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Published by President University /// Display until July 12, 2010 /// N0. 13

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Agus Martowardoyo: Top Banker, True Reformer JAKARTA (TPP) — President Susilo Bambang Yudhoyono last month showed who was in charge of the nation by appointing a reformer, Agus Martowardoyo, as finance minister to replace Sri Mulyani Indrawati, a reformer in her own right who had earlier resigned to take a post as managing director at the Washingtonbased World Bank.

He is seen by many as a reformer, which is considered critical to attract muchneeded foreign direct investment, spur economic growth and create jobs, as Indonesia, a G-20 member, seeks a higher profile on the international stage and an investment grade credit rating.

I

n making the announcement, the President noted that Agus, who had just been reelected Bank Mandiri president director, is capable of taking up the ministerial job due to his international exposure. Born in Amsterdam on January 24, 1956, Agus completed his undergraduate studies at the Faculty of Economics, University of Indonesia, in 1984. Agus then took part in several banking and management courses in State University of New York, Standford University, and the Institute of Banking & Finance, Singapore. He started his banking career as an international loan officer at Bank of America’s Jakarta branch and then moved to Bank Niaga as vice president and stayed there for eight years before jumping to Bank Bumiputera as president director in 1995. Three years later, he was appointed president director of state-owned Bank Expor Impor Indonesia. In 2005, he was appointed as president director of Bank Mandiri, the country’s biggest state lender, where he cut nonperforming loans and raised the bank’s profile among international investors, delivering strong performance in terms of net profit and share price. The stock, up 18 percent this

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year, has outperformed the broader market this year and last. Agus is seen by analysts as an investor-friendly minister and is well-known to many international investors. Many had actually expected him to be picked to join the new cabinet after the 2009 elections. Agus’ appointment signals Southeast Asia’s biggest economy will stick with its reform agenda.

During his time at Bank Mandiri, he cut non-performing loans and raised the bank’s profile, delivering strong performance in terms of net profit and share price. He is most notably credited for revitalizing an almost-bankrupt private bank, PT Bank Permata, into a stable performer during his time as president director from 2003 to 2005.

He is seen by many as a reformer, which is considered critical to attract much-needed foreign direct investment, spur economic growth and create jobs, as Indonesia, a G-20 member, seeks a higher profile on the international stage and an investment grade credit rating. “This is positive,” said Kevin O’Rourke, a political risk analyst based in Jakarta. “Agus has a track record of standing up to vested interests such as the bank’s bad debtors that were there when he took over Mandiri. The appointment signals meritocracy will continue in the finance ministry instead of patronage.”

Moody’s Investors Service says that the appointment of Agus as new finance minister could reinvigorate the improving trend evident in Indonesia’s sovereign credit profile. “The key elements of likely credit support would derive from various considerations, including those of a political nature and those related to the actual career and experience of Mr. Martowardojo,” says Aninda Mitra, a Moody’s Vice President and Senior Analyst. “With this appointment, key fiscal policies and budget management goals are not expected to shift significantly from the appropriate positions set by the for-

IDR 20,000

mer finance minister.” “Agus is well regarded by the financial markets on account of his successful career as a banker and as a reformer of state-owned financial institutions; in particular, he is well known for his strong management abilities and personal integrity,” says Mitra. “Agus could boost coordination between the Finance Ministry and Bank Indonesia, the country’s central bank. Such a development would in turn strengthen the broader institutional setting for overall economic management in Indonesia.” Moody’s notes that Indonesia’s political and financial system as well as its government finances have come a long way since the 1997-1998 Asian financial crisis. The country’s economy and credit fundamentals have proven resilient in face of the global economic crisis of the last two years and the preceding series of commodity shocks. As such, this particular transition at the Finance Ministry could ensure policy continuity, represent a stable political com-

promise, and enhance policy coordination between fiscal and monetary authorities. These developments could in turn continue to provide lift to Indonesia’s credit fundamentals, says Moody’s, which has a Ba2 rating with a stable outlook for Indonesia. In fact, Agus was also the President’s choice of Bank Indonesia governor in 2008, but was rejected by the House of Representatives that appeared keen to undermine the executive branch’s political power. This time around, the House uninamously endorsed Agus as the new boss at the helm of the finance minstry, a sign that the longtime banker is actually in good terms with legislators. To what extent the nature of that relations is will come to the test as the Golkar Party last week warned the upcoming deliberation of the 2011 draft state budget at the House of Representatives would face a deadlock if the government refused to approve the party’s demand for Rp 8.4 trillion (US$916 million) in the

so-called “aspiration fund”. Golkar’s Harry Azhar Azis, who chairs the House’s budget committee, said the party would insist that the next state budget allocate the fund as part of development spending as Agus had never rejected the initiative. “The finance minister said the proposal could be discussed together,” Harry said. However, Agus is also on record as having told a House plenary meeting last week that “the proposal might violate some regulations.” According to the proposal each of the 560 House lawmakers would receive Rp 15 billion to help develop their respective electoral districts as part of their accountability for their constituents. The House and the government are slated to start deliberating the draft budget this week in what could be a defining moment for the new finance minister.

President: RI Serious on Preserving the Environment President Susilo Bambang Yudhoyono said that to Indonesia preserving the environment is an article of faith. In a statement on the occasion of World Environment Day 2010 at the State Palace here this week, he said: “Let us from now on be more serious in preserving our environment.” He called on regional leaders to involve colleges and non-governmental organizations in the endeavors, and urged local governments to be more careful in issuing permits to use forests and land . The president also urged regional leaders to rehabilitate damaged mangrove forests in their respective jurisdictions. The President also hoped regional administrations would allocate sufficient funds to recruit the needed personnel to maintain mangroves forests such as forest rangers. Indonesia has at least eight million hectares of mangrove areas throughout the archipelago, mostly in Sumatra, Java and some other regions. “They are very important ecosystems on beaches, If they are damaged, the life of fishes, birds and clear water supply will be disrupted. They also function as barriers against tsunami which can greatly affect life on land,” he said. Greenpeace hails SBY`s deforestation moratorium plan

Greenpeace has hailed President Susilo Bambang Yudhoyono`s plan to declare a moratorium on deforestation that he expressed before the signing of an agreement between Indonesia and Norway on forest conservation worth US$1 billion in Oslo on Wednesday. Greenpeace`s chief forest campaigner for Southeast Asia Bustar Maitar said: “We hope the president would soon implement the moratorium and stop all peat land and forest conversions.” The governments of Indonesia and Norway signed in Oslo on Wednesday a Letter of Intent (LoI) on forest conservation worth US$1 billion as part of their joint commitment to overcoming climate change.

Kadin Eyes US$5 billion in Singaporean Investment The Indonesian Chamber of Commerce and Industry (KADIN) intends to attract US$5 billion in investment from Singapore this year. “We have targeted to see Singaporean investments to will grow 10-15 percent from US$4.3 billion last year,” Iwan D. Hanafi, chairman of KADIN`s Singapore committee, told Antara

on the sidelines of a conference themed “International Arbitration in Indonesia: Practice and Procedure/” According to him, data released by the Singaporean government stated that in the first quarter of 2010, Singaporean investment in Indonesia reached US$678.8 million.

He said the figures are most likely to grow rapidly and result in an annual aggregate surpassing last year`s. “Unfortunately, there are technical problems, including in practices and procedures in regulations,” he said. To limit the impacts of those problems, KADIN has approached various stakeholders to

talk about arbitration from the practice and procedure points of view in international businesses. “That`s what we have done to increase investments in Indonesia,” he said. Legal issues are very important in ensuring the success of an investment, he said, adding that potential investors also need to know about Indonesian laws.

VIEWPOINT

THE ECONOMY

BUSINESS

RETAIL

Ushering in a new era in RI-US relationship

Government to focus on five industries

Garuda Indonesia to boost tourism in East Indonesia

Trans Corp set to enter fortune 500 after controlling Carrefour Indonesia

Indonesia looks forward to working closely with the United States in promoting multilateral diplomacy, including in moving forward the UN reform agenda, not least it’s Security Council. PAGE A2

The five prioritized industries are manufacturing, processing, automotive, petrochemical and oleochemical.

PAGE A5

Garuda’s Boeing 737-400 would start flying into Palu from Jakarta with a stopover in Makassar, South Sulawesi, on July 1, 2010.

PAGE B1

Indonesia’s indigenous businessman Chairul Tanjung was actually sending out the message that his Trans Corp would be the first to enter Fortune 500 before 2030. PAGE C1

The President Post/Nandi Nanti

Garuda Indonesia targets Rp 3.75 trillion in net income An engineer does repair work at the GMF Aerosia at Soekarno-Hatta airport, as Garuda Indonesia aims at a net profit of Rp 3.75 trillion in 2014 by adding new routes and aircraft that will bring its fleet of 54 units in 2008 to 114 units in 2014.


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Viewpoint Ushering in a New Era in RI-US Relationship Today, as fellow democracies, Indonesia and the United States share much in common.

T By DR Marty Natalegawa

Indonesia looks forward to working closely with the United States in promoting multilateral diplomacy, including in moving forward the UN reform agenda, not least it’s Security Council.

he idea of a comprehensive partnership between Indonesia and the US was first proposed by President Susilo Bambang Yudhoyono, when he spoke at the USINDO Forum “Indonesia and America: A 21st Century Partnership” in Washington DC, on 14 November 2008. The response of the United States was positive and immediate. Upon his visit, US President Barack Obama will find an Indonesia much transformed from the country he had left early in the 1970s. Indeed, change permeates in Indonesia. Then, in the early 1970s, it is fair to say that Indonesia was marked by a democratic deficit. Today, in sharp contrast, Indonesia is the third largest democracy in the world, a living proof that democracy, Islam and modernity can flourish together, and a testament to the fact that democracy, at all levels of governance, from national to local, is ultimately the best guarantor for national unity and cohesion. Indeed, I can find no greater contribution to the global cause for democracy and human rights in the past decade than that which has been achieved in Indonesia: the fact that nearly a quarter of a billion of humanity now enjoys rights and liberties hither-

to denied them. As we begin the second decade of the 21st century, Indonesia is reaping the democratic dividend of its transformation, [such as] in the peaceful resolution of previously intractable conflict situations. Here, resolution of the decades-long conflict in Aceh comes to mind. In the forging of an all direction foreign policy of a million friends and zero enemy, thus giving our independent and active foreign policy a 21st century context. In the democratization of its foreign policy, our leadership role in promoting democracy and human rights within ASEAN and indeed beyond to the Asia Pacific region, through the Bali Democracy Forum, are obvious examples. Contrast the situation three decades ago of an Indonesia whose development efforts was overseen by what was then called IGGI (Intergovernmental Group on Indonesia). Today, Indonesia occupies a permanent seat in the G-20, the premier forum on global economic issues. In short, Indonesia has changed. It has transformed for the better. It is democratic. Today, as fellow democracies, Indonesia and the United States share much in common. Through the upcoming visit of President Obama, we would very much like to see the promotion of a true partnership between fellow de-

mocracies that is forward looking and full of optimism about the potentials of the future rather than a relationship that is shackled by the failings of the past; a partnership which strengthens the capacity of our democratic institutions - one, however, that is at the same time cognizant of the importance of national ownership; a partnership which recognizes that even a young democracy like Indonesia has much to impart and share, based on its long held and practiced principles of moderation and tolerance. Thus, we are today witnessing a dynamic and fluid geopolitical environment, as evidenced by the ongoing discussion on the regional architecture. Our views are well defined. They are in keeping not only with our national interests, but also with the region’s collective interests. Our vision is that of an Asia Pacific regional architecture marked by inclusion rather than exclusion; of a constellation of inter-state relations marked by a concert, and indeed, a community of nations working hand in hand in promotion of regional peace, stability and prosperity, rather than one marked by the domination of one over the other. ASEAN has developed much since its inception. Despite the challenges it continues to face, the Association has in recent years undergone its own transfor-

mation. Indeed, in less than five years it is to achieve an ASEAN Community in the economic, politico-security and socio-cultural areas. It is by no means an accident that ASEAN’s ongoing transformation, catapulted at the 2003 ASEAN Summit in Indonesia, coincided with Indonesia’s own transformation. ASEAN Community-building is inseparable from the wider Asia-Pacific community-building. The various ASEAN plus processes with its Dialogue Partners, other related ASEAN¬led efforts, most notably the East Asia Summit and the ASEAN Regional Forum, as well as APEC are multi-pathways towards an Asia-Pacific community. From our perspective, the inclusion of the United States in the aforesaid evolving regional architecture offers positive potentials. And the road-map ahead is encouraging. The ASEAN-US Dialogue relations begun in 1977 and has over the past year enjoyed significant stimulus, namely the US accession to the Treaty of Amity and Cooperation as well as the convening of the First ASEANUS Leaders Meeting. With these important developments, the participation of the United States in the East Asia Summit is made more plausible. The financial, economic, energy and food crisis; threat of com-

municable diseases; the challenge of climate change and other transnational challenges such as terrorism—these are just a few examples that add to the list of so called traditional challenges such as conflict resolution in various corners of the world and nuclear disarmament and non-proliferation. They are multifaceted in their form and demand solution all at the same time. Above all, not a single one is ripe for solution at the national level. Indonesia looks forward to working closely with the United States in promoting multilateral diplomacy, including in moving forward the UN reform agenda, not least it’s Security Council. Indonesia envisages working closely with the United States in promoting greater understanding within the international community; in attaining the Millennium Development Goals; in achieving a world free from nuclear weapons; and in addressing the threat of climate change as well as in mitigating the effects of natural disasters. In facing all these issues, and more, Indonesia shall constantly present itself as part of the solution. Equality, mutual respect, common interests and shared benefits. These are key principles as we forge a comprehensive partnership to address the challenges of the 21st century, a comprehensive partnership that com-

plements and is consistent with our independent and active foreign policy, covering a widerange of sectors: education, science and technology, trade and investment, energy, food security, security, good governance, environment, and health - all sectors which are critical to Indonesia’s long-term development. Thus, for example, we must tackle head on the disappointing reality that the number of Indonesians studying in the US has declined significantly, from 14,000 a decade ago to some 7,000 today. This needs to be reversed again with an urgent policy of promoting educational linkages. We also need to ensure that a wide-range of key stakeholders are active in enriching this Partnership, including parliamentarians on both sides, business community, academics, informal leaders, journalists and the provinces. I am convinced that change in Indonesia, in our region and in the global milieu will usher in a new era in Indonesia-US relationship: a comprehensive partnership for the 21st century anchored in our commitment to peace, freedom, prosperity, rule of law and tolerance. This article is an abridged version of a keynote speech by the Minister for Foreign Affairs Republic of Indonesia at the USINDO Gala Dinner, Jakarta, March 14, 2010

The Birth of the Superhero By Dr Walter G. Tonetto

President University recently had the great honor of hosting a person who may be the closest thing to a superhero this side of Paradise: H.E. Lech Walesa, former President of Poland and Nobel Peace Prize Laureate in 1983.

W

alesa was not a hero merely of his nation but also of Europe, as the movement he headed brought down the repressive Soviet Union. A classic domino effect ensued, as the collapse of the Soviet Union created breakaway republics and ultimately ended the Cold War. The ripples of that monumental moment are still felt today and the consciousness for freedom that Walesa’s movement created has become a birth-right for everyone. How could an unemployed electrician set in motion a train of events that led to the demise of communism and to the birth of what is today a Republic? I’m not going into an analysis of the political events surrounding the historic event but will simply offer some suggestions as to how Walesa’s example can serve as an inspiration for us. But we need a few details to set us under way. Let’s sort out the names first. Solidarnosc, or Solidarity, is the name given to a giant cluster of trade unions in Poland. At the word’s root is the Latin word solidum (“whole sum”) and solidus (“solid”).That name proved to be prophetic: by early 1981 Solidarity had a membership of about 10 million people and represented almost the entire work-force of Poland. Walesa was the Chairman of Solidarity during those hard and dangerous times. In December of that year, when General Jaruzelski came under increasing Soviet pressure, martial law was imposed and leaders were thrown into jail. Parliament took the hint and officially banned Solidarity in October 1982. By then, the labor organization had begun fomenting change on an ever-grow-

ing scale, fed by the seeds of discontent of the people. What had been the thorn in the eye of communist apparatchiks? It was the publication of a Charter of Workers’ Rights in 1980 as a counterpoint to self-serving government decrees and communist principles: the official government ban and the tanks rolling out were thus the instruments to put an end to popular aspirations of workers’ equality and recognition of basic standards of decency. But the movement continued to operate underground, creating ever more potent cocktails of opposition.

A major contrast with Churchill is also Walesa’s fiery insistence on the possibilities of nonviolent change, fuelled by a deep-seated spirit for the harmony of all beings as perfectly encapsulated in Walesa’s well-known quixotic phrase: “Są plusy dodatnie i plusy ujemne.” (There is a positive plus and a negative plus). I’m not going into the repertoire of the Velvet Revolution here, a subject I can discuss some other time, but to focus on a few aspects of this remarkable movement spearheaded by Walesa. First of all, great leaders are not assiduous and sticklers to ossified

protocols but are more similar to firebrands or hurricanes sweeping in when barometric pressures and other weather conditions so permit. Billington’s definition of an apparatchik or bureaucrat stands in strong contrast to such spirits: “a man not of grand plans, but of a hundred carefully executed details.” Here we see Walesa, the worker, with Churchillean V-sign emerging from arms clad in a light summer jacket, and unlike the bowler-hatted cigar-pouting Brit sporting a cigarette: the contrast between Churchill the aristocrat and Walesa the common man. But the rallying pose is remarkably similar, though more light-limned and relaxed in the common man. A major contrast with Churchill is also Walesa’s fiery insistence on the possibilities of non-violent change, fuelled by a deep-seated spirit for the harmony of all beings as perfectly encapsulated in Walesa’s well-known quixotic phrase: “Są plusy dodatnie i plusy ujemne.” (There is a positive plus and a negative plus). It still confuses commentators, who rifle through grammar-books, and consult with textbooks on logic. But dependable augury for such meanings is more easily discovered in breviaries that pulverise conventional logic by insisting that all things, whatever their appearance, are essentially good, and if not good right now, can be turned towards good: here is the essence of Walesa’s inspiration and his political genius. “We’ve had enough generals. What Poland needs now are American generals: General Motors, General Electric and General Dynamics,” Walesa once said. The writer can be reached at tonetto@tonetto.org

Walesa, the worker, with Churchillean V-sign emerging from arms clad in a light summer jacket, and unlike the bowler-hatted cigar-pouting Brit sporting a cigarette: the contrast between Churchill the aristocrat and Walesa the common man. But the rallying pose is remarkably similar, though more light-limned and relaxed in the common man.


The President Post

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June 12, 2010 A3

Profile Photo: The President Post/Nandi Nanti

A Journey of an Inspiring Woman:

Herawati Diah

Herawati Diah, the late B.M. Diah, Rosihan Anwar, and Mochtar Lubis are considered to be the giants of Indonesian journalism of the 1945 Generation, or what many believe to be the nation’s “Greatest Generation”. By: Jeannifer Filly Sumayku

H

erawati Diah’s long and fascinating journey began in 1917, when she was born into an upper-class priyayi family, which allowed her to enjoy high education and a privileged, western way of life. While most intellectuals of the time were drawn to The Netherlands and Western Europe to further their studies, Herawati went to Columbia University and became the first Indonesian woman to obtain a degree from a respected American university. After a journalism course at Stanford University in California — between her principal studies of sociology at Barnard College at the Columbia University in New York — she returned home in 1942 as the first Indonesian woman journalist to be academically trained abroad. She became a stringer for the United Press International (UPI) newswire when she was 22, joined Radio Japan or Hosokyoku as an announcer, and later married the legendary journalist BM Diah, who was then working for the Asia Raya newspaper.

Herawati Diah, the late B.M. Diah, Rosihan Anwar, and Mochtar Lubis are considered to be the giants of Indonesian journalism of the 1945 Generation, or what many believe to be the nation’s “Greatest Generation”. BM Diah is the founder and owner of the newspaper “Merdeka”, which was first published in October 1945 with a personal mission and vision to enrich the intellect of post-Independence Indonesians. Herawati is the founder of The Indonesian Observer, which was launched on the eve of the AsiaAfrica Conference in 1955 in Bandung. The daily was the country’s first English newspaper and for some time the only one until the 1960s. Though Herawati was, as she acknowledged herself, a tomboy when she was a kid, she became a truly elegant Indonesian woman by wearing the Indonesian timehonored attire kain and kebaya on most events. When BM Diah became the minister of information in 1968, following his stints as ambassador to Czechoslovakia and Hungary,

the United Kingdom and Thailand, Herawati quit as a journalist. She went on to assume a new role, representing the country’s interests as a wife whose intellectual capacity and integrity, international experience and multilingual abilities helped to raise Indonesia’s profile in diplomatic circles. She is a pioneering Indonesian woman. In her book, “An Endless Journey: Reflections of an Indonesian Journalist”, she shared her experience as a woman journalist. She also discusses the transition of Indonesia from a Dutch colony to an independent republic and the life and times of five Indonesian presidents. In her book, Rosihan Anwar notes, “it’s interesting to watch Herawati’s life and career evolving pretty much in a manner that comes close to her own deep desires. In whatever field she chooses to work or carry out her hobbies, which are of a great variety, she has found inner satisfaction and complete fulfillment.” Now in her nineties, she doesn’t suffer from senility like most people of her age do. In a

In a recent interview with The President Post, Herawati Diah said that she likes to play bridge to maintain an active thought process.

recent interview with The President Post, she said that she likes to play bridge to maintain an active thought process. On changes in the media world in Indonesia, she said: “So far the media has only partly motivated the growth of our nationalism. The media of today is now commercially-oriented. Idealism is no more prevalent in today’s newspapers. I cannot blame those working in the media, because the upbringing and the political and economic settings are so different from what we experienced in the early years of our independence. We had different values in those days. We didn’t work for a salary, but for our idealism to become a free, independent nation after 300 years of western colonialism”.

She also shared motivations for young journalists, when she said: “Journalism is a profession which is not only exciting, adventurous and sometimes even dangerous, but most of all satisfying because a journalist not only informs the public what is happening on the national or international level on a daily basis, but also she or he can influence the reader to choose what is best for them.” She added: “As such I would like to encourage the younger generation to consider journalism as a positive career path.” When asked about her biggest hope for the media in Indonesia, she said: “What I personally would like to see is the media taking a balanced view on news. They must check and re-check

sources and stories all the time. They must also come up with more in-depth stories and respect people’s feelings and reputations.” Herawati has established many foundations to in the realm of the nation’s culture, such as the Indonesian Cultural Partners (Mitra Budaya Indonesia), Wastaprema, and Ratna Busana. In the social field, she founded the Indonesian Women’s Association (ISWI). She is also one of the founders of Gerakan Perempuan Sadar Pemilu (GPSP), a movement to raise Indonesian women’s level of awareness on matters related to general elections. In the course of time this organization became Gerakan Pemberdayaan Swara Perempuan, a movement to empower the voice of women.

She is a pioneering Indonesian woman. In her book, “An Endless Journey: Reflections of an Indonesian Journalist”, she shared her experience as a woman journalist. She also discusses the transition of Indonesia from a Dutch colony to an independent republic and the life and times of five Indonesian presidents.


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The Region THE ASIAN ECONOMY:

Moving to Center Stage Asia is returning to the center stage which it occupied for eighteen centuries before the rise of the West. By Atmono Suryo

F

PROFOUND CHANGES

or centuries Asia has always been considered by many to be the most impoverished and troublesome region in the world. During colonial times, there was the notion that, with teeming millions of the poor, Asia would continue to be a troubled region marked by hunger, disease and conflicts. Nothing could ever change the situation in that old continent. However, as stated by Kishore Mahbubeni in his book The New Asian Hemisphere: “For two centuries Asians – from Teheran to Tokyo, from Mumbai to Shanghai – have been bystanders in world history, reacting defenselessly to the surges of Western commerce, thoughts and power”. That era is now over, as he stated with confidence. Asia is returning to the center stage which it occupied for eighteen centuries before the rise of the West. The rise of the West transformed the world; the rise of Asia will also bring about an equally significant transformation. Looking back at the developments of Asia, one would recall that after World War II international observers were beginning to talk with disbelief (but with admiration) about the changes which began to take place in the region, which was ravaged by two big wars and many conflicts. It was at that time not expected that extraordinary developments could ever happen in Asia. Japan’s moves, together with other “Asian tigers”, were then considered as an Asian miracle. As was stated, Asia is beginning to move in the “flying geese formation”, bringing business progress to the region. During the last few decades phenomenal changes have taken place in the region, with China and India in the lead, followed by other emerging countries, including Indonesia. The region seems to be on the move again, this time in an integrated manner. It should be noted that Asia has absorbed many of the West’s best practices which are adjusted to the situation and the dynamics of the region. They include the following policy tools: market economics, including in the areas of trade, finance and business, innovative science and technology, meritocracy, and the rule of law. CENTER OF GRAVITY

Presently, the world community recognizes that the center of gravity of the global economy is shifting to Asia. Everywhere, the skyline of Asia is changing and the economic and business rhythm of the region is accelerating, triggering rapid developments and transformation in many economies of the region. Asia’s emergence is marked by its enormous size, in terms of population. Asia is home to over half the world’s population. With a population of almost 4 billion

people (3.7 billion in 2007), it is almost ten times bigger than the European Union with a population of 461 million or the United States with a population of 301 million. Within Asia, Indonesia with a population of around 235 million is the third largest country after China and India. GDP PROJECTIONS

As to the size of economies the following data (Figure 1) reflect the size of the Asian economies. The GDP of Asia in 2020 is expected to be almost at the same level of the United States or the European Union. This is a very significant development in the global economic structure. As rightly stated by the President of the Asian Development Bank, Haruhiko Kurida, Asia today has become an economic dynamo. Its success story is more than about rapid development, poverty reduction and its ever-expanding middle class; it is also about production and distribution networks that place Asian goods within easy reach of consumers around the globe.

The current view is that the application of the openmarket economic system, with all its shortcomings, has brought benefits to Asia, particularly in the area of trade expansion and the inflow of investment.

In 2009 the EU (European Union) was by far the largest exporting region, followed closely by Asia. It is not only the growth of labor-intensive industries, hightech production of intermediate goods, or the final products assembled in Asia’s myriad plants and industrial estates, as the President of ADB concludes; part of Asia’s success story is also the growing integration that is gaining momentum in this vast region. In addition to the development of trade-oriented activities, across Asia countries are building at high speed a remarkable number of infrastructure projects such as new highways, highspeed rails, subways, airports, seaports, telecom networks and other large-scale projects. There FIGURE 2. asia’s reserves

China

$2,447

Japan

1,043

Taiwan

355

India

279.1

South Korea

272.3

Hong Kong

258.8

Singapore

196.4

Thailand

144.2

Malaysia

95.3

Indonesia

71.4

Philippines Pakistan

46.2 15

FIGURE 1. GDP PROJECTIONS Populoation

GDP at market prices

(million)

Economies 2005 Cambodia

Average growth rate

($ billion) 2020

2005

2020

2005-2020

13.8

18.8

6

15

6.3

1,303.7

1,422.8

2,244

5,877

6.6

6.8

7.1

178

353

4.7

1,101.3

1,295.7

779

1,748

5.6

Indonesia

218.9

259.5

287

611

5.2

Japan

127.8

123.3

4,549

5,806

1.7

48.1

50.5

791

1,580

4.7

China, People’s Rep. of Hong Kong, China India

Korea, Republic of Lao People’s Dem. Rep.

5.7

7.2

3

5

3.7

Malaysia

26.1

31.1

137

313

5.7

Philippines

85.3

103.3

99

166

3.6

Singapore

4.3

4.9

117

240

4.6

Taipei, China

22.7

24.4

355

641

4.0

Thailand

64.8

69.5

176

347

4.6

Viet Nam

83.1

97.5

53

117

5.5

3,112.7

3,515.9

9,783

17,839

4.1

450.6

472.1

13,,568

19,176

2.3

Integrating Asia European Union United States World

296.4

331.2

12,376

19.904

3.2

6,128.1

7,462.1

44,309

75,001

3.6

Sources: Asian Development Bank

is recognition in Asia that good infrastructure drives economic growth and speeds up integration. Asia is must fortunate to be a cash-rich region. Asia’s reserves, especially that of China and Japan, are huge, followed by Taiwan, India, South Korea and Hong Kong (Figure 2). Asia has performed remarkably in the wake of the global recession, having the experience in overcoming the l997/98 Asia financial crisis. Asia has adopted the right monetary and fiscal policies to promote demand to counter falling global demand. Asia has also accumulated sizeable reserves to protect their economies against sudden reversals in the global economy. In terms of business, the region is experiencing a rapid development of its business networks in the areas of production, distribution and international trade, all of which are driven by market forces. Remarkable progress has been made by the business community of Asia, which includes an increasing number of Western and Asian large business enterprises (conglomerates/multinational companies). ECONOMIC AGENDA

The current view is that the application of the open-market economic system, with all its shortcomings, has brought benefits to Asia, particularly in the area of trade expansion and the inflow of investment. China, once a very dogmatic communist/socialist country, has adopted the free open-market economy and is now a world trade crusader. It is noteworthy that the Indonesian political elite is not comfortable with this system. It is increasingly recognized, however, that the doctrine of market economies has to be ad-

in billions

justed to local situations and demands of the region. With its large population, the countries of the region must continue to pur-

sue the goals of prosperity and the increase of employment opportunities. The present access to world sci-

ence and technology has made it possible for Asian countries to spread technology to many corners of their economies. The application of science and technology has become important instruments for countries in Asia to leap ahead. What is most amazing is the explosion of Asian R & D activities, combined with the immense growth of its brainpower sent to Western countries. It is reported that on many occasions Asian PhD students often excel in such areas as computing, physics, engineering and biotechnology. Throughout the Asia-Pacific region Asian students are present in Australia, New Zealand and Canada as well as in Europe. Not enough students, however, are going to the US, especially from Indonesia. One can predict that in the coming 5 to 10 years Asia will be facing a number of tough challenges, which include the following issues: • Asia, which is well represented in the G20, needs to assist the G20 to stabilize and reform the global financial systems and reform the global economic structure • It is becoming increasingly evident that the world expects

Asia to take the lead to consolidate sustainable recovery and attain global growth • Within Asia, the region will be hard-pressed to help strengthen its economy, including Indonesia’s, to achieve greater welfare and to reduce poverty and unemployment • To that end strenuous efforts will be required on the part of ASEAN to give strength to the Association to become an economic and political powerhouse in Asia (alongside China, Japan and India). • As Asia is moving to center stage, it will become increasingly urgent to boost the growing regional (East Asia) integration to achieve full momentum in this potential region, with the understanding that ASEAN would continue to be in the driver’s seat. As of next year, Indonesia will assume ASEAN’s chairmanship, giving the country a golden opportunity to strengthen its position and role in the region and to support the rise of Asia in becoming the epicenter of the world’s economy. The writer is former ambassador the EU.


The President Post

www.thepresidentpost.com

June 12, 2010 A5

The Economy Government to Focus on Five Industries

ECONOMIC UPDATES Irish companies show interest in Indonesia Irish Ambassador to Indonesia Richard O`Brian has said his country would increase bilateral cooperation with Indonesia in the field of economy and business, trade, and investment. O`Brian has dedicated Ireland Business Network to facilitate and to step up bilateral relations with Indonesia in economy and business, trade, and investment. “Trade value between the two countries reached 1.2 billion euro in 2009 with a surplus of 650 million euro for Indonesia and the rest was for Ireland,” O`Brian said. Irish companies at present are doing business in Indonesia, among others Kerry Group Plc, and Independent News and Media Plc AT PT Abdi Bangsa.

West Kalimantan offers 3 locations suitable for international seaports The West Kalimantan Transportation, Telecommunications and Information Agency has considered three locations suitable for international sea port. HeadoftheSeaTransportationDivisionoftheWestKalimantanTransportation, Telecommunications and Information Agency Bergowo said the three locations are Kijing Coast (Pontianak regency), Kura-kura Coast (Bengkayang regency), and Merbau Coast(Sambas regency). Pontianak regent Ria Norsan on a different occasion said the construction of an international port at Temajo Island may cost Rp7 trillion, but it would cost only Rp 3 trillion if moved to Kijing Coast, which is being reclaimed to 500 meters of the coast to reach a depth of 14 meters. As a CPO producer, West Kalimantan needs to use ports in Belawan (Medan) or Tanjung Priok (Jakarta) to export the commodity.

RI expects to earn $400 million from Shanghai Expo Trade Minister Mari Elka Pangestu has expressed hope Indonesia`s participation in the ongoing World Expo 2010 in Shanghai, China, will at least contribute US$400 million in foreign exchange earnings to the state. “The World Expo 2010 which will last until the next six months will hopefully attract up to 4 million visitors,” Mari said on the sidelines of a joint working meeting with the House of Representatives` Commission VI last month. Since the expo was opened early this month the Indonesian pavilion had attracted Mari Elka Pangestu a total of 596,525 visitors, she said. “If 400,000 of them visit Indonesia and spend around US$1,000 each during their stay, they will at least contribute US$400 million to the state coffers,” she said.

7 Districts receive state assets The Home Affairs Ministry handed state assets with a total value of Rp40.9 billion to seven districts, namely Tanah Datar in West Sumatra, Lebak in Banten, Kebumen in Central Java, Bantul in Yogyakarta, Lamongan in East Java, and Goa and Takalar in South Sulawesi. The seven districts are participants of Local Governance Reform Initiatives (P2TPD) program. Home Affairs Minister Gamawan Fauzi explained that the assets were from the investment of P2TPD program at its first stage from 2006-2008. Up to the end of 2009, the total funds from the investment had reached Rp110 billion. Situmorang said the mechanism of investment funds distribution to those districts was done through assistance duty mechanism.

Subsidized fuel consumption projected at 42.1 m kiloliters State oil and gas company PT Pertamina has predicted that the country`s subsidized fuel oil consumption in 2011 will reach 42.5 million kiloliters, a 6-percent increase compared to this year`s consumption forecast of 40.1 million kiloliters. Pertamina Marketing and Commercial Director Djaelani Sutomo said, “the increase in fuel consumption has already taken into account the forecast of economic growth and the increase in the number of motor vehicles.” The government is trying to lower subsidized fuel oil consumption by 4 million kiloliters this year to achieve the subsidized fuel oil target of 36.5 million kiloliters. Under the road map for subsidized fuel oil retrenchment, the government is expected to introduce a closed distribution system starting next year.

Photo: The President Post/Nandi Nanti

The five prioritized industries are manufacturing, processing, automotive, petrochemical and oleochemical.

T

he government is promoting the growth of five prioritized industries considered able to become the engine for the industry to grow more than seven percent in 2014. Industry Minister MS Hidayat said here recently the five prioritized industries are manufacturing, processing, automotive, petrochemical and oleochemical. “So, in the next 4.5 years the industry will grow by more than 7%. In the first quarter of this year, industry has grown 4.3%, up from last year’s 2%,” he said at a ceremony marking the extension of PT Indopoly Swakarsa Industry. With regard to processing industry, Hidayat said the government is emphasizing the development of industries that produce derivatives and with regard to automotive sector it is set to make the country the base of the industry. “My ambition is to move the production base here while Thailand is now dealing with political conflicts,” he said.

With regard to processing industry, Hidayat said the government is emphasizing the development of industries that produce derivatives and with regard to automotive sector it is set to make the country the base of the industry.

On the petrochemical industry, Hidayat said Indonesia wished to be able to produce naphta and condensate so that it would not import again. The government is meanwhile pushing for growth of downstream industries that give a large added value in the oleochemical sector, he said. Head of the Capital Investment Coordinating Board, Gita Wirjawan, said he was optimistic the government target of drawing Rp1,000 trillion in investment would be achieved through fiscal incentives. RI industrial exports up 36%

Indonesia`s industrial product exports in the first four months of 2010 jumped 36.66% to US$28.68 billion over the same period last year, the Central Bureau of Statistics (BPS) said.

Indonesia`s industrial product

Three leading Dubai companies interested in investment in Bogor are Al Badiya (Bristol), Moafaq Al Ghadah (MAG) Group of Companies and Thani Investments. Three companies in Dubai and Sharjah have expressed interest in investment in Bogor, West Java, in a meeting with a Bogor regency delegation led by Bogor Regent Rahmat Yassin in Dubai. Indonesian Consul General in Dubai Mansyur Pangeran flanked by Economic Counsellor Dede Achmad Rifai welcomed the business delegation from

Bogor. First Secretary for information, social and cultural affairs Yana Rudiyana told Antara`s London correspondent that the meeting was the result of approaches by the Indonesian Consulate General in Dubai. The meeting with the three leading Dubai companies Al Badiya (Bristol), Moafaq Al Ghadah (MAG) Group of Companies and Thani Investments, pro-

duced several commitments. Al Badiya (Bristol) runs an automotive business producing car tyres, and is interested in taking over or cooperate in developing the tyre industry with PT. Elang Perdana Tyre Industry in Bogor or with other tyre manufacturers. Al Badiya (Bristol) which has an office in Dubai, London and Baghdad, had been buying tens of thousands of car tyres each month from car tyre producers in Indonesia and plans to raise the volume by 50 tousand each month for sale to Iraq and some other countries. The Moafaq Al Ghadah (MAG) Group of companies op-

Bali province consists of eight regencies and one city with a total population of 3.5 million, but still faces infrastructure shortcomings, lack of important facilities, rather poor security, he said. He said the 5,636 square kilo-

erates various lines of business, including car tyres and batteries, and wished to take over car tire factories in Bogor or build new ones there. MAG had already purchased car tires from several producers in Indonesia, and plans to take over car battery plants. At the meeting, the Bogor delegation was received by Chairman of MAG Moafaq Ahamed Al Ghadah who had once visited Bogor. Thani Investments, which explores gold, gas and oil mines in many African countries like Egypt, Ethiopia and Nigeria, wished to invest in gold mines in Bogor, as offered by the Bogor

delegation. At the meeting, the Bogor delegation was received by Chief Executive Officer Richard Camball and Chief Financial Officer Chew Khang Wee. Camball, who has visited Indonesia several times to explore investment opportunities, said Thani Investments will invest if the Bogor administration is ready to become a partner by way of Bogor administrations` business companies. After the Bogor administration established the company, Thani Investment will send a team to Bogor for a feasibility study and to estimate the economic value of gold mines in Bogor.

Govt Targets 2011 Revenue of Rp1,086.7 trillion

Photo: The President Post/Taufik Darusman

Bali contributed to the national tourism sector 35% meters province has 270 different tourism destinations, including 180 marine tourism facilities, mostly in the south like Garuda Wisnu Kencana, Uluwatu, Tanah Lot, Sanur and Kuta beaches. It has 155 star-rated hotels with 46 thousand rooms, including cottages with 2,175 accommodation facilities and 1,693 restaurants, with the support of 635 travel agents and 5,127 active tour guides of the total of 8,000 certified guides. The number of foreign tourists coming to Bali had been increasing in the last five years with the exception in 2006, when the number dropped due to terrorist bombings. Their number reached more than two million in 2009, and in the first quarter of 2010 alone reached 550 thousand, up by 18.40% of last year`s same period.

to US$8.66 billion, a 84.53% increase compared to the same period last year or representing 18.19% of overall exports in the first four months of 2010. Cumulatively, Indonesia`s exports in the January-April 2010 period jumped 51.16% to US$47.59 billion from a year earlier. Non-oil/non-gas exports in the year ended April 2010 reached US$38.7 billion, up 43.87% from the same period the year before. The government has set its export target for 2010 at US$114.6 billion with mining products and crude palm oil expected to be the prime foreign exchange earners.

Dubai Companies to Invest in West Java

Bali Earns 45% of Forex from Tourism The Bali provincial administration contributed 45 percent of the foreign exchange of Rp34 trillion earned from foreign tourists visiting Indonesia. Head of the Bali Tourism Service Ida Bagus Kadek Subhiku said Bali contributed to the national tourism sector 35% or approximately two million of the 6.4 million foreign tourists to Indonesia. “He added that total earnings of hotels and restaurants in this province had been directly absorbed by the people, and Badung regency had the highest income of Rp850 billion, followed by Denpasar and Gianyar.

exports in the first four months of 2010 jumped 36.66% to US$28.68 billion over the same period last year, the Central Bureau of Statistics (BPS) said. The figure accounted for 60.27% of overall exports in the January-April 2010 period, BPS Chief Rusman Heriawan said here on Tuesday. Export of farm products in the year ended April 2010 rose 11.33% to US$1.35 billion from the same period last year, contributing 2.85% to the overall exports in the first four months of 2010, he said. He said the export of mining products and others in the January-April 2010 period climbed

Garuda Wisnu Kencana, one of Bali tourism destinations.

The government aims to reach Rp1,086.7 trillion in state revenue in 2011, which is a 9.5% increase of the state revenue of 2010,” a finance ministry official said last month. State expenditure has been projected at Rp1,204.9 trillion to be allocated by way of central government expenditure of Rp840.9 trillion (69.8%) and transfer to the regions totaling Rp364.1 trillion (30.2%). “The 2011 State Budget had been designed on the basic principal of optimizing state revenue resources and efficiency and effectiveness in state expenditures,” the official said. On the basis of the abovementioned fiscal policy calculations and configuration, the budgetary deficit is projected at Rp118.3 trillion or 1.7% of the GDP.

The government is also trying to cover the deficit through domestic debts by issuing state securities. The official also said that next year`s economic growth needs to be planned with higher quality to meet three conditions, namely employment opportunities, lowering unemployment and poverty. In the meantime, next year`s projected macroeconomic indicators are economic growth of 6.26.4%, inflation 4.9-5.3%, exchange rate Rp9,100-9,400, SBI 3-month interest rates 6.3-6.7%, and ICP oil prices 80-85 dollars per barrel, and oil lifting 960-980 million per barrel. The 2011 macroeconomic policy targets are open unemployment at 7% and a poverty rate of 11.5-12.5%, with an investment need of at least Rp2,243.8 trillion and an ICOR of 4.25 and 1% of the economic growth to absorb 400.000 workers.


The President Post

A6 June 12, 2010

www.thepresidentpost.com

The World FORCES OF GLOBALIZATION:

The Trade Factor The forces of globalization have opened up international trade in a spectacular way, among others through the reduction of tariffs and the development of the free trade doctrine. By Atmono Suryo

G

lobalization encompasses many things. It entails the increased flow of goods and services around the world, the flow of capital and technology and even the flow of labor. It also covers the international exchange of ideas, knowledge and policies. Globalization also encourages the sharing of cultures and promotes regional integration. It is incredible to observe how globalization has brought wonders to the world since World War II. At the same time it is increasingly recognized that globalization has also become a disillusion or a threat for many. As Joseph Stiglitz wrote in Globalization and its Discontents: “Why has globalization – a force that has brought so much good – become so controversial?” A growing divide between the haves and the have-nots is developing not only between countries but also within countries. Unemployment is rising and speculative hot money is roaming around causing financial disasters in the world. What is bothering the world today is particularly in the area of finance. The world financial system is the freest of all, wreaking havoc in many parts of the world. The financial world is presently again facing strains emanating

from the crisis in Greece, requiring some $1 trillion in safety net provided by EU nations and the IMF. TRADE

Compared to the area of finance, developments of trade are still under control and are more manageable. In fact, trade is one of the forces of globalization which has delivered many wonders. Through the immense developments of communication and transportation, trade has the ability to take goods, even the most sophisticated ones, to all corners of the world. For many countries trade has become a highly important vehicle, a driving force for growth. It is opening up and expanding world markets. It is bringing home machinery and equipment needed to modernize the local economy and its industrial facilities. This is precisely what is happening in Asia. The forces of globalization have opened up international trade in a spectacular way, among others through the reduction of tariffs and the development of the free trade doctrine. But globalization in the area of trade has also its negative aspects. In the early 1990s globalization was greeted with euphoria. The establishment of the WTO (World Trade Organization) in

1995 was expected to produce the rules of law which will increase world trade. Through the concept of multilateral trade and free trade, everyone, including developing countries, was expected to be winners. But that did not happen. Critics argue that the new environment of free trade has created intense competition. People are saying that “the law of the jungle prevails” with the fittest to dominate the playing field, leaving many on the losing side. What is happening in the WTO has apparently come to a standstill, with no progress in sight. It is not clear how it will eventually end: what kind of a trade regime will evolve? It is fortunate that world trade is again on the rise and that the world will not return to the era of protectionism. ASIA-INDONESIA

As a region, Asia is considered fortunate in trade and economic growth. Asia has taken advantage of globalization which brought an increase in world trade. The development of world trade has become a must for Asia and Asia has developed its export-led strategy. Asia has developed to become the second largest trading region, after the European Union with its 27 member countries. Asia has surpassed trade of the North

American continent. The largest trading country is now China, which has even surpassed Germany as the largest trading country in the world.

Although Indonesia has a long tradition as a trading nation and a good source of many commodities, in the area of trade the country has been losing out during the last decade even compared to countries in ASEAN. Critics in Asia, particularly in Indonesia, however, often complain that globalization with its free trade doctrine has brought intense competition between countries, resulting in adverse effects on the weaker ones. Such sentiments are presently being aired with the implementation of ACFTA (ASEAN-China Free Trade Agreement) as of January 2010. It is quite amazing that free trade agreements have flourished in East Asia. According to some observers, there are more than 30 Regional Trade Agreements in

force involving the East Asia region. Indonesia is heavily involved in various trade and economic agreements such as: • AFTA (ASEAN Free Trade AREA 1993): Ever since its implementation, there has been a significant reduction of tariffs for trade in goods in ASEAN. Intra-ASEAN trade, however, has not developed as expected. • AEC (ASEAN Economic Community) is to come into force in 2015. There will be free flow of goods, services and investments. Intra-ASEAN trade amounted to 25.1% in 2003 and increased somewhat in 2008 to 26.8%. • ACFTA (ASEAN-China Free Trade Agreement) is being implemented as of January 2010 causing a great deal of anxieties in Indonesia. Other agreements are still pending at the present time, among others with India, Japan and others. BOOSTING EXPORTS

Although Indonesia has a long tradition as a trading nation and a good source of many commodities, in the area of trade the country has been losing out during the last decade even compared to countries in ASEAN. In the area of exports, Singa-

pore is the prima donna with exports of US$241.1 billion, followed by Malaysia (US$194.5 billion) and Thailand (US$174.9 billion). Then comes Indonesia in fourth place with US$137 billion. It will be noted, however, that much of Indonesian exports go through Singapore. There are various reasons for this unfortunate development. Indonesia has become a highcost country, as the real sectors of the economy are not developing, transportation costs are high and bureaucratic inefficiencies a big obstacle to progress. In the Indonesian economy exports does not occupy a dominant position. With regard to the GDP (demand side 2009) consumption represents the largest share at 60%, followed by investment (30%), exports (23.6%) and government apex (capital expenditure) at 7%. It should be noted that imports also represents a rather high figure of 20.6%. Indonesian exports’ composition is still traditional, as it relies on raw materials and commodities. As a comparison, exports of Malaysia include such items as electrical and electronic products, petrochemical products, chemicals and chemical products, and machinery. Thailand’s exports include automobiles, iron and steel, radios and televisions and chemicals. It shows that Malaysia

and Thailand have already modernized their economies, as their products are already entering the global economy. It has become increasingly urgent for Indonesia to bolster trade, especially exports. It is imperative that Indonesia improves its competitive position and restructure and modernize its exports base. It will not be possible for the country to remain basically as an exporter of commodities since colonial times. Indonesia is well-known for its rich and varied natural resources. They have now to be developed and processed in the country itself. The restructuring of its export base should include the development of resource-based industries. It is important also for her to take advantage of value-added strategy in such areas as agro and food industry, maritime and fishing, mining and minerals, forestry, agricultural estates and foodproducing estates, as well as in upcoming areas of gas & energy development. The development of these industries will at the same time promote the development of the enormous and rich regions of Sumatra, Kalimantan, Sulawesi and Papua. The writer is former ambassador to the EU.

THE BP GULF OF MEXICO DISASTER:

A (Very) Preliminary Legal Overview The destruction of livelihoods and the environment and the life of future generations cannot be measured money-wise. By Erwin Ramedhan

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Who is responsible and for how much?

hat unanswerable question (TIME, May 24, 2010) is the first to come to mind when looking at the Gulf of Mexico disaster. It is the multibillion, if not multitrillion, dollar question because the sheer dimensions and duration of the catastrophe are still unknown— shades of the Lapindo Brantas disaster in 2006. The destruction of livelihoods and the environment and the life of future generations cannot be measured money-wise. And as a prelude to the very messy legal melting pot to come, BP and their partner companies are playing the “blame game” at the US Congress. The public at large can already foresee a legal wrangle for many years, if not decades ahead. It fits The New York Times (June 5, 2010) description perfectly: “New government and BP documents, interviews with experts and testimony by witnesses provide the clearest indication to date that a hodgepodge of oversight agencies granted exceptions to rules, allowed risks to accumulate and made a disaster more likely, particularly with a mix of different companies operating on the Deepwater whose interests were not always in-sync.” Further, The New York Times states that “in the aftermath, arguments about who is in charge of the cleanup — often a signal that no one is in charge — have led to delays, distractions and disagreements over how to cap the

well and defend the coastline. As a result, with oil continuing to gush a mile below the surface in the Gulf of Mexico, the laws of physics are largely in control, creating the daunting challenge of trying to plug a hole at depths where equipment is straining under more than a ton of pressure per square inch.” Is the regulator (i.e. US Federal authorities) guilty of not regulating? The US MMS (Minerals Management Service) is considered guilty of more than excessive complacency towards BP due to many BP favors given to the MMS. A report mentioned by the media noted more than 700 rules or regulation violations by BP against one by Exxon. Perhaps Exxon learned their lesson since the Valdez oil spill accident in Alaska in 1989. Deregulation, free market regulation, and corporate self-regulation have now reached the point where Federal authorities can only admit they do not have the necessary competence to overcome the disaster. To cool heated critics the US government launched a federal criminal and civil investigation initiated in June 2010. Who is liable for what?

As a first step, BP comes under the Oil Spill Act of 1990. “The 1990 act authorized use of a trust fund — the Oil Spill Liability Trust Fund — that the government can use on an emergency basis to respond to the disaster and help clean it up, and then the parties responsible for the spill must repay the cost.” (Jody Freeman, Director Harvard Law School, Environmental Law and

Policy Program) But the “responsible parties” must pay in full for the cleanup. Beyond the cleanup expenditure there is a US$75 million sanction not inclusive of gross negligence, willful misconduct, and violations of federal regulations. Insurance-wise, BP is self-insured but it is doubtful that any insurance company, or BP, can really cover the extent and scale of such a planetary disaster, while other liabilities are to the fishing industry, the tourism industry and state or federal trustees acting on behalf of fish and wildlife. A computer simulation (with color dyes) of the oil spill by UCAR (University Corporation for Atmospheric Research US) already depicts the oil spill going through a loop in the Gulf of Mexico and then getting into the Gulf Stream to travel to the coasts of Europe at an initial speed of more than 30 km a day and picking up at more 150 km/day. By autumn the spill should reach Europe according to this simulation, enough to make any inhabitant of the planet shudder. Not surprisingly, there are already preliminary liability limitation maneuvers. For example, Transocean, the drilling platform company for BP, filed under the Limitation of Ship Owners’ Liability Act of 1851, which purports to limit the ship (or drilling platform) owner’s liability to the post-accident value of the wreck. Here, the wreckage of the rig that Transocean owns is estimated to be worth about $26 million. More importantly, the Oil Pollution Act of 1990 preempts the

1851 law with respect to oil spills. Eleven persons died in the catastrophe and damages awarded due to loss of life are not limited to tens of millions of dollars in US courts.

And to crown it all, BP management is projecting dividends in the tens of billions of dollars to shareholders, to be confirmed in July 2010, when the oil spill and destruction will have spread heaven knows where.

As the French saying goes, wars are too important to be left to the military, one could paraphrase it and consider that legal battles should not be up to the legal profession alone. At present claims are estimated at about 30.000 and 130 suits have been filed in courts’ BP has spent nearly US$1 billion in disaster mitigation attempts, cleanups, and paying off (or buying off?) individual claimants at US$5000 each. US common law has no rigid separation between criminal law and business law and what can come into play are the following: statutory law, common law, mixed legal systems (Louisiana civil code and US common law), maritime law, state and federal laws, not to mention business law (eventual intra corporate litigation for BP, Transocean, Halliburton/petroleum services, and Cameron International/ blow out preventer). Last but not least, and most importantly, conflicts of laws will lead up to the US Supreme Court for many decades ahead. Legal limbo and losses

While the White House has announced the first bill (of many) for the disaster for BP, the company’s total stock value has lost US$70 billion since the end of April 2010. BP shares have fallen nearly 40%, wiping out nearly US$70 billion in shareholders value. Before the accident the

company had a market capitalization of nearly US$183 billion. Now it’s just below US$115 billion (first week of June 2010). The CDS (Credit Default Swap), a sophisticated financial contract to insure against credit default, has risen sharply at 2,7% and reflects fear towards BP. For his part, securities analyst Youngson states that “BP stocks could get so cheap, it might be the subject of a takeover. If the stock falls much below US$30 a share, BP will become a target.” Shares traded around US$38 Tuesday after noon (June 1, 2010). If the share price continues to fall, other companies may see this for the bargain it will be. According to CNN: “For a company that made nearly US$17 billion in profit last year and is expected to top US$20 billion this year, most analysts say the stock hit is unjustified.” This leads to key question: what happens in business law if the company goes under or is taken over? Company assets are attractive, not so their liabilities. It is a matter of fact that telling or not telling the truth can be vital or fatal in US courts. From this viewpoint, BP’s CEO Tony Hayward could have refrained from making statements on the disaster that earned him the nickname of “Tony Wayward”. Telling the truth (or not telling) is an extremely vital issue in US courts. Newsweek has noted the following untruthful statements. • “What the hell did we do to

deserve this?” (760 safety violations over the last three years, ExxonMobil had one). April 21, 2010. • ”The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume.” May 14. • ”The environmental impact of this disaster is likely to be very, very modest.” • ”There’s no one who wants this over more than I do. I would like my life back.” May 30. • Ecosystem-threatening underwater oil plumes - consisting of droplets of partially dissolved oil suspended in water that many scientists have observed – do not exist. He said simply, “There aren’t any plumes.” • Hayward responded to claims that cleanup workers were being sickened by the fumes from the oil they were exposed to by suggesting another possible, non-oil-spill cause. When nine workers fell ill, according to Yahoo News, he told CNN that “food poisoning is clearly a big issue.” Preliminary conclusion

With these (wayward) statements the adversaries of BP & Co will have a field day in court(s) while President Barack Obama is forced to cancel his state visits to Indonesia and Australia for a second time in view of the gravity of the situation. And to crown it all, BP management is projecting dividends in the tens of billions of dollars to shareholders, to be confirmed in July 2010, when the oil spill and destruction will have spread heaven knows where.


The President Post

www.thepresidentpost.com

June 12, 2010 A7

Technology Can Information Technology Contribute to Saving the Environment?

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s we enter the coming decade there seems to be a nagging question, a question that I have to say, I frequently answer without any concrete proof. The question is simple yet profound in its implications as a global citizen; ‘Is IT part of the problem or part of the solution to Climate Change?

By Michael Mudd

Indonesia is gradually moving its power generation from primarily oil to a mix of thermal coal, gas and hydro, which will emit less carbon than oil powered plants, but it is how this electricity is used is still important; the measure of course is saving money.

First, I will admit, I am among the group of IT advocates who claim that IT is overall green; I say this based on simple numbers, primarily from the US where more data is available in the growth of such things as telecommuting. For example, 15 years ago there were an estimated 5 million telecommuters in the US, and they really were just that; staying at home a one or more days a week, using the phone to conduct their business, rather than in an office. That figure is now 25 million – and growing and they are no longer just on the phone, but connected via high speed broadband to their company data centres. This has led to an estimated 30 billion liters savings in gasoline in commuting alone and the consequential decrease in CO2 output. Green IT therefore is as much about cash as it is carbon and pollution reduction. Another recent concept is related to reducing air travel using TelePrescence whereby large LCD screens duplicate one side of a conference table and which us-

ing high resolution cameras – all connected by high speed broadband –there is an illusion of being in a meeting room with your colleagues or customers opposite as if they were really there. The system really is great - as long as you aver a 30mbps connection or preferably a 100mbps to get over the latency inherent in the Internet. This has implications for the many islands that make up the Indonesian archipelago A major innovation is large scale next generation utility computing, often described as ‘Cloud Computing’ which appears to be more environmentally friendly compared to traditional data center operational / deployment models, due to greater utilization. Industry consensus says that by reducing the number of hardware components and replacing them with remote cloud computing systems reduces energy costs for running hardware and cooling as well, thus reducing your carbon foot print while higher data centre consolidation / optimization will save energy, reducing costs. When this is combined with virtualization technology that results in greater utilization of servers, typically taking usage from 10-15% to over 80%, energy – read electricity – is reduced per operation, saving more. An issue that needs to be addressed however is to ensure data interoperability which will ensure that information may be accessible using disparate hardware to avoid lock in. Simply put, reducing en-

CLOUD COMPUTING:

A New IT Solution from Microsoft Cloud Computing is an ICT solution through a mechanism that allows users/ customers to rent ICT services without having to invest. PT Microsoft Indonesia and PT Telekomunikasi Indonesia Tbk have entered into a partnership with the launching of Cloud Computing Solution service in Jakarta recently. This partnership program is expected to accelerate the penetration of technology and the empowerment of future businesses in Indonesia. Cloud Computing is an ICT solution through a mechanism that allows users/customers to rent ICT services without having to invest.

It is so simple and more efficient. Cloud computing business development in a broad sense includes: • Infrastructure as a Service (IAAS), where Virtual Private Servers (VPS) allow the company to share server costs with other customers and retain full control over their applications. VPS run as an isolated process within a Web Server, and provide full privacy and access with guaranteed bandwidth, CPU and disk space. • Platform as a Service (PAAS), where the developing process is more advanced. In one company, there are few systems to develop, deploy, and operate. Before cloud exists, we had to have our own system in our data center. But now, it can be rented as a service, allowing us to develop and troubleshoot application, deploy, and upgrade release. • Software as a Service (SAAS)

that provides unified communications features of Microsoft technology without having to install hardware or software. Through Cloud Computing, applications, operating systems and other softwares could be obtained online. Computing Cloudbased services can make the firm quickly and easily increase storage capacity. This service also offers a “utility computing” business model where customers pay only for facilities that are used. President Director of Microsoft Indonesia Sutanto Hartono says, “This service helps businesses in Indonesia to more quickly adopt the latest technology with affordable prices in a well-planned manner.” He also explained the origins of the term cloud: the existence of a network on the Internet, and this network includes server, hard disks, memory, network and others. (JFS) Photo: The President Post/Nandi Nanti

MICROSOFT-TELKOM PARTNERSHIP: President Director of PT Microsoft Indonesia Sutanto Hartono (right) with Director of IT & Supply of PT Telekomunikasi Indonesia (Telkom) Indra Utoyo (left) show the MoU they had just jointly signed in Jakarta, witnessed by President Microsoft APAC Emilio Umeoka. The partnership launched Cloud Computing Solution services to accelerate the technology for businesses in Indonesia.

ergy consumption in your use of IT not only saves you money, it makes you green. The International Organization for Standardization (ISO) considers the label “Environmentally Friendly” to be too vague to be meaningful because there is no single international standard

The bottom line is that through existing and developing technologies, the IT industry is making a positive contribution to alleviating climate change, and working with customers, savings can be made in cash, and that can’t be bad!

for this concept. Although there are a few emerging Data Center Energy Efficiency Initiatives, notably by the EPA in the United States through their Energy Star program. The EPA programs

are working to identify ways in which energy efficiency can be measured, documented, and implemented in data centers and the equipment they house, especially servers. So what can small companies in Indonesia do to be green with their IT? Indonesia is gradually moving its power generation from primarily oil to a mix of thermal coal, gas and hydro, which will emit less carbon than oil powered plants, but it is how this electricity is used is still important; the measure of course is saving money. As described previously, being green is basically the same as cost management through good work practices leading to energy reduction. For most SME’s this means from an IT perspective, ensuring that IT assets are only powered up when being actually productive. The first thing to do is switch off screensavers they use energy when no one is at the computer. ANZ bank in Australia saved an estimated AUD$100,000 per annum when they removed them from their 40,000 PC’s. With all new monitors being LCD’s there is no need to avoid image ‘burn in’ with a screen saver. All desktop computer software operating systems have power settings that may be activated under ‘settings>control panel>power options’. Simply select the type of device the software is running on, typically a netbook/notebook

or desktop PC, and then set the options to power down when inactivity is expected. Typically this would be after a period of the system being idle, a good guide is 15 minutes to turn the screen/monitor off; 30minutes to stop the hard disks and 2 hours to ‘hibernate’, which suspends the system but still allows a relatively fast start up. I use 2 hours to enable my lunch break! This will have the added advantage of extending the life of moving components such as the hard disks and will also ensure that PC’s will power down overnight. In addition, any device that has a transformer connected should be unplugged or switched off at source when the device is not in use as transformers may consume 50% or more of their normal output power just at idle doing nothing. Printers should have their standby mode enabled and be switched off at the close of day, as should cable modems or consumer satellite boxes. These consume as much as 90% of their normal operating power in standby mode, just feel the heat coming out of them even when no device is being charged; heat = energy being used. The above will not only reduce direct device power consumption, but will enable air-conditioning to work better as there is less waste heat to be removed. In a typical small office, savings in monthly electricity bills of 5-15% from efficient setting as above of

IT devices are to be expected, and most of the above will cost nothing to implement. A more comprehensive program would include installing sensors in rooms to turn air conditioning and lights on and off only when there is movement in the room; however this involves an additional investment. Relocation of large data centers to higher elevations in the country will also reduce cooling needs, and hence lower carbon output and electricity bills. This may be appropriate for government, banks or insurance companies to locate their disaster recovery and back up centers in say, Bandung; however these will require a very robust FTTN connection. The bottom line is that through existing and developing technologies, the IT industry is making a positive contribution to alleviating climate change, and working with customers, savings can be made in cash, and that can’t be bad! The writer is the chief representative of the Open Computing Alliance (www. opencomputingalliance.org) in the Asia Pacific region. The OCA seeks to encourage productivity, growth and employment through new opportunities arising from distributed and networked computing, together with care for the environment. He may be contacted at mmudd@ opencomputingalliance.org


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A8 June 12, 2010

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Education RI Needs Five Pillars of Education to Produce Capable Human Resources The government of President Susilo Bambang Yudhoyono is working hard to erect what it calls “the five pillars of national education” in an attempt to upgrade the quality of Indonesia’s human resources. By Widya Nathalia

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his was recently revealed by Vice Minister of Education Prof. Dr. Fasli Jalal, who elaborated on the concept that was previously promulgated by Minister of Education Prof. Dr. Muhammad Nuh. According to the government’s grand strategy for educational development, the five pillars that must be in place are availability of good education, access to good education, good quality of educational facilities, equity in educational opportunities and guarantee of sustainability. Prof. Fasli believes that before talking about details of educational quality, one needs to evaluate the macro aspect namely the condition that creates Indonesia’s current level of educational achievements. Therefore, he says, it is absolutely necessary to analyze more deeply each of those factors in order for the country to apply the right remedy.

The shape of Indonesia’s educational population is like a pyramid—the higher the level of study, the smaller the number of students; and the opposite is also true— the lower the level of study, the bigger the number of students.

Availability of good education

This factor seems trivial at a glance, but it is here that much of Indonesia’s failure in the educational process resides. The government’s current challenge is to make sure that anytime and anywhere across the country a child wishes to go to school, there must be a sure guarantee that he or she can be accepted readily. This has not been the case in many parts of the country for many years. The education minister has therefore called on all schools and institutions running schools to provide a sure guarantee that there will never again be any story of students being denied entry simply because of a lack of quota. Schools must guarantee that any student at any level of education will never again be denied entry for such pretexts, he says.

lower the level of study, the bigger the number of students. This year for instance, there are only about 4.5 million students on university campuses compared to more than 12 million in junior high schools and 29 million in elementary schools. In other words, the majority of Indonesian students drop out while pursuing either primary or secondary education. Given that they lack the necessary expertise to compete in the tough employment market, they normally end up being jobless or get employed in institutions that pay them very poorly.

Access to good education

Good quality of education

In the eyes of both Prof. Fasli and Prof. Nuh, availability of space alone is not enough. Parents from all walks of life must have the ability to send their children to any level of study and they must never again be barred by preferential treatment, favoritism, or other subjective factors that have often been blamed for low level of acceptance at the university level.

Prof. Muhammad Nuh is believed to be the right man in the right place at the right time. One of the major steps he has taken is encourage even villages to become technology-minded in that he pushed for deployment of Internet facilities in many remote parts of this vast archipelago. This is true for the fact that the shape of Indonesia’s educational population is like a pyramid— the higher the level of study, the smaller the number of students; and the opposite is also true—the

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The third pillar Indonesia must have is good quality of education. Schools which force themselves to exist with poor quality are useless because their graduates will have great difficulty finding a job. But how can a school be recognized for good quality when it in fact does not even have enough qualified teachers? As it is today, one of the most cumbersome issues confronting the government is how to create well qualified teachers within its term of office in order to have enough reason for pride. This year the government has allocated Rp221.47 trillion in education budget but 60 percent of it will go for routine expenditure and much of the rest will be for maintenance and repairs apart from quality upgrading programs. That is why educational analysts have said that even though the government has increased to 20 percent the allocation on national budget for educational development, this is not a guaranteed therapy for the problem. It is still unclear to date whether the government has a comprehensive mechanism for measuring the effectiveness of budget allocations to the extent that the huge fund is well spent. National equity in education

This is a very cumbersome issue given the fact that Indonesian schools exist in cities, towns and villages which are starkly different from one another in terms of welfare levels, cultural practices and traditions, stages of modernization, records of achievements, exposure to global sources of data

and information, and so forth. For instance, a school in Papua or other remote parts of Indonesia cannot compete with a school of similar level in big cities like Jakarta because of a stark difference in socio-economic factors. A simple example is that students in remote areas cannot even afford to own a decent mobile phone whereas in big cities like Jakarta even high school students use Blackberry mobiles which cost around Rp5 million each— enough to pay two months’ salary of a school principal in remote islands. Likewise, students in the outer island are so isolated that their knowledge of modern technological tools is limited. As a result, most of them have not even touched a laptop or a personal computer, let alone used it. So whenever they sit for exams to answer questions regarding modern amenities, they don’t know how to deal with the issue. Results of this year’s national exams demonstrated this assumption very convincingly. In some parts of Indonesia, especially in the eastern region, there are schools that failed to graduate even a single student. Worse, in the Indonesian capital city Jakarta, at least 10 schools are being shunned by students for the same reason and are on the verge of being closed down. Educational equity has much to do with socio-economic condition of students’ families and local governments’ policies. Now that Indonesia has applied the decentralization policy, educational funding up to high school level especially in public schools falls within the responsibility of regional governments. So, it is up to the regents and local legislative councils to decide how much of their locally generated revenue will be allocated for education to augment centrally distributed fund which is derived from national budget every year. Educational equity is also about removing the gap between schools in rural areas and those in urban areas, as well as about removing gender-based discrimination or discrimination in other areas. Sustainability and consistency of policy

PUBLISHED BY Yayasan President University CEO & EDITOR IN CHIEF Ali Basyah Suryo CONTRIBUTORS Atmono Suryo Cyrillus Harinowo Hadiwerdoyo Taufik Darusman Thomas W. Shreve Jeannifer Filly Sumayku Eka Putri

EDITORIAL & CIRCULATION DEPARTMENT Eka Galliano LAYOUT & DESIGN Mohamad Akmal SALES & MARKETING Detia PHOTOGRAPHER Nandi Nanti

By now, SBY is already recognized as a “pro-education president” due to his consistent support for educational development and far-reaching vision on the nurturing of capable human resources to run the economy.

Photo: The President Post/Nandi Nanti

This is also a very important factor because the absence of policy sustainability and consistency could lead to schools drifting aimlessly without direction. The biggest tragedy in Indonesia is that every time there is a change in national leadership, almost certainly ministers’ policies will change as though success is measured by high frequency of policy changes. What therefore is necessary for the current government is to create a system in which national leadership change in 2014 will not adversely affect development of education. The biggest of these problems according to the education minister are huge number of students (national total is well over 50 million) and the great disparity in the performance of schools in big cities and those in remote areas. In recognition of this fact, the SBY government is multiplying efforts to at least lay the right foundation for building a national education system that can provide the right answer to the nation’s future need, “because the

future of this nation depends largely on the quality of its education,” the minister says. Prof. Muhammad Nuh—he was the minister of communication and information before sitting in his current chair—is believed to be the right man in the right place at the right time. One of the major steps he has taken is encourage even villages to become technology-minded in that he pushed for deployment of Internet facilities in many remote parts of this vast archipelago. This has enabled many school teachers to roam the globe for information and data relevant to their curriculum development purposes; it has also enabled students to collect a lot more information they would otherwise not be able to obtain elsewhere. The only thing that schools must now watch out for—following rampant Internet penetration—is the lure of porn sites that is diverting many young minds from their core duties. Parents in this Oriental society are also having a hard time con-

trolling children’s use of the Internet at home. Nevertheless, President SBY’s government has laid the right foundation for a more focused development of education beyond his term of office. Whoever sits in his chair after 2014 will need to focus on employment creation strategy and lifting Indonesian educational institutions onto a global level of excellence. By now, SBY is already recognized as a “pro-education president” due to his consistent support for educational development and far-reaching vision on the nurturing of capable human resources to run the economy. The only disadvantage is that the government has wasted too much of its precious time and positive energy removing political snares on many occasions. Analysts are saying that development of education cannot be seen as the duty of the government alone; it must be taken as a call for any responsible citizen—including fussy lawmakers—to answer.


Business

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Display until July 12, 2010 /// N0. 13 Published by President University

Garuda Indonesia to Boost Tourism in East Indonesia

BUSINESS BRIEFS Gold company to boost output to 3 tons Publicly-listed mining company PT Aneka Tambang Tbk is set to boost its gold production to increase to 3 tons this year from 2.5 tons a year earlier “from the Cibalung mining site in Banten,” ANTM Finance Director Djaja Tambunan said here recently. He also sees gold prices rising from US$1,000 to US$1,200 per troy ounce this year. Gold prices hit a record high of US$2,000 per troy ounce last year. The company decided at its general shareholders meeting earlier in the day to allocate 40 percent of its net profit of Rp241.723 billion last year for dividend payments. The dividend is equal to Rp25.383 per share. Last year ANTM posted a net profit of Rp604.307 billion.

National car sales up National car sales in the first quarter of this month increased to 239,306 units from 134,861 in the same period in 2009, car-makers association Gaikindo said. Gaikindo said in the first quarter of 2010 car sales were recorded at 59,837 units per month, surpassing the figures in 2008 and 2009. It said car sales totaled 134,861 in the first quarter of 2009 with sales averaging 33,715 units per month. In 2008 it was recorded at 187,245 or an average of 46,811 units per month. PT Astra International still dominated the market of four wheel vehicles in the country with an average market share of 56.6 percent.

Telkom, Korean firm set up joint venture firm PT Telekomunikasi Indonesia Tbk (Telkom) and SK Telecom (Korea) have signed a cooperationagreement to set up a joint company operating in digital content. Telkom`s president director Rinaldi Firmansyah said they signed a memorandum of understanding on industry productivity enhanceemnt in Seoul, South Korea, on May 20, 2010. He said the cooperation was significant for Telkom which is now developing telecommunication, information, multimedia and edutainment (TIME) business. SK Telecom controls 49 percent of shares of the total investment worth no less than Rp100 billion (almost US$10 million) while Telkom through subsidiary Metra will control 51 percent of shares and play a role in local marketing, sales, networking, collection and bundling products.

Indofood to pay dividends of Rp 93 per share Publicly-listed instant noodle maker PT Indofood Sukses Makmur Tbk (INDF) said shareholders have agreed to pay 40 percent of last year`s net profit of Rp2.075 trillion as dividends. The dividends were equal to Rp93 per share compared to Rp47 per share last year, Indofood President Director Anthoni Salim said. He said the dividends would be paid to shareholders on August 5.

B Photo: www.indoflyer.net/Lutomo Edy Permono

Garuda’s Boeing 737-400 would start flying into Palu from Jakarta with a stopover in Makassar, South Sulawesi, on July 1, 2010.

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he opening of national flag carrier Garuda Indonesia`s Palu route as of July 1, 2010 is expected to have a significant effect on tourism in Central Sulawesi province. “Based on our experience, foreign tourists, especially from Europe, prefer flying Garuda more than other airlines in Indonesia,” Avia Tour director Ary Wowor said here last month. He said Garuda’s Boeing 737-400 would start flying into Palu from Jakarta with a stopover in Makassar, South Sulawesi, on July 1, 2010. The Garuda plane will depart from Soekarno-Hatta airport in Jakarta at 6 am local time with a stopover in Makassar, and arrive in Palu at 10.30 am Central Indonesia Standard Time (Wita). Garuda has meanwhile reopened its Jakarta-Ambon route with a stopover in Makassar in the first week of June. The general manager of Garuda Indonesia`s Makassar branch office, Hendra Sumarno, said Garuda flights to Ambon were scheduled to depart from Jakarta`s Soekarno-Hatta airport at 10 a.m. Western

Indonesia Time (WIB) with a stopover at Makassar`s Hassanudin airport before flying to Pattimura airport in Ambon, and return to Jakarta at 5 pm East Indonesia Time (WIT). “World`s most improved airline” Garuda Indonesia has won a “World`s Most Improved Airline” award from the Londonbased independent world airline rating agency Skytrax for its successful business transformation programs. Skytrax Chairman Edward Plaisted presented the award to Garuda Indonesia Commercial Director Agus Priyanto on the occasion of the Skytrax 2010 World Airline Awards in Hamburg, Germany, last month, Garuda Indonesia corporate communications official Pujobroto said. “They (Skytrax) consider Garuda one of Asia`s most successful and profitable airlines,” he said. Pujobroto says the award would encourage the national flag-carrier to proceed with its business transformation programs in order to provide the highest level of services to passengers. Skytrax Chairman Edward Plaisted said: “It is clear that a real process of transformation has become well progressed at Garuda Indonesia, and aside from new aircraft and new onboard products, it was improvements in onboard service that were most fre-

Garuda has meanwhile reopened its Jakarta-Ambon route with a stopover in Makassar in the first week of June.

quently commented upon by survey respondents.” Garuda, China Airlines develop cooperation

Garuda Indonesia and China Airlines announced they had been developing operational cooperation in the form of passenger and cargo revenue sharing and exchange of pilot training. Pujobroto confirmed in Jakarta last month that the MoU had been signed by Garuda Indonesia President & CEO Emirsyah Satar and China Airlines President Huang-Hsiang Sun in Taipei, China, last month. Pujobroto said the cooperation covered passenger/cargo revenue sharing, and frequent flying program. “China Airlines will be Gar-

Government Urged to Speed Up Foreign Ownership Ruling on Property The government has been urged to immediately issue a legal umbrella on foreign ownership of property in Indonesia. “We should appreciate this great idea about foreign property ownership, but an idea without realization makes us deeply disappointed,” Ciputra said on the sidelines of the International Real Estate Federation (FIABCI) congress in Bali last month. Ciputra added that Indo-

nesia can learn from Malaysia, which 20 years ago had already allowed foreigners to buy property but restricted to those worth below US$100,000. The former FIABCI president said Indonesia lags behind Malaysia, which issued a policy dubbed “Malaysia, My Second Home”, that successfully created many job opportunities and brought in income in forex and tax. Sharing similar views, Bakrieland Development (ELTY) President Director Hiramsyah S

Thaib said a policy to allow foreigners to purchase property will bring positive impact on housing supplies for low-income people. “Foreign property ownership policy and housing supplies for low income brackets are inrelinked, that’s why the government should immediately realize the plan,” said Hiramsyah. “Developers who sell property to foreigners can be asked to build houses for low income brackets using a cross subsidy scheme. This will benefit the people,” he elaborated.

Garuda Indonesia has won a “World`s Most Improved Airline” award from the London-based independent world airline rating agency Skytrax for its successful business transformation programs. uda Indonesia`s first partner in mileage value-added exchange. The cooperation also covers simulator pilot training,” he said. Emirsyah Satar said “the coop-

eration also provides both Garuda Indonesia and China Airlines more options and facilities. It is also a renewal and development of previous cooperation”. China Airlines’ Huang-Hsiang Sun said the MoU with Garuda would increase air traffic between the two countries and open an opportunity for the development of cooperation between the two airline companies in the years to come. Previously, Garuda Indonesia and China Airlines established cooperation in operations and codesharing on the Jakarta-Taipei and Denpasar-Taipei routes. Under the cooperation, China Airlines acted as operating party while Garuda Indonesia as the marketing party.

Indofarma Revamps BoD, BoC Lineup Shareholders of state pharmaceutical company Indofarma (INAF) last month reshuffled its board of directors and commissioners lineup during an annual general meeting of shareholders. Shareholders approved the appointments of former Indofarma Global Medika Operational Director Elfiano Rizaldy as Indofarma marketing director to replace Muhammad Munawaroh and Health Ministry Staff Expert on Financing and Public Empowerment Chalik Masulili as commissioner to replace M. Dwijo Susono and Nizar Yamanie as independent com-

missioner. Shareholders also decided not to pay out dividends and instead retain the company’s 2009 earnings of Rp2.125 billion to strengthen the company’s capital base. Previously it was reported that Kimia Farma (KAEF) hoped to finalize the merger process with Indofarma by the end of the year. KAEF President Director M. Syamsul Arifin said the company was ready for merger and is waiting for assessment report from an independent consultant and for the government to make the move.

Astra to Boost Daihatsu Production Capacity to 280.000 Units Astra Daihatsu Motor (ADM/ Daihatsu) aims to boost its production capacity from 211,000 to 280,000 units per year. The automotive company will start expanding its facility early next year. ADM Vice President Sudirman MR said the company has allocated Rp250 billion to support the expansion plan, which is aimed at anticipating the growing automotive market demand next year. The company will even boost its production to 330,000 units per year through production overtime process if the market is bullish. “The plan to increase production capacity will be sped up from initially March 2011 to January or February 2011 and is aimed to

optimize the market’s potential,” Sudirman said last month. Astra is allocating a total of Rp7.5-8 trillion in capital expenditure this year with Rp1.5 trillion allocated for Astra Agro, Rp5 trillion for United Tractors, and the remaining for its automotive division. Astra International will pay out dividends of Rp1,120 per share or a total of Rp4.534 trillion, which accounts for 45% of its 2009 net profit. The company plans to pay out the dividends on 5 July 2010. The company will use the rest of its net profit for business expansion, including adding production capacity of its automotive division and to add new outlets both for cars and motorcycles.

Tin profits continue to surge A worker processes tin at a mine in Bangka Belitung operated by PT Timah Tbk (TINS), which scored significant growth in net profit of 884.72% in the first quarter of 2010 triggered by an increase of revenue and lower costs. In the first quarter of 2010, TINS earned a revenue of Rp 1.835 trillion, an increase of 15.62% over the same period in 2009 of Rp 1.587 trillion. Photo: The President Post/Nandi Nanti


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B2 June 12, 2010

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Investment China, HK Investments in RI Up After ACFTA Signing Investors from Hong Kong put funds in the real estate, industrial zone, office building, construction and mining sectors in West Java, Jakarta, Banten, Lampung, and Central Kalimantan.

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apital Investment Coordinating Board (BKPM) Chief Gita Wirjawan said Chinese and Hong Kong investments in Indonesia increased during the 20032009 period or after the signing of the ASEAN-China Free Trade Agreement (ACFTA). Gita said Chinese entrepreneurs mainly invested their money in the industrial sector in several Indonesian provinces , namely West Java, Jakarta, Banten, Lampung and Central Kalimantan.

Investors from Hong Kong who became interested in Indonesia after the signing of FTA put funds in the real estate, industrial zone, office building, construction and mining sectors in West Java, Jakarta, Banten, Lampung, and Central Kalimantan. According to BKPM data, realized Chinese investment in the 2003-2009 period amounted to an average of US$57.4 million per year or about 0.7% of the overall value of foreign investment in the period, absorbing 2,996 workers

per year. The numbers were higher than in the 1999-2002 period when the anuual amount of realized Chinese investment averaged only US$2.5 million and the number of absorbed workers was 188 per year. Hong Kong investment after ACFTA`s signing reached US$160 million per year and the average number of workers absorbed 5,682 per year. Compared to other countries investing in Indonesia, the

amount of realized Hong Kong investment ranked eighth and that of Chinese investment 16th. On the other hand, realized Indonesian investment in China until mid-2009 amounted to US$2.7 million by a total of 511 companies. Overall, Gita said, the problems Chinese investors were facing when they plan to invest in Indonesia mainly had to do with management conflicts, land-related issues, environmental issues and misuse of facilities.

Chinese Businessman set to Invest in Maluku A Beijing-based investor is interested in running hotels in Maluku, which has many interesting tourist objects and destinations, and build a star-rated hotel there. The Maluku investment coordination agency (BKPMD) Rahman Soumena said the foreign investor planned to build a starrated hotel in an area close to the Liang beach tourist site, Salahutu subdistrict (Ambon island), Central Maluku regency. The prospective investor visited Ambon last month along with the provincial administration group in a return visit of Maluku Governor to China on January 12, 2010. Soumena said the Chinese businessman, which Antara did

not identify by his name, was keenly interested in investment in fisheries, agriculture and tourism in Maluku including the building of a star-rated hotel. On June 6, 2010, the business group and Governor Henan visited Maluku for the signing of an MoU with Gubernur Karel Albert Ralahalu. Following the 2006 economic census,hotels in Maluku totaled 138 consisting of 15 star-rated hotels and 123 ordinary hotels. The average stay of foreign tourists at star-rated hotels in Maluku is 3.23 days, and local tourists 2.29 days. Hotel occupation of ordinary hotels reached less than 30% of the total number of hotel rooms available.

South African Company Considers US$10m Coal Project

SHARES GAIN STRENGTH A stockbroker checks the latest news from a newspaper at the Indonesia Stock Exchange, Jakarta, as the Composite Stock Price Index (CSPI) continued to rise sharply in line with gains of 1-2% in bourses in Western countries. The Rupiah also rose sharply to the level of 9.190/US$. All but two of the 114 blue chip stocks made major gains. Photo: The President Post/Nandi Nanti

Riau Airlines Mulls Coop with Malaysian Flight School Riau Airlines is exploring the possibility of cooperating with the Asia Pacific pilot training school in Malaysia, a company spokesman said. Riau Airlines` interest in cooperating with the Malaysian pilot training school was expressed by a delegation of the company`s management during a visit in Kota Bharu. “Our visit here is to study the possibility of cooperating with Malaysia`s flying school because we want to have professional pilots,” CEO of PT V12FLY, Andi BM Arief, said. Arief said he had come to the Asia Pacific pilot training school with Riau Airlines` operational manager Captain Heru Tri Per-

wiranto in the framework of the company`s plan to acquire 30 new aircraft by 2013. He said the airline wanted to send 15 candidate pilots who had received basic flight training in Jakarta to the Malaysian school. In the future, Riau Airlines, the majority of whose shares belonged to the Riau provincial government, is resolved to open its own flight training school, he said. “At the moment and for some years to come, Indonesia will still be facing a shortage of professional pilots due to the imbalance between the airlines’ growth and the number of trained pilots,” he said.

Government Upbeat on Rp 2,200 trillion Investment

As a result, the practice of hijacking professional pilots by airlines continues to happen, he said. Riau Airlines has been operating since eight years ago. But, despite its name, none of its pilots are original people of Riau, he said. Due to its steady growth,Riau Airlines has great potentials to later become the embryo of Sumatran Air, as recently recommended in a coordinating meeting of governors in Sumatran island. The meeting itself had recommended that Riau Airlines becomes the feeder of short flight routes, Arief said.

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Riau Airlines is exploring the possibility of cooperating with the Asia Pacific pilot training school in Malaysia

Hatta Rajasa expressed optimism that investment would be able to reach Rp2,200 trillion this year.

Coordinating Minister for Economic Affairs Hatta Rajasa expressed optimism here that investment would be able to reach Rp2,200 trillion this year. “We are optimistic we can draw up to Rp2.200 trillion worth of domestic and foreign direct investment,” he said at his office. He predicted investment growth in the energy sector would be big in the next few years, particularly in the geothermal sector. He said a number of contracts had also been signed with various US companies for investment in energy projects. “So the trend of foreign investment in our country is rising. Japan is also interested in developing industrial zones in Karawang and Bekasi,” he said. He said to achieve 7% economic growth in the future up to Rp2,000 trillion

in investment would be needed every year. “The source for investment from the national budget is only around 14% and so we will rely on private domestic or foreign direct investment,” he said. He said there was a rising tendency of investment in the mineral and oil/gas sectors as well as in manufacturing. “We are optimistic we could achieve the Rp2,000 trillion investment, in addition to the investment made by state-owned companies,” he said. Regarding reports about investment movement from Thailand to Indonesia due to the political crisis in that country, Hatta said cancellations had indeed happened but he had never received information about investment movement from that country to Indonesia. “But actually our position is now good. So we must not lose the momentum to attract investment into the country,” he said.

South Africa`s minning company Sasol is expected to decide whether or not to invest US$10 million in Indonesia after it has completed a feasibility study in September, an official said. “The company is expected to complete its feasibility study in September 2010. It is expected they (Sasol) will decide whether or not to invest here two months later,” Chairman of the Investment Coordinating Board (BKPM) Gita Wirjawan said after a working meeting with the House of Representatives` Commission VI at the parliament building here last month. He said the agency had sent a team of officials to South Africa

to meet with the management of Sasol. “Our staff members are now in South Africa to discuss the investment plan with Sasol,” he said. The South African company had expressed interest in building a coal liquefaction plant in Indonesia. It will become the biggest foreign investor in the country if it realizes the investment plan. Gita said Sasol was one of the companies which had the technology to convert coal into fuel oil. “Sasol is ready to build a plant to process coal into fuel oil in Indonesia,” he said.

Unilever Indonesia Set to Invest €116.67m This Year Unilever Indonesia (UNVR) is ready to invest €116.67 million this year or a total of €350 million for the next three years. The company said it may build new facilities if its production increases, especially on the home & personal care (HPC) and food & ice cream (FI) businesses. UNVR President Director Maurits Lalisang last month further said that the company will launch 71 projects this year, including relaunching existing products. He added that additional facilities may be needed in line with an increase of production. “We may build new facilities if required and we will also boost consumption from the current level by, for instance, holding a series of campaigns to brush teeth twice a day,” said Maurits. The company has set a double digit growth target this year both in terms of revenues and profits. The company’s growth is spurred by its HPC and FI busi-

ness lines, both accounting for 75% and 25% respectively. UNVR will also distribute dividends of Rp399 per share, which would be paid out on 13 July 2010 at the latest. According to Maurits, the dividend payment is equal to 100% of its net profits in 2009 or totaling Rp3.044 trillion. The company booked 17.1% sales growth last year to Rp18.2 trillion, partly spurred by volume growth. “Operating profits grew 23.2% and net profit per share grew 26.7%,” he explained. In the first quarter of 2010, the company posted Rp4.973 trillion in revenues or up by 10.9% from Rp4.482 trillion in the same period a year ago. Its profits grew 9.4% from Rp769 billion to Rp972 billion and profit per share rose 25.7% to Rp127 per share. Unilever has operated in Indonesia for 76 years and currently employs around 4,000 workers.

Freeport to Invest US$15 billion Until 2041 Freeport Indonesia (PTFI) will invest up to US$15 billion until 2041 to build infrastructure to support its operations and has asked the government to provide legal certainties. “Our projection is that we still need about US$15 billion in investment. We are still discussing the matter with the government,” said Freeport Indonesia President Director Armando Mahler on the sidelines of a hearing with House Commission VII in Jakarta last month. Armando said that legal certainty is crucial given the huge amount of investment, he said. Until 2015, PTFI will focus on

building infrastructure for its Grasberg Block Cave and to support other underground mining activities, expected to become operational by 2016. Armando said that underground infrastructure development and mining operations in the future require huge amount of investment. “We have realized some of the investments and if our exploration at Block A is successful and we continue to find additional reserves, we expect mining operations to continue for years and may even exceed our working contract,” he explained.


The President Post

www.thepresidentpost.com

June 12, 2010 B3

Management Emotional Intelligence:

One Thing Business Leaders Should have to Succeed

Yuliana Tan Senior Consultant Hay Group Jakarta

Lusi Lubis Managing Consultant Hay Group Jakarta

T

he concept of Emotional Intelligence (EI) was first introduced by Daniel Goleman, an internationally known psychologist who is also one of Hay Group’s researchers. This notion was initiated by his argument that effective business leaders are distinguished not only by their technical knowledge, but also by EI. His research showed that a person with a high level of EI has more probability to succeed. A rigorous study has also been conducted to leaders to see the correlation of EI level and their effectiveness to lead their people. Recently, Hay Group Indonesia conducted an event, called EI Golf, to provide experience on EI competency using golf as the analogy as well as a means to practice the learning.  The event was directed by John Haimes, a professional golfer and an accredited professional of Hay Group’s EI. He has acted as an EI competency coach to client companies. Why Golf?

Leadership and Golf have some common ground: • Extremely challenging • Leaders and golfers have wide gaps between performance and potential • Leaders and golfers rarely transform themselves – too difficult • Require a number of emotional competencies to reach elite levels Leadership and Golf require the players, be it a golf player or a leader, to understand that different situations require different tools. A golf player needs to be able to decide which club to use in a certain condition, what kind of stroke to utilize, how strong the strike should be. A leader also needs to figure out what style to use in what situation to what kind of people he/she is dealing with. The only difference is that leaders deal with people with their uniqueness, while golf deals with less varying distinctiveness. The Concept of EI

There is an apparent difference between workers grouped under the generation X and today’s new generation. In the past, workers tended to adjust their expectations and behaviours to what the workplace provided to them. Today, this new generation expects the workplace to adjust and provide what they expect to receive. This attitude presents its own challenge to leaders as these young people come from various background and may spend years in various cultures. As such, they bring with them their own values, strengths, expectations and career aspirations. Leaders will face some problems in dealing with each one of them in a heterogeneous team. EI can help sharpening the skills that leaders need to utilize to understand the behaviour and motivation of their people who have different values. EI can also assist leaders to find a common ground that can build a cohesive, effective team to handle

daily tasks and issues. So, what is the definition of EI? Emotional Intelligence is the capacity for recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions effectively in ourselves and in others. It describes the behaviours that sustain people in challenging roles, or as their careers become more demanding, and it captures the qualities that help people deal effectively with change. Based on decades of research, across hundreds of roles and organizations, the Emotional Intelligence model (Figure 1) describes 12 competencies that differentiate outstanding from average performers. Although all of the EI competencies are important, you may not need to master all of them, in order to be successful. You may draw on different competencies, depending on your strengths, preferences, and the needs of the people and situations you work with. Effective leaders are distinguished by a high degree of emotional intelligence, which includes Self Awareness, Self Management, Social Awareness, and Relationship Management. The quadrant starts with Self Awareness, which means really knowing oneself, having a deep understanding of one’s strengths, weaknesses, needs, and drives. People with a high degree of self awareness recognize how their feelings (or hot buttons) affect them, other people and their job performance. They have the selfconfidence to drive initiatives, take leading positions, and move ideas and programs forward. They are realistic and candid in their assessments of themselves, others, and business situations. Emotional Intelligence also involves controlling our moods and impulses. It is that inner conversation people have when they know they are in a bad mood or are feeling strong emotions but find ways to control them, even channel them in useful ways.

Figure 2: Leadership Effectiveness through Golf Program on May 4 and 5, 2010

When faced with these situations, people with high EI choose their words carefully, avoid making hasty judgments, pause and take into consideration other mitigating factors, and consider the ramifications of their actions before they act. They create an environment of trust and fairness. In such an environment, politics and infighting are reduced and productivity is high. Emotional Intelligence is critical at the leadership level but will have an impact on business results at all levels of the organization. The applications are broad because the more EI people have, the better they are at working with others - customers, peers, supervisors, subordinates, top executives, alliance partners, etc. Our research showed that it is a valid predictor of individuals’ success rates which collectively impacts the organization. Relationship Management is where EI (or the lack thereof) becomes most visible to others. The competencies in this cluster impact on the motivation and performance of others, but they depend on strengths in the Self-Management and Social Awareness competencies. These clusters provide direction, energy, restraint, and skill to the way we use Relationship Management competencies. Self-Awareness is at the heart of the model. It describes the ability to understand our emotions, our drives, our strengths and our weaknesses. It enables us to sustain our emotionally and socially intelligent behavior over time, despite setbacks. Self-Awareness

Self-Awareness is the critical underpinning of Emotional Intelligence in leadership and performance and everything we do. Self Awareness consists of one competency: Emotional SelfAwareness. Key questions to know whether you have Emotional Self-Awareness: 1. Do you understand how your emotions impact you and your

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Figure 1: The Emotional Intelligence Model

performance from moment to moment? 2. Do you understand how your emotions impact others? 3. Do you intimately know your strengths and limits? Can you write them down? 4. Do you solicit ongoing feedback from others about your performance? 5. Are your values and goals always aligned with your actions? 6. Do you make time for self-reflection and thoughtfulness?

What it showed was that in the workplace, a leader that keeps in mind his/her roles as a leader who needs to provide sufficient guidance and empathy (and of course other EI competences) will energize people to work better and enjoy what they are doing.

Self-Management

Self-Management is about how effectively we are in managing our own emotions. Competencies in this cluster provide the ability to strive to meet or exceed a standard of excellence; flexibility in handling change; keeping disruptive emotions and impulses in check; and persistence in pursuing goals despite obstacles and setbacks. The example of these competencies in the EI Golf program: During the coaching exercises on the green (hole 6) it was the turn of a beginner golfer to coach a highly experienced golfer. The experienced golfer was facing a difficult green where the environment was highly accentuated, with a lot of side wind and he had to drive the golf ball 250 meters to a particular spot. The experienced golfer insecurely turned to the beginner and asked “Well, tell me what to do, this is quite difficult, which club should I use and any tips or directions?” The beginner felt challenged to give a golf related content driven answer. But he also was aware of the fact that he did not have the experience to really help the experienced golfer content wise. So the beginner restrained himself on given a content driven answer and took another direction. He asked the expe-

rienced golfer when he experienced the same situation and was very successful in driving the ball exactly where he wanted it to be. When the experienced golfer recalled such a situation the beginner brought him back into that successful moment in the past: which club he used, what he did, thought and felt. After going through that successful past experience in his mind the experienced golfer drove the ball exactly where he wanted it. Both experienced and beginning golfer had a feeling of success. Social Awareness

Social Awareness is about recognizing and understanding the emotions of others. Competencies in this cluster provide the ability in sensing others’ feelings and perspectives and taking an active interest in their concerns; in reading a group’s emotional currents and power relationships. The ability to relate to others’ situations and put yourself in their shoes, will provide leaders direction and skills to the way they interact with their stakeholders. Relationship Management

Relationship Management is applying emotional understanding in our dealings with others. As mentioned earlier, competencies in this cluster are most visible to others, in term of: • Communicating effectively – managing conflict, resolving disagreements, interpersonal skills • Creating high performance cultures – inspiring and guiding individuals and groups • Cultivating team effectiveness – collaborating, cooperating with others toward shared goals • Leading change efforts – initiating, managing change The example of these competencies in the EI Golf program: For the ninth hole a by the team chosen leader put together the order in which each team member needed to play. For that he reflected briefly on what he had seen in the previous 8 holes. He explained up front when he wanted who to play and why, highlighting the strength of each individual and implicitly avoiding their weaknesses. He also expressed that he was confident that the team could reach at par for this hole. He gave the first good example when driving the ball and afterwards coached each individual when it was their turn, giving examples, tips and encouragement. In the end the result of the team effort was indeed at par. Leadership Effectiveness Program through Golf

One week before the session, Hay Group conducted a 360 degree EI survey to understand the participants’ level of EI. We sent user IDs and passwords to all the raters and based on their responses to the questionnaires, generat-

ed the report on the participants’ EI scores. During the session, since the purpose of the game was to practice EI, it was designed as a very structured nine-hole game. The session began with John giving a brief explanation on the concept of EI and the rules of the game. All the participants were then put into groups of four. The first step into the golf course was used for a 30-minute golf clinic, in which John demonstrated a good golf posture and strike. Then, all participants started with their leadership program through golf. In the first four holes, each participant was asked to take turn and play individually. When one person was taking his/her turn, the others watched or gave some guidance on how to play better. For the next five to eight holes, one person in the group coached another member, regardless their technical competency in golfing. This exercise gave an opportunity for everyone in the group to become a coach. For the last hole, the group selected a leader who would direct the group to function optimally. The group decided the criteria of the leader. At the end of the game, the participants were asked their opinion about the exercise. All participants stated that they enjoyed the learning and, of course, the game. Even the first time golfer, which there were quite many, felt that they gained self confidence in swinging the club with the guidance of their peers and their coach. After the sharing session, reports on their EI were distributed. The result was quite surprising to them as their self assessment was not in line with what their peers, subordinates, and manager perceived. Lessons learned

During the session, most of the participants were very cautious that they were practising EI and, therefore, it was in their conscious mind that they had to apply the concept on their interaction with their peers and even their ‘subordinates’. With sufficient coaching and empathy, the result was that people were able to perform at their best, even for the very beginner golfer. They felt that they were excited about the game and intended to play more in the future. What it showed was that in the workplace, a leader that keeps in mind his/her roles as a leader who needs to provide sufficient guidance and empathy (and of course other EI competences) will energize people to work better and enjoy what they are doing. The leaders at an organization set the tone and culture for interpersonal interaction. The leader’s EI affects their team’s emotions and

behaviours. Such emotional contagion travels down the chain in an organization, ultimately affecting your customer’s emotions and buying behaviours to affect your bottom line. Second is that it is worthwhile to ask others’ perception on what we are doing as what we intend to deliver may not be perceived as such. People with high level of EI will be open to any perception that he/she may receive and act to improve themselves. For many years, people have debated if leaders are born or made. So too goes the debate about emotional intelligence. Are people born with certain levels of empathy, for example, or do they acquire empathy as a result of life’s experience? The answer is both. How much of each will never be known, but research and practice clearly demonstrate that emotional intelligence can be learned. It’s important to emphasize that building one’s emotional intelligence cannot – will not – happen without sincere desire and concerted effort. To enhance emotional intelligence, organizations must refocus their training to help people break old behavioral habits and establish new ones. That not only takes much more time than conventional training programs, it also requires an individualized approach. Independent studies (conducted by the ASTD and other trade organizations) continue to point to people issues as a leading driver of failure. The emphasis has traditionally been so heavily weighted on technical skills in evaluating people when it is the inability to work with others that hinders results. After all, the leader’s task is to get work done through people, and social skill makes that possible. A leader’s motivation will be useless if he/she cannot communicate the passion to the organization. It is fortunate that emotional intelligence can be learned. The process is not easy. It takes time, and most of all, commitment. But the benefits that come from having a welldeveloped emotional intelligence, both for the individual and for organization, make it worth the effort. About Hay Group Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 86 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. Visit www.haygroup.com.


The President Post

B4 June 12, 2010

www.thepresidentpost.com

Leadership

An Empowering Leader A leader should have the ability not only to make people under his or her supervision good followers, but good leaders as well. It will be a great achievement for a leader if his or her followers have the ability and willingness to work together towards goal accomplishments.

N By A.B. Susanto

o leader is able to do everything by himself in his effort to attain the organization’s vision and mission. He will always need competent followers to succeed. In an organization, followers play pivotal roles in implementing strategic matters: performing leadership activities such as taking initiatives and making decisions, providing information for leaders, giving feedback regarding activities performed by leaders to ensure that the organization is moving to the right direction, and functioning as friends and partners. Along with leaders, followers should also be responsible for the organization, individuals inside the organization, ethical and social issues, development and networking. The responsibility towards the organization is aimed at achieving organization goals in a smooth manner. Responsibility towards individual emphasizes on the individuals’ self-development. Responsibility towards ethical and social matters means that the organization will adhere to business norms

and help to improve the well-being of society and its surrounding environment. And finally, responsibility towards development and networking means that an organization will always continue to develop itself and its networks, both with organization members and people outside the organization. A leader should have the ability not only to make people under his or her supervision good followers, but good leaders as well. It will be a great achievement for a leader if his or her followers have the ability and willingness to work together towards goal accomplishments. Therefore, a leader should be able to delegate, motivate, and educate his or her followers. He or she should provide specific and useful feedback, share information, advice and suggestions, provide effective coaching and counseling, give assignments which enable followers to develop their skills, knowledge and positive attitude, and meet regularly with them to review their development and progress. In other word,s leaders have to be able to empower their followers. Followers can be empowered in several stages. The first stage is insight, in which both leaders and followers conduct in-depth observations. This is aimed at re-

vealing life aspirations, possible contribution to the organization, expectations, efforts to enhance skills and knowledge and obstacles in making contributions.

There should be a harmonious cooperation between top management, line managers, human resource specialists, and individual employees. The second stage is called cementing. In this stage, each side tries to strengthen a good relationship, both from the organization and personal aspects. The first element that should emerge in this stage is trust. Each side must believe that every decision and action is aimed at achieving positive and beneficial results. The relationship foundation built in this stage is trust towards personal aspects. In this situation, leaders and followers accept each other as they are. The collaboration is expected to get stronger, and can be achieved through the

organization’s goal-setting program. Empowerment requires leadership commitments, which include clarifying personal values; conforming action to shared values; envisioning a bright future; involving others in shared vision; identifying opportunities with innovative manners to allow the organization to continue to grow, develop, and sustain; experimenting and taking calculated risks and learning from mistakes; strengthening collaboration by promoting common goals and building trust; empowering organization members by delegating authorities and providing wisdom; rewarding contributions and individual achievements; and celebrating success by building a community spirit. In their efforts to empower the leader, many organizations rely on leadership development programs. Unfortunately, many of these programs fail to produce competent and dynamic leaders. According to Conger and Ready, one of the factors is the absence of coherence among units and functions within the organization. To overcome this problem, there should be a harmonious cooperation between top management, line managers, human resource specialists, and individual employees. The next factor is that

the organization often implements a leadership development program that disregards its relevance with actual needs and conditions. The other factor has to do with how a leadership development program is measured, which is often not linked to capability development. In addition to the three abovementioned factors, lack of resources, skills, accountability and support also undermine an effective leadership development program. A leader has to be wary of and anticipate the possibility of a leadership development failure. He or she also has to be aware that leadership a development program is a process which takes time to succeed. Someone can only master leadership skills through experience and continuous practice and supported by high commitment and motivation. Good empowerment policy, strong leadership commitment, and the ability to understand and anticipate factors that cause a leadership development to fail will help organization followers to optimize their leadership potentials. The writer is Dean of the Faculty of Economics, President University, & Managing Partner of THE JAKARTA CONSULTING GROUP

Good empowerment policy, strong leadership commitment, and the ability to understand and anticipate factors that cause a leadership development to fail will help organization followers to optimize their leadership potentials.


The President Post

www.thepresidentpost.com

June 12, 2010 B5

Markets Trade Numbers Worth a Look By Helmi Arman

T

here were no surprises as May inflation, at 0.29% mo-m (4.16% y-o-y), was close to a consensus and our expectation. The monthly number is up from 0.15% in April, which is mainly because the harvest season has passed and food inflation is back in positive region. Generally, inflation is still mild for Indonesian standards. Monthly core inflation was at 0.25%. Yes, this is higher than 0.13 in the same month last year, but taking out gold prices the figure is much lower. And more importantly, we still see low inflation in many services-related components, which shows that mild inflation is not only due to the absence of cost push pressures. We also notice that the wholesale price index (WPI) is now published in parallel with the CPI. There doesn’t appear to be any alarming trends there either. Wholesale agriculture inflation even went down in the past few months, giving us fewer reasons to worry about food inflation going forward. This month the foreign trade data for April deserves more attention than usual, particularly due to the rather significant deterioration in the trade surplus. Exports (42.6% y-o-y) dropped and imports (72.0% y-o-y) rose from the previous month, narrowing the trade surplus. At first we thought this surge in imports was related to the slow pace of growth in goods-producing sectors, as shown in the 1Q10 GDP numbers (see our report on 10-May-10). However, it turns out instead to be due to a rise in

  Headline CPI (% chg y-o-y) Headline CPI (% chg m-o-m) Headline CPI (% chg y-t-d)

May-10 (Actual)

May-10 (Fcast)*

4.16

May-10 (Cons.)

4.22

0.29

4.18

0.35

1.44

0.30

1.50

1.45

Apr-10

Mar-10

3.91

3.44

0.15

-0.14

1.15

1.00

INdoNESIaN CpI INflatIoN Headline Inflation (%MoM, lhs)

2.0

Headline Inflation (%YoY) BI Rate (%)

1.5

9.0

1.0

7.3

0.5

3.81

n/a

3.80

3.70

3.56

-0.5

Source: Bloomberg, CEIC, *Danamon estimates

12.5 10.8

Core Inflation (%YoY)

5.5

0.0

Core CPI (% chg y-o-y)

5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5

2008

2009

Meanwhile, June has arrived so we may want to start looking for-

ward towards 2011 inflation. We continue to expect more administered price adjustments next year (as part of the government’s medium term strategy of reforming subsidies). And with demand pull pressures expected to accelerate by then, we think 2011 inflation would be higher than 2010. To be on the cautious side we are still sticking to our 6.2% inflation forecast for 2011, although admittedly with the global growth outlook clouding-up (again), the risk looks more to the downside. In regard to interest rates, we continue to expect the BI rate to be hiked starting early 2011, by a total magnitude of 100bps for the whole year. The writer is Economist, Treasury & Capital Markets at PT Bank Danamon Indonesia. He may be contacted at helmi.arman@ danamon.co.id

indonesian foreign trade: trade surplus further narrows

3.5

USD bn

%YoY Trade Balance (lhs)

3.0

Export (fob) Import (cif)

50 %y-o-y

80 60

40

40

30

2.0

20

20

1.5

0

10

2.5

1.0

-20

3.8

0.5

-40

2.0

0.0

1

2

3

4

5

2010

Source: BPS, CEIC

imports of oil, not manufactured goods. Given the noisy nature of Indonesia’s monthly trade data, today’s figures may or may not be worth highlighting. We’ll just have to wait and see if the trade surplus recovers in the following months as oil import levels return to normalcy (we think it will). We revise down our 2010 inflation forecast back to 5.3%, as our 5.7% estimate had assumed a 25–30% electricity price hike, not the mild 10% that has been agreed to. Yet the risk to our latest forecast is still to the downside; it already factors in plans to moderately ration subsidized fuel starting in August. Indeed, the details of the rationing program are not yet clear, and if it is delayed, 2010 inflation may end up below 5%.

WholESalE pRICE INdEx (WpI) INflatIoN

INdoNESIaN foREIGN tRadE: MoNthlY 14.3

2.5

Source: BPS, CEIC

6

7

8

9

10

11

2009

12

1

2

3

4

-60

Mining & Quarrying

Agriculture Construction Materials

0 -10 -20

2010

Imports Nov-06 May-07

Nov-07 May-08

Nov-08 May-09 Nov-09

May-10

Source: BPS, CEIC

Indonesia: Selected Economic Indicators

2007

2008

2009

2010E*

2011E*

National Accounts Real GDP (% y-o-y)

6.3

6.1

4.3*

5.2

5.9

Domestic demand ex. inventory (% y-o-y)

6.0

9.1

3.4*

6.9

7.0

Real Consumption: Private (% y-o-y)

5.0

5.3

5.1*

5.0

4.8

Real Gross Fixed Capital Formation (% y-o-y)

9.2

11.7

3.9*

8.0

10.0

GDP (US$bn) — nominal

433

507

532*

635

708

1,925

2,227

2,309*

2,721

2,996

9.8

8.6

9.9*

9.8

9.5

Exports, fob (% y-o-y, US$ bn)

14

18.3

-19.0*

11.0

16.0

Imports, fob (% y-o-y, US$ bn)

15.4

36.8

-26.7*

15.8

18.0

Trade balance (US$ bn)

32.8

22.9

27.6*

26.5

28.8

2.5

0.1

1.8*

0.5

n/a

Central government debt (% of GDP)

35.1

32.0

29.9*

28.2

26.3

International Reserves –IRFCL (US$ bn)

56.9

52.1

65.7

74.9

85.0

GDP per capita (US$) — nominal Open Unemployment Rate (%) External Sector

Current account (% of GDP)

Merchandise import cover (months)

6.2

5.4

9.4*

9.0

8.7

Currency/US$ (Year-end)

9,419

11,120

9,403

9,750

n/a

Currency/US$ (Average)

9,163

9,767

10,356

9,576

n/a

BI policy rate (% year end)

8.00

9.25

6.50

6.50

7.50

Other

Apr-10

Mar-10

Feb-10

Jan-10

Export Growth (% y-o-y)

42.6

46.6

56.5

59.3*

Consumer prices (% year end)

6.60

11.20

2.78

5.30

5.90

Import Growth (% y-o-y)

72.0

68.6

59.9

43.8*

Fiscal balance (% of GDP; FY)

-1.3

-0.1

-1.6

-1.5

-1.0

Trade Balance (US$bn)

0.5

1.58

1.67

2.11*

S&P's Rating -FCY

BB-

BB-

BB

BB

BB

Source: CEIC, BPS

Source: CEIC, *Danamon Estimates


The President Post

B6 June 12, 2010

www.thepresidentpost.com

Human Capital John V Rangam Director & CEO Potentia HR Consulting

Executive Search I HR Consulting I Training

Executive Staff Turnover Retain your talent or else your competition will “Talent without discipline is like an octopus on roller skates. There’s plenty of movement, but you never know if it’s going to be forward, backwards, or sideways.” - H. Jackson Brown, Jr. (author of Life’s Little Instruction Book) By John V Rangam

Y

ou don’t need to work hard today to get higher bonus or salary increments – just switch jobs. And that seems to be the name of the game today . Well, think again . Little do these job hoppers know that in the long run, besides leaving HR Directors hopping mad, the end result will be a doomed career sacrificed for short term monetary gain. Resumes with too many job changes are either deleted on computers or consigned unceremoniously to the dustbin. “ If he has changed more than three jobs in the last five years , don’t waste my time – don’t send me that resume “ is the common guideline given to headhunters. Today’s talented executives are looking for not just good pay packets , but better working environments , better corporate im-

age, better business ethics , fairer bosses , training & development opportunities . The big challenge is for companies to come up with creative strategies for retaining and motivating the top talents critical to the business. Not all staff turnover however is bad , and many companies celebrate when an overpaid, low performing executive , joins the competition. Staff turnover provides an opportunity to inject new blood , sometimes at lower cost into the workplace. Organization need to study and analyze the problem closely . However turnover leading to loss of business, low morale , low productivity , loss of market share should be a wake up call for the organization. Most CEOs would agree that it is cheaper to keep a good current customer than to acquire a new one. The same applies to

employees. One of the best ways to reduce turnover is to recruit the right people in the first place. Go for the optimum fit rather than the best candidate , The guys who are too smart may only be using your company as a launch pad for the next job. What can organizations do to stem the tide?

Retention is all about a) creating the right environment for enhancing growth and development b) formulating the right HR policies to be one up on the competition c) providing growth and development opportunities to ensure your employees don’t have to look elsewhere for this basic need. There a no common remedy for reducing employee turnover . Each organization is unique and what may be a sure fire remedy

in one may not work in another . The list below is by no means exhaustive – and is provided as a check list for review. How does your company compare against this ? If you have a retention problem this may be just the tip of the iceberg and further probing through a Employee Satisfaction Survey could reveal more symptoms of a deeper rooted HR issue being the underlying cause of employee turnover. If your organization is focused on growth, customer loyalty, new product introductions etc. then a strategy for talent management and retention is a must. This strategy must be tightly woven to retain and nurture talent. The writer is Director & CEO of Potentia HR Consulting. He can be reached at johnvrangam@ potentiahr.com

SUGGESTED ACTIONS FOR DEALING WITH STAFF TURNOVER (sample) Financial

• Employee Reward Program • Performance Bonus • Long Service Award • Stock Options • Housing Loan • Car Loan • Pension Plan • Club Membership

Work Environment

• Employee Satisfaction Survey • Celebrating success parties • Recreation • Employee Contact sessions • Housing Loan • Suggesstion Schemes

Personal Growth

• Career Planning • Job Rotation • Scholarship for children • Counselling • Learning & Development • Exit Interview • Goals & Targets


The President Post

www.thepresidentpost.com

June 12, 2010 B7

Industry The Rising Clout of the Indonesian Automotive Industry Photo: www.mediaindonesia.com

In the last four months Indonesian car sales have started to surpass its counterparts in Thailand and Malaysia. As displayed earlier, the number of Indonesian people that belongs to the middle class is larger than the entire Malaysian population.

people will be able to afford to buy cars. But with lower interest rates, it is more attractive for people to lease, because with the same income they can spend less for the product. Indonesia is currently experiencing historic low interest rates.

By Cyrillus Harinowo

R

ecently, The Financial Times featured an interesting article about the rise of the Brazilian car industry, saying it is set to become the fourth largest industry in the world in 2010, overtaking the position of Germany. Having recovered from the crisis at the end of the 90s, the Brazilian car industry quickly made a swift rebound. Car sales have increased sharply from almost 1.5 million units in 2000 to over 3 million units in 2009. A two-fold increase in 10 years time is certainly a miraculous comeback for the industry. The Brazilian car industry is ganged up by various foreign names such as Fiat, Volkswagen, General Motors, Ford, Toyota and many others. Fiat, the first ranked Brazilian car producer with its popular Pinto and Fiesta brand, has produced more cars in Brazil than in its headquarters in Italy. Volkswagen, ranked number two in Brazil, is also churning out many products in the country. General Motors and Ford are the two North American car industries which so far conceded to European car manufacturers. The Brazilian success story in its car industrial development may provide some lessons to the Indonesian car industry. Looking back to the past, the Indonesian car industry had also experienced a roller coaster-like development. Sometimes sales increased very sharply, on other occasions it experienced a steep drop. The development is far from being linear. However, the Indonesian car industry has continued to grow, in fact very rapidly. In 2008, the Indonesian car industry made record-breaking sales of over 600 thousands units. In addition, the industry also actively sold its products to overseas markets. While data are quite scanty, by referring to BPS (the Indonesian Central Bureau of Statistics) we can predict that Indonesian car exports (both in the forms of Completely Built-up or Completely Knocked-down) may reach around 300 thousand units. Thus, both domestic and export car sales have almost touched the psychological level of one million cars annually. If that number is achieved, we may

have to celebrate it as a milestone for the Indonesian car industry. Just as what have been achieved by the Brazilian car industry in 2000, we may have approached that level in the not too distant future, ten years behind Brazil. As if to display its “roller coaster” pattern, car sales in 2009 nosedived to just 486 thousand units. The global economic crisis and the tight break on monetary expansion have hit the industry badly, especially in the first half of the year. On the second half of 2009, the industry has regained part of the lost ground so that the decline was less steep than in the first semester. In fact, in the last quarter of 2009 the Indonesian car industry has returned to its long-term path by producing a small positive growth. For those who only look at the big picture, including GAIKINDO (Indonesian Car Manufacturer Association), they will easily become pessimistic on the outlook of 2010. It was no surprise, therefore, that many in the industry predicted 2010 car sales was initially kept at a level of 550 thousand units, an increase of 13^ compared to sales of 2009. This pessimism has been gradually eroded after seeing a heartwarming performance in the last four months. The longer term prospects of the Indonesian car industry demonstrate more optimism due to several factors. Firstly, the most positive development in the Indonesian car industry’s development was the decision by the Soeharto government to develop a strong local content for the industry. That decree led to rising investments in the car components manufacturing so that the local content of Indonesian-produced cars now is around 65 percent, relatively high in such industry. In fact, in the booming motor cycle industry, the local content is approaching 100 percent. Many of the components manufacturing companies are owned jointly by Indonesians and their counterparts from Japan, Korea and many others. Regardless of the ownership structure, the fact of the matter is that the automotive component industries have become the source of employment for thousands of Indonesians. Secondly, with the increase in

In 2008, the Indonesian car industry made record-breaking sales of over 600 thousands units.

car production level, it makes more economic sense for car components industrialists to invest more in the country to fill the existing gap so that cars’ local content will continue to increase. Based on track record, the quality of the Indonesian car components has improved significantly and has met international standards. Indonesia has in fact started to export car engines to Japan as part of Indonesia becoming a regional production network. The increase in components produced in the country can make the car industry more efficient. In Indonesian industry, the practice of “just-in-time manufacturing” only allows a few hours for the stock of domestic components, while for imported components the level of stocks has to last at least three days. With the increase of local content, the level of stocks of components can be made lower. Thirdly, the potential domestic demand for cars is indeed very big. The demographic nature of the country will eventually follow a similar pattern to that of Brazil. Looking topast performance, Indonesia, with a few millions more population than Brazil, will see rapid growth in domestic car sales in the next few years. Another important variable is per capita income. Currently, Indonesia has seen a rapid increase of its per capita income: US$2,591 in 2009. I predict that 2010 will produce an average income of around $ 3,000. With the current pattern of income distribution, 10 percent of the population will receive 30 percent of the income. That means, 24 million people will receive around $ 9,000, higher than the entire (26 millions) Malaysian average income of $8,000 in 2010. Another 10 percent of the population will receive an average income of $4,500. The third 10 percent of the people will receive around

Photo: The President Post/Nandi Nanti

Imported Wheels A car salesman waits for prospective buyers of wheels imported from China and Taiwan, sold at Rp. 4-11 million. The Indonesian automotive market is flooded with imported products as demand for automotive goods is high.

$3,000. This mathematics will produce a huge Indonesian middle class that now may have reached around 35 million people, bigger than the entire Malaysian people. In the next 5 years, the Indonesian middle class will be around 60 million people, almost the same as the current entire population of Thailand. Fourthly, the state of the Indonesian financial industry: more and more banks have provided loans to consumers to buy motor cycles, cars or houses. In addition to that, banks also provide big loans to financing companies

which in turn provide loans to consumers. With the rise of the Indonesian capital market, financing companies now can develop a better portfolio by combining the sources of financing from banks and capital markets. More and more finance companies went public to tap equity financing as well as longer term bonds. With more parties involved in the financing of automotive sales, the availability of financing has increased tremendously. Fifthly, the level of interest rates: With rising income, more

Single-digit interest rate is something that we rarely see in the past. If this level is sustained, this will guarantee a faster growth in car sales. In the past, financing and the level of interest rates played a very significant role in the upturn or downturn of Indonesia’s car sales. On the basis of the aforementioned factors, what are the future prospects? Recently, Hino truck manufacturer officiated its capacity expansion from 10 thousand annually to 35 thousand trucks in Indonesia. This event marked the optimism of the company on the prospects of Indonesia. Volkswagen officials have also stated that they will build a factory in Indonesia in 2012. One Korean car manufacturer is in the process of deciding whether to put its factory in Indonesia or in Vietnam. Again, this shows the optimism of global car manufacturers on the prospects of the Indonesian car industry. In the mean time, the mathematics of demography has shown its magic in the last few months. Indonesia has always stood third

in the ASEAN car industry. However, in the last four months Indonesian car sales have started to surpass its counterparts in Thailand and Malaysia. As displayed earlier, the number of Indonesian people that belongs to the middle class is larger than the entire Malaysian population. Similarly, thirty percent of the Indonesian population has greater average incomes than the entire Thailand population. Therefore, the demographic picture and the distribution of income will eventually be reflected in the demand for cars. I continue to believe that the Indonesian rank will be sustained and in fact the gap will widen in the next few years. Afew months back I wrote that Indonesian domestic car sales in 2010 will be in the range of 610 to 650 thousands units. On the basis of the performance of the last four months, that target may be exceeded as long as the economic environment does not change significantly. In the longer term, Indonesia may hit its first million annual car sales in the next two to three years. With the pattern depicted by the Brazilian car industry, we may have two million sales in the next ten years. This prospect will be the center of attention of global car manufacturers. Those who are already inside the country will certainly prepare to expand; those who are still outside will to start thinking when to penetrate.


The President Post

B8 June 12, 2010

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Executive Highlights President Yudhoyono saw the signing of 8 has appointed Agus gas sales agreements Martowardojo as worth US$800 million. Indonesia’s new finance The gas sales agreements inminister to replace volved state-owned oil and gas Pertamina, state gas diswell-regarded reformist firm tributor Perusahaan Gas Negara and private local energy economic technocrat (PGN), firm Medco Energi InternationSri Mulyani Indrawati. al. The event also saw the energy The outgoing minister, after a prolonged battle with old guard politicians over her reform initiatives and tough stance on corruption, will leave her job to take up a managing director position at the World Bank on 1 June. Most analysts agree that the selection of Agus, a career banker and president director of the country’s largest lender Bank Mandiri, was positive given his solid track record of standing up to vested interests. Taking charge of the state-controlled Mandiri in 2005, Agus was able to deal effectively with the bank’s politically connected bad debtors, reduce Mandiri’s non-performing loans and raise its profile among international investors. Agus was named Best Indonesian Executive by Asia Money in 2009, and received the Leadership Achievement Award by the Asian Banker in 2006. Following his appointment, Agus asserted that he would continue with the bureaucratic reforms initiated by Sri Mulyani. He also emphasized the need to strengthen the country’s investment climate and highlighted the importance of providing certainty with respect to businesses’ tax obligations. President Yudhoyono, meanwhile, appointed Anny Ratnawati, the finance ministry’s director general of budgeting, as deputy finance minister. Although less known in the investor community, she is well-regarded within the ministry and academic circles for her expertise on macroeconomic policy. Earlier this year, Anny’s directorate general received a top award from

The International Monetary Fund’s (IMF) latest report on global sovereign debt showed that Indonesia was well-placed relative to other nations over the need to make major policy adjustments to curb government spending and pursue fiscal consolidation. The multilateral agency said general government debt in developed countries would increase by 36% of GDP by 2014, while costs for health and pension expenditures would rise by 4-5% of GDP by 2030. Although it said the outlook for most emerging economies was more favorable, policy changes to support fiscal consolidation were still necessary. According to the IMF, Indonesia would need to make policy adjustments to boost revenue and reduce expenditures equivalent to 0.3% of GDP to ensure that it achieves sustainable debt levels by 2030. This compares to 3.1% of GDP for China, 7% for India, the 2.6% average for emerging G-20 nations, and 2.7% average for all emerging countries. Indonesia also compares favorably to developed nations, with the U.S. at 12% of GDP, Japan at 13.1%, the average 9.3% for developed G-20 countries, and the 8.7% average for all developed nations. The IMF, however, highlighted the need for Indonesia to boost government revenues through better tax collection, noting that the country was rated second lowest in tax revenues as a percentage of GDP among OECD and G-20 nations after Saudi Arabia.

ministry offering 27 oil and gas blocks for exploration and development. The concessions were located mostly in the eastern part of the country and included four coal bed methane (CBM) blocks. During his key note speech, energy minister Darwin Zahedy Saleh reported Q1 realized investment in the oil and gas sector totaling US$2.6 billion, up slightly from US$2.5 billion in the same period in 2009. IPA president Ron Aston, meanwhile, noted how the convention underscored the strong collaboration between the government and stakeholders in the Indonesian oil and gas industry to improve the investment climate.

PriceWaterhouseCoopers Indonesia’s latest survey on the Indonesian oil and gas industry highlighted growing concerns with the sector’s investment climate.

looking to divest its 46% stake in the bank in a potential deal worth up to US$1.4 Billion.

State fertilizer producer Pupuk Kaltim is selecting potential contractors for a US$850 million urea plant in Bontang, East Kalimantan.

The Gunawan family, which founded the bank in 1971, has appointed UBS to help manage the sale. The Australia and New Zealand Banking Group, which already owns a 38.5% stake in Panin and has maintained a long-term strategic relationship with the bank, is a leading candidate for the stake. Nothing is confirmed, however, and there is talk the Gunawan family is also scouting for potential buyers from China. Bank Panin posted Rp420 billion in net profits in Q1, up 220% from the same period in 2009 on improved margins. Net interest income (NII) jumped 44% to Rp857 billion, while its net interest margin (NIM) increased to 5.6% from 4.3% last year. Fee-based income, meanwhile, surged 71% to Rp576 billion from a year earlier. As of Q1, Panin’s non-perform-

Company president director Hidayat Nyakman said he expected to finalize a deal by October this year and have the production facility, which will also include a coal-fired power plant, start commercial operations by 2013. Among the companies bidding for the contract include Japan’s Mitsubishi Heavy Industries, Italy’s Maire Tecnimont and Saipem SpA, South Korea’s Samsung and Hyundai Heavy Industries, Ger-

Selected Instant Indicators EXCHANGE RATE 2009 - 2010 16,450

15,000

15,800

14,500 14,000

15,150

14,004

14,500

13,500 13,000

13,850 13,200 12,550 11,573

11,900

Published earlier this month, the survey showed only 30% of respondents seeing an increase in capital expenditures over the next five years, compared to 94% in last year’s survey. The report said this was a crucial negative trend given the long-term nature of the industry. Critical challenges facing industry players operating in Indonesia included: intervention from government agencies like tax authorities; uncertainty over cost recovery and BP Migas/BPKP findings; questions over contract sanctity; corruption; and confusion over implementation of the 2001 oil and gas law. At the same time, the survey also highlighted the country’s competitive features such as: geological opportunities, mainly in eastern Indonesia like Papua, Sulawesi and Maluku; improving political stability; a trained workforce; ease of foreign ownership; and an attractive risk premium.

ing loan (NPL) ratio dropped to 0.6% from 2.4% a year earlier.

US$ (LHS)

12,500

100 YEN (LHS) EURO (RHS)

12,000 11,500 11,000

11,250

10,500

10,356

10,600

10,000

10,729

9,950 8,650

8,500

8,000

8,000 May 09

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F

Mar

2009

A

24 May

2010

STOCK MARKET INDEX

IDX

USA S&P 500 1,300

3,300 IDX - Jakarta

3,100

S&P - USA

2,900

1,200

2,700

2,623

2,500

2,368

2,300

1,100

1,088

1,053

2,100

1,917 1,000

1,900 1,700

919 900 May 09

Financial details were not disclosed. Following the deal, ConocoPhillips, operator of the two blocks, will hold a 51% interest in the Amborip block, with OPIC Indonesia Corporation holding the remaining 24.5% stake. ConocoPhillips will also control a 75.5% interest in the Arafura Sea block. Total said the acquisition highlighted the firm’s strategy to pursue exploration and production activities in Indonesia’s “new frontier” geological areas. The firm said exploration wells were planned for the two blocks before the end of the year. The Amborip IV and Arafura Sea oil and gas blocks each cover areas of 9,000 sq. km and lay in water depths of 30-100 m.

J

Jul

A

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N

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J-10

2009

F

Mar

A

24 May

2010

INTEREST RATES % 8.0 Deposit Rate

7.5

7.0

7.3

Interbank Call Rate SBI

7.4 6.5

6.5 6.4

6.4 6.0

6.2

5.5 May 09

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2009

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INTERNATIONAL RESERVES AND TRADE BALANCE US$ Mn

US$ Bn

3,500

75 Trade Balance

3,000

69.7

2,813

Net FX Reserves

72 69

2,500

66 2,105

2,000

1,747

63 1,581

57.9

57.9 1,500

60 57

1,001

The Indonesian Petroleum Association’s (IPA) annual convention

54

1,000

51

The majority stakeholder of Bank Panin is reportedly

500

lution) signals. Indosat saw its subscriber base rise by 17.6% to 39.1 million users in Q1 from 33.3 million users in the same period in 2009. First quarter net profit rose to Rp285.9 billion or up 140% from a year earlier. Revenue for the period, meanwhile, saw a 2.5% increase to Rp4.7 trillion. The firm is projecting 2010 full year net profit of Rp1.7 trillion.

9000

9,335

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branch, Zainuddin, remarked that Dalle Energy’s power facilities would help meet demand for electricity on the industrial island, which he said has surged this year after stagnating in 2009 due to the global economic downturn. Dalle Energy uses a steam turbine generator manufactured by Japan’s Kawasaki Heavy Industries. Dalle Energy is a subsidiary of local energy firm Medco Energi International.

Tamin M. Zakaria, director for clean water development at the public works ministry, said the loan deal was part of a government effort to expand clean water supplies in urban areas of the archipelago. Five PDAMs, out of 394 across the country, have been initially selected for the program following a comprehensive review of their finances and managerial capacity by the state development audit agency (BPKP). They are the PDAMs in Malang, East Java; in Tasikmalaya, West Java; Bogor, West Java; Bandung, West Java; and Tangerang, Banten. Another 11 PDAMs are also on the shortlist to participate in the initial funding program. Zakaria said the ministry would allocate Rp50 billion a year to partly subsidize any interest payments paid out by the local water supply firms.

Leading mining contractor and Cellular services distributor United provider Indosat is looking to sell US$500 Tractors said it has million in global bonds completed its due diligence of two coal this quarter. concessions in Central The firm, which plans to move Telecom operator XL forward with the flotation despite Kalimantan the current turmoil in the finanAxiata has awarded cial markets, has appointed Cit- that it plans to acquire. Corpoigroup, DBS Bank, Deutsche rate secretary Sarah Loebis said U.S.-Based mobile Bank, HSBC and Royal Bank the company was currently neof Scotland to manage the sale. gotiating the price for the mines, internet services Proceeds from the issue will be adding that it hoped to finalize used to finance its capital expen- a deal by the second half of the provider Motricity a ditures, including upgrading its year. United Tractors has alloexisting BTS network with multi cated US$75 million for the ac- contract to provide a standard radio (MSR) capacity quisition. The concessions con- comprehensive data which would enable the broad- tain an estimated 20-40 million casting of multi GSM, WCD- tons of coal and are located near solutions package MA, and LTE (long term evo- mines operated by Tuah Turang-

9,500

9,300

1,500

France’s Total has acquired a 24.5% stake each in the Amborip IV and Arafura Sea oil and gas blocks offshore Papua from Conocophillips.

many’s Krupp Uhde, as well as local engineering firms Rekayasa Industri, Tripatra and Inti Karya Persada Teknik. The East Kalimantan plant is slated to produce 1.2 million tons of urea per year, which will add to Pupuk Kaltim’s current annual production capacity of 3 million tons of urea. Nyakman said the firm, which is projected to book US$100 million in profits this year, would fund the project with a combination of internal funds and bank loans.

Dalle Energy Batam has completed its US$55 million, 21 MW combined cycle power plant at its Panaran II facility on Batam Island. The addition of the new plant will bring Paranan II’s total power capacity to 82 MW. Dalle Energy president director Yovie Priadi said the firm was also finalizing talks with state power utility PLN to develop another 21 MW combined cycle plant at Panaran. Priadi expects construction of the new plant to start in the second half of the year and come on stream by 2012. The senior executive for PLN’s Batam

ga Agung, a United Tractor subsidiary acquired in 2008. Loebis said the firm expects commercial production to start around 10 months following the acquisition. The deal reflects a plan to boost coal output to 10 million tons per year over the next five years from 3.5 million tons per year it currently produces. The company said it was looking to raise the contribution of its coal mining business to total revenue to around 30% over five years from 10% currently. United Tractors is majority owned by diversified conglomerate Astra International.

The Public Works Ministry and four state banks have signed an agreement to distribute Rp5.5 Trillion in loans to local water supply companies (PDAM) over the next five years. National banks Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) are committing Rp1.8 trillion each, while provincial government-owned Bank Jabar Banten is committing Rp100 billion.

for its network. XL president director Hasnul Suhaimi said the deal with Motricity would enable the firm’s subscribers to experience enhanced mobile data services, amid surging demand from Indonesian consumers demanding better and faster access to the mobile internet. Motricity chief executive Ryan Wuerch remarked that the contract was an important new customer relationship with the country’s third largest telecom operator. He said the deal represented a significant opportunity for the firm to benefit from the growing demand for mobile internet access in developing markets like Indonesia. XL Axiata, majority owned by Malaysia’s Axiata Group Berhad, posted Rp598 billion in net profit in Q1 compared to an Rp306 billion loss in the year earlier period. Sales for Q1 rose 42% to Rp4.2 trillion from last year.

Business Highlights are contributed to The President Post by CASTLEASIA/PT Jasa Cita from information supplied to members of their CEO Forum, the Indonesia Country Program. They are reprinted here with permission. For more information about CASTLEASIA programs, please contact Juliette or Wijayanti at 62 21 572 7321 or email castle@castleasia.com subject CEO Forum


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Retail ON THIS SECTION

RETAIL

Matahari Shines Brightly in Indonesia’s Investment Sky The gigantic Indonesian retailer sold 90.76 percent of its stake in PT Matahari Department Store to Meadow Asia Company Ltd., a venture it established with the U.K. buyout firm CVC Capital

Display until July 12, 2010 /// N0. 13 Published by President University www.thepresidentpost.com

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Trans Corp Set to Enter Fortune 500 after Controlling Carrefour Indonesia Photo: www.daylife.com

In 2004 Chairul Tanjung declared before meeting President Susilo Bambang Yudhoyono that by the year 2030 at least 30 Indonesian corporations would be listed in the prestigious Fortune 500 list of top corporations. By early 2010, however, he has already taken over the majority stake in PT Carrefour Indonesia, paving the way to realizing his dream much more quickly than he himself had expected.

PAGE C2 By Alci Tamesa

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Mahakarya Borobudur & Sumunarin Abhayagiri Sendratari Mahakarya Borobudur tells the story about King Samaratungga and Gunadharma in building Borobudur Temple. PAGE C4

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Some Quitting Facebook as Privacy Concerns Escalate This comes as a response to rising privacy concerns about the site. Facebook has been hit with bugs lately, and it recently announced changes. PAGE C6

n taking over a 40 percent stake in Carrefour Indonesia in April 2010, Indonesia’s indigenous businessman Chairul Tanjung was actually sending out the message that his Trans Corp would be the first to enter Fortune 500 before 2030. Though his company is not yet in the list this year, it is well on track to becoming one of the world’s biggest retail giants now that he owns and runs Carrefour in Southeast Asia’s largest consumer market, which he now dominates. The move to control the Indonesian operation of Carrefour is part of what Tanjung describes as a “strategic partnership to drive growth and provide access to quality products at affordable prices for consumers across Indonesia.” Carrefour itself is already on the Top 25 of Fortune 500; Tanjung’s ownership of its Indonesia operations promises to elevate Trans Corp onto the plateau of the world’s most influential companies in the near future. Trans Corp is the holding company of Para Group’s media, lifestyle, retail, and family entertainment businesses, which is expanding so fast these days that regional market analysts have described it as Southeast Asia’s faster growing consumer industry giant. In Carrefour ownership structure today, Tanjung’s Trans Corp, through PT Trans Retail, is the single largest shareholder, while the other shareholders are Carrefour S.A. (39%), Carrefour Nederland B.V. (9.5%), and Onesia B.V. (11.5%).

On the board, besides President Commissioner Chairul Tanjung, are former chief of State Intelligence Agency, Army Lieutenant General (ret) A.M. Hendropriyono, and former national police chief S. Bimantoro as commissioners. Already Carrefour is the biggest retailer in Indonesia controlling a lion’s share of the fast growing market and having a major impact on the distribution of goods from SMEs and farmers to consumers, a Carrefour announcement says. “We are all aware of its leadership position and importance to the country. However, Carrefour has faced some issues and our immediate objective is to settle these issues. Our long-term objective is to make sure that Carrefour is loved by everyone. My personal objective is to ensure that sembako (the nine basic necessities for daily living) are sold at the best

Indonesia’s indigenous businessman Chairul Tanjung was actually sending out the message that his Trans Corp would be the first to enter Fortune 500 before 2030.

prices in Carrefour,” Tanjung declares. “I am happy that this partnership is reversing the recent trend whereby it is an Indonesian company that has purchased shares of a foreign retail company and not vice-versa. Through this partnership, we will ensure that business development and community development go hand in hand, guided by our national values,” Tanjung adds. Carrefour Indonesia has announced to the world that Trans Corp “will bring its strengths of

innovation, operations, and deep local market knowledge to the partnership to work with Carrefour in meeting the unique needs of Indonesia’s consumers.” The partnership will also bring together Carrefour’s stores with Para Group’s offerings in financial services and lifestyle – fashion, food & beverage, and travel – to create unparalleled value and convenience for Indonesian shoppers, he says. “This partnership reflects Carrefour’s long-term outlook and confidence towards Indonesia. Carrefour is very excited to part-

ner with Trans Corp as its values and governance match well with Carrefour’s,” he added. Meanwhile, President Director of Carrefour Indonesia, Shafie Shamsuddin, says that Trans Corp also has “a very clear strategic vision for the retail sector and businesses that have significant synergy potential with Carrefour.” This is apparently the reason why Hendropriyono has said continued on page C2

Business Leaders Comfortable with Carrefour’s Takeover of Alfa Contrary to public assumptions, business leaders are not worried about Carrefour’s takeover of the Alfa retail chain. Worries had emerged in the public following Carrefour’s 2007 purchase of 75% of publicly listed PT Alfa Retailindo Tbk as to whether this represented a bad omen for local players. Three years after the takeover, however, the situation has proven to be beneficial for both sides: Alfa earned a handsome profit while Carrefour ended up with the domestic retail chain in ways that prevented them from having to make investments.

This is why Handaka Santosa, chairman of the Association of Indonesia’s Retail Companies, says he does not see any threat so far coming out of the Carrefour move. “I don’t think of a monopoly threat coming out of the entry of Carrefour because in fact they have been controlling domestic market for some time. What is clear is that this enables them to expand more easily,” he says. “Unless Carrefour suddenly opens dozens of outlets in Jakarta, for instance, which is highly unlikely, the competition map will not change much because every player has its own characteristics,” he adds. This is a very common strate-

gy in international retail competition. Instead of investing heavily in building retail infrastructure and network from scratch, it is often better to use what has been built by others. “Now Carrefour does not need to invest in such start-up infrastructure because they just took it over from the companies they bought.” This is why retail industry leaders believe big players won’t kill the smaller ones because they have different concentrations. Carrefour’s annual sales reached more than Rp7.2 trillion in 2006, steeply rising in subsequent years to around Rp9 trillion per annum—thanks to con-

tinuous stream of customers flowing into its outlets every day—compared to only Rp2 trillion that Alfa made before the takeover. Before Carrefour bought Alfa, the company had been approached by PT Ramayana Lestari Sentosa Tbk which intended to acquire 55% of its stake at Rp1,600 per share worth Rp411.85 billion in total. Therefore industry leaders say that Carrefour’s takeover of Alfa provides a good lesson for local players on how to expand smartly using facilities that have been built by those who have been in the market earlier.


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C2 June 12, 2010

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Retail Matahari Shines Brightly in Indonesia’s Investment Sky The gigantic Indonesian retailer sold 90.76 percent of its stake in PT Matahari Department Store to Meadow Asia Company Ltd., a venture it established with the U.K. buyout firm CVC Capital

50 cities in Indonesia, including 81 Matahari Department Stores (MDS) outlets, 48 Hypermart, 29 Foodmart, 43 Boston Health & Beauty Center, and 90 Timezone—family entertainment centers, to provide the best retail services to its loyal customers throughout Indonesia.

By Diana Sasmita

M

oving somewhat cautiously but very c on f ident ly, one of Indonesia’s most profitable retailers, PT Matahari Putra Prima, is intensifying efforts to perpetuate its reputation in the minds of millions of people in this third most populous Asian nation. Its latest corporate action last January was a spontaneous image-bolstering move in that a US$772 million purchase transaction by CVC Capital Partners Ltd. caused Matahari’s stocks to soar to the highest level in more than 12 years in Jakarta trading. This marked Matahari’s best stock performance since July 1997 as it registered a 21 percent stock price surge to Rp1,350 in line with an increase in the Jakarta composite index. The gigantic Indonesian retailer sold 90.76 percent of its stake in PT Matahari Department Store to Meadow Asia Company Ltd., a venture it established with the U.K. buyout firm CVC Capital, according to Matahari’s president director Benjamin Mailool, who also hinted that they would move on to purchase at least a 20 percent stake in Meadow, with an option to purchase an additional 10 percent in the future. News reports say that Meadow would also buy another 7.24 percent stake in Matahari Department Store from shareholders. With the purchase, the CVC immediately controlled a profitable department-store chain with at least 27 locations across Indonesia, most of whose 240 million people are already familiar with the trademark. This was apparently the reason why local newspapers quoted Edwin Sinaga, president director of PT FinanCorpindo Nusa, a Jakarta-based brokerage firm, as saying that the transaction was “proof of foreign investors’ interest in Indonesian companies.” Ever since the deal was realized, Matahari’s stocks have performed relatively well and analysts expect a further surge in sales before the end of the year, given the fact that the transaction

Its 81st outlet was opened in East Java in June 2008 at City of Tomorrow Mall in the East Java province capital city of Surabaya. This is also the complex that houses the Surabaya branch of Universitas Pelita Harapan (UPH Surabaya). The City of Tomorrow store represents Matahari Group’s fifth store operating in Surabaya to further strengthen its dominance that have been created through previous stores in operation at Pakuwon Mall, Tunjungan Plaza, Royal Plaza and Galleria Delta Mall. Additionally, the store’s presence also demonstrates the group’s further commitment to sustaining its reputation as the leading multi-format retailer in Indonesia. The presence of new MDS in The City of Tomorrow is expected to become a key contributor to the overall economic growth in East Java province as well as providing the brand-new shopping experience for customers within Surabaya and its surroundings.

has sent waves of optimism about Matahari upgrading its service quality across all its outlets. Matahari Department Store has a store in almost every mall and plaza across the archipelago. In the Indonesian language, the word “matahari” means “sun”. The Matahari logo resembles the shape of the sun, and this common word makes it easier for buyers to remember their favorite shopping destination. Matahari also runs a retailing business. Nowadays, almost every Matahari Supermarket either converts to Hypermart or exists side by side with it. As such, the hypermarket chain also comes under PT. Matahari Putra Prima’s general management. These two chains are competing headon with French giant Carrefour’s Indonesian operations under the leadership of tycoon Chairul Tanjung. Both Hypermart and Carrefour are offering various news services and marketing gimmicks to attract local and international customers as they compete to be the biggest retailer in Indonesia. They are posing a serious threat to smaller retailers such as Giant hypermart, a Malaysian retailer, which has a smaller market presence in spite of it having embraced Hero Supermarket in many parts of Indonesia. Matahari’s fast expansion is visible in the opening of more outlets either under its own brand or under its sister operation, Hypermart. For instance, the Hypermart’s 38th store called Hypermart Puri Indah in West Jakarta has been a heavily congested shopping cernter since its commencement in March 2008. Hypermart Puri Indah is the first Hypermart store on the stand-alone basis, with total store area reaching 10,000 square meters. Representing the 5th generation of Hypermart, this Puri Indah facility confirmed Matahari’s commitment to establishing Hypermart as the leading local hypermarket for affluent consumers, in spite of the aggressive onslaught by Carrefour. According to Bloomberg, this innovative concept is expected to create the ultimate, convenient

As of 2005 Matahari has been expanding even more confidently through the opening of new retail centers either under its own brand or under Hypermart.

destination for grocery shopping amongst the community surrounding Puri Indah area. Through its innovations, the Hypermart store is fully prepared to serve its customers with a variety of high quality products at competitive prices to serve its valued consumers’ expanding needs in West Jakarta areas, especially Puri Indah, Taman Permata Buana, Intercon Kebun Jeruk, Mega Kebun Jeruk, Taman Semanan Indah, etc. This is why Carmelito J. Regalado, Director of Marketing & Merchandising Matahari Food Divison told Bloomberg ”the opening of this Hypermart outlet is a privilege for us because it delivers various new innovative concepts not found in other Hypermart stores.” He added: “Through Hypermart Puri Indah, we are trying to bring grocery shopping experience to a new level, by provid-

ing Refreshment & Snack Zone – the first F&B zone within hypermarket business in Indonesia and regional Asia, as well as offering a variety of health and beauty products and the complete up-todate equipments.” Lighting arrangement and focused luminosity is driven to enhance the merchandise display for its 30,000 item available at Hypermart Puri Indah—creating total ambience and modern store design for a total comfortable shopping experience to its valued consumers, Bloomberg reports. Matahari has progressively transformed from its original business as department store operator into the current position as the leading and largest multi-format retailer in Indonesia. It has been a home to more than 6,000 local and multinational vendors. Matahari’s extensive retail network spreads over in more than

In 2008 MDS won the prestigious Indonesian Most Admired Company (IMAC) Award for Department Store category for its proven track record in providing the best retail service in Indonesia. Perhaps one particular aspect that differentiates Matahari from other big retailers is its work ethics and culture of professionalism: this is a giant corporation that pays very close attention to integrity across its leadership board down to lower levels. As explained by Christian “Clean Man” Kurnia, its Director of Purchasing, in Matahari, integrity and honesty are very important traits that are highly upheld as part of their way of life. Kurnia reportedly controls a Rp5 trillion budget, but has never stolen even a single penny, according to a local educational magazine. He is also one of Lippo Group’s role models of integrity that is being imitated by lower ranking executives and workers in general. He says that his Chinese family background, which is heavily influenced by Chinese philosophy and tradition, has shaped his personality and this has been bolstered even more strongly by his faith in God which enables him to shun temptations for stealing

Trans Corp Set to Enter Fortune 500 after Controlling Carrefour Indonesia from page C1

that he would go all-out in supporting Tanjung in Trans Corp’s community, infrastructure, and modern retail sector development programs to elevate Indonesia’s welfare level. That would go down well with the fast expansion of the Indonesian middle class. The financial services of Tanjung’s Para Group supporting the super-modern retail industry include Bank Mega, the largest bank owned by an individual Indonesian businessman, as well as Mega Life, which has the biggest amount of annual revenues in the Indonesian life insurance industry. Facilitating Chairul Tanjung’s retail industry is his aggressive television stations—Trans TV and Trans 7—which are trendsetters and altogether major money machines in his group. Trans Corp manages national franchises for 15 high-end fashion brands and for Coffee Bean & Tea Leaf and Baskin-Robbins, as well as Anta Tour and Vayatour—Indonesia’s largest

tour and travel companies—and Metro, a popular and highly frequented international department store. His retail industry strategy is worth imitating given the fact that not only does he establish retail outlets everywhere; he also builds public relations and mass media infrastructure to support the retail business. For instance, after controlling the capital city’s television industry market—with two stations being among the most favored— Tanjung moved on to open in 2009 a brand new Trans studio along with a world-class indoor theme park in Makassar, South Sulawesi. He is now building the group’s Bandung Super Mall, which is due to open in 2011. The rapid growth in Carrefour Indonesia’s performance is also due to continuous expansion of the size of the middle class segment of the Indonesian society. As Carrefour provides most of Indonesians’ daily necessities at very competitive prices, buyers have been flocking to its outlets either as first time or loyal customers. The strategic locations that Carrefour has chosen for its out-

lets is another advantage. In all parts of Indonesia, Carrefour is perhaps the most strategically located super-modern retail center with spacious parking lots that regular customers find it very convenient to shop there. PT Carrefour Indonesia started operations in 1998 running 79 stores comprising 63 hypermarkets and 16 supermarkets in 22 cities across Southeast Asia’s largest country with 240 million people. But Tanung is a man of great ambitions. Taking over Carrefour is not enough. He wants to open at least 10,000 convenience stores in 10 years through his retail unit PT Trans Retail, a move that seems to have raised the concern of many in the retail industry. With this, Tanjung aims to confront head-on the dominance of Indomart and Alfamart. Indomart is planning to open 750 new outlets while its main competitor Alfamart plans to open 600 new outlets. These minimarket chains operate through franchising contracts, but they are having hard times competing against such bigger players as Matahari, the

operator of Hypermart, and especially gigantic Carrefour. With more than 12,000 employees, Carrefour registered a gross turnover of € 890m in 2009 and this year a substantial increase is expected to further boost its image as market leader even in the local industry. This year, Tanjung plans to open at least 13 more giant outlets to boost its market share and at the same time provide opportunity for thousands of suppliers, including many small and medium-scale enterprises to channel in their products. Para Group is one of the fastest-growing and most influential business conglomerates in Indonesia. The group provides financial services through more than 800 branches and employs more than 40,000 people across Indonesia. The Carrefour Group itself is the biggest retailer in Europe and the second largest worldwide, with more than 15,500 stores under banner in 32 countries and more than 475,000 employees. For over forty years, Carrefour has been a partner in the day–to– day lives of more than 20 million

customers in Europe, Asia and Latin America. The Group combines different store formats— hypermarkets, supermarkets, hard discount, convenience stores as well as cash-and-carry outlets. Nevertheless, it is often seen by some as a threat to their existence given the huge scale in which it operates and its very competitive pricing strategy. In terms of contributing to national economy, Carrefour Indonesia has done quite well—its regular tax payments, huge absorption of the workforce, marketing and accounting expertise it shares with local workers, and above all, creating pride of being a reputable world-class company whose majority ownership is in the hands of an Indonesian. This is apparently the reason why Tanjung once proudly said that if in the past foreign corporations came in to take over Indonesian companies, now is the time to reverse the trend. Market analysts say that given the aggressive expansion of Tanjung’s business empire, it is only a matter of time before the whole world recognizes him as a key global player.

anything from his company or elsewhere.

In 1996 Matahari issued 5-year US$100 million bond and launched its second rights issue that fetched a handsome profit of Rp226 billion. The following year, Multipolar became the majority shareholder after Matahari’s third rights issue worth Rp 902 billion. In 2000 Matahari launched its now popular Club Card (MCC) followed by the settlement of 5-year US$ 100 million bond. Following that the group began to restructure its management and strengthened Matahari Department Store, Matahari Supermarket & TimeZone as independent and transparent business units resulting in a Rp450 billion five-year bond issuance preceding its consolidation in 2003. The result was the launching in 2004 of Hypermart, which immediately earned the group a Top 500 Asia-Pacific Retail Award.

With such lessons of integrity and fair play being championed by Matahari, it is expected that the retailer chain will see more people flocking to its outlets in respect of such noble values which are fast disappearing in society. This apparently is the reason why local business commentators are saying that despite very tough competition, Matahari will shine on brightly, counting on its long years of experience as well as the integrity and vision of its leaders. Matahari began its operation by setting up a store in Pasar Baru, Central Jakarta, back in 1958. In 1972 it became the pioneer of department store concept in Indonesia, transforming itself into a modern retail center. In 1980 Matahari opened its first shop outside Jakarta, called Sinar Matahari Bogor (meaning sunshine in Bogor). In later expanded into a supermarket and began its first rights issue worth Rp75 billion which was followed in 1992 by an initial public offering (IPO) at Jakarta and Surabaya stock exchanges.

As of 2005 Matahari has been expanding even more confidently through the opening of new retail centers either under its own brand or under Hypermart. The group employs thousands of workers, including foreign expatriates on its management board.

JABABEKA’S PROPERTY INDEX January - May 2010 No.

SEGMENTS

SIZE - M2 Building

PRICES

Land

 

RESIDENTIAL 

 

The Veranda Town House

 

 

 

 

1

Veranda Deluxe

294

166

 

Rp. 2,008,000,000

2

Veranda Corner

306

288

 

Rp. 2,689,600,000

 

Simprug Garden

 

 

 

 

1

Green Pine

53

112

 

Rp. 517,000,000

2

Yellow Pine

70

139

 

Rp. 585,000,000

3

Golden Pine

90

136

 

Rp. 800,800,000

 

Orchid

 

 

 

 

1

Orchid Deret

53

120

 

Rp. 266,500,000

2

Orchid Corner

53

225

 

Rp. 382,600,000

3

Orchid Corner

53

206

4

Orchid Corner (Limited)

53

189

 

 

Tropikana Garden

 

 

 

 

1

Zelosa - Standard

114

119

 

Rp. 854,500,000

2

Axela Standard

159

160

 

Rp. 1,069,000,000

Axela Standard Plus

159

188

3

Ortiz - Standard

188

300

4

Axela - Corner (Land Plot)

228

5

Zelosa - Corner (Land Plot)

262

Rp. 766,700,000

6

Ortiz - Corner (Land Plot)

349

Rp. 1,021,500,000

 

Metropark Condominium Tower A

1

Deluxe , 2nd fl

27/1 Bdr

Rp. 218,950,000

2

Deluxe ,3rd fl

27/1 Bdr

Rp. 218,950,000

3

Deluxe, 5th fl

27/1 Bdr

Rp. 224,500,000

4

Deluxe , 7th fl

27/1 Bdr

Rp. 257,500,000

5

Premium, 7th fl

54/2 Bdr

 

Metropark Condominium Tower B

 

5

Deluxe , 2nd fl (view Metro Blvd.)

27/1 Bdr

Rp. 218,950,000

6

Deluxe, 3rd fl (view Metro Blvd)

27/1 Bdr

Rp. 218,950,000

7

Deluxe , 5th fl (view JCBD)

27/1 Bdr

Rp. 224,500,000

8

Premium, 6th fl (view JCBD)

54/2 Bdr

Rp. 462,600,000

9

Deluxe, 6th fl (view swim. pool)

27/1 Bdr

Rp. 261,900,000

10

Deluxe , 7th fl (view swim. pool)

27/1 Bdr

Rp. 261,900,000

 

Pavilion-Exclusive Boarding Houses

1

Grande-Corner

 

COMMERCIAL 

 

Rp. 364,800,000 Rp. 424,600,000

Rp. 1,143,200,000  

Rp. 1,595,500,000 Rp. 667,200,000

 

 

Rp. 463,050,000  

 

 

 

 

 

221

216

 

Rp. 1,287,000,000

Hollywood Plaza 1

Commercial B - Module SFB

552

552

Rp. 3,838,500,000

2

Commercial B - Module SFB

682

552

Rp. 4,147,000,000

3

Commercial A - Module Studio

1,229

967

 

Pavilion Niaga

1

Block A3

100

2

Block A2

 

Ruko Sunter Niaga Mas

1

Rp. 7,209,500,000  

 

50

 

Rp. 575,000,000

100

50

 

Rp. 575,000,000

 

 

 

 

Corner

165

71.5

 

Rp. 1,025,000,000

2

Standard

120

52

 

Rp. 750,000,000

3

Standard

120

44

4

Standard

120

53

 

Ruko Sentra Niaga Square

 

 

 

 

1

Standard 1 (4 x 11), 2nd fl

80

44

 

Rp. 508,000,000

2

Standard 2 (5 x 10), 3rd fl

150

50

 

Rp.715/727 Million

3

Corner (6 x 10) , 3rd fl

180

60

 

Rp. 891,000,000

4

Standard 1(4 x 11) , 2nd fl

80

44

 

Rp. 495,000,000

5

Standard 2 (5 x 10) , 3rd fl

150

50

 

Rp.715/727 Million

6

Corner (6x10) , 3rd fl

180

60

 

INDUSTRIAL

 

Rp. 700,000,000 Rp. 755,000,000

Rp. 891,000,000

SIZE - M2

 

Land

Factory

Office

1

Grand Standard Factory Building

2000-3500

830

115

start from Rp.4Bn

2

New 3-IN-1 Factory Building

576-1260

304

124

start from Rp.1,8Bn

3

Comercial Office Building

500

356

Rp. 1,700,000,000

4

Standard Office Building

425

160

Rp. 1,200,000,000

5

Land Plot

 

min 5000m2, $80

 

SALES and MARKETING OFFICE Jababeka Center, Plaza JB Jl Niaga Raya Kav 1-4 Kota Jababeka, Cikarang Baru Bekasi, West Java, Indonesia Ph. (+62 21) 893 4350 Fax. (+62 21) 893 4331 / 4038

 

 

Notes: The Above Prices are not Included: Tax 10%; PPAT; BPHTB fee; KPR/Notarial Fee and can be changed without prior notice


The President Post

C4 June 12, 2010

www.thepresidentpost.com

Pictorial Events The Future Challenges of Indonesia

T

he world is changing and dynamic. Nations are going global and are inter-linked to each oth-

er. As Indonesia is a member of the G-20, this creates challenges but also opportunities. There are challenges from outside, but also challenges from inside. On the domestic side, we need to reconcile our views on the challenges. There are three major players, namely: • Government: it has announced that the biggest challenge is how to mobilize Rp 10 trillion in order to achieve 7% growth • The real sector: it argues that the amount is very huge • Banking sector: always try to provide cash loans These are part of the opening remarks by Prof. Dr. Adrianus Mooy, former Governor of Bank Indonesia, at the panel discussion held by ICWA, Ernst & Young, and The Financial Club on May 10. The Chairman of Advisory Group for the President on the Environment and the Economy, Prof. Emil Salim, as the keynote speaker explained that there are five major challenges for Indone-

sia in 2010-2020. Regionalization of development Asia will become the major locomotive of global growth, and Indonesia has to be the part of it. ASEAN Community must mean a single economic entity. The orientation must be change from inward looking to outward looking, and efficiency is the key to change. ASEAN must be a peaceful region in Asia. The purpose of ASEAN in the context of Asia is to eradicate poverty. Need to take climate change seriously The Copenhagen meeting noted that global temperature will be higher in 2100 by 3.2-3.9 degrees. Do not delay taking action to overcome the problem since we are an archipelagic country. The islands are in danger because of rising sea levels, and rainfalls have become less than before. For us, climate change is not just in theory but a real situation. Food and energy security Indonesia strives for resilience in food and water that dictate food self-sufficiency with diversification. Supply of rice still a major problem.

While energy mix is aimed to support low carbon growth, we need to diversify energy because of the islands’ geographical condition. Attaining MDGs Millennium Development Goals (MDGs) must be attained in order to eradicate poverty, improve education, reduce infant and maternal mortality rates, and reduce the prevalence of HIV AIDS. Indonesia’s unique and competitive position Indonesia is the world’s largest archipelago with more 17.000 islands on the equator with terrestrial tropical rainforests and tropical marine resources. The other speaker at the forum is Sandiaga S.Uno, the Vice President of KADIN. In his speech, he emphasizes the importance of entrepreneurship. SMEs, he said, will create jobs in Indonesia. “Indonesia will become the 6th biggest economic power in the world. By improving SMEs, job opportunities will galvanize Indonesia’s economy. Indonesia will be better than being in 12th position in 2020 as long as we finish projects on time,” he predicts. Photos: The President Post/Nandi Nanti

Breakfast Dialogue on Leadership in Indonesia at The Financial Club Jakarta The Financial club Jakarta organized a monthly Breakfast Dialogue on the subject of Leadeship in Indonesia on May 18, 2010 with Anies Baswedan Ph.D (on “National Leadership”), Prof. Dr. Komarudin Hidayat (on “Spiritual Leadership”) and Robby Djohan (on “Corporate Leadership”) as the speakers.

Brazil Night Brazil Night was held at Grand Melia Hotel Jakarta on Mei 2010. It presents various culture, dances, music, and food festival from Brazil. This event was intended to develop the cooperation between Indonesia and Brazil. The event was attended by The Ambassador of Brazil, HE. Mr. Manuel Innocencio de Lacerda Santos Junior (Ambassador of Brazil) , Mr. Conrad Bergwerf, Chef Tohya Yamashita, HE. Mr. Javier Sanz De Urquiza, HE. Mr. Eduardo Calderon, Mrs. Richard Mau, HE. Mr. Javier Sanz De Urquiza, Mrs. Tience , HE. Maria Mercedes Angel,Mrs. Jorge Leon Cruz, Mr. Conrad Bergwerf, Mr and Mrs Ali Basyah Suryo and more.

Present at the breakfast were prominent businessmen and professionals, among others, Felia Salim, and Betty Alisjahbana. Photos: The President Post/Nandi Nanti

Graduation Ceremony Academic Year 2009-2010 President Senior High School was held the 4th Graduation Ceremony (5/6). The percentage that graduates is 100%. Most of them have passed the selection on such universities like President University, University of Indonesia, Institute of Technology Bandung, Fontys University, and so forth. From 59 graduates, 2 students are followed the exchange students program at United States and France. The ceremony was attended by The Head of President University Education Foundation, Syonanto Wijaya, Headmaster of President Senior High School, Cornellius Suyadi PhD, and the representative from Education Department of West java Province.


The President Post

www.thepresidentpost.com

Travel The Magnificent Performances:

Mahakarya Borobudur Sendratari Mahakarya Borobudur tells the story about King Samaratungga and Gunadharma in building Borobudur Temple. Jeannifer Filly Sumayku

S

endratari Mahakarya Borobudur (22/05) was held spectacularly at Panggung Terbuka Aksobya, Borobudur Temple, Magelang, Central Java. It was an impressive show that takes audience on a sensory odyssey through magnificent performance of light, sound, and 150 Javanese dancers from the Indonesian Arts Institute (ISI) Surakarta and local artists. Sendratari Mahakarya Borobudur tells the story about King Samaratungga and Gunadharma in building Borobudur Temple. Many obstacles were arising in the construction of a temple.

Yet through hard work by all the people, the temple had been successfully built in order to realize peace and teach the way of life that is good for all mankind. The whole movement is a dance interpretation of the three courses of life that exist in relief starting of Kamadhatu, Rupadhatu, and Arupadhatu. There were more than 400 audiences from Jakarta and foreign tourists. They were captivated by the show that was hold for 1.5 hours. Meanwhile, another great performance called Sumunaring Abhayagiri was held at Ratu Boko Palace, Yogyakarta on Mei 29th. ‘Sumunaring Abhayagiri’ means the sparkling of hill light that serene and peaceful).

The dance performance is about the journey of life of peaceloving leader in the area Boko who lived around the sixth century with the title “Syailendra Sri Maharaja Dyah Pancapana Rakai Panangkaran” or Rakai Panangkaran. Supported by hundreds of dancers and lighting systems as well as majestic stage, this show promised that the show will not be forgotten by the tourists. Ratu Boko was probably a fortified palace built by the Buddhist Sailendras and later taken over by Hindu Mataram. Sendratari Abhayagiri was held in the cooperation between PT. Taman Wisata Candi Borobudur, Prambanan & Ratu Boko and Yogyakarta State University.

Sumunaring Abhayagiri The dance performance is about the journey of life of peace-loving leader in the area Boko who lived around the sixth century with the title “Syailendra Sri Maharaja Dyah Pancapana Rakai Panangkaran” or Rakai Panangkaran.

Sendratari Mahakarya Borobudur The whole movement is a dance interpretation of the three courses of life that exist in relief starting of Kamadhatu, Rupadhatu, and Arupadhatu.

June 12, 2010 C5


The President Post

C6 June 12, 2010

www.thepresidentpost.com

Living

Women Marrying Men with Less Income

Women made more money than men in 22 percent of married couples surveyed in 2007, compared with 4 percent in 1970.

But most educated women prefer to secure a partner on the same educational level -- or higher.

A

fter earning her Ph.D. in political science, Yazmine Watts, 33, is proud to be called doctor. Now, she works for the government in a job that carries a salary twice as much as her husband’s, a warehouse supervisor. There is a saying that love conquers all, and for Watts that means Laurent Sagna’s salary and job status are inconsequential. She said she adores her 39-yearold blue-collar partner for the way he listens, for his affectionate hugs and musical talents. Watts ignored her mother’s concerns about his “financial prospects” when they married a few years ago. “I’ve met and dated plenty of people with Ph.D.s, and it doesn’t mean they are smarter,” said Watts, who lives in North Carolina. “He might not have the degree, but he’s got a lot of talent.” A Pew Research Center report this year noted a surge in women between the ages of 30 and 44 making more money than their husbands. Women made more money than men in 22 percent of married couples surveyed in 2007, compared with 4 percent

they trust them,” Kaba said.

ple ask about her husband’s profession. Instead, people are intrigued by his dog-walking job.

in 1970. While men make more money overall and hold more management positions, women are making greater gains. “The supply of men has changed,” said D’Vera Cohn, senior writer at the Pew Research Center’s Social and Demographic Trends project. “The pool of college educated men isn’t growing as rapidly as it is for women.” Women represent nearly 60 percent of students holding ad-

vanced degrees in areas such as medicine, law, business and graduate programs, the U.S. Census reported in April. Popular online dating sites Match.com and eHarmony reported that romances happen occasionally between educated, professional women and men who are less educated or have a lower salary. But there remains a stigma on men who make less. Some professional women say they are reluctant to “marry down.”

But Leah MacIsaac-Ruff, a 45-year-old who works 11-hourplus-days as a technology vice president at a Wall Street firm, doesn’t view it that way. She has a college degree. So does her husband, Doug, 43, who walks dogs for a living. MacIsaac-Ruff may be the breadwinner, but she finds her husband’s career choice refreshing. “If I were to marry a typeA personality and we sat on our computers side by side in the evenings, I think I’d die,” she says. “The last thing I want is to go home to an investment banker.” Despite their job disparities, the couple share enjoyment of the opera and theatre. When they attend her upscale corporate events, she isn’t embarrassed when peo-

The recession has shaken some traditional gender expectations, said several marriage and family experts. About 4.7 million jobs were lost among men during the recession, according to April figures from the Bureau of Labor Statistics. Two million women lost their jobs, the report said, leaving more women to become sole supporters of their families. Gone are the days of the “Cinderella complex,” a term coined decades ago to describe women who unconsciously waited for a rich man to sweep them off their feet. Educated, professional women exposed to men working lowerpaying jobs growing up are more likely to date them, said Amadu Jacky Kaba, a sociology professor at Seton Hall University in New Jersey. “When they see a hard-working garbage collector or different kinds of lower-level jobs, then

This was the case for Daniella Abruzzo, 40, of New York, who grew up in an Italian-American household. She was the first to attend college in her family. She is married to a 43-year-old plumber, who, she jokes, comes in handy around the house. Robin Coates, 45, of Mobile, Alabama, found starting a relationship with her boyfriend, Sam, a 39-yearold who installs floors, to be tricky. Coates works as a creative director and has a college degree. She, too, makes more money than her boyfriend, who dropped out of school in the eighth grade. Coates said they have dated for eight years and plan to get married soon. Dating a man who makes less money or isn’t as educated can be difficult, said Whitney Casey, a dating expert at Match.com, the online dating site for singles. She said the differences can work if the couple has similar goals and values. But most educated women prefer to secure a partner on the same educational level -- or higher. A woman with a master’s degree may marry someone without an advanced degree, but he will likely have a bachelor’s degree, said Christine B. Whelan, author of the book “Why Smart Men Marry Smart Women.” Since the couple is the same social class, the educational differences matter less. (CNN)

Poll: Men Lie More Than Women (No, Really) Just where to begin with this? A new poll released in the U.K. by the Science Museum reveals that the average British male tells three lies a day (your British correspondant’s non-fibbing math works out that’s the equivalent of 1,092 a year) whereas the fairer sex only lies twice a day (728 a year). Our long suffering mothers are the main target for porkies (25% of men, 20% of women) though only 10% of people said they’re likely to lie to their partner. As for feeling guilty about not telling the truth, 82% of women feel badly but just 70% of men admit to a sensation of guilt. And how about the most popular lines? For the men, “I didn’t have that much to drink” comes out on top (bear in mind this is the U.K.), followed by “Nothing’s wrong, I’m fine” and “I had no signal.” But the likes of “I’m on my way” and “you’ve lost weight” also make the top 10. For women, they go with “Nothing’s wrong, I’m fine,” “I don’t know where it is, I haven’t touched it” and “It wasn’t that expensive.” Naturally, readers of NewsFeed have never been anything but honest and anyone who tells you differently is clearly lying…

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Liposelection by Vaser An alternative to the harsh techniques of traditional liposuction, Liposelection by Vaser is a new way to precisely and efficiently remove unwanted fat. Liposelection uses state-of-the-art ultrasound technology to reshape your body. If you are frustrated by the resistance of certain body areas – such as the abdomen, thighs, arms, chin, male breast etc – to diet and exercise, this can very well be a solution. Duration : 1 to 3 hours ( depend on the body area ) Endotine Face Lifting To obtain a natural, youthful and refreshed appearance, ENDOTINE facial rejuvenation may be for you. This treatment refers to a set of surgical procedures which helps to restore facial geometry and skin appearance by using different products to counter the different signs of aging through cheek, brow, neck and jowl lift procedures. Duration : 1 to 2 hours

“Your one stop beauty clinic Where technology meets artistry”

Madonna Face Lift ( Intraceuticals ) The “Madonna” Face Lift uses Intraceuticals Opulence Infusion. It is a unique experience providing instant results without an invasive procedure. Skin looks brighter and more radiant with uneven skin pigmentation improved. An opulence Infusion is soothing, relaxing and suitable for all skin types. In just one soothing treatment your skin will look younger, brighter and more luminous. Uneven skin tone is balanced, skin looks and feels hydrated, rejuvenated, radiant and fresh Duration : 45 minutes The Accent Alma Laser This treatment is a comfortable way to tone and tighten your skin. It provides controlled heat therapy to fight wrinkles and tighten skin on the face and body. The treatment process is entirely comfortable, quick and virtually pain free. Since it’s not surgery, there are no incision, stitches or even anesthesia needed and no recovery time required. The treatment is frequently used to improve the thin, delicate skin that develops on the face, neck and under the upper arms. Duration : 30 minutes to 1 hour

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www.ultimoaesthetic.com wardrobe by Ivan Gunawan

Pain Free Hair Removal This is a revolution in permanent body hair reduc-

tion that is virtually painless. This laser hair removal treatment, offered by spas and physicians around the world, gives you a silky smooth and beautifully bare skin Duration : 10 to 30 minutes Laser 360 Achieve complete skin rejuvenation using 3 technologies in just 60 days with Laser 360. If you’re not ready for a full facelift, but you’re no longer satisfied with the results of topical creams and lotions, Laser 360 is for you. It treats fine lines and discolorations from deep in the skin to give you a lasting new, revitalized look. Laser 360 stimulates new collagen to grow, which improves your skin’s texture and tone to fight fine lines and wrinkles Duration : 15 – 30 minutes Peeling by SkinMedica SkinMedica Peelings brings the benefits of alphahydroxy acid and other peeling agents in a unique blend to provide an effective, but gentle treatment that is appropriate for all skin types. Reducing the visible signs of aging, Vitalize Peel helps fight the effect of time, sun damage, and environmental assaults Duration : 30 minutes Dermolissage Dermolissage combines a smooth and precise exfoliation with the infusion of skin-specific topical solutions, leaving patients with fresher-feeling and better-looking skin. Dermolissage provides a safe and controlled abrasion of dead skin cells. The first treatment will show significant and visible results. The skin will look younger and healthier and feel smooth and fresh. 4 to 6 treatments are recommended for best result. Duration : 30 minutes Dental Treatment & Women Health Ultimo Aesthetic provides dental treatments which include scaling and polishing, prophylaxis, light curing, endodontic, tooth whitening, bleaching, dental implant, Veneer Porcelain, Crown Porcelain, fixed orthodontic appliance and fashion dentistry. It also provides dental care for children, from preventive action to children’s aesthetic and early orthodontic treatment


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June 12, 2010 C7

Living

Some Quitting as Privacy Concerns Escalate This comes as a response to rising privacy concerns about the site. Facebook has been hit with bugs lately, and it recently announced changes.

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n recent weeks more people appear to be deleting their Facebook accounts. This comes as a response to rising privacy concerns about the site. Facebook has been hit with bugs lately, and it recently announced changes. Concerns over Facebook’s new privacy policy and the online social network’s recent efforts to spread its information across the Web have led some of the site’s faithful to delete their accounts -or at least try to. On an episode of a podcast called This Week in Technology, host Leo Laporte, a well-known tech pundit, said he had to search wikiHow, a how-to site, to figure out how to delete his Facebook account permanently. After finding the delete button, which he said is hidden deep within the site’s menus, Laporte proceeded to delete his account during the online broadcast.

“That’s it. It’s gone,” he said during the show. “And I think that’s the right thing to do.” It’s unclear how many people have chosen to delete their Facebook accounts in recent weeks. The popular social network doesn’t publish statistics on how many people quit the site. But there has been much uproar online about Facebook’s alleged lack of concern for the privacy of its users’ personal information, and its clear that some people have become so upset that they’re leaving the networking site, which has more than 400 million members. Still, the account deletions likely aren’t numerous enough numbers to affect the site’s overall size. Facebook spokeswoman Annie Ta said that Facebook has grown by more than 10 million active users since late April.

In recent times, the site has been hit with several privacy bugs and scares that, among other things, made private chat conversations briefly visible to Facebook friends. And on April 21, Facebook CEO Mark Zuckerberg announced a new Facebook feature called the “Open Graph,” which essentially brings Facebook-like functionality to a number of websites. Some Facebook users, including Sam Schreiber, say they are bothered by the fact that their online preferences are showing up all over the internet now, instead of just on Facebook.com. Schreiber, a 24-year-old who considers herself social-media savvy, says she may delete her account soon because she doesn’t understand Facebook’s privacy settings well enough to know that her information is being kept safe.

THE UNIFORM PROJECT:

How to Wear One Dress for 365 Days Their personality came out in how you roll up the sleeves or add a few accessories.

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ne outfit at a time, Sheena Matheiken was determined to make a change. She sported a simple, tunic-style dress for not one, two or three days. She did it for 365 days in a row. The New York resident gave herself the fashion challenge of reinventing the same black dress. She did it by adding colorful tights, funky shoes and patterned tops, all donations from eco-friendly designers, thrift shops and mail-in leftovers from strangers. Her outfits varied. Some were random, others organized; some bright, others muted; some classic, others modern. For example, she dressed as an intergalactic goth mermaid one day. The next, she became a modern hippie adorned with a floral bandana and cutout tights. Matheiken completed her yearlong Uniform Project this month; the effort started a year ago to raise money for the The Akanksha Foundation. The foundation is a nonprofit helping children in India’s slums attend schools. She raised enough money to send 233 children to school for a year. Matheiken also wanted to bring awareness to sustainable fashion. That’s not a bad lesson for those of us feeling the recession’s pinch. CNN spoke to Matheiken about the Uniform Project and her eclectic style. CNN: Why did you decide to pick a uniform? Matheiken: First, giving yourself a creative challenge requires giving yourself a constraint. I wanted to recreate one dress for 365 days and have that test. I also have a personal connection with uniforms. I grew up in India and went to a Catholic school where we had to wear uniforms. The cool thing was that even with uniforms, there are so many subtle ways everyone reinvents it so that all the idiosyncrasies of teenage adolescence come out. Their personality came out in how you roll up the sleeves or add a few accessories. I was very fasci-

nated by all of this. I think we all have that white T-shirt in our closet. How do you jazz up something plain? Accessorizing can go a long way to elevate something. Just a pair of tights or maybe if you have a jacket, you can wear it over, and it will look chic and upscale. A white shirt doesn’t have to look like a white T-shirt. For some people, it’s hard to mix and match. You seem to do it so effortlessly. How? There is so much of fashion that is prescribed by magazine trends and looks that are seasonal. I think that’s the biggest problem with fashion. And some people really are stressed about getting ready. The starting point needs to be identifying who you are and what do you like. Some people are hat people, others are belt people and skirt people. You have to try things out and see what you like yourself in.

I want people to see the value in their closet. I’ve gotten people writing on my website that they went to a wedding and recreated an old dress and that it was so much more gratifying.

How did you choose the dress? I designed it with a friend of mine, Eliza Starbuck. I had a few prerequisites. I wanted short sleeves and pockets. I wanted the dress to be a button down so it could open. I wanted to be able to wear it in reverse. We had to keep the material light enough for summer. Did you wear the same dress every day? No, I had seven identical copies so I wouldn’t have to wash it every night. How would you get ready each day?

I didn’t plan the outfits ahead of time. That was very important to me to keep it spontaneous because that’s how I usually get ready. I wanted to keep it that way because that’s how normal people get ready that way. You sort of look around, and I sort of gravitate to a few things like a hat, belt or shoes. I’m a big tights girl. I build off of one piece and add onto it. You go with what you feel like and throw things together. Did you ever get bad reactions from your outfits? Some days I walked out of the door with stuff you never normally wear, and I’d say, ‘This is kind of crazy I have no idea how they will react.’ But that’s the fun. I realized it didn’t matter what people think. There were days where half the crowd loved it and half the crowd hated it. Those turned out to be the most exciting days. Those are the days I valued the most because then you are doing something on your own. I saw on Halloween, for example, you dressed the black tunic up to look like a sea creature. Did the outfits ever reflect your life? I did a lot of references to what was going on politically and culturally. Like when Michael Jackson died, I did a MJ tribute with the gloves. Those were a lot of the days that became meaningful to me. When the volcano happened, we did a crazy poster of me hovering over the Icelandic volcano. What do you hope this project does? I want people to see the value in their closet. I’ve gotten people writing on my website that they went to a wedding and recreated an old dress and that it was so much more gratifying. Depending on where you live, there are amazing vintage and thrift finds but if you don’t have that, there is still online. EBay is one of the greatest sources. The items are perfectly usable, and they are often one-of-a-kind, which is better than a mass-produced good. Why not use what’s already on the planet in perfect condition?

In recent times, the site has been hit with several privacy bugs and scares that, among other things, made private chat conversations briefly visible to Facebook friends.

“People already use them like it’s crack, so I don’t see what the next step is aside from world domination,” she said. “So I just think it’s too much.” Schreiber said she tried to change her Facebook privacy settings to keep that from happening again, but had to turn to news articles for information about how to do so, which she thought was unreasonable. Facebook appears to be rattled a bit by these changes. The blog All Facebook reports that the site’s executives called an “all hands” meeting to discuss its privacy policy in light of recent criticism. The site has had its detractors before. Each time Facebook makes changes to its privacy policy, thousands of users tend to complain. But interest in deleting Facebook accounts appears to be rising. If you type in the phrase “How do I” on Google, one of the first suggested searches that comes up is “How do I delete my Facebook account,” a factoid discovered by Danny Sullivan, a blogger at Search Engine Land. Sullivan looked at similar searches over time and published a graph that shows searches about deleting Facebook accounts have been on the rise sharply since 2009. “Yes, there’s definitely a rising trend,” he writes in a blog post

on the matter. “Over time, more and more searches at Google have involved [deleting Facebook accounts], it appears. In fact, if you go back to Google and start typing in ‘del,’ you get ‘delete facebook account’ as the top suggestion.” A number of tech pundits, including Laporte, have also written recently about deleting or deactivating their accounts. The blog Silicon Alley Insider posted a list of these with a headline that says, “Suddenly, everyone is quitting Facebook!” The New York Times reports that people who once made a career promoting Facebook now may cancel their accounts. The

newspaper says Deanna Zandt, author of “Share This! How You Will Change the World With Social Networking,” may delete hers. “It’s getting harder and harder for me to say, yes it’s worth it, you’re giving up your privacy to get these services, and I have to put my money where my mouth is,” she told the paper. Facebook says on its website that you can “deactivate” your account by following these steps: “To deactivate your account, navigate to the ‘Settings’ tab on the Account Settings page,” the site says. “Deactivation will remove your profile and content associated with your account from Face-

book. In addition, users will not be able to search for you or view any of your information.” If you want to completely “delete” your account -- meaning that all of your information will be deleted from view, although some of it may remain on Facebook’s servers for a bit -- you can follow these instructions from wikiHow. The user-edited site lists several methods for deleting a Facebook account. One of them is a sevenstep process. In his podcast, Laporte said one of the main reasons he felt he needed to delete his Facebook account is that having one gives his friends and family members an incentive to join, too. And, because many people don’t understand that everything on Facebook can be public, Laporte doesn’t think it’s responsible to have an account. By having a Facebook page, he said, “I’m coercing people I’m in relationships with to do something.” (CNN)


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C8 June 12, 2010

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Health Brain Injuries Often Lead to Depression

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More than half of all people who suffer a traumatic brain injury will become depressed in the year after the injury, a rate eight times higher than in the general population, according to a new study in the Journal of the American Medical Association.

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eople who experience serious head injuries often require days -- if not weeks -- of medical care to get back on their feet. For most of them, the mental aftershocks will last long after they’ve checked out of the hospital. More than half of all people who suffer a traumatic brain injury will become depressed in the year after the injury, a rate eight times higher than in the general population, according to a new study in the Journal of the American Medical Association. And only about 45 percent of those

who do become depressed are likely to receive adequate treatment. “We’re not talking about normal day-to-day changes in mood, but symptoms that last for more than two weeks,” says the lead author of the study, Charles Bombardier, Ph.D., professor of rehabilitation medicine at the University of Washington School of Medicine. Symptoms to watch for include low mood, low energy, feelings of worthlessness or guilt, difficulty concentrating, acting restless or slowing down, and thoughts of death, says Bombardier.

Previous research has shown a higher rate of suicide following traumatic brain injury, he adds. “Any signs that the person may be thinking of killing himself should be taken very seriously.” Brain injuries themselves may cause changes in brain structure and function that predispose people to depression, says Bombardier. But certain factors also seem to increase a person’s risk, including a history of alcohol abuse or depression before the injury. The people who were depressed were more likely than the non-depressed patients to say they were experiencing trouble with pain,

Study Fails to End Debate on Cancer-Cell Phone Link The study itself acknowledged that the findings were not definitive and called for more research.

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ong-awaited data from an international study have shown no evidence of increased risk of brain tumors associated with mobile phones, except in people who have the most exposure. But design flaws of the Interphone study, which is partly industry funded, suggest that the latest results cannot be taken to mean that cell phones and brain cancer are unrelated, critics say. “I’m not telling people to stop using the phone. I’m saying that I can’t tell you if cell phones are dangerous, but I can tell you that I’m not sure that they are safe,” said Dr. Devra Davis, professor of preventive medicine at Mount Sinai Medical Center in New York. The study itself acknowledged that the findings were not definitive and called for more research. But Daniel Krewski, professor of epidemiology at the University of Ottawa in Ontario and one of the Interphone collaborators, said the study went to “great lengths to make sure that the results were scientifically sound.” The results showing no connection between cancer and phones are “reassuring,” he said. “It tells us that we don’t have an epidemic of brain cancer on our hands associated with mobile phones.” At the highest exposure levels -- using a mobile phone half an hour a day over a 10-year period -- the study found a 40 percent increased risk of glioma brain tumors. With adjustments for statistical biases, that turned into 80 percent. But Krewski and colleagues say that there is not enough evidence to show a causal connection, and the group of participants using their phones this much was relatively small. In regular mobile phone users, the study found that phone radiation exposure actually decreased the likelihood of tumor, although this “protective” effect may have resulted from limitations in the study, the authors wrote. But critics say that “high” exposure may actually be most representative of the average cell phone user, meaning the study may underestimate the actual risk of tumors. The decade-long study defines a “regular” cell phone user as someone who uses a phone at least once a week for at least months. Results were based on patients’ average talk time rang-

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ing from 120 minutes to 150 minutes a month -- some U.S. users talk that much on the phone in a single week, Davis said. Another concerning flaw in the study’s methodology was that it did not address cordless phone usage, which has been found in other studies to have a risk of tumors similar to cell phones, said Lloyd Morgan, a retired engineer and consumer advocate who has published several analyses on the phone-cancer issue. The study therefore may underestimate the risk of brain tumors because it does not take this exposure into account. Children and young adults were not included in the study, critics note, despite other findings that exposure beginning at a younger age is associated with increased risk of brain tumors, Morgan said. Interphone also released results on only two types of brain tumors: meningioma and glioma. Previous Interphone research on cell phone users’ ability to recall how many hours they spend on the phone has found that heavy users generally underestimate that time, and light users overestimate it, Morgan said. This suggests that the current study, which used people’s recollections of phone usage, underestimates the risk of tumors in many users, he said. But Krewski said that overall people generally have a good ability to recall the number of phone calls reasonably accurately, and tend to overestimate call duration by about 40 percent. The way that the study selected a control group also biases the results, Davis said. “Their comparison isn’t between people who used cell phones and didn’t. It was between people who used their phone less than once a week, and more than once a week, all on self-reflection memory of their mobile use, the day after they’ve had a brain operation,” she said. Krewski said the authors acknowledge this limitation of participant selection, and corrected for it when doing statistical analyses. The study was conducted at 16 locations in 13 countries, not in-

cluding the United States. In hospital interviews, brain tumor patients were asked to answer a series of questions based on memory about their mobile phone use habits prior to being diagnosed. They were asked to reflect on how many hours they talked on their phone a month, how long they had been using their cell phone, if they remembered how many phone calls they made a month and to what side of the head they typically held the phone. Data collection took place between 2000 and 2004, and results have been expected since 2005. The World Health Organization’s International Agency for Research on Cancer is coordinating Interphone. Several of the researchers analyzing the data acknowledged that they received money from the mobile phone industry. An analysis in the Journal of Clinical Oncology last year found that studies that have looked at people who had used cell phones 10 years or longer tended to find the strongest risk of tumors. Eight of the strongest studies came from the same researcher: oncologist Dr. Lennart Hardell in Sweden. This research made sure the investigators did not know which participants had tumors when they conducted the interviews about cell phone use, and they did not receive funding from industry groups. But there may be something unique to Sweden in terms of cancer susceptibility and cell phone use, experts say, and therefore Hardell’s findings may not be widely applicable. The Interphone study has not been released in its entirety. There are ongoing analyses of cell phones’ effects on other kinds of tumors, and other analyses. There is also a study to correlate the position of where participants’ tumors started to grow in their brains, and what the energy level from cell phones are at that area in the brain. (CNN)

Higher intellect self-control inhibitions emotions cognition memory

Association Auditory Equilibrium and muscle coordination

Symptoms to watch for include low mood, low energy, feelings of worthlessness or guilt, difficulty concentrating, acting restless or slowing down, and thoughts of death

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FUNCTIONS OF THE BRAIN mobility, and everyday activities after their injury, but it’s unclear whether these problems were responsible for the depression, or vice-versa. Each year in the United States about 1.7 million people suffer traumatic brain injuries, according to the Centers for Disease Control and Prevention. These injuries, which range from mild concussions to coma-inducing trauma, claim tens of thousands of lives each year. Most of the participants in the study suffered their injuries in falls, car crashes, or other accidents involving vehicles. Although this study focused on civilians, the authors note that traumatic brain injury is a “sig-

nature” injury among soldiers. As many as 360,000 U.S. soldiers in Iraq and Afghanistan have experienced these injuries, the U.S. Department of Defense has estimated. Bombardier and his colleagues studied 559 patients who were hospitalized for mild to severe traumatic brain injuries at Harborview Medical Center, in Seattle, where Bombardier works as a rehabilitation psychologist. (The mild cases all had some form of complication.) Once the patients were discharged, the researchers screened them for depression every one to two months. Fifty-three percent of the people were considered clinically de-

pressed at some point during the year following their injury, the study notes. Nearly half of the patients who were depressed had no prior history of depression. The study corroborates previous research on the subject, says Dr. Ricardo Jorge, associate professor of psychiatry at the University of Iowa in Iowa City. “There is consistent evidence that depressive disorders are very frequent after traumatic brain injury,” he says. The increased risk of depression after a traumatic brain injury can last much longer than a year, Jorge adds. “There are a few studies that show increased rates of depression 20 or 30 years after traumat-

ic brain injury,” he says. Only 44 percent of the people who were depressed were receiving treatment, the study found. People who suffer brain injuries “should be encouraged to try antidepressant medications, psychotherapy, or both together,” says Bombardier. “Other research indicates that people receive inadequate dosages and duration of antidepressants and psychotherapy, so getting a sufficient amount of treatment also may be important.” Starting people on a low dose of antidepressants in the first year after traumatic brain injury may even help prevent some cases of depression, according to Jorge. (Health.com)


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