This inadequate condition of infrastructure is considered as being one of the three biggest problems for doing business in Indonesia, identified in all concessive GCI surveys, together with the inefficiency of government bureaucracy and corruption. The same trend was being posted as well by LPI. Even though Indonesia has


that the government must settle to ensure equality in economic development. Many parts of the country are still lagging behind, not being integrated within the main system and experiencing low growth and relatively high unemployment and poverty levels. Urban and rural areas do not cooperate as agents of ‘mutual symbiosis’. Rather, urban centers have a parasitic symbiosis with rural areas. As a result, a development bias towards urban centres occurs and more than half of our population lives in urban areas, leaving rural areas undeveloped and unattractive to investment. improved its ranking from previous years, it’s score still only is 2.54 out of 5 points. Under-developed infrastructure adds to costs Further analysis reveals that within the transport-related infrastructure (e.g. ports, roads, airports, and information technology) roads, rails and ports stand out as the areas that are under-performing. This factor is the main contributing reason for the low score awarded. Poor road quality across Java, not to mention the rest of the archipelago, the lack of the trans-Java expressways and alternating railways add to the cost of moving goods by land. Outside Java, connections between ports and the related hinterland are so poor that they inhibit not only exports, but also domestic trade: Shipping a 40-foot container from many regional ports to Jakarta is more expensive than shipping the same container from Jakarta to Singapore. Our main international sea freight gateway, Tanjung Priok, is also close to full capacity. It handled almost 6.3 million 20-foot equivalent units (TEUs) containers last year while it was originally designed to accommodate only 5 million TEUs. Average dwell time of container ships is now six days compared to three days for major regional ports. Moreover, road access to the port has become increasingly congested. On the other hand, the planned railway to shift freight ‘from road to rail’ has made little, or no progress.

Many parts of the country are still lagging behind, not being integrated within the main system and experiencing low growth and relatively high unemployment and poverty levels. According to data from the Indonesian Coordinating Ministry of Economy, Indonesian companies spend at least 14.08% of their average production costs on logistics – adding to 27.02% of the national GDP. This is much higher than in other Asian countries, such as South Korea where companies only spend around 12.5% of their production costs on logistics. From these costs, Indonesian companies spent most on physical transportation, accounting for 66.8% (the rest is on administration as well as for procurement). These are the reasons why transport infrastructure and transport-related services play a major role for the outcome of Indonesia’s economic performance. If Indonesia could improve its infrastructure, for sure the desired two-digit economic growth would become more than a dream. Geographical Challenges Spanning nearly two million square kilometers and consisting of five main islands and about 30 small archipelagoes, with 17,508 islands and a population of over 234 million people, Indonesia obviously faces a mammoth challenge

Of course, improving infrastructure in disadvantaged regions will not in itself guarantee speedy economic growth because of their weak demand and economic agglomeration. Rather, connecting less developed regions and growth centres can increase rural demand and promote economic clustering, such as in agro-processing and labour-intensive manufacturing. This would also lead to a significant increase in employment in the regions. Moreover, greater integration between islands will reduce the impact of sudden shocks in production or demand-reducing price volatility. Cheaper and more reliable transportation means will increase market access as well as increase the competitiveness of our goods, as they can reach markets at a more competitive price. With improved connectivity we will have greater diversification in production and exports as it helps businesses develop competitive advantages in higher value-added goods, both in terms of manufactured and processed commodities. In the upcoming month Indonesia will host the APEC Summit, with ‘Regional Connectivity’ being very high on the agenda. We must ensure that we have prepared ourselves for this, since Indonesia plans to generate billions of dollars in investment - aiming for its gross domestic product (GDP) to reach US$4.5 trillion by 2025, a move that will prompt it to join the world’s top 10 economies.

www.britcham.or.id | 33


THIS MONTH'S FEATURES

Graham Brooke

Graham Brooke is the Asia-Pacific Regional Head of KPMG’s Infrastructure & Projects Group, and President Director of PT KPMG Infrastructure Advisory. Graham is a specialist in complex infrastructure projects with more than 20 years’ experience in the UK, South Africa, Asia and Australia. He is currently working on several significant projects in Australia and Indonesia in the transport, housing, defence and telecommunications sectors. Graham is a Board Member of Infrastructure Partnerships Australia, a Member of the NSW Housing Minister's Community Housing Advisory Committee and an Adjunct Professor of Bond University’s Department of Sustainability. PT KPMG Infrastructure Advisory is a joint venture of KPMG Indonesia and KPMG Australia established to bring together the resources, experience and expertise in Infrastructure of both firms, to deliver financial and commercial advice on infrastructure projects to the Indonesian market.

Infrastructure spending In 2012, the Government of Indonesia (GoI) allocated US$20 billion (2.4% of GDP) in its budget for capital expenditure, predominantly on infrastructure development. Coupled with private sector investment, this amount brings total capital expenditure on infrastructure to 4.7% of GDP, but this remains low compared to its peers, as shown in the graph below. Investment gap The National Development Planning Agency (Bappenas) has estimated that Indonesia needs to spend approximately US$ 200 billion on infrastructure development over 2010-2014. Despite being the largest economy in South East Asia, the GoI is only able to provide up to US$ 58 billion (29% of the financing needs). It is therefore seeking other sources of infrastructure funding, including aid, multilateral agencies and private sector funding in the form of PPPs.

Market overview Total Infrastructure spending is expected to rise to 5.9% in 2015 in order to achieve the GoI’s 2015 real GDP growth rate target of 7.2%.

Quality of Infrastructure

Indonesia is ranked number 76 in the world in 2012 in terms of quality of infrastructure, lower than several neighbouring countries. However, the quality of Indonesia’s infrastructure has improved from the previous rank of 84 in 2010. The symptoms of more than a decade of low infrastructure investment include increasing congestion in urban areas, high inter-island cargo transport costs, electricity blackouts, and low access to improved sanitation.

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Infrastructure continues to be a key area of focus for the Government for the next few years in Indonesia. Bappenas publishes an annual list of priority projects. The 2012 list contains 58 projects worth about US$ 51.2 billion, of which 9 projects are new. Those projects have been selected through a screening process and consolidated to be in line with the Government Working Plan 2012. 16 projects that were in the 2011 PPP Book have been eliminated due to the introduction of more rigorous screening of projects. As of 2013, the Government is ready to offer 14 major infrastructure projects valued at approximately $6.1 billion, including a $1.56 billion coal-fired power plant and a $780 million mine-mouth coal-fired plant in South Sumatra, a $1.33 billion municipal water supply in West Semarang, and an $870 million project to revitalize the Malioboro rail station in Yogyakarta. The Government is under increasing pressure to develop basic infrastructure due to recent high profile failures – water shortfalls, collapse of a flyover bridge, rolling electricity blackouts, dam collapses and traffic congestion. The Government is seeking funding support from multilateral and bilateral aid initiatives such as AusAid, USAID, ERIA, World Bank, ADB, and KfW. In addition, the Master Plan for Acceleration and Expansion of Indonesia Economic Development 20112025 was introduced as the development guideline of the GoI,


encouraging participation of private investors in infrastructure through financing and investment. On October 6th 2011, the Indonesia Infrastructure Guarantee Fund signed a Guarantee Agreement (co-guaranteed by the Ministry of Finance) for the Central Java Power Plant (CJPP) project. This signing has proved that PPP projects based on an open, competitive, transparent, and accountable process can be conducted in Indonesia. CJPP is currently awaiting Financial Close.

Improving transport in Jakarta After months of consideration, Governor Joko Widodo has confirmed that his administration will proceed with the construction of the Mass Rapid Transit (MRT) network, and approved the construction of the Monorail. After years’ of delays, construction of the MRT network will commence in the first half of 2013 as a means to combat the growing issue of traffic congestion. Although the MRT may not necessarily eliminate traffic congestion, it will bring with it a wide range of economic and social benefits through increased mobility in Jakarta. In addition, the GoI is undertaking detailed feasibility studies for a high-speed rail link between the Soekarno-Hatta International Airport and central Jakarta, undertaken as a PPP. Subject to the results of these studies, procurement may start later in 2013.

Continuous improvement in regulations for infrastructure Indonesia has tremendous needs for infrastructure and financing from the private sector. The GoI has been facilitating infrastructure development through large-scale legal and institutional reform to encourage private investment and to increase transparency in its procurement process. One of the main focus areas has been PPPs. PPPs primarily apply to economic infrastructure, including transportation, road, irrigation, water and sanitation, telecommunications, power, and oil and gas infrastructure. Presidential Regulation 67/2005 regarding cooperation between the government and legal entities in the provision of infrastructure, as amended by PR 13/2010 and PR 56/2011, is the basis for PPP implementation in Indonesia.

The PPP and general infrastructure procurement systems have been subject to many reforms and revisions to improve the procurement procedures and to accommodate the enhanced fiscal authority of the regional governments under regional autonomy laws. Despite the supporting law and regulations, PPPs in Indonesia have been hampered by both technical and practical issues. Technical issues are mostly caused by the time required for the remaining laws and regulations to agree with each other and the allocation of roles in institutions. The main practical issue has been the land acquisition problem, which has caused failure and delay of a number of infrastructure projects. The Government has been enacting laws and regulations to address these issues through allocation of responsibility to acquire land to the relevant Government Contracting Agency prior to tender and the provisions of government guarantees from IIGF and government support in the form of Viability Gap Funding (through Minister of Finance Regulation 223/PMK.011/2012 regarding Granting Feasibility Support for Part of Construction Costs for a Cooperation Project by the Government and a Business Entity for the Provision of Infrastructure.

Land acquisition

After months of consideration, Governor Joko Widodo has confirmed that his administration will proceed with the construction of the Mass Rapid Transit (MRT) network, and approved the construction of the Monorail. However, over the last decade, the Indonesian Parliament also has been passing new laws for specific infrastructure sectors aimed at streamlining and providing clarity on the procurement and private sector development process.

Land acquisition issues have been one of the main obstacles for infrastructure projects in Indonesia. The GoI has enacted “Law No.2/2012 concerning Land Procurement for Development Purposes in Public Interest” to improve and put clarity around the land acquisition framework, supported by “Presidential Regulation No.71/2012 concerning Administration of Land Procurement for Development Purposes in Public Interest” and Regulation of BPN No.5/2012, which sets out technical implementation guidelines and rules. These regulatory developments are anticipated to improve progress in infrastructure development and the availability of private finance funding through the removal of impediments to acquiring land in the old regulatory environment.

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THIS MONTH'S FEATURES

Aziz Adam Sattar

Aziz has been located in Indonesia since 2002. He currently serves as a BritCham Board member and is the Marine Practice Leader at Marsh & McLennan Companies' for their Indonesian office, PT. Marsh Indonesia.

Managing infrastructure investment risk in a shifting lending environment Asia’s infrastructure challenge Asia’s immense need for infrastructure is well documented. The Asian Development Bank (ADB) estimates US$8 trillion in new infrastructure investment is needed in the region in the 10 years to 2020 to support current levels of economic growth. That equates to around US$750 billion each year to meet the cost of building power plants, roads, water systems, information, communication and telecommunication networks, and other infrastructure throughout the region. The government of Indonesia has allocated US$20 billion for infrastructure development this year to boost national economic growth. This includes extending national roads by 4,278km and building over 500km of new roads, 380km of railways and some 15 additional airports. The need also stretches beyond Asia. An estimated US$53 trillion must be invested worldwide in infrastructure to accommodate these future needs. While these statistics paint a clear picture of demand for infrastructure investment, not so certain is how projects will be financed, as the funding environment dynamics – in Asia and globally – undergo considerable change. Militating against the risks involved with financing or investing in such large scale infrastructure projects should be a key concern for investors.

Funding squeeze from traditional sources Until relatively recently, international

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MARCH/APRIL 2013

project finance has been the preferred option for funding Asian infrastructure projects. Just five years ago, the global syndicated loans market was dominated by European banks. However, the sovereign debt crisis in the Eurozone has changed that, with many European banks currently under pressure to scale back their Asian project financing activities or withdraw operations from Asia altogether.

Regional private sector lenders fall short of filling the void As the European banks withdraw, some regional Asian lenders have taken the opportunity to meet the shortfall in project finance, leveraging their greater access to capital due to stronger deposit bases and less regulatory pressure. For example, Indonesia’s largest private bank, Bank Central Asia (BCA) has allocated some US$2 billion of loans this year to finance infrastructure projects across the country, according to media reports. This included its recent contribution to a syndication loan agreement of US$915 million to finance a toll road project in West Java province, announced in September 2012.

Political, sovereign and credit risks top the risk list Infrastructure project lenders and investors are heavily reliant on project completion and successful operation to facilitate loan repayments. Large scale infrastructure projects are often complex, require significant capital, and the long tenors often required for completion means a high degree of unpredictability around future risks. In emerging markets in particular, the risk of non-completion is seen to be stronger than other jurisdictions due to uncertainties created by evolving

political and sovereign risk environments. Currency inconvertibility is another concern, along with the possibility that cash flows will be unable to be repatriated. Weak regulatory or legal systems intensify the risk, while shallow or illiquid capital markets can complicate exit strategies. More than 80 percent of the demand for infrastructure investment in emerging Asia over the next ten years will come from energy and transport, the sectors most critical to supporting heightened economic activity. Energy and transport sectors will provide much of the demand for infrastructure invetsment. Investment needs for Asia’s identified and pipeline infrastructure projects, 2010-20, $trillion 0.4

2.5

8.1

1.1 4.1

Energy

Telecom Transport Water and sanitation

Total

Annual growth rate in investment in spending, 2008-18, % Infrastructure (global) Infrastructure (Asia-Pacific) Clean energy (global) Clean energy (Asia-Pacific)

6.0 8.2 10.9 18. 2.3x

Source: Asian Development Bank; Clean Edge; World Bank Private Participation in Infrastructure (PPI) Database: McKinsey analysis

Infrastructure projects are seen to be vulnerable to these risks, which can potentially unfold without warning, at any point during the lengthy planning and construction period of a project. If these risks are not adequately managed, the effect can mean costly, unproductive delays at best, or project abandonment at worst. While these types of real risks have lessened the attractiveness for some investors and lenders creating a substantial financing gap, the need for infrastructure investment is not diminished.


The risks are real According to MIGA’s World Investment and Political Risk Report, expropriatory actions against foreign investors have been on the rise over the last five to ten years. Additionally, analysis of data from the 1970s to 2010 reveals that all disputes between investors and foreign governments were triggered by actions outside of foreign investors’ control, namely economic shocks and significant political shifts.

project finance, whether from the public or private sector, is to mitigate any risk which may potentially devalue the assets or endanger the project revenues. The importance of this lies in the fact that a project finance lenders’ only security of repayment resides in the assets and revenues of an infrastructure project. Insurance plays a major role in reducing the risks to which the assets and revenues are exposed.

insuring challenging risks, especially those in the most volatile regions of the world. This market should not be overlooked, as it can broaden the range and availability of insurance products available to an organisation.

Setting up for long term success While risk management is vital to securing finance for an infrastructure project, it is also critical in the longer term success of

The rise of political risk insurance To address this growing gap, a number of government backed development, export-import and multilateral financial institutions have stepped up their involvement. While many of these public sector agencies are providing additional project finance capacity, they have also been focusing on developing innovative, new schemes designed to de-risk public private partnerships (PPPs) through creditor political-risk guarantees. The use of guarantees improves the credit rating of selected projects which then allows those projects to tap capital markets.

Getting infrastructure deals up in the new environment While public sector agencies are stepping up to provide finance and guarantees to infrastructure projects, seeking their support can often be challenging and time-consuming and requires a high level of engagement, relative to traditional experience with the private market. Lending decisions by development banks are often guided by the strategy being pursued by the agency. They may be focused on specific industry sectors depending on the greatest needs of the country’s people and will prioritise projects designed to resolve a tangible problem hindering the efficiency of a city or region’s infrastructure. For example, some development banks see the greatest present need is in improving education and agriculture for a country’s people therefore, investment in those sectors is likely to be prioritised.

Risk mitigation is a pre-requisite The most critical element of securing

Political risk insurance has become increasingly vital as a risk management instrument for major infrastructure projects, including helping to secure finance. By providing cover for possible losses resulting from expropriation acts, currency inconvertibility and political violence, political risk insurance can reduce erosion of value caused by sudden disruptions to operations, allowing more focus to be placed on measures to increase profit potential.

Structured trade credit insurance A growing number of lenders are also turning to structured trade credit insurance policies to protect project finance transactions. Structured trade credit policies, which have evolved over the past few years

Political risk insurance has become increasingly vital as a risk management instrument for major infrastructure projects, including helping to secure finance.

Investment Insurance Claims Paid 200

USD in million

Development banks stepping up

150

100

50

0

2007

2008

Transfer Expropriation etc Unspecified

2009

2010

2011

Political Violence Breach of Contract Source: Berne Union

a project throughout the life cycle of the project. In fact, according to a report by Oliver Wyman, governments and companies can reduce cost overruns and delays by in excess of 20%, by developing greater transparency and more sophisticated management of the risks involved and tracking mitigation efforts. Oliver Wyman estimates this can potentially free up more than US$5 trillion of public finances globally by 2030 for use in other purposes.

in response to the challenging lending environment, insure against non-payment risk which can be caused by political risk events or company specific issues, covering exporters, commodity traders, and the financial institutions that support them.

Public sector insurance should not be overlooked The public sector is a major provider of political and trade credit risk insurance and, in some cases, is the only option for

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THIS MONTH'S FEATURES

Malcolm Llewellyn

Malcolm was, until very recently, Chairman of the British Chamber for over three years. During that that time he was also a member of the EuroCham board. He is President Director of PT Boral Indonesia, currently working on a new fully-integrated cement project in Java and consults on cement plant projects.

Cement consumption - a good indicator of growth As has been said: ‘’we are only caretakers of this world for following generations’’. It seems to me few think that way and most are only interested in the short term and their own interest. The few have to take responsibility for the many who think only of themselves. A lesson all Governments tackle in different ways and most of them get wrong because they are themselves self-centered. The Government of UK is being pressed to sharpen up its Infrastructure and so is the Government in Indonesia. Neither is doing much but talk. They are abdicating to the private sector but then the corruption of civil servants takes the margins out of the business and there are few winners and still little true infrastructure. Infrastructure summits come and go but the lack of performance goes on forever. A UK Government white paper of 25 years ago claimed that for every pound spent on local roads the benefit to the country was nearly 4 times that. I am sure it is greater now. Look at the repeated destruction wrought by the floods in Jakarta and yet investment is still minimal. Few in this elite society care about a few hundred poor being wiped out and a million homes wrecked. Better to invest in toll roads where personal gain is enormous. Indonesia is growing at an astronomic rate in all ways but there is massive expenditure needed to sustain this. I have always considered cement consumption per head a good indicator of growth but then one has also to look at the likely consumption of a farmer against that of a business man. There are not many farmers in Singapore where consumption per capita (cpt) has exceeded 1000 kg for the past 30 years but

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there are 100 million ‘farmers’ in Indonesia and the cpt has remained around 100kg all that time. When I joined Blue Circle cement in 1960 we had 32 factories in UK and about the same number abroad. By 1988 that number was down to 10 in UK, 7 of which had been built in those 28 years. They now have 6 and yet output and cpt at 400kg has remained at the same level. In Indonesia when Blue Circle was building Cement Andalas in 1978 National output was under 2m tpa. There were 8 operating plants (Cibinong and Nusantara, Indocement’s two plants, Padang, Batu Raja, Gresik and Tonasa). In 2012 consumption was 55m tonnes with 10 plants (Andalas 1982, Gresik Tuban which has replaced Gresik’s first plant, Bosowa the only new player to complete during the 1998 crisis had been added. Kupang, built by the Government around the same time, has never produced cement. During these 35 years cpt has risen from around 20kg to 200kg but half this growth has taken place in the last five years. Total domestic consumption is expected to double to 110m tonnes within 10 years. To sustain the current 12+% growth in cement supply alone requires at least 2 billion dollars investment per year. The cement ingredient

is a mere 20% of the concrete volume and less than 20% of the construction cost. The Minister of Trade has said (and this was reiterated by Hasan Basri Saleh from the Governor’s office at a BritCham breakfast a couple of months ago) that they expect 80% of total investment to come from private investment! How can this happen? In the case of cement the ‘Cement Association’ has consistently denied the risk of shortfall and said they can cope. In this way newcomers have been held off and growth has come from the big three producers. We now have a crisis which individuals have forecast for long enough. Dumping from China could solve the shortage but watch out for quality. Vietnam is cutting their new cement plant building programme as there is no market so their surplus may not be available. Gresik has bought a plant in Vietnam so that they can support shortfall here while prices in Vietnam are so low. At the same time Gresik (Cement Indonesia) is building and expanding as fast as they can at all their group plants and so is Batu Raja the other government plant. Holcim and Indocement who both bought cheap assets here rather than build in the late 90’s are following suit but cannot possibly keep up. Gama, a leading palm oil producer and


Cumulative Year on Year Domestic Cement Supply TOTAL SUPPLY

Tonnes

Jan

Feb

Mar

Apr

2005

2,244,897

4,563,222

7,208,335

9,579,231

12,283,986

2006

2,243,181

4,459,493

6,964,899

9,314,123

2007

2,634,942

4,925,940

7,518,003

2008

3,087,590

5,788,306

8,780,749

2009

2,968,859

5,605,531 8,272,966

2010

3,362,322

6,352,084

2011

3,525,392

6,804,777

2012

4,059,711

8,122,225

12,501,249

9,043,410

13,574,120

2013

4,648,607

Jul

Aug

Sep

Oct

15,046,969

17,839,679

20,934,888

23,979,563

26,764,348

28,827,082

31,471,425

11,877,095

14,510,969

17,302,196

20,364,694 23,552,863

25,803,585

29,012,721

31,982,298

9,917,966

12,828,164

15,595,986

18,679,632

22,097,899 25,186,054

27,683,751

31,029,600

34,157,249

11,856,019

15,424,508

18,889,597

22,303,948

25,621,378 28,591,844

31,697,347

34,962,568

38,087,741

11,123,272

14,175,189

17,570,906

21,081,188

24,646,355

30,985,204

34,527,337

38,352,501

9,738,405

12,927,208

16,199,635

19,596,525

23,336,572

26,951,753 29,507,571

33,339,722

36,871,690

40,778,465

10,574,214

14,308,416

18,391,306

22,492,410

26,870,803

30,474,037 34,316,563

38,984,335

43,431,601

47,988,199

16,684,042

21,402,839

25,891,528

30,702,944

34,304,201

43,977,421

49,199,024

54,307,620

new entry into cement, has also acquired a plant in Vietnam and is preparing their market launch here by bringing clinker (an intermediate step) to a new grinding plant, and also cement into a starving market, in advance of commissioning their own plant production at Bayah/Lebak where they will be fighting with Siam Cement (SCG) who bought the Boral project for space and the port. SCG also plan a plant at Sukabumi. The Infrastructure plan will be undersupplied and so there are fears that the long awaited progress will be slowed and the price of expansion will be even higher.

The governments should force higher targets but have no personal incentives to aim for the fantastic levels achieved by internationals in Europe. I joined Blue Circle as a trainee manager in 1960. Within a few weeks I had been taken off my 6 month training schedule and put in charge of a shift with 140 employees with four kilns producing a mere 60mtph between them and factory covering about 40 acres with quarries some miles away. Promoted to Assistant Manager and on to General Manager within 7 years we

May Jun

60’s trainees moved on to run the biggest cement group in the world. We were not educated per se but my pre-war mentors were full of experience and motivation. We managers were backed by some brilliant scientists and achieved quantum leaps in development through my 50 years in the industry. The smallest kilns I have personally worked with were rated at 18 tons per day (tpd). The largest in the world now are 10,000 tpd! Ratio of clinker output to fuel used to be 23% it is now 9% and then another 20% saving can be made by adding volume enhancers such as flyash, pozzolan, limestone etc. thus saving fossil fuels. The use of secondary fuels such as oil sludge, palm oil, jatifur and other oil wastes, rice and coconut husks, household refuse, sewerage etc. further shows how far the world’s worst polluting companies have moved to improve their lot. We still have a huge job to do out there and few are doing more than the bare minimum. The governments should force higher targets but have no personal incentives to aim for the fantastic levels achieved by internationals in Europe. Indonesia has a very large uneducated population. UK government and Universities are working hard with Indonesia on this. We all need to help with the following priorities: • Produce and personally mentor the best young engineering prospects and get real technical training done here in Indonesia

27,191,475

38,808,740

Nov Des

-

• Slim down extravagances and extras in our buildings to save materials • Press Governments to make quick decisions and cut red tape on land and permits to allow new projects to proceed legally • Lobby for greater long term investment in infrastructure.

Malcolm (center) at the opening of the first independent plant in Indonesia 1982 . The largest nonoil project at that time. British investment.

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THIS MONTH'S FEATURES

Poonam Sagar

Certified Project Management Professional, Technology and Online Media Consultant at PT Infotech Solutions (www.infotech.co.id) an international IT firm empowering media broadcasters, content providers and distributors to optimize business processes with integrated, scalable and optimized IT solutions.

Planning For a Disaster:

Data Backup and Recovery In the constantly evolving technology driven world, companies struggle with increasing amount of data being stored on the networks of small and medium-sized businesses. Data that users want to be able to access wherever they are from a variety of devices including; smart phones, tablets and laptops. Imagine for a moment that one day you go to work to find that all your company data – emails, documents, databases, contact lists, accounting data, billing information, etc. – has simply vanished, permanently. Gone is everything that makes your company what it is and that has allowed it to operate and grow as a business. How soon can this data be recovered, and what can be the impact of this loss to your business? With the growing value of data as a strategic corporate asset, data backup and its recovery is possibly the most important part of your IT infrastructure. Odds are that at some point your company will experience a computer crash, virus, or some other disaster that will affect your data storage. Without a well thought out data protection strategy you are placing your business at risk for eventual disaster. The challenge is to implement a reliable backup and recovery solution in the most efficient, cost-effective manner. Threats to your business and your data range from acts of nature, such as earthquakes, and floods; to crashed servers or corrupted hard drives; to simple data loss caused by employees walking out the door with laptops or USB drives. Think of backup and disaster recovery as an insurance policy for your data. Just as you would never consider driving a car without auto insurance, you shouldn’t use data without having data recovery insurance.

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MARCH/APRIL 2013

Getting it right So what makes an effective data backup strategy? The first step is to know what needs to be backed up and archived. Backups are copies of active data for short-term use and are frequently overwritten with updated versions. Archives, on the other hand, contain static data, such as inactive document files and old emails. An effective data backup plan consists of five parts: 1. Plan for data backup a) What data needs to be backed up b) Where to keep the backup c) Store a full backup at another location or online to protect against fire, theft or other disasters d) Quarterly or annual backup for critical data. 2. Create a backup routine a) Data backups to be regular scheduled daily tasks b) Who will backup data c) Wherever possible automate the backup process. 3. Custom backup strategy for business needs a) Determine the best schedule for data backup based on how often the data changes. b) Supplement full backups with incremental backups. 4. Test the backup periodically a) Ensure backup data fidelity by attempting to restore them to an alternate location. This will bring out any flaws or corrupt data before it is too late.

b) Use backup applications that generate a reports or logs to quickly identify any problems or skipped files in the backup job. 5. Backup of a backup of a backup a) A backup is more than simply moving email, financial documents or other important files off to an external hard drive or removable disk. Simply moving data from one location to another isn’t giving you any extra protection in case disaster strikes. If there aren’t at least two separate copies of your data, it isn’t a backup at all. b) While a single backup may be a good start (two copies of irreplaceable files), there is still some risk for data loss, especially if both copies are kept in the same location. c) The best protection against data loss, especially from catastrophic events, is having at least three copies of your data (the original files, an easily-accessible backup and a protected copy of your backup). While some large companies may use dedicated off-site data storage services for this, a business doesn’t have to be big to have three copies of your data. Even something as simple as using an inexpensive online backup service to keep a third copy of the data is sufficient. Any business that cares about the security of its data needs to have an effective backup strategy to guard against inevitable data loss. Given the overall negative impact permanent data loss can have on a company, up to and including its bankruptcy, a data backup and recovery strategy that is effective is essential.


LIFESTYLE & HEALTH

Wendy Kusumowidagdo She is the Senior Consultant for Outward Bound Indonesia. An international licensed organisation for outdoor learning, focuses on maximizing businesses performance by empowering leadership, developing winning attitude and building teams. To learn how we can help you accelerate your teams, visit www.OutwardBoundIndo.org

Summer Camps for Teenagers

Attending School of Balanced Lifestyle = Holistic fitness This morning when I turned on the TV, there was a feature news report on the alarming and heartbreaking rate of obesity in America being more than 30 percent. They say that more kids and teenagers are inflicted with obesity, versus more adults 15 to 20 years ago. It concluded that fitness was not only a diet issue or how little or how healthy people ate, but more importantly it comes from a holistic lifestyle and wellness. Like adults, teenagers who lead a balanced lifestyle, are active and have a positive self-image are more likely to be physically fit also.

Teenagers today live in a cyber world, which means they interact with people through gadgets more than they do in person. This reality can pose advantages and disadvantages. Advantages being speedy communication and access to information. On the flip side, disadvantages of technology on teenagers can be lack of inter-personal and social skills. When we interact with other people in person, we exercise and balance our minds and our bodies. For example, when we talk to somebody in person, not only do we hear their voice, but also listen to them through their body language. Also, when we are listening to a person talking, we must use our senses effectively to be able to gain a more complete understanding.

Which one is your teenager: Book smart or Street Smart?

When talking about youth development, I’m a firm believer of the importance of school of formal education, as it cements one’s basis of knowledge and skills. However, at the same time, teenagers must learn to balance book smarts and street smarts. I personally believe that in the grand scheme of things in life, with ample book smarts someone will get further in life with the right attitude. There are many ways and channels to get teenagers to attend the school of life, while being active and having fun.

Adventure summer camps: a fine alternative to attend School of Life When a teenager is active and involved in a community-based activity where they are exposed to unfamiliar elements, they are impelled to apply their skills, knowledge and attitude. Summer camps where teenagers would do outdoor activities together such as hiking,

canoeing, rock climbing, orienteering, pitching a tent, cooking etc. will teach them a multi-faceted life lessons. By going back to basics, teenagers will learn to adapt in an environment that is quite foreign and uncomfortable for them. By giving them basic tools, teenagers will learn about craftsmanship. By doing activities in nature, teenagers will develop physical fitness. By doing things together in a team, teenagers will learn about leadership and teamwork. By interacting with local communities, teenagers will learn about service and how to be humble. By doing adventurous activities, teenagers will learn to break away from their comfort zone and expand creativity. By exploring new things, teenagers will get to be young and courageous. There are many avenues to explore when it comes to Youth character development. Formal education is great, but done alone will not sustain. Informal character education certainly can be a fine complement. It has many shapes and forms, and adventure camps are one of them. Essentially, a good adventure camp can provide a host of benefits for teenagers to learn about life, develop their attitude while staying active and having fun.

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LIFESTYLE & HEALTH

Dr Lynette Ngo MBBS (s'pore), M Med (int Med), MRCP (UK), Dip Palliative Med Raffles Cancer Centre Medical Oncology Dr Ngo’s areas of interest are in breast and gynaecologic cancers, psychosocial oncology and palliative medicine, in addition to general medical oncology

The Silent Killer

OVARIAN CANCER -

Ovarian cancer is the most lethal gynaecologic malignancy. Worldwide, more than 140,000 cases are diagnosed annually, representing more than 4 percent of all cancer cases in women. As these ovarian tumours cannot be detected early in their development, they account for a disproportionate number of fatal cancers, being responsible for almost half of the deaths from cancer of the female genital tract. Risk Factors:

Symptoms:

Older women are more likely to develop ovarian cancer than younger women. About 90% of women who get ovarian cancer are older than 40 years of age, with the greatest number aged 55 years or older.

At the early stages, ovarian cancer may not cause obvious symptoms. However, as the cancer progresses, some of the following symptoms may be experienced: • Lower abdominal or pelvic pain • Lower backache • A swollen or bloated abdomen • Nausea, indigestion, or change in bowel habits • Feeling persistently tired • Breathlessness • Frequent urination • Unusual vaginal bleeding (heavy or irregular periods, or bleeding after menopause)

Although it is not known exactly what causes ovarian cancer, certain traits make some women more susceptible than others to develop ovarian cancer. • Inherited genetic mutations, including mutations in the BRCA1, BRCA2, MLH1, MSH2 or MSH6 genes. • A first degree relative (mother, sister or daughter) with ovarian cancer. • A personal history of breast cancer prior to age 40. • A personal history of breast cancer prior to 50 and one or more close relatives with breast or ovarian cancer at any age. • Two of more close relatives with breast cancer prior to age 50 or with ovarian cancer diagnosed at any age. Lesser risk factors include the following: • A history of infertility and/or use of assisted reproductive therapies, such as in vitro fertilization (IVF). • A history of endometriosis (a condition in which tissue from the lining of the uterus grows outside of the uterus). • A history of hormone replacement use for the management of symptoms related to menopause. • A personal history of breast cancer diagnosed after age 40 with no family history of breast or ovarian cancer. • Obesity. • Women who have never been pregnant.

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MARCH/APRIL 2013

the following ways: - Intravenous: Where drugs are infused directly into the veins - Intraperitoneal: Where drugs are infused directly into the abdominal cavity • Targeted Therapy Efforts to improve survival in ovarian cancer have increasingly been focused on targeted drug therapies that interfere with specific molecules and pathways involved in tumour growth and progression. Targeted cancer therapies hold the promise of being more selective for cancer cells than normal cells, thus harming fewer normal cells, reducing side effects, and improving quality of life.

Treatment: Ovarian cancer is a disease best managed by a multi-disciplinary team in a tertiary hospital with a combination of surgery, chemotherapy and in some cases, targeted therapy. • Surgery Approximately 70% of patients with ovarian cancer are diagnosed at stages 3 or 4. Even in the advanced stages, surgery is the mainstay of treatment, in combination with chemotherapy. Aggressive surgical resection has been shown to be a strong predictor for survival in advanced disease. Women with early stage ovarian cancer have excellent survival, with more than 85% living beyond 5 years. • Chemotherapy Chemotherapy after surgery is indicated in patients with a high risk of relapse after primary surgical treatment. Chemotherapy uses anticancer drugs to kill cancer cells which may be present after surgery. Usually, a combination of drugs is given. Drugs for ovarian cancer can be given in

Prevention: Because ovarian cancers often remain undiagnosed until they are large, or present on the ovarian surface from where they readily spread to the pelvis or abdominal cavity, many patients are first seen when the cancer is no longer confined to the ovary. Close monitoring of high risk women, genetic testing and employing prophylactic surgical removal of the ovaries and drug prevention for women with inherited genetic mutations are some preventive measures.

Raffles Medika Indonesia Menara Anugrah 1st Floor, Kantor Taman E3.3. Jl. DR Ide Agung Gede Agung Lot. 8.6 - 8.7 Kawasan Mega Kuningan, Jakarta 12950 Phone : (021) 5785 3979 Fax : (021) 5785 3977 24 Hour Hotline: (65) 6311 1111 Email: enquiries_indonesia@raffleshospital.com


Bring Y Bring Your our F Family amily ffor or A D Day ay o off F Fun un Brought to you by:

Join Us!

Mark the dates! Note: Now on Saturday

23rd May: 24th May: 25th May: 26th May:

Highland Gathering Golf (13.00) The JHG Reception and Scotland in Concert (18.30) The Jakarta Highland Gathering (9.00 - 19.00) Kid’s Charity Day (10.00 - 16.00)

For further information : www.jkthighlandgathering.org/2013 or email : jhg@phoenix.co.id

The Jakarta Highland Gathering is an annual event which combines a traditional Scottish Highland Games with a fun family festival. There’s a dedicated Kid’s Area, a Food Festival with over twenty restaurants (and all day live music), a dance stage featuring everything from Highland dancing to Salsa and a host of sporting competitions.

Team Sports

Spectacle and Tradition

Dances Great Fun for Kids

Lots of Food Choices

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LIFESTYLE & HEALTH

John Arnold John Arnold currently serves on the BritCham Board of Management and is a Partner at Arghajata Consulting. He has been located in Indonesia since 1983. He has served variously as first vice-chairman of the International Business Chamber and as a board member of Eurocham. From 2002-04 he was chairman of Britain in Asia Pacific, the regional association of British chambers of commerce and business associations. He is a member of the Council of Trustees of the British International School in Jakarta.

How I was hand bagged; wet feet and other memories of Baroness Thatcher I am not sure whether I can accurately recall my first awareness of the then Margaret Thatcher MP. It is probably of her speaking at a Conservative party conference during the late 1960s. While at that time almost certainly not agreeing with her politics, I couldn’t fail to be impressed by the directness and clarity of her arguments. I would not have given a thought to her ultimately becoming Prime Minister, never mind her now being regarded by many as one of the world’s most influential post World War Two politicians and statesmen. I am not sure whether I can accurately recall my first awareness of the then Margaret Thatcher MP. It is probably of her speaking at a Conservative party conference during the late 1960s. While at that time almost certainly not agreeing with her politics, I couldn’t fail to be impressed by the directness and clarity of her arguments. I would not have given a thought to her ultimately becoming Prime Minister, never mind her now being regarded by many as one of the world’s most influential post World War Two politicians and statesmen. Nevertheless, few people expected Mrs. Thatcher to usurp Ted Heath as Tory leader and thus also as leader of the opposition in 1975. I was still in the UK in May 1979, when she became Britain’s first and so far only woman Prime Minister. However, individuals may have voted, I believe the vast majority of the electorate wanted change and a new approach to solving Britain’s chronic economic crises. That autumn I accepted a welcome transfer to Singapore and left Mrs. Thatcher to save Britain without me. I am not sorry I was away during the early period of the first Thatcher

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government. Those were very tough years to have been in the UK. Many, even among her own party, doubted whether Thatcherism would restore Britain’s economic competiveness. Despite all the ensuing economic turmoil, the winning of the Falklands War in 1982 re-united a much-divided nation. I was on home leave when many of the ships returned and the victory parades took place. You could not fail to feel pride at the bravery and brilliance of our armed forces. A new sense of national hope prevailed. Even so, when I was asked by my firm either to return to the UK or pursue the rest of my career in Asia, it was an easy decision to remain here. I could not have known then that even in Indonesia I would eventually meet Mrs. Thatcher and as she later became, Baroness Thatcher, on several occasions during the years that followed. By 1985, Margaret Thatcher had been reelected with an increased majority. She had survived an assassination attempt in 1984, and with her economic policies now finally reaping dividends, she was at the height of her power. Her visit to Indonesia in April of that year, the first and still the longest ever visit by a British Prime Minister, was an exciting event for both Indonesian and British residents alike. We had then only been in Jakarta 18 months. The day of Lady Thatcher’s death marked the 28th anniversary of that visit. My most vivid recollection is of attending the reception at the Mandarin Hotel on the evening of the first day of the visit. We did our best to arrive early as our invitation instructed, but the elements had a conflicting agenda. A downpour had transformed Jalan Thamrin into a lake. After water had seeped into

the floor of our car, we struggled to the ballroom flustered and somewhat disheveled and more than 10 minutes late. We need not have worried. The first sight to greet us was of a senior cabinet minister; his trousers rolled up while he rang out his saturated socks! The ballroom was almost empty as both the guest of honour and most other guests were still on their way. The Prime Minister and husband Denis finally arrived 45 minutes later. Mrs. Thatcher strode immediately to the front of the room just in front of us, grabbed a microphone and began by apologizing for keeping us all waiting. Barely pausing for breath, she then proceeded to congratulate President Suharto (who was not present) on the excellent job he was doing running Malaysia! The alert Denis, whispered into her ear: “Wrong country, my dear. Try Indonesia.” She smiled broadly and began again to the laughter of all. The ice was broken and she went on to deliver an otherwise faultless unscripted speech. She later mingled freely among the guests, listening intently to stories of the numerous challenges being faced by those British businessmen present. The highlight of her visit was undoubtedly her tip to Bandung where huge crowds of ordinary Indonesians turned out to greet her. She was to comment subsequently in her memoirs that this made her appreciate that she had by then become not just the leader of the UK’s government but was also an international leader. The by then Baroness Thatcher next visited Indonesia in late 1992, shortly after she had ceased to be an MP and two years after her resignation as Prime Minister. She may no longer have held


office but her opinion was still eagerly sought-after by the international community. She was accorded just as an enthusiastic a welcome by Indonesia as many incumbent heads of government enjoy. During this visit, BritCham’s predecessor organization, the Indonesia British Association was able to secure her to address the general membership. I was then vice-chairman and RM Hadjiwibowo chairman. It was almost certainly the largest event the old IBA ever organized, with well over 450 in attendance at the Mandarin. With Hadji and me seated either side of her, Lady Thatcher held court at the top table. As she listened and ate, she also scribbled notes on a card for the basis of her speech to follow, selecting her themes from the table banter. During the conversation, Lady Thatcher conveyed to us her personal admiration for the achievements of Dr BJ Habibie, then the Minister for Technology. She and he were old friends, fellow scientists and mutual admirers. As the conversation flowed, and the mood lightened, I dared to comment that despite Dr Habibie’s achievements, some questioned the appropriateness of all his policies. That was a mistake. No sooner were my words uttered than Lady Thatcher’s stare was fixed on me as she told me in no uncertain terms that should I ever again encounter anyone holding such opinions, I would be sure to immediately counter and correct them. There was no more to be said. I had been ‘hand bagged’ and understood, just a little, what it must have been like attempting to argue against her over policy during a cabinet meeting. Hadji went on to deliver what Lady Thatcher then said was one of the finest introductions she had ever received. Her own speech was wide ranging and held everyone enthralled. Q&A followed. The inimitable late John Read put the first question, as was usual at many of our events. Lady Thatcher demanded he stand up and be seen, and thus better

heard. John tried his best but could not do her bidding quickly enough. She asked him again and told John that she didn’t answer questions put by people she couldn’t see. It was then that someone at John’s table shouted aloud: “He can’t stand up, his legs are broken!” “ Very well”, she responded, “ I can now see you. You may sit down.” The brief exchange brought down the house. Later that evening, I attended a ceremony at which Lady Thatcher received a special award presented by Dr Habibie on behalf of the Indonesian Academy of Science. It was a very

Indonesian occasion and I think Lady Thatcher and I may have been the only Brits present. Lady Thatcher’s third and last visit was in 1995. It was part of a Citibank sponsored world speaking tour. At her insistence Lady Thatcher’s contract provided for her to have an event wherever she spoke with the local British community. The old IBA by then had become the Indonesian British Business Association. I was chairman and again we were given the opportunity to host a lunch. It was another spectacular success with literally standing room only for many guests.

Several cabinet ministers attended. There was no repeat of the ‘hand bagging’ incident. John Read, his legs by then recovered, distinguished himself once again. As I escorted Lady Thatcher out through doors of the Mandarin ballroom following the lunch, John had the temerity to run round through another door to be standing in front of us both with three open copies of the just published Downing Street Years. “ Lady Thatcher, would you be kind enough to sign these copies for my children?” pleaded, John. Without missing a beat Lady Thatcher obliged. I like to think that John’s daughters still have their copies. Lady Thatcher was noticeably more relaxed and I found her to be excellent company. I sensed that by then she had become reconciled to being no longer in government, which had not been the case in 1992. I can readily understand how many people who knew her well recalled her personal kindnesses on her death. I last saw her for the last time later that day. Ironically we finished as we had begun ten years earlier. The British Council was to host an early evening event for Lady Thatcher at the Hotel Shangrila. I had promised her at lunch that we would only then say our goodbyes. She had also wanted to meet Gillian. Yet again the heavens conspired to intervene. Jakarta was once more awash. I arrived for the 5pm start together with Gillian just before 6pm when the event was scheduled to end. We were almost the first to arrive. Lady Thatcher was just about to leave after waiting in vain for the arrival of her guests. On seeing us, she stopped and told her minders to wait while she gave us both time and particularly Gillian. It was a small but very personal kindness and one I shall not forget. She was a very remarkable individual that few will ever emulate. I was glad and privileged to have known her, however briefly.

www.britcham.or.id | 45


LIFESTYLE & HEALTH

THE PILLARS OF THE EARTH Ken Follett

Plot Summary The central plot element of The Pillars of the Earth is the construction of a new cathedral in the fictional English town of Kingsbridge during the 12th century. But the story is really about the conflicts between the people building the cathedral and those who want to destroy it. It is the early 12th century and England is about to erupt into civil war. The new prior of the monastery at Kingsbridge is determined to rebuild the current run down cathedral into one that will glorify God. He finds a young master builder who shares his vision of building the most beautiful cathedral in England. Unfortunately, the local bishop is a power hungry man with other plans. He works to disrupt the prior's eorts at every turn. His frequent ally in this is a cruel and vengeful earl consumed by his own greed.

Thoughts The story kept my interest and flowed well. The book is 970 pages but doesn't feel long at all. With a story spanning over 50 years (1123-1174) those pages are all needed to weave this multi-generational story together eectively. It's like a medieval emotional roller coaster. There are moments of love, joy and happiness mixed in with scenes of greed, cruelty, violence and tragedy.

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The book is divided into six parts with a drawing of the cathedral in its current state for the start of each part. The drawings are well done and a nice touch. It was interesting to learn more about medieval life while reading this book. Little everyday practices like people walking right into someone's house unannounced or bringing your horse and other livestock inside the house added flavor to the story.

This is one of those books that so engrossed me in the story, it made me want to play a computer game related to the storyline. In this case, it was Lords of the Realm II where you compete against other nobles (including an untrustworthy Bishop) to control the realm. Source: http://www.squidoo.com/the-pillars-of-theearth-book-review


This Month in History 1

May M

8

M day a holiday and May sspring festival since aancient times

June 1898 Britain signed a 99-year lease for Hong Kong

M 1937 12 May

George VI was crowned at G Westminster

2

15

M May 1611 King James’s Bible K was first published w

June 1215 King John set his seal to Magna Carta

M 1859 22 May

7

Sherlock Homes creator S Arthur Conan Doyle was born in Edinburgh

M May 1945 N Nazi Germany surrendered to the Allies

10 MMay 1940

28

Winston Churchill becomes Prime Minister

11 MMay 1812

Winston Churchill becomes W Prime Minister

21

June 1982

30

June

Prince William (William Arthur Philip Louis) was born

May 1979 William Pitt the Younger was born and went on to become Britain’s youngest Prime Minister

1

June 1946

6

June 1944

Television liscences were introduced for the first time

D-Day invasion of Normandy by Allied troops

Tower Bridge was officially opened by the Prince of Wales

www.brit www. www.britcham.or.id britcham.or.id cham.or.id | 47


LIFESTYLE & HEALTH

May Day History and Folklore In medieval times, May Day was often celebrated by young men and women dancing on the village green around a specially-decorated tree called a maypole. The branches of a slender tree were cut o, coloured ribbons tied to the top and the revellers held on to the ends of the ribbons and danced. Some villages still carry on the tradition today. Before the dancing began there was also a procession led by a woman appointed May Queen for the day. Sometimes she was accompanied by a May King, who dressed in green to symbolise springtime and fertility.

In Germany, it was the tradition that a fir tree was cut down on May Eve by young unmarried men. The branches were removed and it was decorated and set up in village square. The tree was guarded

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all night to prevent it being stolen by the men of a neighbouring village. If the guard was foolish enough to fall asleep the going ransom rate for a maypole was a good meal and a barrel of beer. A similar festival existed in ancient Rome called Floralia, which took place at around the end of April and was dedicated to the Flower Goddess Flora. On May 1, oerings were made the goddess Maia, after which the month of May is named. Pagan groups call the fertility festival by its Celtic name of Beltane. The church in the middle ages tolerated the May Day celebrations but the Protestant Reformation of the 17th century soon put a stop to them. The Puritans were outraged at the immorality that often accompanied the drinking and dancing - and Parliament banned maypoles altogether in 1644. But when Charles II was restored to the throne a few years later, people all over the country put up maypoles as a celebration and a sign of loyalty to the crown. May Day had a boost in popularity again in the 19th century when the Victorians seized on it as a "rustic delight". But many of the significant pagan aspects of the day were ignored by our strait-laced ancestors and instead of a fertility rite, dancing around the maypole became a children's game. For traditionalists other things to do on May Day include getting up before dawn and going outside to wash your face in dew - according to folklore this keeps the complexion beautiful. "Bringing in the May" also involves getting up very early, gathering flowers, making them into garlands and then giving them to your friends to wear. If you are feeling particularly charitable, folklore advises that it is good time to make up a "May basket" of flowers to take to someone who needs cheering up.

http://news.bbc.co.uk/2/hi/special_ report/86133.stm


MEMBER'S ANNOUNCEMENTS

Etihad Airways announces strongest ever first quarter results

Etihad Airways, which this year celebrates its 10th anniversary of operations, has recorded its strongest ever passenger and cargo results for a first quarter. The Abu Dhabi-based airline posted Q1 2013 passenger revenues of US$900 million (2012: US$758 million), an increase of 19 per cent; and cargo revenues of US$193 million (2012: US$165 million), an increase of 17 per cent. Passenger numbers in Q1 2013 grew by 18 per cent, rising from 2.3 million to a record 2.8 million. Revenue from codeshare and equity partners jumped by 34 per cent from US$136 million to US$182 million in the first three months of the year and represented 20 per cent of total revenue in the quarter. Another Etihad Airways’ highlight during its 2013 first quarter is the launch of its daily flights from Abu Dhabi to Washington D.C., the fourth North American destination for Etihad Airways after New York, Chicago and Toronto.

OUTWARD BOUND® INDONESIA’S EVENTS Outward Bound Indonesia’s POWER TEEN Camp & Expedition is coming back this summer. This adventurous summer camp is opened for teenagers aged 11 – 18. The theme this year is Lake Summer Holiday where teens will experience Outward Bound’s water, climbing and trekking adventures while island hopping, experiential learning about the local cultures & eco biodiversity, and doing community service. Teens will also experience floating camps in a unique, picture perfect natural surrounding. For information and enrollment please contact info@outwardboundindo.org Turning Disability into Achievement:

Giving a Second Chance at Life “ Tu r n i n g Disability Into Achievement ” is an annual scholarship program initiated by Outward Bound Indonesia given to people with physical disabilities to help empower them, restore their confidence, transform their mindset, turn hopelessness into hopefulness and essentially give them a second chance at life that they deserve. Hundreds of blind, mute & deaf and physically disabled scholarship recipients have come through to an Outward Bound empowerment program every year and undergone

a life-changing experience. This year the program will take place from 24 – 27 July 2013 at the OBI Eco Campus. Make an Impact and be a Sponsor You have the power to make an impact on these people’s lives. Please join us in helping them. Learn about how Your Organization can help empower more people with disability, be involved and be a Corporate sponsor. For more information about the program and sponsorship opportunities, please contact info@ outwardboundindo.org

www.britcham.or.id | 49


NEW MEMBERS

INDIVIDUAL MEMBERSHIP

Mr. Cameron John Sheild cameron.sheild@aon.com

Mr. Terzian Ayuba Niode ayuba12@gmail.com

Mr. Steven Piro steve@synergycarbon.com

STANDARD MEMBERSHIP

www.gms-financial.com markblackwell@gms-financial.com

Mr. Paul Beale CEO

Mr. Payam Jasem Marketing Manager

Mr. Mark Blackwell Consultant (Life Insurance)

Founded in 1996, GMS Global Management Services is one of Asia's leading professional Financial Advisors with well over 100 years of combined experience in the wealth management arena. With emphasis on strong long term relationships with clients, consultants at GMS are qualified and trained to international standards to ensure clients are provided with the best advice.

info.jakarta@kempinski.com

Ms. Ferita Tanudjaja Director of Finance

Mr. Dery Sukma Director of Sales & Marketing

Mr. Mohamad Daud People Training Manager

Located in the Central Business and Embassy District, Hotel Indonesia Kempinski Jakarta balances sophistication and elegance. Directly facing the famous landmark Bundaran HI, which features the iconic Fountain and the Welcome Statue, this fullyrestored historical building marks the revival of the first five-star hotel in Southeast Asia. Mix business with pleasure as it is adjacent to the luxurious Grand Indonesia Shopping Town, a mixed-used complex with premium facilities, one-stop solution for staying, working, meeting, shopping, dining and entertainment, Hotel Indonesia Kempinski Jakarta will be the best option for visitors who look for first class service and facility.

www.kpiconsultancy.com info@kpiconsultancy.com

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www.mri-group.com shanti.dewi@mri-group.com

KPI help companies and individuals to achieve better results from their business communications. After attending our in-house or public training workshops and seminars, delegates are equipped with the skills they need to help them achieve their goals. Participants learn proven techniques to get more time, improve their bottom line, increase sales or reduce stress. Professionals of all levels can learn simple, functional ways to communicate better and make a positive difference at work.

MRI Group is the world’s 3rd largest independent non-ferrous concentrates and bulk commodities trader with 2.1 million tons traded in 2011. With CWT Singapore-listed logistics group as our parent company, MRI has expanded into the energy sector, trading Coal, Gasoline, Naptha and Biomass. PT MRI Trading is also actively involved in the Domestic coal trade. The Group has a global presence in more than 20 countries worldwide with main offices in Singapore and Zug. MRI’s business model are Low-risk physical commodity arbitrage, sourcing and delivering products to our buyer; Active hedging of all index price exposure for the trade while protecting profitability; Strong emphasis on active management of all credit and operational risks

Mr. Nick Blake Director

Mr. Kirk Evans Director

Mr. Winston Bonawi – Tan Mr. Rendy Soenarso V.P. Domestic Trading V.P. Biomass Trading

MARCH/APRIL 2013

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in pla Li so ce mi m s t Ap e y ava ed pl ear ila y To gro ble da up y! s-

Learning Together is Fun!

In our Primary School the pupil teacher relationship is crucial and we consciously offer a happy, safe, caring and practical environment to learn in. We focus on independence and skills development, with a balance between adult led and child initiated activities. Oh, and we have fun too!

For 2012/2013 enrollments, please contact Admissions today. www.britcham.or.id | 51 Tel: (62-21) 745-1670 • Fax: (62-21) 745-1671 • E-mail: admissions@bis.or.id • www.bis.or.id PRIMARY Ad ANZA i dd 1

10/8/12 5 51 PM


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Up.Date March April 2013  

The British Chamber of Commerce /in Indonesia second edition of 2013 with a central focus on infrastructure in Indonesia. Key contributions...