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Display until October 12, 2010 /// N0. 16
With SBY, Indonesia Has Its Finest Hour Photo: www.presidenri.go.id
By Lukman Hakim
Indofood`s Profit Surges 76.4% in H1
As a president, Yudhoyono not only has to lead the nation but also deal with a host of national-level issues that many think can only be undertaken by him.
t the end of his meeting with President Susilo Bambang Yudhoyono here last month, Volker Kauder, the chairman of the Christian-Democratic Union (CDU) and Christian-Socialist Union (CSU, a faction in the German parliament, told the press that “I am impressed by the way Indonesia [under the Indonesian president] was able to get out of the economic crisis which hit the country in the past.” The senior German politician also extended an invitation from German Chancellor Angela Merkel for Yudhoyono to meet on the sidelines of the Asia-Europe Summit in Brussels in October. The idea, he added, is to talk about efforts to strengthen the world`s economic structure within the G-20 framework in order to avoid financial crises in the future. Kauder also took time to admire Indonesian democracy, which he said upholds religious tolerance and harmony. On that very same day Yudhoyono reaffirmed Indonesia’s brand of democracy when speaking at the commemoration of the Descent of the Koran at the State Palace. “Everyone in Indonesia is free to practice his or her religion or faith,” he says, adding that “no group is allowed to force its will on others, especially by resorting to violence.” No national leader in the world today faces the unenviable task of maintaining a US$650 billion economy to sustain the welfare of 237 million people as Yudhoyono does, and at the same time try to ensure social harmony pervades among them. By the same token, few leaders as the four-star Army general have been chosen twice in a row by the people in direct and democratically-held elections. Says one foreign diplomat who refused to be identified: “There is still much to do, of course, but the president deserves credit for seeing Indonesia become a member of the G20.” “If his popularity has dropped, it reflects more the Indonesian
people’s unrealistic expectations than the president’s real achievements.” “Among so many other things, President Yudhoyono has provided a strong, calm center of gravity to anchor Indonesian society during a period of great political, economic and social change, “says James Castle of Jakartabased consultancy firm CastleAsia. In fact, Indonesians have never had it so good. Its economy is booming marked by exports that allow it to have over US$80 billion in foreign reserves, an unheard of figure in the annals of the 65-yearold republic. Inflation is meanwhile single digit while the annual economic growth figure is expected to pass the 6% mark by the end of the year. Its automotive industry is the largest in Southeast Asia, employing hundreds of thousands of skilled workers. Sure, about 13% of the population lives below the World Bankdefined poverty line, and unemployment remains an unfinished business. At the same time, however, one can not help but notice the growing wealth of ordinary Indonesians as many of them nowadays no longer shop for basic needs in traditional markets but in hypermarkets. As a president, Yudhoyono not only has to lead the nation but also deal with a host of nationallevel issues that many think can only be undertaken by him. Hikmahanto Juwana, professor of international law at the University of Indonesia (UI), for example, has called on Yudhoyono to should personally lead the Indonesian delegation in talks to ease the tensions over border issues with Malaysia. While the meeting would actually be held at foreign ministerial level, he said, “it would be better if the President attended and lead the Indonesian delegation.” Yudhoyono took Juwana’s cue as a snub on his subordinates but has been careful in maintaining their integrity. This, however, has not pre-
Publicly-listed instant noodle maker PT Indofood Sukses Makmur Tbk said last month its net profit in the first half of 2010 surged 76.4% to Rp1.14 trillion from a year earlier, thanks to improved operational performance. Core profit in the first semester of 2010 almost doubled to Rp1.38 trillion from Rp595.2 billion in the same period last year, Indofood President Director Anthoni Salim said in a press statement. Consolidated sales in the first semester of 2010 reached Rp18.12 trillion, a 0.2% increase compared to Rp18.08 trillion in the same period last year, he said.
When Yudhoyono finishes his term in 2014, he will be only 65, the prime age when most statesmen of his stature traverse beyond national borders and take on larger global issues.
While many may discreetly agree that a third term for Yudhoyono may not be an entirely bad idea for the good of the nation, the president strongly opposes it. vented him from rebuking his ministers for being unresponsive to criticisms. “As part of the government you should be more proactive in reponding to problems and not hide or remain silent,” he said at a plenary cabinet meeting. “Not all problems must be explained by the president, as I will only enter into certain problems. Ministers have to explain, to communicate with the people with good will. Understand the essence and respond to public criticism properly,” he said. While many may discreetly agree that a third term for Yud-
hoyono may not be an entirely bad idea for the good of the nation, the president strongly opposes it. “I and I think all people share my view to reject and oppose the idea,” the president said in his address to mark the Constitutional Day at the People`s Consultative Assembly/House of Representatives/Regional Representative Council building here last month. The president was responding to media reports quoting a statement by a politician, who planned to propose an amendment to the constitution to extend the tenure of the president to three terms.
More Chinese Tourists Visiting Bali
China ranked third after Australia and Japan as a source country of foreign tourists visiting Bali in the first half of 2010 with 98,258 tourists, up slightly from 97,930 a year earlier. All of them came to Bali by direct flights from their country, Head of the Bali Provincial Statistics Office Ida Komang Wisnu said last month. Chinese tourists made up 8.33% of the overall tourist ar-
rivals in Bali in the first half of 2010 reaching 1,180,118, a 10.23% increase compared to the same period last year. He said six out of top ten source countries of foreign tourists saw an increase in the number of their citizens visiting Bali in the January-June 2010 period, while the number of tourist arrivals from the other four declined.
Government Upbeat on Paying Debts in 2011
Garuda to Conduct IPO in Late November 2010
Mochtar Leads the Way in Improving Health Service
Trie Utami has been in the entertainment world for years, but she declines to be called a celebrity and prefers to be called an art worker as, according to her, “art is beyond borders“. PAGE A3
In 2011 the figure would increase to Rp110 trillion consisting of Rp65 trillion in state bonds and Rp45 trillion in foreign debts.
Garuda`s management once said it expected to raise US$300 million from the IPO.
Dr. Mochtar Riady, founder of the Lippo Group, took the rare initiative to implement a comprehensive health development strategy with the opening of Siloam Gleneagles Hospital in 1996.
Yudhoyono is now serving his second five-year term which will end in 2014. When the constitution was amended Yudhoyono was chairman of the Armed Forces faction in the House of Representatives and was among those agreeing to the restriction on the presidential tenure to a maximum of two terms. “I encouraged the idea to restrict the presidential term of office to a maximum of two terms,” he said. “I will be consistent,” Yudhoyono said. Indonesians recently had another glimpse of Yudhoyono’s statesmanship when the president called for calm and insisted that preserving good relations with Indonesia’s neighbor is paramount. “The first principle should be that we have to maintain our good relations,” he said. His statement came as the media was abuzz with mounting public indignation over Malaysia’s arrests in early August of three Indonesian maritime officers, which Jakarta said took place within Indonesian territori-
al waters off the Riau Islands. But lest anyone mistook his statement as a sign of weakness, the president immediately followed it up by saying” “Please don’t misunderstand. If it pertains to our fundamental interests, our sovereignty and our territory, we should of course do what we have to do,”. When push comes to shove on territorial issues, he said firmly, “there is no compromise.” According to Anies Beswaden, rector of Paramadina University, Yudhoyono could become a regional leader of immense significance. “He could emerge as a global leader,” he said, noting that Indonesia had banked a huge amount of international goodwill for holding a peaceful election when the region was beset by political turmoil. “I think his destiny and legacy will be in the international sphere.” Indeed, when Yudhoyono finishes his term in 2014, he will be only 65, the prime age when most statesmen of his stature traverse beyond national borders and take on larger global issues.
“Our gross and operating profit margins grew to 32.5% and 17.2% respectively.” Anthoni Salim Indofood President Director
The increase was mainly contributed by Indofood`s Consumer Branded Products (CBP) unit, reaching 47% of the consolidated sales in the first half of 2010. This compares with 43% in the same period last year. However, contributions from the company`s agribusiness unit to the first-semester sales stagnated, he said. “The Bogasari group`s contribution to the consolidated net sales fell 26% from 30% in the same period last year particularly because of a shortfall in the prices of wheat flour. The agribusiness and distribution units contributed 19% and 8% of the sales respectively,” he said. Indofood`s gross profit rose 24.6% to Rp5.88 trillion from Rp4.72 trillion in the same period last year. Operating profit jumped 40.3% to Rp3.12 trillion from Rp2.22 trillion. “Our gross and operating profit margins grew to 32.5% and 17.2% respectively,” he said.
The President Post
A2 September 12, 2010
Viewpoint Indonesia’s G-20 Re-Positioning By: Shanti Shamdasani
While the US continues with its policy reform to regain lost trust, Indonesia continues with its policy reforms to attract investments and garner respect in world affairs. Indonesia’s ambition is to lead the region and become a key player in the world; it is using public affairs strategies and initiatives to attain its ambitions.
THE MAP OF G-20 COUNTRIES
n the wake of meetings, discussions and workshops in the past years on biodiversity, the environment, climate change and the need of sustainability, President Susilo Bambang Yudhoyono finally took the lead by imposing a twoyear moratorium on forest clearing in Indonesia. He refused further meetings and talks and understands the urgency of action-oriented measures to protect the environment, granting the world a contribution for fresh air (as we breathe, we could say “courtesy of Indonesia”). If there are any implications at all of his decision, he should be in line for the Nobel Prize or a UN leadership post for sticking his neck out for a good cause. But this article is not about praising SBY; it is more about evaluating the various state level PR (media tactics) and Public Affairs (intergovernmental negotiations, industry and stakeholders outreach strategies) that has been put at play to better position Indonesia on the world map. Breaking the Engagement Code Post G20 There are probably as many stereotypes about today’s government strategies as there are government leaders. Consider two of the most enduring: (a) government officials are bound to conventional national agenda, getting by doing the minimum possible or, at the other end of the spectrum (b) governments are ambitious “free agents”, loyal to their needs and their careers, but not to their country. The reality is both simpler and more complex. As current world affairs evolve, we learn about the different shapes governments take, from the “US-Obama Leadership Engagement” to the “Indonesia-SBY Leadership Engagement” and their approaches and similarities. The reality in Indonesia is more pleasant; evidently our post-G20 participation has resulted in several public affairs strategies that have produced positive results for the country. As for the US, the giant is still muddling through with challenges on peace, democracy and environment while securing economic stability and its relations with China. The difference between the US and the Indonesian strategy is that Obama is working on closing the engagement gap with the world to regain its lost leadership position, while SBY is working on establishing an engagement platform with the world that rests on peace, democracy and economic development in order to gain leadership status.
Indonesia’s high profile participation at the G20 meeting has raised the bar for this country, allowing it to flex its muscles and take a broader leadership function in response to world challenges. It has provided this government with an opportunity to underscore Indonesia in the map of the world as the emerging leader in South East Asia.
Indonesia has broken the engagement code with its international participation and public affairs strategy. Given the right opportunityand resources, the government is set to take on bigger challenges. Now that Indonesia has broken the code, perhaps most noteworthy is that Indonesia wants to do more, but it must first be sure that it will reap clear and measureable returns on their efforts. The pitfalls for Indonesia on the public affairs front would be that the region is not engaged – at least not to the extent that Indonesia needs its neighbors to in order to produce results. Regional Imbalance Regional dynamics and cooperation determine Indonesia’s leadership success; the engagement platform that Indonesia is trying to build rests on regional acceptance and dynamics that in turn are subject to geographical boundaries, economic inequality, education gap, and country agenda. However, the silver lining here is that the region (ASEAN countries) understands the spotlight they are on and that the ASEAN Secretariat is working hard to ensure they can tap the passing opportunities in a timely manner. Another daunting task for the region is that the ASEAN Secretariat needs to work on public affairs initiatives and break their own engagement code. The art of engagement provides a terrific framework to begin the thought process on those participative practices that, if done well, can
re-positions Indonesia once again in ways that allow it to display leadership in world affairs such as environment, peace, democracy, anti-terrorism, all of which saw in the past saw Indonesia in the driving seat within ASEAN. From a Public Affairs perspectives and analysis, the re-positioning is much called for to establish a footprint that will portray Indonesia as the desired partner within the South East Asia region. Indonesia is not a mere partner of choice to attract investments and tangible financial capital, but a partner to safeguard the confidence of non-business parties for a better tomorrow or, should we say, a better world.
The difference between the US and the Indonesian strategy is that Obama is working on closing the engagement gap with the world to regain its lost leadership position, while SBY is working on establishing an engagement platform with the world that rests on peace, democracy and economic development in order to gain leadership status.
elevate ASEAN region to a whole new level of performance. To this end, leaders at country and ASEAN levels need to be inspired by their responsibilities and view the
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region as a whole unit while managing a single country. As a Public Affairs practitioner, I find Indonesia’s public affairs initiatives to be a good move as it
The pre-requisite public affairs agenda of a country rests on three things, namely (a) national interest vis-a-vis international pressure, (b) peace, environment and democracy and (c) economic development. How does a country conduct its public affairs initiatives whilst ensuring the above agenda objectives are met albeit pressure from international affairs and business issues? Indonesia’s high profile participation at the G20 meeting has raised the bar for this country, allowing it to flex its muscles and take a broader leadership function in response to world challenges. It has provided this government with an opportunity to underscore Indonesia in the map of the world as the emerging leader in South East Asia. Through various “public affairs” strategies at national and international lev-
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The Similarities between Indonesia’s and Obama’s Engagement Strategy The Center for a New American Security has released an indepth report assessing President Obama’s global engagement strategy. It wrote: “While the Obama administration has achieved its initial objective of “re-starting” America’s relationship with the world, it has struggled to capitalize on its early promise and so far has failed to make lasting reforms necessary to ensure public engagement strategies further key national security objectives”. In contrast, Indonesia’s engagement strategy rests on the country’s stakeholders outreach (the international and regional organizations, the players in world affairs and agenda and business community), which has brought the country on a positive footing on the world map. While the US continues with its policy reform to regain lost trust, Indonesia continues with its policy reforms to attract investments and garner respect in world affairs. Indonesia’s ambition is to lead the region and become a key player in the world; it is using public affairs strategies and initiatives to attain its ambitions.
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The President Post
September 12, 2010 A3
rie Utami has been in the entertainment world for years, but she declines to be called a celebrity and prefers to be called an art worker as, according to her, “art is beyond borders“. “I write, dance, paint, sing, play music and teach too”, said Trie Utami in an exclusive interview with The President Post. She has fallen in love with one of the greatest heritage of Indonesia, Ratu Boko, and has immersed herself in knowledge of the temple with the aim to promote it to the world. Since when did you get to know Ratu Boko? I discovered it when I was in fifth grade, around 1978. At that time the place was in a mess and was not opened yet as a tourism site. Since 1978 I felt that I have the responsibility to always return to the place. Is it a very beautiful place? To me, it is a very beautiful place, and possesses powerful energy. How did you become the ambassador of Ratu Boko? Mr. Darmono (the chairman of PT Jababeka) has suggested that no one knows Ratu Boko better than me. So maybe Mr. Darmono felt that Trie Utami would be the most appropriate person to become the ambassador of Ratu Boko. So, how do you feel as the ambassador of Ratu Boko?
An Artist with Enormous Passion for Indonesian Heritage The Kalasan and Ratu Boko inscriptions show that Panangkaran had granted permission requested by a common guru of the Sailendra king to build Buddhist sculptures, shrines and monasteries in honor toof the goddess Tara. The structure was built under Panangkaran’s supervision but financially underwritten by Sailendra.
For me, it is an opportunity to explore and share with other people what Ratu Boko is and other what things are found on that place. Well, what really is Ratu Boko? Ratu Boko is a relic of a former kingdom. Its gate and pavilion still exist. It is located 3km south of the Prambanan temple. In the beginning, the building around Ratu Boko was called Abhayagiri Wihara. Abhaya means no danger or peace. Abhayagiri means a dormitory for Buddhist monks dormitory located at the peaceful area on the top of a hill. The infrastructure in the area is quite poor. But many tourists are now coming to Ratu Boko; I
don’t want them to get the wrong information. In the late eighth and early ninth centuries, Java saw intense rivalry between two dynasties. The first four Sanjaya dynasty lines after King Sanjaya (Panangkaran, Panunggalan, Warak and Garung), which were known as the Amrati Kings, competed over their power and religious influences with the Sailendras princes in the south of central Java who had arisen since 779. The Sanjayas were Hindus while the Sailendras were Buddhists. Although the relationship between the Amrati Kings with Sailendra was important at that time, there was rivalry between the two.
One of the structures is the colossal Buddhist temple of Borobudur, which was listed as a UNESCO World Heritage Site in 1991. In order to show his respect for the guru, Panangkaran agreed to the construction of the shrine by giving in exchange the village of Kalasan to the Buddhist community. The existence of Abhayagiri was an important point in its history and culture. In 792 AD Rakai Panangkaran built Abhayagiri Wihara at Ratu Boko Hill. Abhayagiri later became a complex built not at the behest of its king but a non-royalty. Rakai Panangkaran had been asked three times to have a coronation, but he insisted that as a civilian was not ready for it. When he was finally coronated, he earned titles from Hindu civilians (Shiwaism) and Javanese Buddhist (Bodhicitta). Etymologically, Bodhicitta is a combination of the Sanskrit words bodhi and citta. Bodhi means “awakening” or “enlight-
enment”. Citta is derived from the Sanskrit root cit, and denotes “that which is conscious” – mind or consciousness. Bodhicitta may be translated as “awakening mind” or “mind of enlightenment” Rakai Panangkaran preached Bodhicitta which till now it still taught in Tibet by the Dalai Lama. Atisha, who was a prince from Nepal, introduced Bodichitta teachings to Tibet. After Atisha had studied with all the famous teachers of India, he was told that there was one more left who could teach him more. That person was Serlingpa (or Dharmakirti), who himself had been in India before. Together with 125 disciples and traders Atisha set out for Sumatra. There was so much to learn and see that Atisha stayed with Serlingpa at Sriwijaya for 12 years. Atisha also visited the island of Java, where Serlingpa’s ancestors had built many holy places such as the world famous Stupa Borobudur, the temple complex Prambanan, the Tara Temple Kalasan and Boko Palace, which Javanese people consider the cradle of their philosophy. When Atisha left to return to India, Serlingpa gave him six of his scripts containing the essence of Buddha’s teachings. Almost one thousand years have passed now, and many Tibetan monasteries honor Atisha with statues, murals or Tankas.
They say Atisha was a great Lama and Serlingpa was his teacher. Panangkaran teachings were able to unify Buddhist and Hindu at that time because of its high level of humanity. What do you do as the ambassador of Ratu Boko? Everywhere I go, I always recount the story of Ratu Boko. I have been involved in Sumunaring Abhayagiri performing arts, and have written a book entitled Abhayagiri Keraton Ratu Boko that was published in a joint venture between PT Taman Wisata Candi Borobudur, Prambanan & Ratu Boko and myself. I am also involved in Padepokan Panangkaran in Yogyakarta, a place for animation artists, where are involved in the process of character building process. What is your next plan in promoting Ratu Boko? I am planning to do a musical drama that can be packaged in ways that would enable it to be performed anywhere. I’m trying to reconstruct the minds of Indonesian children who wrongly believe that their heroes are Superman, Spiderman or others. We have great ancestors that had built this nation. What is your next agenda in your career? My duo with Dian HP called Kumari will be released this year. In two months’s time another book will be published.
When another party steals our treasure, we should not be angry because we did not actually protect them. We don’t know much about ourselves; others know much more because they wish to know more. We have to relive our heritage and not only conserve it.
What is your opinion on the fact that our heritage has been claimed by another country? When another party steals our treasure, we should not be angry because we did not actually protect them. We don’t know much about ourselves; others know much more because they wish to know more. We have to relive our heritage and not only conserve it.
The President Post
A4 September 12, 2010
The Economy ECONOMIC UPDATES Customs realization reaches Rp 50.63 trillion Realization of customs and excise revenues up to July 28, 2010 reached Rp50.63 trillion or more than half of the Rp79.83 trillion target set in the revised 2010 State Budget, official data showed last month. The Online Module Report data of the Directorate General of Customs and Excises showed that most of the realized receipts were contributed by the excise sector. The realization of the excise revenues reached Rp37.25 trillion, or 62.85 percent of the target in the revised budget set at Rp59.27 trillion.
Singaporean tourist arrivals in Bali up 55.36% The number of Singaporean tourists visiting Bali in the first semester of 2010 rose 55.36% to 41,483 from 26,702 in the same period in 2009, a statistics official said. “The significant increase ranks Singapore eighth on the list of ten top countries supplying most foreign tourists to Bali. Singapore wasusuallynottakenintoaccount,” Head of the Central Bureau of Statistics (BPS) for Bali office, Ida Komang Wisnu said here last month. Singapore was able to contribute 3.52% to the tourist arrivals to Bali which totaled 1.18 million in the first semester of 2010. Singapore was eighth after Australia, Japan, China, Malaysia, Taiwan, South Korea and France.
“Hot money poses overheating risk” The National Development Planning Agency (Bappenas) warns of a possible economic bubble or overheating as a result of hot money flow in the market. Bappenas Secretary Syahrial Loetan said the government continues to persuade investors to invest in the real sector by among others, improving facilities and infrastructures and by maintaining economic and political stability. Bank Indonesia data showed that foreign funds in Bank Indonesia promissory notes increased Rp2.02 trillion in a week, from Rp54.71 trillion on 6 August 2010 to Rp56.73 trillion on 13 August.
Apindo scrutinizes state plan on incentives The Indonesian Employers’ Association (Apindo) has accused the government of not seriously wanting to offer investors incentives as they are burdened with a requirement to build basic infrastructure in the investment destination area. “Infrastructure development is the government’s responsibility,” said Apindo Chairman Sofjan Wanandi, Sofjan Wanandi adding that the government should not apply certain conditions if it really wanted to offer incentives as it will only discourage investors from coming to Indonesia. Sofjan added that incentive is needed to enable investors to gain benefits from their investment. He also said that incentive is crucial to bring in investments to the regions, especially eastern Indonesia areas.
Export to grow at 10-12% next year Export is predicted to grow 10-12% next year in line with global economic recovery. Industries like oil palm, manufacturer, textile, footwear and mineral are expected to contribute to the growth. Trade Minister Mari Elka Pangestu said export growth this year is quite strong, boosting confidence that exports will grow better next year. The government has set an export growth target of 7% - 8.5% this year, but with export growth reaching 18% in the first semester compared to the same period last year, she is confident that export growth will exceed the target.
Rice Production Up 4.49% in Past Three Years Based on a forecast by the Central Bureau of Statistics, rice production this year is expected to reach 65,151 million tons in the form of dried hulled rice or up 1.17 percent.
ndonesia`s rice production grew 4.49% in the period 2008-2010, a senior agriculture official said. “The country had a rice surplus of 2.367 million tons in 2008 and 3.895 million tons in 2009,” acting director general of food crops, Sumarjo Gatot Irianto, said in a written address read out by the director of seeding, Rahman Pinem, at a hybrid rice harvest in Purbalingga, Central Java, last month. He said the country may still have a surplus of 4.322 million tons this year. Based on a forecast by the Central Bureau of Statistics, rice production this year is expected to reach 65,151 million tons in the form of dried hulled rice or up 1.17 percent. Corn production meanwhile is expected to reach 18.016 million tons and soybean 927,384 tons or down 4.84% compared to 2009. “This means we have been able to maintain rice selfsufficiency in the midst of weather changes and pests,” he said. He said the production hike was driven by the use
of prime seeds including hybrid seeds. Hybrid seeds were used on 3,360 hectares of land in 2009 and 24,000 hectares of land this year in several provinces in the country including Central Java. Efforts to develop hybrid rice are still being made mainly at the integrated resource and crop management field school program and based upon prime seed direct aid program. Regarding corn development, he said the use of hybrid variety would be extended while development of soybean would be carried out through special efforts and aid to farmers with regard to increasing acreage to increase production. He admitted that the projection of rice production in the second season of 2010 was still below that of 2009 due to a decline in harvest areas in various provinces as a result of a delay in the 2009/2010 planting season and insect attacks. “However, we still have an opportunity and resource potentials to increase harvests and productivity to increase production of rice and corn in the second projection period,” he said. He said the government in 2010 still gave facilities, aid and counseling especially seed to support the farmer.
RI aims at soyabean self-sufficiency by 2014 Minister of Agriculture H Suswono said that the government is trying to become self-sufficient in soybean by 2014, and develop Lahat in South Sumatra, as its barn. The minister said this in a working visit and soybean grand harvest in Pagarjati village, Kikim Selatan subdistrict, Lahat, last month. He said that of all the raising soybean locations in Indonesia, Lahat was the only area with good harvests. Production of each hectare of land increased from 1.3 tons to 2.6 tons. He said that the progress and achievement were made by an integrated planting and management, farmland expansion, secured production and institutional promotion. “And the agriculture ministry also needs to be more focused on funding, with the consistent support of the South Sumatra provincial and Lahat administrations,” he said. He added that the South Sumatra provincial administration and the Lahat regency administration also needs to build and expand new planting areas into new soybean centers in South Sumatra and in other parts of the country as well. In the meantime, South Sumatra Governor H Alex Noerdin said the provincial administration will support all government policies and those from Lahat regency administration as well, especially with regard to the development of culture of soybean.
Government Upbeat on Paying Debts in 2011 In 2011 the figure would increase to Rp110 trillion consisting of Rp65 trillion in state bonds and Rp45 trillion in foreign debts. The government is confident it will be able to pay its matured debts in 2011 even though the amount has significantly increased, a cabinet minister said. “If the amount of matured debts is big, the government will study it and try to pay it duly,” Finance Minister Agus Martowardojo said here last month.
He said so far Indonesia had never been subject to a debt payment moratorium. “The amount will surely increase but we will make efforts to optimize tax and non-tax receipts so that our budget will remain sound,” the minister said. Based on a report from the directorate general of state debts management, the amount of Indonesia`s debts due in 2010 reaches Rp36 trillion, consisting of Rp15 trillion in state bonds and Rp21 trillion in external loans. In 2011 the figure would increase to Rp110 trillion consisting of Rp65 trillion in state bonds and Rp45 trillion in foreign debts. The minister said the government had a program to increase its tax revenues through a taxa-
tion system, tax administration, regulations, human resources, and development of tax potentials.
Sustainable fiscal self-reliance was part of the government`s efforts to preserve economic resilience, he said.
Goverment aims to cut debt-to-GDP ratio The government aims to cut the country`s debt-to-gross domestic product (GDP) ratio to 26 percent next year from 27.8% this year. “The lower debt-to-GDP ratio will, God willing, be able to strengthen the structure of our fiscal resilience in line with the government`s objective to achieve sustainable fiscal self-reliance,” President Susilo Bambang Yudhoyono said when delivering the draft 2011 state budget and its financial notes to a plenary session of the House of Representatives (DPR) here last month.
The government projected the 2011 state budget deficit at Rp115.7 trillion or 1.7% of GDP. The figure represented a decline of Rp18.1 trillion or 13% of the 2010 state budget deficit target of Rp133.7 trillion or 2.1% of GDP, he said. The reduction in the state budget deficit had to do with the direction of consolidated fiscal policies to create a healthier and more balanced state budget in the future, he said. “The higher deficit will only cause our debts to go beyond a safe ratio and add to the burden of future governments,” he said. He said the government would
Officials Upbeat 2010 Inflation to Fall Short of Target The 2010 inflation rate would most likely accord with the government-set target of 5 plus or minus 1 percent Photo: The President Post/Nandi Nanti
The government believes the 2010 inflation rate can be kept below 6% although the monthly inflation rate climbed to a 15-month high of 1.57% in July. The 2010 inflation rate would most likely accord with the government-set target of 5 plus or minus 1 percent, Coordinating Minister for Economic Affairs Hatta Rajasa said on the sidelines of market operations in Jakarta last month. “From the beginning the assumed inflation rate remains at 5 plus or minus 1% and we are still optimistic that it can be below 6%,” he said. Deputy Finance Minister Anny Ratnawati said the
Bank Indonesia (BI) Governor-elect Darmin Nasution said on Tuesday the July`s inflation rate of 1.57% was mainly driven by a 1.08% rise in food prices but it would decline as supply improved and the harvest season arrived. “Indeed, the car license tax hike factor is also involved in it but this is just a one-time event. It does not happen repeatedly,” he said.
The Central Statistics Agency (BPS) said on Monday the on-month inflation rate rose to 1.57% in July from the previous month, driven chiefly by higher food prices.
prices of several commodities in the wake of the fasting month of Ramadhan and subsequent Eidul-Fitr festival would likely fall,
Efforts to develop hybrid rice are still being made mainly at the integrated resource and crop management field school program and based upon prime seed direct aid program.
thus leading to deflation. “Normally, the prices of several commodities will fall (after the festivities),” she said.
Darmin said the inflation rate this year would still undergo pressures due to the impact of the electricity price hikes but he was optimistic supply of staples would remain safe and thus would not negatively affect inflation. “Of course, we will keep monitoring it and seriously make the needed calculations. Do not
think we will remain idle,” he said. The Central Statistics Agency (BPS) said on Monday the on-month inflation rate rose to 1.57% in July from the previous month, driven chiefly by higher food prices. The July inflation rate brought the calendar inflation rate to 4.02%, 1.28% lower than the government forecast of 5.3% for this year and increased the year-onyear inflation rate to 6.22%. BPS Chief Rusman Heriawan has hinted the 2010 inflation rate may come close to 6% as July`s inflation of 1.57% was the highest monthly inflation rate so far this year.
Finance Minister Agus Martowardojo
use both local and foreign financing sources to offset the budget deficit. The local financing sources would chiefly come from the issuance of state debt securities, and the foreign financing sources from the withdrawal of offshore loans including program and project loans, he said.
New Power Plants to Operate Soon A number of power projects which are part of the 10,000 megawatts power crash program in Java will operate in the near future, an electricity official said. “The power projects that will operate soon in Java include the Indramayu project with a capacity of 600 MW, the 600-MW Rembang project and the 600-MW Suralaya plant,” spokesman of state-owned electricity firm PLN, Bambang Dwiyanto, said here recently. He said that the entry into the operations of the power plants would further complement the Java-Bali electricity networks system. The other power plants which are part of the 10,000 MW power program out-
side Java are also expected to operate in a not too-distant time so that the power outage in the country would be minimized. However, he said, it was still possible for PLN to rotate power cuts even if it had already able to overcome its power supply deficit. He said that PLN had already overcome power shortage throughout Indonesia since June 30, 2010. “But power cuts are still possible due to disturbance,” he said. Indonesia is now pursuing its ambition to reach the international quality power service standard in Java in November 2010 following its success to achieve its target of free rotating power cuts last June 30.
The President Post
September 12, 2010 A5
RI`s Economy Grows 5.9% in H1 The Asian Development Bank spokesman Edimon Ginting has predicted that economic growth this year could reach 6.5%
he Indonesian economy grew 5.9% in the first half of 2010, thanks to growing exports, imports and household consumption, the Central Statistics Agency (BPS) said. Household consumption grew 4.5%, gross fixed capital formation 8.0%, exports 17.2% and imports 20.1%, however, government consumption fell 8.9%, BPS Deputy Head for Balance Sheet and Statistical Analysis Slamet Sutomo said here last month. Based on an increase in gross
domestic product (GDP) the domestic economy in the second quarter of 2010 expanded 2.8% compared to the first quarter of 2010 and 6.2% compared to the second quarter of 2009, he said. “The GDP based on the current prices and the 2000 constant prices in the second quarter of 2010 reached Rp1,572.4 trillion and Rp573.7 trillion respectively,” he said. The second-quarter growth was driven by household consumption, government consumption, gross fixed capital formation, exports and imports, he said. Compared to the same period last year, the economy in the second quarter of 2010 grew 6.2%, fueled by household, gross fixed capital formation, exports 14.6 and imports 17.7, while government consumption fell, he said. On a quarterly basis, the economic growth was led by the transportation and communica-
tions sector which grew 5%percent, followed by the electricity, gas and drinking water sector 4.8% and the service sector 3.7%. The transportation and communication sector also was on top of the year-on-year growth, contributing 12.9%, with the trade, hotel and restaurant sector trailing behind with 9.6% and the construction sector with 7.2%, he said. Slamet said the second-quarter GDP was still dominated by the processing industry, the agricultural sector and the trade, hotel and restaurant sector, contributing 24.9%, 15.9% and 13.7% respectively to it. ADB predicts economic growth of 6.5% The Asian Development Bank spokesman Edimon Ginting has predicted that economic growth this year could reach 6.5% following the first semester`s growth of 5.9%.
“Economic growth in the first semester has reached 5.9% and it is very good comparing with that of our neighbor country. Therefore the economic growth this year is predicted to reach 6 to 6.5% or 6.2 to 6.3%,” Ginting said here last month. According to him, the short term growth would be even better if bureaucratic reform was sped up. “Economic growth to 7 to 8% is no dream,” Ginting said, adding that the government should maintain and encourage the realization of infrastructure projects because they had a big contribution of 25%. But he said its contribution at present experienced a down turn and therefore infrastructure projects should be the focus of next program as they absorb a lot of manpower. Ginting said the attained economic growth should have a good quality with the occurrence of manpower absorption and the
reduction of poverty rate including the improvement in manpower quality. “Some 51% of our manpower graduated from elementary schools, so we have to improve it in order to reach quality growth,” Ginting said. Meanwhile, deputy minister of national development planning board Lukita Dinarsyah Tuwo said he was optimistic that the economic growth could reach beyond the government target of 5.8%. “I am optimistic because in the second semester it grew by 6.2%,” he said. Lukita added that besides encouraging economic growth, the government would also hold the speed of inflation which usually accompanies high growth. He said the government has prioritized the effort to hold inflation, especially in the third semester which is predicted to get higher because of seasonal factor.
RI`s Forex Reserves Now Total US$78 billion Photo: www.presidenri.go.id
Indonesia`s foreign exchange reserves have risen to US$78 billion in 2010 following the country`s economic growth in the past ten years from minus 13 percent in 1998 to six percent in 2008, President Susilo Bambang Yudhoyono said when presenting the draft national budget for 2011 and economic notes to the parliament here last month. “Indonesia`s foreign exchange reserves now total more than US$78 billion (and) the rupiah remains stable, the poverty rate is down and the country`s credit rating improving,” he said in his speech to mark the country`s
65th independence anniversary. “The process of improvement is continuing. The country`s non-oil/non-gas exports have surpassed US$100 billion, the national budget totals more than Rp1,000 trillion and the loan-togross domestic growth ratio has dropped significantly to 27.8% which is the lowest in Indonesian history,” he said. The economic achievements, he said, were made due to strong commitment to corruption eradication and the massive transformation the country has undergone to make it more whole, secure, economically stronger,
more peaceful, dynamic and democratic. He said while the world was facing a big financial crisis in 2008 and 2009 and its economy was contracting, Indonesia remained growing 6% in 2008 and 4.5% in 2009. “It was the third highest growth rate after China`s and India`s,” he said. Indonesia, he said, was now targeting a 7.0 to 7.7% growth in 2014. “Acceleration of economic growth is expected to be able to create more employment and reduce unemployment,” he said. President Yudhoyono hoped
that in the next four years 10.7 million new jobs would be created to reduce the poverty rate to 8.0 to 10% by the end of 2014.
Central Bank Targets Productive Sectors Bank Indonesia (BI) hopes its new policy of connecting the loan-to-deposit ratio to reserve requirements will encourage banks to extend more credits to productive sectors. BI Deputy Governor Halim Alamsyah told ANTARA News here he was optimistic the policy would not only increase credits but also create new credits for productive sectors such as for working capital and investment. “If banks extend too much credit for consumptive purposes,they could from a managerial point of view, create new risks, namely credit concentration,” he said. “BI will certainly monitor the risks including the credit concentration risk,” he said. Halim also said through micro- and macro-economic approaches and supervision from BI it was hoped expansion of credits would enter productive sectors. “The BI regulation is not yet finished as it still has yet to be taken to the board of directors` meeting once more. It will be effective six months later after the Bank Indonesia Regulation (PBI) is issued,” he said. According to sources Bank Indonesia is set to require banks to have a 78 to 102% loan-to-deposit ratio (LDR). If a bank`s LDR is below 78% or above 102% BI will impose a penalty. A bank however may still be allowed to have a LDR above 102% so long as its capital adequacy ratio is minimally 17%. A source in BI said the new regulation in principle reminds banks of their intermediary role, namely distributing the funds they have collected by extending credits. To make the banks` role effective for economic growth the government must improve that infrastructural or supporting means that have so far hindered industrial development.
“Indonesia`s foreign exchange reserves now total more than US$78 billion (and) the rupiah remains stable, the poverty rate is down and the country`s credit rating improving,” President Susilo Bambang Yudhoyono
New Elegant and Sporty Coupés from BMW The news series are BMW 335i Coupé, 320i Coupé, and 135i Coupé.
MW Indonesia has launched the new BMW 3 Series Coupé in Jakarta, namely the BMW 335i Coupé and 320i Coupé which offer greater appeal and style, and the top performing compact sports car BMW 135i Coupé. “The new 3 Series Coupé is a very emotional car,” said Ramesh Divyanathan, President Director of BMW Indonesia. “This car is for those who enjoy uniqueness and want to stand apart from the conventional. The model offers an exciting driving sensation and individual elegance and it reflects exclusivity in an informal way. We believe our 3 Series Coupé fulfils the need of increasing the number of individuals in Indonesia who fit this segment.” Its design highlights the sporting and elegant character of this unique two-door Coupé. The classic lines of the car are shown through the long and sleek engine compartment lid, the steeply raked A-pillar, the passenger cell moved far to the back, the long wheelbase and the flowing roofline. All this adds up to create a stretched and dynamic side view, giving the Coupé its unmistakable aesthetic beauty. The new LED light elements
make the BMW 3 Series Coupé even more distinctive and radiant. The front headlights use LEDs for the two light rings, the new distinctive accent line, the side marker lights and the direction indicators. The taillights follow the typical L-shaped BMW design and features continuous LED light bands. LED technology enhances the safety as the bright light is more conspicuous, making the car easier to spot for oncoming traffic. It also has low energy consumption. The new BMW 335i Coupé enters the market with a newly developed inline six cylinder engine, combining BMW TwinPower Turbo Technology, High Precision Injection, and VALVETRONIC fully variable valve management. Displacing 3.0 litres, the engine delivers maximum output of 306 hp at 5,800 rpm, with peak torque of 400 Nm maintained all the way from 1,200 to 5,000 rpm. Acceleration from a standstill to 100 km/h comes in 5.5 seconds and top speed is limited electronically to 250 km/h. Average fuel consumption is 8.4 l/100 km and the CO2 rating is 196 g/km.
The new BMW 335i Coupé is equipped with Harman Kardon Surround Sound System featuring 13 loudspeakers and 420W amplifier power. The latest generation of iDrive, on-board 8 inch monitor with TV and DVD function, USB audio interface, and Bluetooth interface are also standard in this top model. The model also comes with numerous attractive features such as adaptive headlight, comfort access system and electric glass roof. The new BMW 320i Coupé comes with a 2.0 liter four-cylinder engine capable of producing 156 hp at 6,400 rpm and maximum torque of 200Nm at 3,600 rpm. Acceleration from 0 to 100 km/h comes in 9.7 seconds. Average fuel consumption is 8.1 l/100 km and CO2 rating is 189 g/ km. The engine is equipped with sixspeed automatic transmission with Steptronic. The model comes with iDrive, on-board 8” monitor with TV and DVD function, USB audio interface, Bluetooth interface and HiFi loudspeaker system consists of 8 loudspeaker and 180W amplifier power.
The leather sports steering wheel comes as standard with multifunction buttons, while gearshift paddles for selecting gears manually are available together with its seven-speed Sports Automatic transmission with double clutch. The interior features sport seats for driver and front passengers with electric adjustment and memory.
Both Coupes are equipped with high standard safety features, including driver and front passenger airbags, front-to-rear head airbags, side airbags for driver and front passengers, active headrest, dynamic braking lights, Dynamic Stability Control with ABS, Cornering Brake Control, Dynamic Traction Control, and Run Flat Tires.
“This car is for those who enjoy uniqueness and want to stand apart from the conventional. The model offers an exciting driving sensation and individual elegance and it reflects exclusivity in an informal way. We believe our 3 Series Coupé fulfils the need of increasing the number of individuals in Indonesia who fit this segment.”
The 335i Coupé features hill start assistant. The performance of both Coupes is balanced with efficient use of energy through the application of various BMW EfficientDynamics technologies such as Valvetronic, lightweight aluminium engine and tyres with reduced rolling resistance. Both Coupes’ exterior color options are Black Sapphire, Titanium Silver, Space Grey, and Alpine White. While the interior available in Coral Red, Black, and Beige.
The BMW 135i Coupé comes with in-line six cylinder engine, combining BMW TwinPower Turbo Technology, High Precision Injection and fully variable VALVETRONIC valve management, all interacting with one another to set new standards for economy with the highest level of performance. To highlight its striking character, the 135 Coupe is equipped with M Aerodynamics package, including larger front air intakes, sculpted door sills and a decent rear spoiler.
The seven-speed sports automatic transmission with double clutch performs gear changes without interruption of power, enhancing shift comfort and dynamic performance. Gears are selected using the shift paddle on the steering wheel, left for downshifts and right for upshifts. The 3-liter engine produces maximum output of 306 hp at 5,800 rpm. Peak torque of the six-cylinder is 400 Nm at 1,200 rpm all the way to 5,000 rpm. It is capable to accelerate from 0 to 100 km/h in just 5.2 seconds.
The average fuel consumption is 9.2 l/100 km with CO2 ratings of 214 g/km. The BMW 135i Coupé comes as standard with a wide range of BMW Efficient Dynamics technologies, including features such as Double Vanos and lightweight intelligent construction. Alpine White is the only exterior color option for BMW 135i Coupe. For the interior color Black and Orange Pearl are offered.
The President Post
A6 September 12, 2010
ASEAN ASEAN TRADE:
Trials and Tribulations By Atmono Suryo
Important Component he ASEAN economy, which covers 10 Southeast Asian countries, is an integral and important part of the fastmoving Asian economy. China and India are in indeed in the lead, but ASEAN is in close step with the two giant countries. Asia has shown spectacular growth during the last decades, moving to be the epicenter of the global economy, including the important component, namely trade. The growth of the ASEAN economy is underpinned by the growth of domestic consumption, trade and investment. The enormous growth of domestic consumption has an enormous impact, as it creates booming domestic markets, big, small, modern and traditional ones. This is happening in such countries as Indonesia with a huge population of some 237 million people. The importance of Asia as a growing international market place contributes to compensate the falling demand in the global economy, particularly in more advanced countries in the Americas and Europe. The growth of the ASEAN
figure 1: ASEAN trade with selected trade partner countries/regions
figure 2: Top ten ASEAN exports Electronic integrated circuits & microassemblies 9%
value in million US dollars 277,520
85,461 Rest of the world
Crude oil from petroleum and bituminous minerals 4% 75,480
Petroleum gases & other gaseous hydrocarbons propane, butane, ethylene 4%
47,465 8,865 China
13,274 Republic of Korea
4,844 10,377 ANZ
market with 592 million people has increased the eagerness of many countries to conclude trade agreements with ASEAN. A large number of free trade agreements hav been signed, resulting in the so-called “noodles or spagetti bowl” of multilateral and bilateral agreements. As seen on the surface this has brought a significant degree of overlappings and confusions. But with the implementation of AEC (ASEAN Economic Community) by 2015, it is expected that this will all end. Since the year 2002 the trend of ASEAN trade has risen considerably. It is one of the fastest growth regions in world trade. ASEAN trade rose from about US$759 billion in 2000 to US$1,710 billion in 2008; it almost doubled in a period of eight years, a phenomenal development by any measure. As happened to most countries in the world ASEAN trade was badly hurt in 2009 because of the financial crisis of 2008-09, but the years 2010-11 seem to be promising. Trade Partners According to the ASEAN Secretariat data, the largest trad-
Oil (not crude) from petrol & bituminous minerals, etc 7% Automatic data processing machines, magnetic or optical readers, etc. 5%
ing countries within ASEAN in 2008 are Singapore with $472 billion, Thailand $352 billion, Malaysia $338 billion, Indonesia $266 billion and the Philippines $105 billion. It will be noted that in the ASEAN context Indonesia only takes 4th place in the area of trade. This is a strong indication that its competitive position is on the weak side. Hence, much work has to be done by Indonesia to strengthen its competitive position, how difficult it may be. Global and regional trade will be highly competitive as world trade is expected to flourish after the recession of 2008-09 comes to an end. With regard to ASEAN’s external trade, a limited number of countries namely Japan, the European Union (EU), China and the USA are its largest trade partners. Intra-ASEAN trade accounts for only 26.8% and extraASEAN 73.2% in 2008. This still characterizes the traditional trade pattern. In other words Intra-ASEAN trade is not moving fast enough (Figure 1). Intra-ASEAN trade accounts only for a smaller part of ASEAN total trade. However, as the ASEAN Trade data base suggests, In-
Parts and accessories for office machines & typewriters 3%
Since the year 2002 the trend of ASEAN trade has risen considerably. It is one of the fastest growth regions in world trade. ASEAN trade rose from about US$759 billion in 2000 to US$1,710 billion in 2008; it almost doubled in a period of eight years, a phenomenal development by any measure.
Palm oil & its fractons, not chemically modified 3%
tra-ASEAN trade in its totality is still larger than trade with individual trade partners/countries in the region. This trend should not give the impression, however, that intraASEAN trade is large enough and as such needs not to be increased. That would be a wrong assumption. There is in fact still the urgent need to boost intraASEAN trade as well as the larger intra-East Asia trade. Obviously, the potentials and opportunities are in abundance to expand trade among the countries in ASEAN. The upward trend is beginning to show, although at a slow pace. It should be up to the private sector to develop and to take advantage of the growth of intra-ASEAN trade. On this score it must be admitted that Indonesia is among the slow countries, as it is apparently rather reluctant to develop trade with other ASEAN and East Asia countries. They only look to them countries as fierce competitors, not as potential trade partners to nurture. This situation must be changed in the years to come if the inward-looking political views would permit. Export (Products) Composition The developments of the coun-
Natural rubber in primary form or plates balata, gutta percha, guayule, chicle 2%
Semiconductor devices; light - emitting diodes; mounted piezoelectric crystals; parts thereof diodes, etc 1% Electric apparatus for line telephony or telegraphy telephone sets, teleprinters, modems, facs machines 1% Source of data: ASEAN Trade Database
tries in ASEAN will no doubt create compatibilities among the countries in the region. This process will in turn increase IntraASEAN trade. To that end there will be mounting pressures to stimulate and diversify the country’s export capacity. As can be seen from the following data, the top ten ASEAN exports start to include industrial products such as electronic integrated circuits, data processing machines, office machines, electronic apparatus and semi-conductor devices. Soon other export products may follow such as in the area of automobiles, motorcycles, chemicals and products of the food and IT industry (Figure 2). ASEAN countries have the potential to enlarge the range of new “export products”. This is espe-
cially valid for Indonesia as it will become increasingly urgent not to depend only on raw materials or basic commodities, a norm dating from colonial times. The time has come to modernize the Indonesian economy through the “Added Value Process”. This will increase export income, enlarge employment opportunities and speed up the process of industrialization which is still lagging behind. There is the risk that the process of de-industrialization, which has developed in the country, will continue. This trend should be reversed. Asian countries like South Korea, China, including Taiwan, India and even Singapore are good examples of their transformation to become industrialized countries. They are often called the much ad-
mired “Asian tigers”. There are no reasons why Indonesia could not join the high-rated group of Asian tigers. The domestic market can provide a huge number of customers for industrial products. At the same time the international market, which includes the Asian marketplace, can also offer sufficient buyers for various Indonesian manufactures. Efforts that need to be made to significantly improve the country’s competitive position would be the big challenge posing Indonesia in the coming years. Any success on this score would bring dramatic changes in the Indonesian economy. The writer is former ambassador to the EU.
Asia, Asean and the Global Economy By Atmono Suryo
ASEAN, with its total population of 584 million people, $1,5 trillion GDP and ample human and natural resources, has the potential to become another economic powerhouse in addition to China, Japan and India.
Historical Change he world is in the midst of an important historical shift, from the West to the East, which would affect billions of people in Asia, including the Southeastern part of Asia, namely ASEAN countries. The world recession of 2008-09 may expedite the predicted shift to this large part of the world. The West has been losing their economic strength and their dominance in world economic affairs; globalization has changed the world in many ways. Meanwhile, Asia has coped with the financial crisis of 1997-98 and has overcome the 2008-09 crisis with satisfaction. Asia has been on the move with China and India in the lead, changing the Asian landscape in an astonishing way as never seen before. It would be appropriate and instructive to view this ongoing shift from historical perspectives. This has been done by Kishore Mahbubani, an experienced Singapore diplomat, who explained
figure 1: ASEAN GDP
tion to the new emerging Asian big enterprises and MNCs (multinational companies). Kishore already speaks of the New Asian Hemisphere. One can even expect that the development of a New Asia will inspire the quest for the development of a “New World Order”. It is no more Europe or the United States which are the leading countries of the global economy; it is no more the Washington Consensus which will be the leading economic doctrine.
figure 2: Indonesia’s outlook promising
GDP (US$ million)
Global Economic Growth (% yoy)
The Thailand Philippines Newly-industrialized countries
Brunei Singapore Darussalam Well-established countries
-6 -8 -10
Source: CIMB Niaga
in detail in his book, “The New Asian Hemisphere”, the reasons and direction of the shift. As Kishore states in daring terms, Asians have been bystanders for two centuries in world history, reacting defenselessly to the surges of Western commerce, thought and power. That era is over; Asia is returning to the center stage it occupied for eighteen centuries before the rise of the West. This return to center stage has its far-reaching consequences, also for ASEAN. The international world expects Asia to take the lead to achieve recovery of the global economy to open the way towards sustained growth. Another point highlighted by Kishore is Asia’s position on current world practices. Asia has absorbed and understood Western best practices in many areas,
from free-market economies to the embrace of innovative science and technology, the rules of law and meritocracy. But as Kishore points out, Asia has become innovative in their own way and creating new ways and patterns of cooperation. As we often say, that is the Asian way of doing things. Fast-Changing Asia As to the present stage of Asia, one could clearly observe that the continent has been changing in many ways. Asia is adopting the principle of Open Economies but adjusting it to the situation in Asia. Likewise, Asia, including ASEAN, sees the merit of regionalism. But it is practicing it in a different way than the European Union. That is meant by Asia becoming innovative.
Most Asian leaders are confident that Asia’s rise is unstoppable. The innovative way of pursuing their goals must continue. After all, Asia’s mindset, culture and environment are different from the West. Who could predict that China could change almost instantly from doctrinaire central planning to free open market economies? This giant country has already surpassed the advanced countries of the West plus Japan, and is the second largest country in the world after the United States. It is mentioned in Kishore’s book that in China 56 million people belonged to the middleclass in 2000. By 2030 there will be 361 million middle-class people, more than the entire population of the United States. The question is, what would this trend imply?
Japan is presently changing gears to keep track with the speedy moves prevailing in Asia. Another success story happens in India. One of the key factors for change is to tap India’s brain power. No one country can deliver such a large amount of welltrained or educated people to the local as well as to the global economy. Asia, including ASEAN, is on the right track in their attempts to lift up the situation in their respective areas. Although much has still to be done, the ASEAN landscape has changed dramatically. Asia’s future policies would certainly highlight the importance of pro-poor policies and the development of SME”s (small and medium Enterprises). They will become a potential stronghold in Asia’s economic growth, in addi-
The Asean Situation ASEAN is an integral part of Asia. As a regional association ASEAN has also come a long way in terms of openness in their economies. ASEAN, with its total population of 584 million people, $1,5 trillion GDP and ample human and natural resources, has the potential to become another economic powerhouse in addition to China, Japan and India. ASEAN is fortunate to be located and part of the fast-moving East Asian region. Asean in the Global Economy Using the GDP as a yardstick to measure ASEAN’s position in the global economy one will note that the European Union has the largest GDP followed by USA, China, Japan, ASEAN with US $ 1,507 billion and India $ 1,236 billion. Surprisingly, ASEAN is now among the Big Countries of the world. Therefore, ASEAN’s comparative strength in the global economy should not be underestimated. From a very poor region after World War II, ASEAN is now one of the top regions in the
world, with the understanding that ASEAN is counted as “one country or one regional entity”. For separately and as individual countries, they would have little chance to be regarded as of significant importance to the global economy. It is fortunate that ASEAN has the wisdom to work for the realization of the AEC (ASEAN Economic Community) by 2015. The world hopes that ASEAN would accelerate to become a more integrated economy and politically a more united region. A strong regional grouping would give added strength to the situation of the 10 member countries instead of being disintegrated and all heading in various directions. Let us see whether ASEAN would be able to successfully implement the AEC (ASEAN Economic Community) in the remaining four years. ASEAN could become another pillar of strength for Asia, where four of its countries are among the largest in the global economy, namely China, Japan, Korea and India, as well as ASEAN. These five pillars could become the combined strength of Asia which is facing an “important historical shift from the West to the East”. On this point it will be noted that ASEAN has a critical role to play. But would ASEAN then be economically able, politically prepared and mentally willing to play that eminent role? As Asia’s senior analysts of world affairs tend to say, “That would be the sixty-four thousand dollar question.” The writer is former ambassador to the EU.
The President Post
September 12, 2010 A7
Around Jababeka Cikarang Dry Port Links up with Tanjung Priok The Cikarang Dry Port offers a one-stop service for cargo handling and a logistics solution for international export and import, as well as domestic distribution.
he government is speeding up the construction of the railroad track between Tanjung Priok port and Cikarang Dry Port integrated customs area (KPPT) to smoothen the dispatch of goods and to raise productivity and industrial capacity. “Many parts of the railroad track had to be built and improved to support the project. And this needs to show progress within three months,” said Coordinating Minister for Economy Hatta Rajasa when making an inspection of the KPPT project in Cikarang, Bekasi, West Java, and the Tanjung Priok port in Jakarta. Accompanying the minister were Finance Minister Agus Martowardojo, State Enterprises Minister Mustafa Abubakar, Transportation Minister Freddy Numberi, Public Works Minister Djoko Kirmanto, Industry Minister MS Hidayat, Agriculture Minister Suswono, Customs and Excise Director General Thomas Sugijata, and President Director of PT Pelindo II RJ Lino. Public Works Minister Djoko Kirmanto stated that the construction of the railroad special track could save costs as “it will reduce pressure on roads and illegal charges”. According to Transportation Minister Freddy Numberi, the construction of railroad track is expected to reduce congestion at the Tanjung Priok Port. The Cikarang Dry Port offers a one-stop service for cargo handling and a logistics solution for international export and import, as well as domestic distribution. It provides integrated port and logistics services with dozens of logistics and supply chain players, such as exporters, importers, carriers, terminal operators, container freight station, bonded warehouse, transportation, third party logistics (3PL), empty container depot, as well as banks and other supporting facilities. Being the extension gate of Tanjung Priok International Port, document formalities
The Cikarang Dry Port is strategically located in Jababeka Industrial Estate, which lies in the heart of the biggest manufacturing zone of west Java, as well as the country, home to a dozen Industrial Estates with more than 2,500 industrial companies, both multinationals and small and medium enterprises (SME).
for port clearance and customs clearance will be completed in the Cikarang Dry Port. It is like bringing a port to the industrial manufacturing region that serves both as a Port of Origin and as a Port of Destination. The Cikarang Dry Port is part of several programs by the government, among which: Customs Advance Trade System and Indonesian Blue Print Logistics, which are intended to streamline and increase country competitiveness in terms of supply chain and distribution of goods. The SAFE Framework of the World Customs Organization and other International standard compliances shall be applied to enhance international trade and return value to supply chain player both in Indonesia and overseas. The Cikarang Dry Port is strategically located in Jababeka Industrial Estate, which lies in the heart of the biggest manufacturing zone of west Java, as well as the country, home to a dozen Industrial Estates with more than 2,500 industrial companies, both multinationals and small and medium enterprises (SME).
Hollywood Plaza – Indonesia Movieland Holds Ground Breaking Indonesia Movieland has started the physical construction in its area by building Hollywood Plaza, a multifunction business area located in the main street of Indonesia Movieland – Jababeka City. The construction began with a ground breaking ceremony held on August 29, 2010 at the Hollywood Plaza. The event was attended by management members of the Jababeka Group, Setiasa Kusuma and Sutedja, and film industry players such as Harry de Fretes, Aldo Bama, Soraya Putri, film director Helvi Kadir , and film producer Tjokro Arifin. It was also attended by government officials, namely Ukus Kuswara from the Ministry of Culture and Tourism, Rudy Sanyoto from BPPN, and Eddy Noor, Director of PPFN. The event was intended to inaugurate the construction of Hollywood Plaza and to announce the cooperation between Indonesia Movieland (the center for integrated film and television industry in the Kota Jababeka) and PPFN, which is committed to open its marketing office and has been carrying out filming production at Jababeka area. In addition, Putra Production has agreed to cooperate in making a new movie following its success with Love and Edelweiss. Hollywood Plaza is built on an area covering 8.200m2 featuring vast plaza facilities. It is a huge and multifunction complex that can fulfill various business needs: studios, production houses, filming equipment rental, office, food & beverage outlets, education, sports and entertainment facilities are available there. Products at Hollywood Plaza consist of two types, namely Studio Type 23m x 36m and Standard Type 23m
x 24m. The net height of Hollywood Plaza is 10m, exuding an elegant look. Indonesia Movieland was officially launched on August 20, 2008 as a fullfledged widescreen movie-making center where soap operas and advertisements can be produced. Kota Jababeka offers various shooting sites such as schools, campus, hotels, apartments, offices, a golf and executive club, sports facilities and botanical garden. All locations are available to meet the production needs of making widescreen movies, soap operas and advertisments. With easy access to all facilities, production processes will become more effective and efficient Indonesia Movieland provides various facilities such as studio filmmaking, post-production facilities, the President International Film Academy, museum, and supporting facilities, including various accommodations, cafes, restaurants and entertainment venues. Further Information: Suwartono 0816 936 596.
The President Post
A8 September 12, 2010
Education: Quo Vadis? By Dr Walter G Tonetto
‘Educe’ or ‘educere’ is the root of the word ‘education’, and designates a “leading out” or a “leading forth”. Note the implication of excellence here, or leadership. The OED, defining its ambit, sees it as “culture or development of powers, formation of character, as contrasted with the imparting of mere knowledge or skill.”
hat much is known, and we have all, to some extent, been sitting in classrooms where we had a teacher, somewhere front stage, perform his ‘leadership’. And here, of course, is the rub. Those who are lead often, very often, indeed, have their own ideas of where to go, and the guidance offered by a person standing front stage has little, at times nothing, to do with the desires of the flock. We hold that thought, our first core problematic. The other core problematic of education is the fact that power and skill (at the intellectual, moral, and physical levels) do not benefit from an abundance of sense stimuli. Goethe so famously remarked that character grows in company and genius in solitude. In fact, feed the learner too many sense stimuli that are discordant (that is, unrelated in some fashion), and the inevitable result is
a diffusion of the attention. The outcome invariably is mediocrity, even if the product is polished and strikes all the right notes. Cultures have a good way of propagating that first idea: that others need to be pushed, coerced and corrected. Truth is, however, that no one, no religious or worldly authority, parents included, has the right to determine what I, as an individual, should think and do. The community has a say in limiting my actions inasmuch as these actions impinge on the freedom of others, but they are out of place in determining my own directions. Yet this is precisely what is happening in all societies, to larger or lesser degrees, and these forms of manipulation are given the veneer of respectability by being clad in the mantle of educational or socializing efforts. Thus education, for all the personal benefit it often brings, also gives despotic, arbitrary and autocratic mindsets an opportunity to roam and enlarge their estate. The re-
sult is inevitably that the individual who thus submits to outside authority feels unhappy for he has neglected the most dependable of gauges: his own feelings. This confusion arises because the individual very often forgets his natural instincts, and in the course learns to distrust his own feelings and intuitions. Yet it is only the feelings that show us clearly how it is with us, if we are working in the direction of bringing happiness to our lives, or sabotaging ourselves in various ways. Education, to become meaningful again as a tool not of society but also for the individual, needs to insist that an individual’s feelings determine whether or not a course of action is beneficial or not: the presumptions of society should run a distant second here. Of course, we are talking of an enlightened society here, and that is in most instances still a long way off. The above would suggest that a natural process of curiosity leads
to an (equally natural) cultivation of powers, which is the bringing of attention and concentration to a subject. And whenever the mind keeps something steadily in view, great powers begin to ripen. This is an important idea to hold. All subtle powers, given the right effort, come on its own accord, and cannot be summoned consciously. The reality of life is that our attention is constantly pulled in a myriad of directions, so that it is difficult to allow great things to form in the slipstream of such winds of confusion. The greater the amount of objects vying for our attention, the more filtering the mind has to perform, and the weaker the mind becomes as a result. The great Richard Williams, one of the most gifted of contemporary animators, makes that point superbly well in his celebrated “The Animator’s Survival Kit”. The graphic lesson here should form the bedrock of all
educational efforts, aside from honouring an individual’s inner life as gauged by his feelings, rather than by his own ideas, or far worse, of others. In his salad days, Williams had asked Milt Kahl, a genius, if he did what most other artists do: have some wires connected to their ears listening to jazz, classics or pop music (see illustrations above). Once Kahl’s lesson had stuck, the quality of his output changed, as it did in all the students who later followed Williams as he passed on this lesson. Such ‘education’ makes sense: it is confirmed by experience. In the welter of today’s information, and the attendant confusions, it is the key piece of advice in an individual’s quest to find mental focus and clarity and thus to come in possession of whatever talents and gifts he may possess. The writer can be contacted at firstname.lastname@example.org
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In the welter of today’s information, and the attendant confusions, it is the key piece of advice in an individual’s quest to find mental focus and clarity and thus to come in possession of whatever talents and gifts he may possess.
Business BUSINESS BRIEFS Indomobil posts 157.6% rise in H1 net profit PT Indomobil Sukses Internasional said its net profit shot up 157.57% cent to Rp209.28 billion (US$23.3 million) in the first half of the year compared with the same period last year. The holding company reported improved performance by its subsidiaries such as in automotive car dealership and assembling, trading, mining, leasing and property. The income of the company rose 59.16% to Rp4.95 trillion in the first half of the year, company president Gunadi Sindhuwinata said.
PC sales grow 20% The sales of personal computers (PC) in Indonesia is expected to remain high and to grow by about 20 percent per annum in line with the country`s economic improvement, says the chairman of the Indonesian Computer Producers Association Foundation (Apkomindo) Hidayat Tjokrowidjojo said here recently. Based on records, personal computer sales in 2009 reached 2.8 million units, he said. Hidayat said that computer sales in general was relatively good but some types of PC experienced declining sales.
Air Asia closes down two routes Malaysian-based Air Asia has announced the closure of its services in two of the busiest domestic flight routes in Indonesia, Jakarta-Medan and Jakarta Surabaya. Air Asia’s spokesperson Audrey Petriny said the decision will take effect on October 1st, after this year’s Idul Fitri season concludes. The company said the decision is just a business strategy as the company is set to focus more on the international flights. Audrey explained the airline will maintain its existing routes like MedanBandung and Medan Surabaya to promote the cities to become international destinations in the future which are directly connected with Kinabalu, Penang, and Kuala Lumpur and Hong Kong.
The President Post
Display until October 12, 2010 /// N0. 16
Garuda to Conduct IPO in Late November 2010 Photo: www.australianaviation.com.au
Garuda`s management once said it expected to raise US$300 million from the IPO.
T Garuda Indonesia will conduct an initial public offering at the end of November 2010, the government confirmed here late last month. “As scheduled the IPO of Garuda will be carried out at the end of November 2010,” state enterprises minister Mustafa Abubakar said. He said the airline company would offer maximally 40% of its shares in stages. “Portions of shares to be sold will depend upon market situation,” he said. He said the IPO process has now reached nomination of underwriters. The three underwriters that have been named are Bahana Securities, Mandiri Sekuritas and Danareksa Securities, which will set up a consortium. “The consortium will determine one or two foreign securities companies to also become underwriters,” he said. Legal consultants have also been named name-
“As scheduled the IPO of Garuda will be carried out at the end of November 2010.” Mustafa Abubakar State Enterprises Minister Garuda Indonesia plans to buy a total of 24 new wide-bodied planes this year.
ly “Kantor Hukum Assegaf dan Hamzah” (Assegaf and Hamzah Law Office) while the foreign legal consultant is Skaden. Datindo Entrycom meanwhile has been named Securities Administration Agency. Garuda`s management once said it expected to raise US$300 million from the IPO. Mustafa however said he did not yet know about the amount of the proceeds to be raised from the IPO pending the results of valuation. The IPO is part of restructuring efforts to increase the company`s performance.
Profit plunges 56.15% in H1 Garuda Indonesia announced last month its unaudited net profit in the first half of 2010 plunged 56.25% to Rp175 billion from a year earlier. “All airline companies saw a decline in their first-semester profit. Their profit will go up in the second half,” Garuda Planning and Information Technology Director Elisa Lumbantoruan said. Elisa said Garuda`s income in the first semester of 2010 slightly rose 3.3% from the same period last year despite the fact that the number of monthly flights rose to 9,000 from 7,000 previously. “Normally, airline companies
will reap full income (from the addition of flights) a few months later. Therefore, sizable promotion funds are needed,” she said. Garuda was focusing on expanding its business by among others purchasing new planes and opening new flight routes, she said. The national flag carrier plans to buy a total of 24 new widebodied planes this year. “Twelve of the planes were delivered in the first semester,” she said. By operating new planes, the airline company expected to slash its fuel cost and attract more pas-
sengers, she said. She said Garuda`s profit in the second half of 2010 was expected to increase following the operation of new planes, the more so because the number of air passengers would increase before and after the post-fasting month festivities, Christmas and New Year celebrations. Garuda has set the target of profit growth for this year at 1015%. Last year, the company posted about 50% increase in net profit to Rp1 trillion from about Rp669 billion in 2008 despite a significant decline in its overall revenues.
Health insurance managed by three agencies The government has determined that three agencies will manage overall health insurance as of 2011, says Coordinating Minister for People’s Welfare Agung Laksono last month. It has been decided that PT Askes and PT Jamsostek will remain the health insurance organizers. PT Asabri and PT Taspen, said Agung, will not be given such responsibility, The management of health insurance for the low-income group, which is currently being managed by the Health Ministry through the People’s Health Insurance, will be handed over to a public service agency.
Minister Urges Blackberry to Set Up Server in RI Agung Laksono
Foreign banks support LDR standard Bank Indonesia’s (BI) plan to standardize loan-to-deposit ratio (LDR) was welcomed by foreign banks. “BI is our regulator, so we will always support it, including its policy on LDR standards,” Senior Vice President of DBS Indonesia, Budiyanto Winata, told Tempo recently. According to Budiyanto, banks are supposed to have good LDR because of their function as an intermediary institution. DBS, Budiyanto said, is not worried about the LDR margin set at a minimum of 75%. “Our LDR is always over 75%,” he said.
Blackberry had been operating in Indonesia for quite some time but it had yet given significant financial benefit for the Indonesian people. Communication and Information Minister Tifatul Sembiring has urged Blackberry`s vendor Research in Motion (RIM) to build a server in Indonesia. “According to Law Number 11/2008 about information and electronic transactions, all telecommunication
operators in Indonesia must establish a local server here,” he said here recently. He said Blackberry had been operating in Indonesia for quite some time but it had yet given significant financial benefit for the Indonesian people. The minister referred to the existence of the Blackberry Messenger system in Indonesia without the company establishing a local server a fact that was causing e financial loss to the country`s nontax revenue. Other cellular operators had to pay fees for hiring spectrum facilities and other products from the government. Tifatul said he had sent a letter to RIM`s headquarters in Canada regarding the issue. Up
till now, negotiations between the Indonesian government and RIM were still going on. Indonesia made the request for server amid reports that the United Arab Emirates (UAE) had recently blocked BlackBerry e-mail, Internet and messaging services. India and Saudi Arabia have announced they might take the same steps and impose bans of their own. Unlike rivals Nokia, Samsung and Apple`s iPhone, RIM controls its own networks which handle encrypted messages through centers in Canada and the UK. This has made the BlackBerry and its messenger application highly popular as a secure way to communicate, but has also worried governments, who are not
able to tap into the network. Thus, there was speculation that Indonesia would follow the UAE`s step in blocking the BlackBerry internet access, though the government was quick to deny it. Last month, an official from the BRTI said a ban was being considered after India and Saudi Arabia announced they might take steps similar to the UAE and issue bans of their own. Minister Tifatul Sembirirng however was quick to clear up the misunderstanding, saying that Indonesia had merely demanded that RIM provide a data center in Jakarta. “There is no plan for a ban. We`re not going to follow the UAE regarding BlackBerrys,” Tifatul Sembiring said.
“There is no plan for a ban. We`re not going to follow the UAE regarding BlackBerrys,” Tifatul Sembiring Communication & Information Minister
The President Post
B2 September 12, 2010
Business Goldman Sachs interested in bourse membership Goldman Sachs has expressed an interest to become a member of the Indonesia Stock Exchange (BEI). Representatives of Goldman Sachs Singapore and Hong Kong have come and inquired about the procedure for it, BEI`s director of trade and membership, Wan Wei Yiong said here recently. Citigroup Securities had earlier been officially registered as BEI member number 120. So far there are five BEI membership vacancies left up for grabs out of totally 125, he said. Five domestic and foreign securities companies have already expressed their interest to become BEI members including from the US, Japan, Australia and an ASEAN member country.
Medco`s net profit up 26.2% PT Medco Energi International Tbk (MEDC)`s net profit rose 26.2% to US$12.1 million in the first semester in 2010 from US$9.6 million in the same period last year. Its finance director, D Cyril Noerhadi, said at a disclosure in the Indonesia Stock Exchange here last month the hike in the
company`s profit occured following an increase in the price of the world`s crude oil and the implementation of purchase agreement-based corporate gas supply. The main contributor to the rising sales and business revenue of the company in the period was the high average price of oil and gas and volume of gas and oil sales making the company`s gas and oil sales to jump to US$258.6 million from US$227.2 million in the same period last year. “The rise is boosted by the rise in the average price of oil and gas and in the sales volume. The average price of oil reached US$80.48 per barrel while gas US$3.56 per MMBTU,” he said. The company`s sales meanwhile reached 55.49 million barrels per day rising 3.6 percent compared to the same period last year. He said from business activities in the period the company collected net cash worth US$6.9 million, from investment activities US$50.8 million and funding activities US$60 million.
Indosat’s profit plunges by 71.5% Indosat (ISAT) saw its first half net profit plunging 71.5% to Rp287.1 billion from Rp1.007 trillion in the same period last
year despite a 5.8% revenue growth. ISAT posted Rp9.661 trillion in revenue from Rp9.135 trillion over the same period last year with cellular business contributing Rp7.678 trillion to total revenue from Rp6.710 trillion previously. Meanwhile, revenue from non-cellular business dropped 18.2% to Rp1.983 trillion from Rp2.424 trillion previously. Nevertheless, the company’s EBITDA increased by 6.7% to Rp4.607 trillion from Rp4.319 trillion. The telco’s debt position also grew 8.9% to Rp24.703 trillion from Rp22.688 trillion and the number of customers reached 37.8 million, a jump of 34.5% from 28.1 million previously customers.
Pusri has new board of directors State Enterprises Minister Mustafa Abubakar inducted Arifin Tasrif as president director of state fertilizer maker PT Pupuk Sriwidjaja here last month replacing Dadang Heru Kodri. On the occasion, the minister also installed the other new members of the company`s board of directors. They are Indra Jaya as production director, Musthofa as technical and development director, Bambang Tjahjono as
marketing director, Achmad Fadhiel as finance director, and Djafarudin Lexy S as human resources and general affairs director. Arifin Tasrif was formerly president director of state fertilizer company PT Petrokimia Gresik. Meanwhile, Dadang Heru Kodri was discharged from the post as his term of office had expired. In his address the minister said the company`s future largely depended on the new board of directors. The new directors must focus on revitalizing the company`s plants and securing gas supplies, he said. “The government is paying attention to the new board of directors to enable the company to grow into a credible fertilizer company at regional and international levels,” he said. Pusri is a state-owned company which played a strategic role in supporting the government`s food security program, he said. The national agricultural industry was inseparable from the fertilizer industry, he said. Also, the minister installed Tursandi Alwi as a new member of state airport operator PT Angkasa Pura II`s board of commissioners replacing Tirta Hidayat.
Sharia Assets Reach Rp75 Trillion Up to the first semester this year the assets had reached Rp75 trillion
he assets of sharia (Islamic) banks in the first semester of 2010 had reached Rp75 trillion. Sharia Bank Indonesia directorate chief Mulya E Siregar said last month sharia banking assets had been growing very favorably. Up to the first semester this year the assets had reached Rp75 trillion, he said. He added that the sharia banking assets this year reached 34%, and up to June 2010 reached 30%.
He was also optimistic that sharia banking assets may reach 35% up to the end of the year. He said efforts at increasing sharia banking had been made by many ways, including innovations as well as education of the public with adjustments to their background and understanding, like socialization of Islamic boarding schools, students and laymen and businesspeople. Mulya also said that 23 sharia business units and 145 Sharia People`s Credit Banks (BPRS) are currently operating in the country. The sharia banking system in Indonesia is currently one of the best in the world, serving as reference for other banks.
The sharia banking assets this year reached 34%, and up to June 2010 reached 30%.
Bakrie Telecom Obtains US$300 m Loan from ICBC Bakrie Telecom (BTEL) received US$300 million loan facility from Industrial and Commercial Bank of China (ICBC) which it will use to finance the company’s capital expenditure. “BTEL and ICBC signed a memorandum of understanding on financing in renminbi (RMB) worth US$300 million today,” said BTEL President Director BTEL Anindya Bakrie in a press release last month. Anindya said the funds will be used to cover its capex needs, adding that the loan commitment reflected the confidence of Chinese financial institutions on Indonesian companies. “The agreement displays a true Asian collaboration in the global
economy with Asia as the driving force. ICBC’s support and trust will help us accelerate our plan to expand our network,” said Anindya. Anindya added that BTEL has become the first telecommunication operator in Southeast Asia to receive RMB Buyer’s Credit from China’s biggest commercial bank ICBC. The bank itself has aggressively placed itself at the center of major economies in Southeast Asia with focus set on infrastructure, telecommunication, automotive, and manufacturing sectors. In April, BTEL secured US$250 million loans from several international investors through
global bond issuance. “More than 50% of the bond was bought by investors from the United States and Europe with the remaining absorbed by Asian investors,” he said. Meanwhile, BTEL has disbursed up to US$70 million capital into Bakrie Connectivity (BCON) to develop data business. In the future, BCON is expected to contribute 30% to BTEL’s total revenue. “We have disbursed about 70% of a total of US$100 million in capex to BCON,” said BTEL Finance Director Jastiro Abi. BCON is a subsidiary of BTEL established on 11 March 2010. BCON is an internet and multimedia provider.
Telkom Customers Increase A child uses public phone in the middle of flood at Jakarta. Telkom’ customers increased in the second quarter of 2010. The number of cellular customer increased by 6.7 million or grew by 16.2 % to become 88,3 million. The number of fixed broadband customers is 1.4 million, an increase of 73.6% over the same period last year. Photo: The President Post/Nandi Nanti
The President Post
September 12, 2010 B3
Investment INVESTMENT BRIEFS Danareksa to issue bonds worth Rp500 bln State-owned mutual fund company PT Danareksa is set to issue rupiahdenominated bonds worth Rp500 billion in October to repay its maturing bonds. “The bonds will be issued in October at the latest,” Danareksa President Director Edgar Ekaputra said here last month. Edgar said the issuance of the bonds would be based on the company`s midyearly financial statement ended on June 30, 2010. The company paid maturing bonds Edgar Ekaputra worth Rp200 billion this year. Danareksa bonds due in 2011 are expected to reach Rp300 billion. Edgar said proceeds from the issuance of the bonds would also be used for long-term financing. The company has set itself the target of managing mutual funds worth Rp15 trillion this year, up from Rp7.4 trillion at the end of 2009.
Unaffected Poor weather resulted in a thunder at a business and commercial area in Jakarta, but the commitment of G-20 member countries to reform the financial system will not affect the existing programs and policies of Bank of Indonesia.
Italy third biggest European investor
Photo: The President Post/Nandi Nanti
Italy is the third biggest European investor country in Indonesia after Britain and the Netherlands with an investment value of US$4.05 million in the first quarter of this year, a diplomat said. “Italy`s investment of US$4.05 million in the first quarter of 2010 increased 2005 compared with that in the same period a year earlier which stood at US$1.4 million,” Musurifun Lajawa, counselor for social and cultural affairs of the the Indonesian Embassy in Rome, told ANTARA last month. He said that Italy`s investment in the third quarter of 2010 was made in three projects while that in the first quarter of 2009 was for four projects. According to the Investment Coordinating Board (BKPM), Italy`s investment in Indonesia in the first quarter of 2010 increased 192.9%. Italy was in the fifth position on the list of European investors in Indonesia in the January - December 2009 period after the Netherlands, Britain, Switzerland and Germany. During the period, Italy`s investment reached US$41.02 million. In the last nine years (January 1990 - 2009), Italy`s investment ranked sixth after Britain, the Netherlands, Germany, France and Switzerland. Its investment in this period reached US$660.90 million. Based on data, Italy`s total investment in Indonesia in the January-February 2010 period amounted to US$501.59 million, a 4.8% increase compared with that in last year`s corresponding period of US478.51 million.
Foreign investors eye stake in Tiga Pilar Two foreign investors from China and Malaysia have expressed interest to buy a stake in Tiga Pilar Sejahtera Food (AISA) to develop the company’s crude palm oil business. AISA Director Sjambiri said the company is expanding its CPO business on AISA’s 80,000-hectare land. According to him, the Chinese investor is even willing to inject capital into the company to boost the company’s land bank by 400,000 hectares. Sjambiri added that negotiation with the Malaysian investor is expected to be finalized by the end of August. AISA reported Rp24.75 billion in first half net profit, up 25.27% from Rp19.76 billion in the same period last year. The company attributed its profit growth to sales volume increase. Sales per end of first semester reached Rp302.74 billion, an increase of 5.84% from Rp286.04 billion in the same period last year. Sales expenses fell slightly from Rp208.674 billion to Rp207.937 billion. AISA also booked 22.54% increase in gross profits from Rp77.36 billion to Rp94.81 billion, operating income of Rp71.271 billion from Rp55.189 billion or up by 29.14%.
Photo: www. www.bkmandiri.co.uk
Bank Mandiri to Increase Stake in AXA
ank Mandiri will increase its stake in AXA Mandiri from 49% to 51% to become the new majority shareholder in the company, increasing the state bank’s consolidated assets by Rp6 trillion from Rp402 trillion currently. “By becoming a majority shareholder, we will consolidate our financial report in Mandiri as a group. AXA’s Rp6 trillion asset will be included in the September report and in our financial statement,” said BMRI President Director Zulkifli Zaini.
However, Zulkifli declined to disclose the total amount of funds the company had readied for the additional 2% shares in AXA Mandiri. Separately, Bank Mandiri will hold a rights issue of 2.4 billion shares worth Rp14 trillion on 13 December 2010 to boost its capital adequacy ratio to 13% over the next five years. “Mandiri’s rights issue will be conducted on 13 December and we will use the July report for it,” said Zulkifli. He said that the bank will set its rights issue price at Rp6,000, its current market price and expects to obtain a total of Rp13-14 trillion in proceeds.
The government’s stake in the bank will be diluted by 6.7% from 66.7% once the rights issue is completed, thus reducing the government’s shares in the bank to 60% and increasing the public’s ownership to 40%. “It will be diluted automatically. The government will own 60%, and the public 40%. We will also maintain our CAR position at 13% over the next five years,” he explained. Meanwhile, BMRI Chief Financial Officer Pahala N.Mansury said the bank will appoint a foreign institution as one of its underwriters due to its huge market capitalization of Rp120 trillion.
Bank Mandiri will increase its stake in AXA Mandiri from 49% to 51% to become the new majority shareholder in the company, increasing the state bank’s consolidated assets by Rp6 trillion from Rp402 trillion currently.
Semen Gresik to Acquire Local Cement Company in 2011 Semen Gresik (SMGR) is set to acquire a local cement producer next year to boost its production capacity. Semen Gresik President Director Dwi Soetjipto said the plan has already been included in the company’s strategic plans. Dwi declined to disclose the identity of the company it is planning to acquire but hoped that the move will help the company boost its production capacity. Aside from acquiring a domestic company, the state
cement producer is also considering building cooperation with an overseas cement company. Dwi said the cooperation can come in various forms, for example, a joint venture or acquisition but affirmed that the plan will not be realized this year. “It is impossible to carry out the plan this year, we can carry it out next year at the earliest,” he said. This year the company will focus on growing the business internally by increasing production by building new factories and in-
creasing efficiency. He added that up until the first half of the year, the company had increased its production capacity through debottlenecking projects, which included bolstering production capacities at Tuban II and III production units. The company also increased its production capacity at its Indarung III production unit from 110 tons of cement per day to 130 tons per day. SMGR has also built two new factories, namely Tuban IV factory and Semen Tonasa V fac-
tory. The construction progress of Semen Tonasa V factory has reached 41% and Tuban IV factory of 37% until the first half of the year. “The Semen Tonasa V factory is expected for completion by the end of 2011, while the Tuban IV factory is expected to finish in the first quarter of 2012,” he said. He added that SMGR will withdraw its Rp3 trillion bank loan facility to complement its capital expenditure budget of Rp5 trillion for next year. “We will use internal cash and credit facility of Rp2-3 trillion to
patch up our Rp4-5 trillion capex next year,” he said. The company will use the capital expenditure to boost production to 20.5 million tons in 2011. Production is expected to reach 19.5 trillion tons by the end of this year although it had only reached 8.4 million tons in the first semester. “This is because we encountered technical problems in our factories in Sulawesi and Padang. But the problems had been fixed and we will catch up in the second half,” said SMGR Investor Relations Agung Wiharto.
The President Post
B4 September 12, 2010
Property Greater Jakarta Property Market Overview ECONOMIC GROWTH As announced by BPS, the national economy posted a growth of 5.70% (y-o-y) during first quarter 2010. The growth is fuelled by robust domestic demand and improved exports and imports. By sector, the growth pace was supported by trade, hotels and restaurants sectors which recorded the highest growth among all sectors. Rice harvest during the quarter also bossted the growth of the agriculture sector. Bank Indonesia is optimistic that economic growth is heading towards surpassing its’ earlier projection at 5.5% to 6.00%. INFLATION RATE Inflationary preassure is starting to rise driven by food prices as the end of the rice harvest has pushed up the price of staplefood. In May 2010, the inflation rate has reached its highest level in a year, recorded at 4.16% (y-o-y). At the end of the year, Bank Indonesia has predicted that inflation rate remains within its target range around 4% to 6%. INTEREST RATES Bank Indonesia decided to maintain its benchmark interest rate at 6.50% as of May 2010. Lower inflation and in order to stimulate positive economic growth is a key decision to maintain the 6.5% interest rate. EXCHANGE RATE The Rupiah exchange rate maintained its appreciating trend against US Dollar during second quarter 2010. Despite negative sentiment on global financial markets triggered by the fiscal crisis in some European countries, continuous positive growth of domestic economy was supported by the strengthening of the Rupiah during the quarter. As of June 18, 2010, the Rupiah was trading at Rp. 9,135 to US$ 1.00. INVESTMENT & PROPERTY INVESTMENT Indonesia recorded a decline in realized domestic direct investment in first quarter 2010, while foreign investmentrecorded a posi tive growth in comparison to the same period in 2009. This shows that the impact of the global financial crisis is likely to ease further and investors are already back to Indonesia due to a positive economic growth and future outlook of the Indonesian economy. Domestic Investment Indonesia recorded a 21% decrease in the realization of domestic investment in the first quarter of 2010. Total value of domestic investment was recorded at Rp 6,690.7 billion, lower than the same period last year which was recorded at Rp 8,497.9 billion. Foreign Investment Indonesia recorded an increase of 34% in realized foreign direct investment in the first quarter 2010, increasing from $2,805.9 million of FDI realized in first quarter 2009 to $3,770.2 million in first quarter 2010. COMPOSITE & PROPERTY STOCK INDEX Foreign capital inflow and improving liquidity on the stock market helps bolster the composite index during second quarter 2010. This performance was supported by macro indicators showing the Rupiah exchange stability, low inflation and high economic growth. As of June 18, 2010, the composite index closed at 2,929.589 increasing by 4.25% from March 31, 2010. LEASABLE SUB SECTOR Supply Following last quarter, zero supply of new completed office premises were recorded during second quarter 2010. Cummulative supply of office space remained unchanged at 6,135,335 sqm, comprising of 3,830,765 sqm in primary areas and 2,304,570 sqm in secondary locations. Under stable economic growth and a positive future outlook, de-
Table 1. Prospective Supply of Leasable Office Accomodation Name of Building
Building area (sqm)
Table 2. Future Supply of Strata-Titled Office Accommodation
Name of Building
Building area (sqm)
Graha 18 Tower
Jl. Dr. Satrio
Sentral Senayan 3
Jl. Asia Afrika
Tempo Scan Tower
Jl. H.R. Rasuna Said
Jl. Dr. Satrio
Jl. H.R. Rasuna Said
World Trade Center II
Jl. Jend. Sudirman
The City Center Batavia Office
Jl. Mas Mansyur
Jl. Dr. Satrio
Graha 18 Tower B, C, D, E
Lot 11 SCBD
Jl. H.R. Rasuna Said
Jl. H.R. Rasuna Said
Jl. H.R. Rasuna Said
Asia Finance Center
Menara Prima II
J.l. M.H. Thamrin
Secondary Area M.T. Haryono Square
Jl. M.T. Haryono
Secondary Area GKM Tower
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Wisma Pondok Indah 3
Jl. Sultan Iskandar Muda
Jl. S. Parman
Oleos Tower 2
Jl. T.B. Simatupang
Horison Strata Office
Jl. M.T. Haryono
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Beltway Tower B
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
Jl. T.B. Simatupang
velopers are starting to develop new office buildings both in the CBD area and in secondary locations. These future supplies are scheduled for completion in 2011- 2013. Supply of new office spaces in the next two years shall add around 740,584 sqm, consisting of 444,346 sqm or 60% in CBD area and 296,238 sqm or 40% in secondary locations. Leasable office blocks which are currently under various stages of development are shown in Table 1. Take-Up And Occupancy Level Demand for office space continues to grow during the second quarter 2010, triggered by stable economic growth and better outlook of global economy showing signs of recovery. Consultant noted that a large number of leasing activities during this quarter occured in recently completed projects in CBD area such as The Plaza, Menara Bidakara 2, UOB Plaza, etc. A total of 59,569 sqm of office spaces were absorbed during the quarter, slightly declining by 10.25% compared to the previous quarter. Despite that, the average occupancy level of office premises increased by 0.89% to 88.46%. Average occupancy level of office building in primary areas increased by 1.29% to 89.81%, while secondary areas improved by 0.23% to 86.23%. Rents And Capital Value Some office premises are starting to raise their service charge in anticipation to government policy to increase electricity rates in the next quarter. Despite that, rental rates remained firm, supported by the Rupiah appreciation against US Dollar during the quarter. On average, rental rates slightly increased by 0.62% in Rupiah and increased by 2.77% in US Dollar. Office block rentals in prime locations ranged between IDR 45,000 to IDR 210,000 or USD 4.93 to USD 23 per square meter monthly. While those located in secondary locations recorded at IDR 45,000 to IDR 137,000 or USD 4.93 to USD 15 per square meter monthly. STRATA-TITLED SUB SECTOR Supply Cumulative supply of strata office space changed with the addition of newly completed premises, after a silent first quarter. These new supplies derived from the completion of Epicentrum Walk Office, Bakrie Tower in the CBD area and Gandaria 8 in secondary area. Cumulative stock of strata-titled office accommodations increased to 858,497 square meters, consisting of 614,539 sqm in CBD locations and 243,958 sqm in secondary locations. There is a growing trend for developers to build strata office premises due to its fast return as an investment tool. In the next
two years, a sum of 403,688 sqm of strata office space is expected to be completed. On going strata-titled office projects are detailed in Table 2. Market Absorption & Occupancy Level Growing demand for strata office spaces were recorded in this quarter, with a total of 13,907 sqm sold in CBD area and secondary locations. Total strata-titled office space sold as of second quarter 2010 increased to 739,371 sqm. Take up rate in CBD areas, on average increased to 99.40%, while secondary locations registered at 81.01%. Massive new supply in this quarter decreased overall occupancy rate. Average occupancy rate in CBD area fell by 5.65% to 83.61%; while occupancy levels in secondary location plunged by 9.63% to 51.15%. Selling Price Selling price of strata-titled offices spaces remained stable during the quarter. In prime areas, selling prices were recorded at IDR 10.8 milion to IDR 19.91 million per sqm or USD 1,139 to USD 2,100 per sqm. While those located in secondary locations were recorded at IDR 6.5 million to IDR 14 million per sqm or USD 685 to USD 1,461 per sqm. Forecast Office sector continues to show its recovering pace with a positive demand for growth. Over the next two years, new completed office premises shall add new supply both in the lease and strata markets. By location, these new supplies are dominated by supplies in non CBD location in South Jakarta, T.B. Simatupang which is quickly becoming a popular location for developer. There is a market indication that strata office premises is also becoming popular for developers due to its fast return as an investment. Massive future supply of these strata office premises is projected to complete in the next two years. LEASEABLE SUB SECTOR Supply Cumulative leaseable retail space remained at 3.49 million sqm as a result of zero new supply during the second quarter of 2010. Leasable retail projects that are currently in various stages of construction shall add an approximate of 616,145 square meters of leasable retail space by the end of 2010. Take-Up And Occupancy Level Retail leasing continued to grow with 14,051 square meters taken up during the second quarter 2010, lower by 32.08% in comparison to the first quarter 2010. Total leased space as of second quarter of 2010 increased to 3.07 million square meters. Food and beverage retail-
ers such as cafes and restaurants are still dominated the absorption rate of retail space during the quarter. Development of new business or business expanding is the reason to lease new retail spaces. Average occupancy level of retail centers increased by 40 bps to 88.11%. Occupancy level of retail center in CBD area recorded an increase by 44 bps to 86.74% and occupancy level of retail centers in secondary locations improve by 17 bps to 93.83%. Rents Rental rate for retail space during the quarter decreased by 0.02% from the previous quarter. Rental rates were recorded at IDR 384,924 per square meter per month. Retail centers in CBD locations were rented at between IDR 300,000 to IDR 1,125,000 per square meter monthly for ground floor space, and IDR 200,000 to IDR 650,000 per square meter a month for upper floors. Retail centers in secondary areas achieved a rental rate of IDR 200.000 to IDR 675,000 per square meter monthly for ground floor space, and IDR 150,000 to IDR 550,000 per square meter a month for upper floors. STRATA-TITLED SUB SECTOR Supply Following previous quarter, there was no new supply of stratatitled retail center during the second quarter 2010. Total stock of strata-titled retail in this quarter remained the same as the previous quarter at 2.413 million square meters. Proposed retail centers that are scheduled for completion shall add 626,300 square meters of strata-titled retail space within the next two years. Market Absorption & Occupancy Level Sales of strata-titled retail space during the second quarter 2010 decreased by 38.18% in comparison to the previous quarter, with a total of 3.261 square meters sold. Total strata-titled retail accommodation sold as of second quarter of 2010 reached 1.665 million square meters. Average absorption rate on existing trade centers increased by 15 bps to about 78.15%, while projects that are still under construction registered an average take-up rate of 41.35%. Overall, trade centers recorded an average occupancy rate of 68.47%. Selling Price Prices of strata-titled retail center remained stable, on average at IDR 42.876 million per square meter. Offering price on existing trade centers ranged from IDR 12.5 million to IDR 125 million per square meter. Projects that are still under construction sold at pre-completion stage recorded prices at IDR 27.5 million to IDR 85 million per square meter.
Forecast Government has a plan to implement a new policy to raise the electricity cost in 2010 which will cause shopping centers to increase service charge. Despite that, retail business is expected to grow in 2010 supported by F & B outlets expanding to new shopping centers. CONDOMINIUM SUB SECTOR Supply New supplies of condominium were added during second quarter of 2010 with a total of 1,276 units. These new supply are derived from the completion of Maple Park Apartment B, Gandaria Heights A, and Centro City A, located in secondary locations. New condominium projects were introduced to the market during second quarter 2010 including Mutiara Menteng Mansion which is located in Menteng area, The Royale Springhill Residence in Kemayoran area, Westmark in West Jakarta, etc. All these projects are scheduled for completion in 2012. Cumulative stock of condominium increased to 70,580 units with 16,498 units in CBD area and 54,082 units in secondary areas. Take-Up And Absorption Rate Lower interest rates helped stimulate the absorption rate of condominiums during second quarter of 2010. A number of 1,718 units were sold, comprising of 475 units from existing projects, and 1,243 units from projects that are under construction. The overall absorption rates of condominium remained stable at 81.47%. Absorption rate of existing condominiums increased slightly by 0.49 to an average of 94.88%. Under construction projects were recorded at 54.78% slightly up by 0.09% over previous quarter due to new projects being launched during the quarter. Selling Prices Average selling prices of condominium units during second quarter increased slightly by 1.94% to an average of IDR 11,877 million. The growing demand supported by lower interest rates encouraged developers to make the price adjustment. Selling price of condominium units in CBD area ranges between IDR 11.5 million to IDR 23.3 million per square meter. In secondary locations, condominium unit prices were recorded at 5.4 million to 15.6 million per square meter. Forecast Lower interest rates and the availability of banking credit during second quarter 2010 helped trigger the demand for condominium units. On the supply side, developers have started to launch new projects as the economic outlook is indicating better performance. By segment, middle to low market segmentation remains the
main target for developers. APARTMENT SUB SECTOR Supply Following last quarter, no new supplies of apartments were added during second quarter 2010. Current stock remains at 11,616 units, consisting of 4,673 units in primary areas and 6,943 units in secondary locations. New proposed of apartment units are expected to enter the market in 2011, derived from Ciputra World Apartment, Apartemen Golf Pondok Indah 3 and the H. Take-Up And Occupancy Level Better outlook of domestic demand and the recovery pace of the global financial market affected the demand for lease apartments. This quarter recorded 161 units of apartment being leased in second quarter 2010, a growth of 3.87% in comparison to the previous quarter. A number of 79 units were leased in CBD areas, increasing by 6,76% and approximately 82 units in secondary locations, an increase of 3.8% compared to previous quarter. Average occupancy levels of apartments in prime areas improved by 1.89% to 75.64%,
while secondary areas grew by 2.17% to 73.52%. Rents Vacancy rate is noteworthy issue for the lease apartment market which pressured the growth of rental rates. Rental rates during the quarter remained firm, mainly as a result of the appreciation of Rupiah exchange rate against the US Dollar. Rental rate was up 2.20% in US Dollar and 0.66% in Rupiah. Apartment units within prime areas achieved rents in the range of USD 7.22 to USD 25.90 per square meter monthly, while units within secondary locations achieved rates between USD 6.55 to USD 21.91 per square meter monthly. Forecast Leased apartment market is showing a positive growth during the second quarter 2010. Market indicates that the demand of leased apartment increased coming from corporations looking for unit to rent for their expatriates. By region, these expatriates are dominated by expatriates from the Asian region which further supports that the impact of global financial crisis continuing to improve.
JABABEKA’S PROPERTY INDEX July - September 2010 No.
SIZE - M2 Building
The Veranda Town House
Orchid Corner (Limited)
Zelosa - Standard
Axela Standard Plus
Ortiz - Standard
Axela - Corner (Land Plot)
Zelosa - Corner (Land Plot)
Ortiz - Corner (Land Plot)
Metropark Condominium Tower A
Deluxe , 2nd fl
Deluxe ,3rd fl
Deluxe, 5th fl
Deluxe , 7th fl
Premium, 7th fl
Metropark Condominium Tower B
Deluxe , 2nd fl (view Metro Blvd.)
Deluxe, 3rd fl (view Metro Blvd)
Deluxe , 5th fl (view JCBD)
Premium, 6th fl (view JCBD)
Deluxe, 6th fl (view swim. pool)
Deluxe , 7th fl (view swim. pool)
Pavilion-Exclusive Boarding Houses
Rp. 364,800,000 Rp. 424,600,000
Rp. 1,595,500,000 Rp. 667,200,000
Hollywood Plaza 1
Commercial B - Module SFB
Commercial B - Module SFB
Commercial A - Module Studio
Ruko Sunter Niaga Mas
Ruko Sentra Niaga Square
Standard 1 (4 x 11), 2nd fl
Standard 2 (5 x 10), 3rd fl
Corner (6 x 10) , 3rd fl
Standard 1(4 x 11) , 2nd fl
Standard 2 (5 x 10) , 3rd fl
Corner (6x10) , 3rd fl
Rp. 700,000,000 Rp. 755,000,000
SIZE - M2
Grand Standard Factory Building
start from Rp.4Bn
New 3-IN-1 Factory Building
start from Rp.1,8Bn
Comercial Office Building
Standard Office Building
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
September 12, 2010 B5
Leadership The Critical Elements of Participative Leadership Dr. Karan Singh MBA, DBA
Research on participation concludes that participative leadership often results in higher satisfaction, effort, and performance, though in many cases it may not due to a variety of downsides that managers could be wary of.
very leader knows that there are broadly three key areas that need to be taken care of in an organization. Targets and, or bottom line objectives, making people work, and keeping people motivated to work. The fourth, golf, can be kept aside for now. We also know that adults, when involved and allowed to participate at the seminal stages of any project, are more motivated towards taking ownership of any related task at hand. Based on these common truths, many a manager have begun to believe in the merits of Participative leadership. So if one puts a lens to it, what really are the potential benefits and risks of using participative leadership?
People’s overt involvement is a good indicator of participation, and this often is a major issue, especially in cross cultural interactions, where certain cultural norms allow only for a didactic interaction. Managers could easily overcome this through some guidelines on how to encourage participation: • Show appreciation for suggestions • Be tactful in expressing concerns about a suggestion • Listen to dissenting views without getting defensive • Describe a proposal as tentative • Look for ways to build upon ideas and suggestions • Try to utilize suggestions and deal with concerns • Record ideas and suggestions • Encourage people to express their concerns
It is now well accepted that there are four biases within Participative Leadership. Autocratic decision, Consultation, Joint Decision and Delegation; which have a dynamic interchangeable quality about them, allowing them to overlap and be substituted over contingent times. For example, what was to begin with a Consultation may turn into a Joint decision as subordinates and leader agree with the latter’s preferred choice; or in another case, a Group Decision may become a Consultation if the group reaches deadlock. And sometimes even an autocratic decision if the hour so requires. Research on participation concludes that participative leadership often results in higher satisfaction, effort, and performance, though in many cases it may not due to a variety of downsides that managers could be wary of. The four potential benefits of Participative leadership are Higher Decision Quality, Higher Decision Acceptance, Higher Satisfaction and Greater Skill Development.
Another question often asked is what conditions really determine whether a participative decision procedure is likely be successful. And of course like all decisions the common answer is that success depends on ‘Situational Variables’; which include the importance or triviality of the decision for subordinates. Their propensity to accept a decision without involvement in making it – this could be dependent on cultural factors as well as individual capability factors. It could also depend on the distribution of knowledge; that is the amount of relevant information possessed by leader & subordinates. Other factors would include goal congruence, time pressure and amount of creative thinking required.
The pros and cons are as follows:
It is often quoted that to succeed a leader must surround himself or herself with good people, and at the same time it is also believed that many a leader keep good people at bay in order to protect their own position of power; that true empowerment is more a matter of theory than practice. But what about delegation? Which is lower in sharing power and more conducive
High Decision Quality
• Due to collective, increased knowledge • Cooperation
• No cooperation with leader: • If process not seen as legitimate and honest • If no trust in leader • If incompatible goals • If different perceptions of the problem
High Decision Acceptance
• Feeling of Ownership, which increases motivation to implement • Better understanding of nature of decision problem • Group/Social pressure
• Having “Voice” • Perception of being treated with dignity & respect
More Skill Development
• Being involved in all aspect of the decision process • For some, by participating in more complex decisions than normal
The emergence of the concept of Participative Leadership is perhaps a result of the paradox of a leader wanting his or her organization to succeed, as against his unwillingness to give up power that works as a detriment. While knowing that without success, there will be no power!
• Reverse effect if leader is seen to be manipulating support
to sharing work loads? Why do some managers find it so difficult to delegate? One particular research conducted in a western nation outlines reasons given by managers for not delegating, are given in the table below:
Failure to Delegate is associated with several factors including the need for Power, insecurity, need for achievement and interpersonal relationships. A manager who is insecure may delegate sensitive tasks to only a few trusted subordinates to avoid the risk of mistakes. Or the risk that a subordinate may do the task better than the leader. Another may not want to share power with his subordinates. High achievers often like to retain challenging and important tasks, and at times, it may be the level of competence of the subordinate that prevents a leader from delegating a task downward. A number of situational limitations, like confidentiality or standardization, also limit the possibility of Delegation. The emergence of the concept of Participative Leadership is perhaps a result of the paradox of a leader wanting his or her organization to succeed, as against his unwillingness to give up power that works as a detriment. While knowing that without success, there will be no power! So what does he or she do? Leadership development. For which the two of the most important conditions are: 1) Support by the Boss, and 2) Learning Climate. Leadership development is enhanced by Bosses who understand the importance of Coaching & Mentoring. Who are not solely preoccupied by immediate Crises or their own career advancement. Those who are not insecure and fearful of developing subordinates. Who see mistakes as learning experiences and not personal failures. Who are not overly protective of some subordinates and provide enough challenge to everyone. And those who promote and support training activities. An organization’s learning climate is also known as it’s prevailing attitudes and values about development. And that, depends on the support of the boss. That is, support by the boss, is a precursor to bringing about a successful learning climate for leadership development in an organization. More Leadership Development is likely when individual learning is regarded as highly important for organizational effectiveness. When pay increases are partly dependent on skills development. When these activities are explicitly measured and rewarded. When an assignment is evaluated in terms of skill development as well as task success. And in the truly learning organizations, when job assignments allow people to pursue their interests and learn new skills. When work schedules allow free time to experiment. When organizations provide financial support for continuing education and when sabbatical programs allow employees to renew themselves. Like mentioned in the beginning, there are broadly three key areas that need to be taken care of in an organization. Targets and, or bottom line objectives, making people work, and keeping people motivated to work. Boil these down to two, and we have the “High-High” theory of leadership. The ‘high-high” theory suggests that effective leaders display high levels of both Task-Oriented and relationship-Oriented behaviors, however, theorists differ in their assumptions on how the two aspect work in tandem.
Reason (Moderately to Very important) Keep decisions involving confidential information
Keep tasks and decisions that are very important
Keep tasks and decisions central to your role
Keep tasks for which mistakes are highly visible
Keep tasks you can do better than subordinates
Keep tasks that are difficult to explain to subordinates
Keep tasks that are difficult to monitor
Keep tasks that are interesting and enjoyable
Some assume that while the two work separately and independently, they have an ‘additive’ effect on subordinates. Both types of outcomes are important and both types of behaviors are necessary to be an effective leader. Other theorists have assumed that the two types of behavior interact and facilitate each other, in that one type of behavior enhances the effect of the other. According to Blake and Mouton, effective leadership is when someone selects specific forms of behavior that simultaneously reflect a concern for both task and people. An example:
Any ordinary mind can easily gauge that decisions in the latter two, of low task, could mark for an early exit from any of today’s modern organizations. In conclusion, there is no choice for leaders to operate within the Participative and high-high leadership domains, concentrate on protecting the bottom line at all costs, and turning on the ‘high relations’ knob to full or maximum. And then be ready with multiple arguments rationalizing the contingencies that come one’s way.
Persuades subordinates to set challenging but realistic goals for excellence in product quality and also consults with them on how to increase quality
High Task Low Relations
Sets tough quality goals and pressures subordinates to increase quality
High Relations Low Task
Ignores quality problems and is considerate towards subordinates and consults with them on how to make the job environment more pleasant
Ignores quality problems and is indifferent to subordinates’ wants and preferences
Dr. Karan Singh MBA, DBA, Management Consultant, is presently Management Development Director at President University, and Managing Consultant of PT King & Singh Consulting. In his seventeenth year in Indonesia, Dr. Singh has wide experience, across a range of multinational companies, in areas like corporate training, market entry strategy, integrated marketing (external and internal marketing), communications, and human performance improvement. With a DBA focus in Cross Cultural Management, Dr. Singh also trains expatriate managers in how to be more effective in Indonesia.
In conclusion, there is no choice for leaders to operate within the Participative and high-high leadership domains, concentrate on protecting the bottom line at all costs, and turning on the ‘high relations’ knob to full or maximum. And then be ready with multiple arguments rationalizing the contingencies that come one’s way.
UPH Festival 17 Holds “Be Transformed” Festival The theme for this year’s festival, “Be Transformed”, was intended to encourage new students to experience a positive transformation during their holistic educational process at UPH.
University of Pelita Harapan (UPH) successfully held its biggest annual event called UPH Festival 17 on August 12-14. It is the welcoming event to new students and open house for public. The theme for this year’s festival, “Be Transformed”, was intended to encourage new students to experience a positive transformation during their holistic educational process at UPH. Rector of UPH, Dr. Jonathan Parapak, stated that, “this year, we chose ‘Be Transformed’ as the festival’s theme as it is our sincere desire to make significant contributions towards global education through our vision: True Knowledge, Faith in God and Godly Character. We believe that we all have roles to play in sharing the responsibility to be transformational agents to prepare the nation’s future leaders by means of Holistic Education. If we wish to be an agent of transformation, we first must be transformed”. It is called ‘Festival’ because UPH is keen to see students start their education journey with high enthusiasm and a joyful spirit. The main programs in the Festival are Spiritual Development, Seminars, Bazaar, Basketball Tournament and arts and music appreciation
This year, Governor of Papua Barnabas Suebu, former Minister Theo L. Sambuaga, and Dean of UPH Medical School Prof. Eka Julianta participated at seminars as guest speakers. The guest speakers are people who are successful and deserve to be role models in this country, so that they can give inspiration and motivation to new students. Kick Andy Off Air also enlivened the UPH Festival 17 with the theme “Soul Lantern”. One of the guest stars in the program was Wahyu Aditya, who chose to be an animator instead of being a doctor as his family had wished. He chose to follow his passion and has
built an animation school, orgaizes annual festivals and runs a shirt store under PT Hello Motion Korpora Indonesia. Another guest was Yoris Sebastian, a young entrepreneur in the creative industry who is the youngest general manager in Asia and the second youngest in the world. Find your interest, be diligent and never give up, is the message delivered to the new students and the audience on the talk show. The UPH Festival 17 closed with a spectacular show of Digital Video Mapping (DVM). The first DVM show in Indonesia was shown at Museum Fatahillah. UPH, a university that always takes part in pioneering new media in Indonesia’s art movement, has decided to hold the second DVM show in the country. The purpose of the show is to enhance the public’s sense of creativity as well as to create a unique way to celebrate the annual commemoration. To brighten up the key event, a DVM show was projected on building D from the direction of the soccer field. This great experience was followed by a performance of popular artists and bands. It is called ‘Festival’ because UPH is keen to see students start their education journey with high enthusiasm and a joyful spirit.
The President Post
B6 September 12, 2010
Markets Inflation Predicted at 6.62% by End of Year By Helmi Arman and Anton Gunawan
he August inflation and July trade figures were released on Wednesday last week. As expected, we saw a month on month inflation rate of 0.93% which will bring up the year on year headline further to 6.62% (from 6.22% last month). Month on month inflation during Ramadans are seasonally high due to rising food prices. But now we’re also expecting a stronger spill-over effect to processed foods (given that raw foods have been surging since June). This inflation will be more persistent, and may lead to a faster rise of the core CPI. Separately the impact of the July electricity tariff hikes (0.2pps direct impact) was also registered in August. With regards to monetary policy, BI may tend to delay raising rates for as long as possible. The global economic outlook has worsened in recent weeks, and this may temporarily strengthen BI’s pro-growth bias. However, FY10 inflation is likely to exceed 6% and the probable direction it will go next year is further up. Eventually, we think BI will hike 4 x 25bps starting Novem-
Headline CPI (% chg y-o-y)
Indonesia: Selected Economic Indicators
National Accounts Headline CPI (% chg m-o-m)
Headline CPI (% chg y-t-d)
Source: Bloomberg, *Danamon estimates
Real GDP (% y-o-y)
Domestic demand ex. inventory (% y-o-y)
Real Consumption: Private (% y-o-y)
Real Gross Fixed Capital Formation (% y-o-y)
GDP (US$bn) — nominal
Exports, fob (% y-o-y, US$ bn)
Imports, fob (% y-o-y, US$ bn)
Trade balance (US$ bn)
GDP per capita (US$) — nominal Jul-10* (Forecast)
Export Growth (% y-o-y)
Import Growth (% y-o-y)
Trade Balance (US$bn)
Open Unemployment Rate (%) External Sector
Current account (% of GDP)
Source: Bloomberg, *Danamon estimates
ber, when the evidence on inflation becomes more compelling. Separately the trade surplus is likely to have remained compressed at $0.66bn in July. We’re expecting a softening of (coal) exports to China as economic growth there moderates. Meanwhile, compared to export growth, import growth
Central government debt (% of GDP)
International Reserves –IRFCL (US$ bn)
Merchandise import cover (months) Currency/US$ (Year-end)
should still be higher—mainly driven by domestic demand and the relative strength of the rupiah.
BI policy rate (% year end)
Helmi Arman is Economist Treasury & Capital Markets at PT Bank Danamon Indonesia, Tbk. He can be contacted at email@example.com
Consumer prices (% year end)
Fiscal balance (% of GDP; FY)
S&P's Rating -FCY
Source: CEIC, *Danamon Estimates
The President Post
September 12, 2010 B7
Leadpreneurship Aside from having entrepreneurial knowledge and skills, an entrepreneur must also have a high quality of leadership. The author calls this combination: leadpreneurship, while the doees are called leadpreneurs.
I By A.B. Susanto
ndonesia needs more entrepreneurs, as they play important roles in promoting innovation, creating jobs, and reducing poverty. Entrepreneurship is the driving force behind civilization and the improvement in the quality of human life. Without entrepreneurship, an employee will not have the opportunity to get a job and develop his or her skills. Customers will not have a lot of choice of quality products, and the government will not be able to collect taxes needed to finance a nationâ€™s development and to spur economic growth. There have been a lot of efforts made by the government and other elements of society to push the emergence of more entrepreneurs in Indonesia. However, this effort has not produced the desired results. Creating entrepreneurship apparently is not easy. Many businesses started by entrepreneurs collapse in the early stages. Why does this happen? The aspiring entrepreneurs may have a good vision, high spirit and excellent technical skills. But that is not enough, as entrepreneurs need discipline and
leadership quality as well. Therefore, developing the elements of leadership that consist of the ability to lead and manage situations is essential for entrepreneurs. In other words, aside from having entrepreneurial knowledge and skills, an entrepreneur must also have a high quality of leadership. The author calls this combination: leadpreneurship, while the doees are called leadpreneurs. People with high quality of leadpreneurship are able to transform low-value resources into high-value resources by taking calculated risks and show effective leadership. In leadpreneurship, pursuing and capitalizing on opportunities are preceded by consideration of resources. People with a strong spirit of leadpreneurship believe that opportunities should be capitalized as soon as possible. Otherwise, they might never return. What kind of personalities should leadpreneurs possess? Firstly, they must have high selfconfidence. They must know themselves well and be confident of their knowledge and skills. They must also prepare themselves with the ability to utilize all the potentials and resources they have, such as personal strength and finances. Leadpreneurs should also possess a cash flow spirit, meaning that they must optimize their efforts to generate maximum cash
flow, not just merely pursue profit. Loyal and competent employees and loyal customers mean nothing if they cannot afford to buy supplies and pay their bills. A leadpreneur is an enthusiastic person, always full of vitality every time he or she does a job, and is energetic. They are also able to identify and understand situations, feelings and the motives of others. Therefore, it is critical for
neur starts from a vision which is interesting, challenging and believable that can be communicated clearly and shared by employees for them to become the driving force of the company to grow and develop. Another factor that also determines the leadership effectiveness of a leadpreneur includes his or her ability to inspire and encourage people around him with hope, courage and faith. The next factors that support there effectiveness are arrangement and planning. A leadpreneur has to be able to design, plan, organize, and implement projects. And lastly, the ability to direct employees in the right path. A leadpreneur should also possess critical skills in order to succeed. Analytical skills relate to the ability to assess situations, search for diverse perspectives, gather required information, and identify key issues that need attention. A leadpreneur should be able to delegate his/her tasks and authority to other people, to actuate the employees so that a plan can be implemented effectively, and manage time.
a leadpreneur to understand personality, motivation, experience level and psychological preferences of other people. Anther personal characteristic is the ability to ask people to strive for organizational achievements. The effectiveness of a leadpre-
Entrepreneurial and leadership quality will not mean much without the support of the right culture. Therefore, a company needs to develop a culture with the orientation toward sustainable wealth accumulation. Also important to develop are the ini-
The effectiveness of a leadpreneur starts from a vision which is interesting, challenging and believable that can be communicated clearly and shared by employees for them to become the driving force of the company to grow and develop.
tiative and willingness to accept challenges in new projects, to learn new ideas, to change in anticipation of environmental dynamics and to preserve harmony among employees. In running his business, a leadpreneur definitely cannot work alone. He always needs employees. Therefore, he must find the right people, or those who are able to work and think hard, share the same vision, and can be managed. For these reasons, it is extremely important to recruit employees who have the proper competency and personality. He has to negotiate compensation, set rewards, clarify employeesâ€™ tasks and responsibilities, evaluate and develop employees. These are done to maintain loyalty and improve working satisfaction in order to create values for the company. A successful leadpreneur is able to combine his entrepreneurial knowledge and skills with leadership qualities so that he/she can create added value for the company. The writer is Dean of the Faculty of Economics, President University & Managing Partner of THE JAKARTA CONSULTING GROUP.
Entrepreneurial and leadership quality will not mean much without the support of the right culture. Therefore, a company needs to develop a culture with the orientation toward sustainable wealth accumulation.
The President Post
B8 September 12, 2010
Executive Highlights President Yudhoyono presented the government’s proposed 2011 budget to parliament on 16 August. The administration is projecting GDP growth of 6.3% in 2011, compared to a 6% forecast for 2010. Inflation is projected to reach 5.3% in 2011, which many analysts view as unrealistically low, given current commodity price trends. The government is projecting inflation of 5-6% for 2010. The benchmark SBI note is forecast at 6.5% for 2011, which is unchanged from the 2010 projection of 6.5%. The average rupiah-U.S. dollar exchange rate for 2011 is projected to be Rp9,300/US$, compared to Rp9,200/US$ for 2010. The average price for Indonesian crude is projected at US$80/barrel in 2011, which is unchanged from 2010. Oil production in 2011 is forecast to reach 970,000 barrels per day (bpd), which is slightly higher than the 2010 projection of 965,000 bpd, again, very optimistic targets. The government is also proposing a 26% reduction in electricity subsidies in 2011, implying more rate hikes next year. On infrastructure, the government is proposing a 28% increase in capital expenditures to Rp121.7 trillion next year. Infrastructure projects the administration is looking to fund include 14 new airports, 85 km of double track railways and several thousand kilometers of new roads.
duction of palm oil, sugar, and other estate crops as well as mining output for coal, tin and other minerals this year. Analysts say this has been a major contributing factor to the recent spike in food prices that pushed inflation to a 15-month high of 6.2% yearon-year in July. Many are warning that a continuation of these abnormal weather patterns during the fasting month and Idul Fitri celebrations will push consumer prices even higher. A recent estimate by the central statistics bureau (BPS) indicated that inflation could rise to 6.5% yearon-year in August. President Yudhoyono also highlighted the abnormal weather patterns, both in Indonesia and other countries, in a recent cabinet meeting. He called on all government agencies to take the necessary steps to ensure ample food stocks and avoid the kind of supply disruptions in 2008 that caused prices to surge.
The rupiah has remained stable at Rp8,950-9,000/US$ over the past week. Concerns over rising inflation pressures are being offset by rising investor confidence with Indonesia’s growth prospects and by the better yields offered by many of the country’s capital assets relative to equivalent assets on the international market. Overseas demand for Indonesian equities remains solid, with net foreign buying totaling US$222 million in the second week of August. Although foreign demand for Indonesian bonds is not what it was just 2-3 months ago, analysts confirm that overseas investors are still buying local debt. Bank Indonesia deputy governor Hartadi A. Sarwono, meanwhile, said investors were shifting their holdings to 3 and 6-month SBI debt paper from the 1-month debt. He said the investor shift to longer-dated instruments was providing an additional layer of stability for the rupiah.
Chief Investment Minister Gita Wirjawan said new guidelines for infrastructure projects that would cut red tape and provide more regulatory clarity for investors would be issued next month. Newmont Nusa Tenggara has received As part of the new regulations agreed with the finance minis- shareholder approval try, Gita’s national investment coordinating board (BKPM) will to raise US$800 million have full and sole authority to issue permits on predetermined in loans by next month. public private partnership (PPP) projects worth billions of dollars. The minister said the one-stop application system would be applied so investors no longer have to get permits from numerous government agencies. He said the government would also provide guarantees on land clearance. Gita said the administration planned to focus on power plants, railroads, ports, and refineries, though he gave no details on specific projects. The minister said one of the main aims of the PPP program was to complete three or four achievable large-scale investment projects to boost Indonesia’s credibility with international investors. The BKPM estimates the country will need Rp1,500 trillion (US$170 billion) for infrastructure development over the next five years, with nearly 70% coming from the private sector.
The Government Meteorology Agency (BMKG) said abnormally wet weather that has hit Indonesia’s dry season over the past several months will continue into September, hurting agricultural production and disrupting transportation. Soeroso Hadiyanto, a senior official at the BMKG, said the extreme weather was being caused by high ocean-surface temperatures, which has unleashed the heaviest rainfalls in 12 years. The abnormally wet dry season has already resulted in declining pro-
cal facility at Balongan valued at US$8-9 billion. The government has long been looking to reduce dependence on imported fuels amid rising energy consumption. However, past efforts to construct new refineries have failed due to the high costs, low margins and regulatory uncertainty. No new refinery has been built in Indonesia since 1995. Nonetheless, industry minister M.S. Hidayat and investment czar Gita Wirjawan, who have spearheaded the venture with Kuwait Petroleum, were confident the Balongan project would proceed within the next 6-12 months. Gita indicated the government would be providing tax incentives for the investment as part of the deal.
Bakrie Telecom president director Anindya Bakrie said the credit facility would be provided in yuan, marking the first time a Chinese bank has extended yuan loans to a foreign telecommunications firm after Chinese financial authorities approved such transactions earlier this year. Anindya said around US$175 million of the funds would be used to refinance existing debt. The remainder would be used to accelerate Bakrie Telecom’s network expansion and plans to improve its transmission quality. The firm is looking to boost its subscriber base by 32% this year to around 14 million users from 10.5 million users as of end-December 2009. Bakrie Telecom is the second largest code division multiple access (CDMA)-based cellular services provider in Indonesia after Flexi, the CDMA unit of state controlled Telkom.
Bakrie Telecom has secured a US$300 million loan from the Industrial and Commercial Bank of China (ICBC).
State fertilizer producer Petrokimia Gresik is scheduled
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Company president director Martiono Hadianto said the funds would be used to fund expansion of its Batu Hijau copper and gold mine in Sumbawa, West Nusa Tenggara. Bank Mandiri, BNP Paribas, and Sumitomo Mitsui Banking Corporation have reportedly committed to provide part of the financing. Copper production at Batu Hijau rose 43% in the first half of the year compared to 2009 to 278 million pounds due to higher mineral ore grade. Gold production also rose by 87% for this period to 335,000 ounces. Martiono indicated that output at Batu Hijau could temporarily decline in 2011 as construction work as part of the mine’s expansion curbs production. Batu Hijau has estimated reserves totaling 11.5 billion pounds of copper, 11.6 million ounces of gold and 41 million ounces of silver. Newmont Nusa Tenggara is also reportedly eying a public offering later this year to secure additional funds for the planned expansion.
Kuwait Petroleum International and Pertamina have signed a preliminary agreement to develop a new refinery and petrochemical project at Balongan, West Java. Pertamina currently operates a 125,000 barrel per day (bpd) refinery there. The two oil and gas firms will review the feasibility of a new 300,000 bpd refinery and integrated petrochemi-
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to hold a tender for the construction of its US$200 million phosphate acid production plant next month. Firdaus Syahril, Petrokimia Gresik’s director for business development, said with feasibility study completed, construction should start by December this year. The new plant, which will have a production capacity of around 200,000 tons per year, will be located near Petrokimia Gresik’s existing facility in Gresik, East Java. Firdaus said the firm aimed to have the new plant running by 2013. Output will be sold on the domestic market to meet growing demand from the agricultural sector. Petrokimia Gresik currently produces 200,000 tons of phosphate acid per year but still imports 150,000 tons to meet commitments with domestic buyers. The new plant is a joint venture with the Jordan Phosphate Mine Co Plc. Firdaus said the venture has financial backing from Bank Mandiri, BNI and other local banks.
(BNI). State-owned enterprises minister Mustofa Abubakar said 70% of the 474 million shares sold went to local institutional investors like state insurance firm Jamsostek and pension funds for Bank Indonesia and Pertamina. Thirty percent of the shares went to overseas institutional investors including Chinese Invesco Hong Kong Ltd and UK’s Fidelity Investment Ltd. Danareksa Sekuritas, Mandiri Sekuritas, Bahana Securities and Macquarie Capital Securities Indonesia comanaged the divestment. The divestment has reduced the government’s stake in BNI to 72.9%. Mustofa, meanwhile, stated that the government was moving forward with plans to divest additional shares in BNI later this year to further reduce its stake in the bank to around 60%.
Palm oil producer BW Plantations appointed BNI Securities, Danareska Sekuritas and Kresna Securities to underwrite a Rp700 Berau Coal raised more billion bond floatation than US$150 million in planned for November. an initial public offering earlier this month. The debt has an “A” rating with a The divestment was equivalent to 8.8% of the firm’s enlarged share capital. The shares were sold at a price of Rp400/share, which was at the top end of the Rp300400/share range amid strong demand from investors. From the 3.4 billion shares divested, 50% was allocated to foreign investors. Around 70% was allocated to institutional investors, while the remainder went to individual investors. Berau said the bulk of the proceeds will be used to finance capital expenditures and fund the acquisition of Maple Holdings, which hold the marketing rights to the company’s coal output. Berau Coal is Indonesia’s fifth largest producer and exporter of thermal coal. It operates three active mines at a single site in East Kalimantan with estimated resources totaling 1.4 billion tons.
stable outlook from local ratings agency Pefindo on robust cash flow projections, solid management and a positive profile for the local crop estate industry. BW’s head of corporate finance, Kelik Irwantono, said most of the proceeds from the issue would be used to fund the planting of 10,500 hectares of land in East Kalimantan over the next two years. A portion would also be allocated to refinance existing debt. As of June 2010, BW Plantations owned a total of 96,000 hectares of land, about half of which have been developed into palm oil estates. BW Plantations is majority owned by the Widodo family.
Global industrial explosives maker Orica has received a The government raised US$45 million loan from the Australian Rp1.4 trillion from Export Credit a 3.1% stake sale in Bank Negara Indonesia Agency EFIC to help
fund its ammonium nitrate plant in East Kalimantan. Ammonium nitrate is a key component in explosives used in the mining industry. Orica has already committed more than US$200 million to the project. The facility is currently undergoing construction and is slated to begin operations next year with a production capacity of 300,000 tons of ammonium nitrate per year. The output will be used to meet growing demand from Indonesia’s expanding mining industry and replace imports brought the domestic market. Orica is currently the largest supplier of commercial explosives and detonating systems to the Indonesian resources sector.
Bank Mandiri has acquired an additional 2% stake in insurance affiliate AXA Mandiri financial services from French global insurance giant AXA Group. Financial details were not disclosed. The deal raises the state bank’s stake in AXA Mandiri to 51% and reduces AXA Group’s stake to 49%. Inkawan D. Jusi, Bank Mandiri senior vice president for wealth management, said acquiring a controlling stake in AXA Mandiri was part of the firm’s strategy to better integrate its investment banking, niche banking, multi-finance service and other financial subsidiaries. As of end-July 2010, AXA Mandiri had assets totaling Rp7.1 trillion, up 27.6% year-onyear. The financial services firm posted Rp220 billion in profits for this period, up 108% from a year earlier. AXA Mandiri’s return on equity (ROE) as of endJuly topped 86%, up from 56% from 2009.
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 firstname.lastname@example.org subject CEO Forum
The President Post
Display until October 12, 2010 /// N0. 16 www.thepresidentpost.com
Mochtar Leads the Way in Improving Health Service By Diana Sasmita and Gita Nirmalasari
Dr. Mochtar Riady, founder of the Lippo Group, took the rare initiative to implement a comprehensive health development strategy which began in 1996 with the opening of Siloam Gleneagles Hospital which later developed into Siloam Group of Hospitals, headquartered at Karawaci, Tangerang.
n estimated 300,000 Indonesian nationals travel abroad every year seeking medical help. In Singapore, for example, at least 80% of patients in the hospitals speak the Indonesian language. So high is the dependence on— and adoration of—foreign medical service that when a patient dies overseas, his family members and relatives would “feel satisfied” that they have done their best, albeit vainly, to salvage his or her life. But had he died in an Indonesian hospital, the relatives may have accused doctors of conducting malpractice. This kind of attitude shows that Indonesians’ respect toward local doctors’ expertise is still low. Making it worse is the fact that four million babies are born every year and Indonesian universities can only produce a maximum of 4,000 medical doctors per annum. With a national population today of 238 million and a total of 70,000 practicing doctors, the ratio of medical doctors against the population is 1:3,400. This ratio will continue to expand, putting constant pressure on the public health sector. Meanwhile, there is a tragic lack of medical research inside tropical Indonesia which can support development of health services. In light of all these challenges, Dr. Mochtar Riady, founder of the Lippo Group, took the rare initiative to implement a comprehensive health development strategy which began in 1996 with the opening of Siloam Gleneagles Hospital which later developed into Siloam Group of Hospitals, headquartered at Karawaci, Tangerang. The main hospital at Lippo Village is the group’s flagship facility offering a comprehensive range of world-class medical services for both in-patient and outpatient needs. These include the Accident and Emergency Department where helicopter transport is available for patients in emergency. This hospital treats more than 250,000 patients annually, and delivers about 1,700 babies each year in its maternity ward, according to its recent announcement on the web. Siloam is home to Indonesia’s premier center of excellence in Neuroscience, Heart Clinic services, in addition to a compre-
hensive range of medical specialties which deliver a full range of services expected of any worldclass facility. Lippo Village owes its success to the 42 full-time doctors (187 specialist doctors in total) and dedicated support staff who work exclusively at the hospital. They recognize the patient’s need for consistent and reliable medical treatment in modern facilities, the hospital management says. Siloam Hospitals Lippo Village is the first hospital in Indonesia to receive international accreditation from the US-based Joint Commission International (JCI). Today, Mochtar has many reasons to be proud of his commitment to improving Indonesia’s health standards: Siloam is where Asia’s first well-documented brain stem surgery was performed; it is also the hospital whose chief neurosurgeon, Prof. Dr. Eka Julianta Wahjoepramono, is Harvard Medical School’s visiting professor on brain stem surgery. This is also a hospital acknowledged by University of Western Australia’s Nobel laureate Prof. Dr. Barry Marshall, whose Helicobacter Theory shook the medical world a few years ago. Prof Marshall regularly visits the hospital to give lectures and to share the latest medical discoveries and ideas with Siloam’s experts. Medical School Mochtar did not stop there. In fact, he went on to establish a Medical School (FK-UPH) within the University of Pelita Harapan. FK-UPH is today known as one of Indonesia’s best medical schools for the simple reason that its graduates usually pass staterun competency examinations by 100%. This is a source of pride for Mochtar because only four of the 70 medical schools across Indonesia have reached such level of graduates’ professional competency—including the medical schools of the University of Indonesia in Jakarta, University of Gadjah Mada in Yogyakarta, and University of Padjadjaran in Bandung, West Java. In order to further upgrade the quality of FK-UPH’s graduates, Mochtar’s trusted dean of the Medical School, Prof. Dr. Eka Julianta Wahjoepramono has brought in one of Canada’s most senior experts in medical school curriculum development, Prof.
David Fairholm. Prof Fairholm, now the Executive Dean of FK-UPH, is planning to upgrade the quality of FK-UPH graduates to be at par with that of Canadia’s medical schools, according to educational magazine CampusAsia. Prof. Eka himself has reportedly said that because FK-UPH now has a world-class curriculum with Prof. Fairholm fully dedicated to creating world-class medical professionals, in the not-so-distant future Indonesia will see worldclass medical doctors streaming out of this medical school. One of FK-UPH’s advantages over other medical schools is its integrated medical science development concept in collaboration with Siloam Group of Hospitals and the Mochtar Riady Institute for Nanotechnology (MRIN) which was established in 2006. Already Siloam hospitals are the teaching hospitals for FKUPH’s students. Prof. Eka, for instance, frequently takes his students to the surgery room to get them accustomed to surgical procedures. Every day Prof. Eka performs an average of three surgeries. This is one of the reasons why FK-UPH students are better than others in terms of field experience even before graduation. This also explains why they can easily pass state-run competency exams. All these developments please Mochtar, but there is more: his MRIN is emerging fast as one of Asia’s best centers of nanotechnology research. Nanotechnology Research The Mochtar Riady Institute for Nanotechnology (MRIN) is certainly a cost and loss center. One may wonder, why on earth has a veteran businessman wasted so much money on research, the result of which he is not likely to enjoy or even see during his lifetime? Mochtar knew from the beginning that developing such a sophisticated nanotechnology research center would mean burning hard cash for many years to come. And yet, instead of quickly turning it into a profit center, Mochtar is equipping the center with state-of-the-art and high cost technology and an extensive network of world-class experts. What about profit? Apparently Mochtar has stopped thinking about earmimg profit ever from this center. In fact, because it is a cost and loss center, he intentionally immortalizes his name
Top Scientists on MRIN’s Board FAMS, FRCP, FACP
MRIN is chaired by Prof. Susan Tai and is backed by some of the world’s top scientists such as Prof. Dr.-Ing. Dr. Sc.h.c. Bacharuddin Jusuf Habibie, former President of Indonesia and chairman of The Habibie Center. He is MRIN’s honorary chairman. The chairman of MRIN’s Scientific Advisory Board is Prof. Gu Jian Ren, MD, PhD, Emeritus President of Shanghai Cancer Institute, China and member of Presidium of Chinese Academy of Engineering.
School of Public Health, Baltimore, Maryland, USA
Professor, Faculty of Medicine, University of Indonesia, Jakarta, Indonesia Former President, Indonesian Association for the Study of Liver
Prof. Madeline Wu, PhD
The Scientific Advisory Board members are:
Prof. Donald Maxwell Parkin, MD, PhD
Prof. David Vaux, MBBS, PhD, FAA
Prof. Esther Chang, PhD,
Department of Oncology and Otolaryngology, Lombardi Cancer Center, Georgetown University Medical Center, Washington, DC, USA
Prof. John Groopman, PhD
Chair, Department of Environmental Health Sciences, Johns Hopkins Bloomberg
Prof. Curtis C. Harris, MD, PhD Director, Laboratory of Human Carcinogenesis, National Cancer Institute, NIH, USA
Prof. L.A. Lesmana, MD, PhD, SpPD-KGEH, FACP, FACG
Director, International Association for Cancer Registries, France
Prof. Ali Sulaiman, MD, PhD, SpPD-KGEH, FACG
Former Dean, Faculty of Medicine, University of Indonesia, Jakarta, Indonesia Advisor, Indonesian Association for the Study of Liver
Dr. John Eu-Li Wong, MBBS,
Dean of the Yong Loo Lin School of Medicine at the National University of Singapore (NUS), Deputy Chief Executive of the National University Health System (NUHS) and Director of the National University Cancer Institute, Singapore (NCIS). Professor, Department of Biology, Hong Kong University of Science and Technology, Hong Kong
Professor, NHMRC Australia Fellow at La Trobe University, Australia, Director of the La Trobe Institute for Molecular Science.
Prof. Astar Winoto, PhD
Professor, the Immunology & Pathogenesis Division at the Department of Molecular and Cell Biology, U.C. Berkeley.
in it so that his offsprings will not dare to change it. “Even James Riady (his son) will not have the courage to change this,” Mochtar reportedly said one day. The message is simple: Mochtar wants to give something back to the nation as a lasting legacy that will continue to keep him alive in Indonesian history. Born in Malang, East Java—his ancestors are Chinese—Mochtar is aware of the fact that he has benefited a lot from doing business in Indonesia. Not many tycoons have the heart to show good deeds as Mochtar has. The vision of MRIN is to become an internationally recognized research center in the field of nanomedicines focusing on oncology; to improve the nation’s quality and competency in the field of nanomedicines through quality education and scientific discovery; and to foster research and education in the field on nanomedicines through interdisciplinary research partnerships and collaborations. With such vision, MRIN aims to conduct innovative research on cancer prevention and new understandings of the cause, early diagnosis, control and cure of cancer. According to MRIN’s official announcement, the institution has five core divisions:
• Molecular Epidemiology Division is a division to study the association of genetic variations of virus, the mutation of oncogenes or the tumor suppression genes and cancer development towards preventing the progress of carcinogenesis. • Proteomic Division develops and applies proteomic-based technology for the identification of differentially expressed or modified proteins that can serve as biomarkers for the diagnosis of cancer. • SNP Division is designed to develop a genetic screen for cancer predisposition that can be utilized as an early diagnostic tool and provide an effective method of improving the outcome of cancer treatment by associating Single Nucleotide Polymorphisms (SNPs) in genes that are linked with cancer progression. • Immunology Division seeks to understand the nature of tumor antigens including their optimal presentation and the regulatory mechanisms that govern the immune system. The purpose is to develop innovative immunotherapy intervention strategies for the t re at-
ment of cancer. • Genomic Division supports the other divisions with respect to any gene of interest by isolating de-
fined DNA sequences and obtaining multiple copies of it in vivo so that the sequence may be expressed in a particular host system.
The President Post
C2 September 12, 2010
Health Mochtar Gives Hope through World-Class Cancer Center By Alci Tamesa
The official noted that since cancer is one of the main killers in Indonesia, the existence of MRCCC brings hope to millions of people who need treatment for the disease.
n a strong gesture of his love of the nation, veteran businessman Mochtar Riady has set up Indonesia’s first private cancer hospital that will open on October 20 this year. He spent more than one trillion rupiah to build this hospital in Jakarta. This facility is called Mochtar Riady Comprehensive Cancer Center (MRCCC) at Siloam Hospital Semanggi, Jakarta. The MRCCC is fully equipped with sophisticated technology and it will use American standards in all its services. Yet by Indonesian standards the rates will be affordable, he says. All the requirements regarding medical experts and hospital facilities have been fulfilled and approved by the Ministry of Healthm whose director general, Supriyantoro, says that Mochtar Riady deserves the nation’s appreciation for building this hospital because in present-day Indonesia it is very rare to find a businessman willing to spend on such a project. The official noted that since cancer is one of the main killers in Indonesia, the existence of MRCCC brings hope to millions of people who need treatment for the disease. The government has welcomed this enthusiastically because MRCCC conforms to a presidential decree which called for development of world-class hospitals in order to reduce the number of people going abroad. At least 300,000 Indonesians seek medical help abroad every year, causing a great amount of foreign exchange to flow into overseas institutions. MRCCC provides an opportunity for local medical doctors with world-class qualification to practice their skills and at the same time further boost Siloam Hospital’s already impeccable reputation. The government hopes that
this facility will help alleviate the burden cancer patients from every corner of the archipelago. Mochtar himself sees this facility as a form of Lippo Group’s corporate social responsibility toward the nation; he has installed the best facilities for cancer treatment and will apparently develop nanotechnology treatment on cancer patients here. This is because Mochtar also has a research institution called MRIN (Mochtar Riady Institute for Nanotechnology), which is supported by some of the world’s best medical scientists exchanging ideas and research input for the purpose of feeding Siloam Group of Hospitals with valid and up-to-date analyses, including genetic expression patterns (GEP). Given the extent of service that MRCCC and MRIN are providing for the nation, Mochtar hopes that this latest entry in what will be his long list of legacies will represent “the salt and the light” for the people of Indonesia. The phrase “the salt and the light” is apparently taken from a biblical passage to indicate good deed to help others. On top of MRCCC is a huge helicopter landing pad enough for five helicopters to land on. This is designed specifically for transporting patients in critical condition. The cancer hospital, built on a 5.3 hectare plot of land in Jakarta’s golden triangle area, occupies a 36-storey building, 29 floors of which feature 366 bedrooms and seven parking floors. As such, MRCCC is one of the world’s 10 tallest hospital buildings to date. One of the most long-awaited facilities that will be operational in October is a liver transplantation center. So, if you have a cancerous liver that must be taken off your body, don’t worry. Just find a donor with a healthy liver and the hospital can take half of it out of his body and plant it in yours. After some time, both parts will grow into full-fledged
The Lippo Village Siloam Hospitals is the first Indonesian hospital to attain the prestigious US-based Joint Commission International (“JCI”) accreditation – the world’s leading internationally recognized hospital accreditation award, putting it in the same league as other leading hospitals in the Asia-Pacific region. Another Siloam hospital is conveniently located in Kebon Jeruk, West Jakarta, about six kilometers from Central Jakarta. This hospital provides international standard facilities catering to both inpatient and outpatient needs. As center of excellence for urology, obstetrics-gynecology, and gastroenterology, Siloam Hospitals Kebon Jeruk is known for its expertise in the diagnosis and treatment of disorders of the urinal system, its ability to handle the most complex and difficult cases in labor and delivery, diagnosis and treatment of stomach and intestine disorders, as well as endoscopic surgery. livers to benefit both of you. Liver cancer is a common killer in Southeast Asia and the People’s Republic of China, which is why Mochtar took the initiative to focus on treatment for this problem. Already installed in MRCCC are facilities for radiotherapy, brachiterapy, chemotherapy, Multisclice CT 256, cyclotron, palliative therapy, and angiography. To fight cancer, MRCCC is collaborating with Varian Medical System, which is a reputable provider of hard and software for cancer treatment by way of killing cancer cells through certain methodologies of radiation. According to Chief Operation Officer of MRCCC, Hanny G Moniaga, the hospital also cooperates with Dharmais Hospital, RSCM and YKI, the Indonesian Cancer Foundation. “Coming here is like going to Singapore for medical treatment because we have very comprehensive service with sophisticated equipment, but at the same time you will pay three times less for the cost of treatment in Singapore,” she says. Apart from developing such health system, Mochtar is also eager to build 1,000 schools across
Coffee May Cut Risk for Some Cancers Drinking more than four cups of coffee may lower the risk of some head and neck cancers, according to a new study. Researchers found that regular coffee drinkers – those who drank more than four cups of coffee a day – had a 39 percent decreased risk of two types of head and neck cancer: oral cavity and pharynx cancers. Coffee did not decrease the risk of a third type of oral cancer – laryngeal cancer. They looked at nine existing studies and analyzed how much coffee was consumed by more than 5,000 cancer patients and about 9,000 healthy people. While these results are encouraging, it doesn’t mean we should just go out and start drinking lots of coffee, says Mia Hashibe, lead researcher and an assistant professor in the department of family and preventive medicine at the University of Utah. Hashibe points out that the main risk factors for oral cancers are smoking and drinking alcohol. She says the best way to prevent getting these cancers is to not smoke or drink alcohol, rather than drinking lots of coffee. In the past, there’s been a perception that coffee may be bad for you, according to Dr. Donald Hensrud, chair of preventive medicine at the Mayo Clinic. But he says that newer studies suggest that drinking coffee may actually be good for you. “Like many things, the evidence changes over time,” says Hensrud.
beneficial Photo: www.engagingconflicts.com outcomes” with coffee and He adds that when oral cancer. But he it comes to the link beis concerned that the side tween coffee and head and neck can- effects of coffee are not addressed in cer, “the benefits outweigh the risks this study. Shin says when it comes to and this is just one more piece of that preventing cancer, the combination puzzle that supports that.” approach is best. He suggests “conIt’s not exactly known why coffee suming coffee, tea, veggies, and fruits may help prevent these cancers. But rather than doing just one thing.” coffee contains over 1,000 different chemical compounds, including Hensrud adds that there are some cancer-fighting antioxidants, and it’s drawbacks to drinking too much those antioxidants that may provide coffee, including liver damage or ina “plausible explanation” for reducing creased blood pressure. Other posthe cancer risk, says Hensrud. sible side effects from drinking a lot Other recent studies suggest coffee of coffee include insomnia, reflux, may have beneficial effects in other heartburn, palpitations, urinary sysdiseases like dementia, diabetes, liver tems and increased fluid intake, says and Parkinson’s disease. However, Hensrud. He says coffee can also be coffee alone may not be the answer addictive and some people may sufaccording to some experts. Dr. Dong fer from withdrawal headaches. Too Shin, a head and neck specialist at Em- much coffee may make it harder to ory Winship Cancer Institute says this conceive and can increase the risk of new study suggests “there is a hint of miscarriage. (CNN)
Indonesia. Under the Pelita Harapan Education Foundation, which is chaired by his son James Riady, Mochtar now boasts the quality of “national plus” Sekolah Pelita Harapan (SPH) the first Indonesian school ever to have implemented the International Baccalaureate (IB) system. There is also Universitas Pelita Harapan (UPH), the Medical School of which is a source of pride to him. His MRIN contributes to scientific and medical re-
search which are made available to all relevant institutions across the nation. Apart from MRCCC, the Siloam Group of Hospitals comprises an array of world-class medical facilities in several parts of the country. The main hospital, which is located at the vicinity of the Lippo Village township in West Jakarta, provides a comprehensive range of medical specialties, foremost two centers of excellence in neuroscience and cardiology.
Meanwhile, Siloam Hospitals Lippo Cikarang has also built a reputation of providing international standard medical care. This hospital offers a broad range of general and specialist services that are particularly dedicated to help trauma patients. Its Pediatric Neonatal ICU, which treats premature and sick babies, has gained respect and stature over the years. The hospital’s centre of excellence is Urology, which is equipped by an ESWL unit to treat patients with kidney stones.
In Surabaya, the second largest city in Indonesia, Siloam Hospitals is the city’s largest private hospital, famous for its centre of excellence in fertility, which specializes in In-Vitro technology also known as Assisted Reproductive Technology. Meanwhile, the Semanggi Specialist Clinic in South Jakarta provides a holistic approach to improving the health and wellbeing of men, women and children, and has become a preferred choice for companies and organizations to send their staff for medical check-up. This state-ofthe art, outpatient clinic provides world-class specialist medical services and general practice, dental and beauty service. All of this shows that what Mochtar is doing is not a mere story of investment; it is about his total commitment to serving the nation with what he can maximally provide. This is why he integrated the Medical School of UPH with the Siloam Group of Hospitals, MRIN, and MRCCC. Together they form a unique community providing excellent services and a center of learning from which Indonesians and the international community can benefit. In so doing, Mochtar believes that one should always give hope to others. “Never deprive someone of hope; it may be all that he has,” Mochtar says. This is why to him the MRCCC is a “building of hope” for Indonesians and for people from other nations on earth.
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The President Post
C4 September 12, 2010
Health Tahir’s Mayapada Hospitals Chain Growing with Confidence By Alci Tamesa Photo: www.mayapadahospital.com
In order to provide world-class health service, Tahir is bringing in the expertise of Singapore’s National Healthcare Group (NHG), which he believes understands very well the health psychology of the upper segment of the Indonesian society.
uccess in property and banking has led the Mayapada Group to enter and in time emerge as a strong cotender in healthcare, with its chairman, DR Tahir MBA, believing they are set to enter of the country’s elite list of hospital developers. Mayapada is investing at least Rp1 trillion (US$111 million) to develop three hospitals in different parts of Jakarta, with funds coming from Dubai and Singapore as well as Mayapada’s own treasury. Tahir believes that the market for this line of business is big and is getting even bigger in line with the growth of the middle and upper segments of society, most of whom often travel to Singapore and other neighboring countries to seek medical help. Tahir’s new venture in healthcare began with the acquisition of Honoris Hospital in Modern Land, Tangerang, at the face value of Rp100 billion. He then went on to partner with Avenue Capital and Harmony Capital, financiers from Dubai and the United Arab Emirates, in order to expand healthcare projects in different parts of the Indonesian capital city of Jakarta. The first plan is to build Mayapada General Hospitals in South Jakarta. This project occupies 3.8 hectares of land in Lebak Bulus, complete with an apartment, a
shopping mall, office space, and a five-star hotel. Mayapada also plans to develop a similar complex in Kelapa Gading, North Jakarta, occupying 13,000 square meters of land and this will be a center for special clinical treatments. A third site to host a similar Mayapada project is Central Jakarta, which has yet to be finalized. In order to provide world-class health service, Tahir is bringing in the expertise of Singapore’s National Healthcare Group (NHG), which he believes understands very well the health psychology of the upper segment of the Indonesian society. The Singapore NHG is reputable for its mastery of state-ofthe-art technological entries for healthcare development. Tahir’s business moves bear the successful hallmarks of his fatherin-law, DR Mochtar Riady, who built Siloam Group of Hospitals, a medical school under Pelita Harapan University (FK-UPH), a nanotechnology research center called MRIN, and a cancer treatment center called MRCCC. And like Mochtar, Tahir is also a key player in the property and banking industries through PT Bank Mayapada International Tbk. Tahir believes that though his business empire is branching out to new directions, they will re-
Mayapada Hospital, Modernland - Tangerang
main focused in the sense that every line of business will be handled professionally “based on strong foundations.” He says that “if the foundation is strong, the rest can be done by professionals.” “So what we are doing is to build platforms. This is not an easy task. We need to be careful because on these platforms there will be new structures built later on.” Tahir explains that the idea is to lay the right foundation so that business units can survive competition and even global crisis like what happened in 1997-98, when Mayapada Bank survived and was not among the 16 national banks closed down by the government. In healthcare, however, there is more to be done because it has to do with social obligation, he says, adding that even though a hospital is a social venture, it also must make profit as otherwise it cannot upgrade its equipment. “If it cannot improve the welfare of its workers, consequently the quality of service will decline,” he says. “But one should not build a
Govt to Allow Foreign Investors to Enter Hospital Business By Diana Sasmita
In a move that demonstrates Indonesia’s seriousness in opening itself up to the world, the government is saying that it will revise the Negative Investment List to allow foreign investors to enter the hospital business. For so long foreign capital can only be channeled into the hospital business in Medan (North Sumatra) and Surabaya (East Java). But now the government will revise the list to allow foreign investors to open hospital business in all parts of Indonesia, says Gita Wirjawan, Chairman of the Investment Coordinating Board. Wirjawan says that with this new liberalization move, the government aims to allow foreign investors to control up to 67 percent of ownership in hospital business in the rest of Indonesia. The official made this announcement when he met with 27 Japanese business representatives at Hotel Nikko earlier this year. This move is a breakthrough and is expected to boost the prospects of investment in this sector, as for some time now the government only allows a maximum of 49 percent of foreign ownership in any joint venture. While the policy may lead to foreign experts running local hospitals and will presumably push operational costs upward, Wirjawan says that the real aim is not to create a situation in which poor people cannot go to such hospitals. The government does not wish to only facilitate the interest of elite groups, says Wirjawan. The real reason, he says, is that Indonesia needs to have its own world-class hospitals so that affluent citizens need not go abroad for medical services.
Bintaro International hospitals in southern Jakarta.
An estimated 300,000 Indonesians travel to Singapore and other neighboring countries every year for medical treatment, and along with them fly huge amounts of foreign exchange. Meanwhile, as Indonesians tend to believe that anything that sounds “international” is of higher quality, many hospitals have attached the word “international” to their names—even though they actually do not meet international accreditation requirements. The government is working to stop this practice. By October this year there should be no more such attribution except for Siloam Hospital in Lippo Village, Karawaci which has been accredited internationally. In Medan, however, the foreign-controlled hospital called Nusautama Medicalindo will remain as it is, as does Surabaya International Hospital (RSSI), popularly known as HCoS (Health Care of Surabaya). Wirjawan is hoping that with this liberalization strategy foreign investment will flow in and
in every provincial capital there will be at least one international hospital. But Chief Executive Officer of RSSI Sulung Budianto says he does not believe that will automatically be the case. Budianto is of the opinion that liberalization alone is not sufficient to bolster Indonesia’s charm among foreign investors. “Legal certainty must be improved,” he argues. RSSI is run by Ramsay Health Care Group from Australia, with branches Mitra Internasional in East Jakarta and Bintaro International hospitals in southern Jakarta. In a related development, veteran businessman Sofjan Wanandi says that the government is not very serious in attracting foreign investment, especially to this particular sector, and this explains why not many foreign investors have come in. Whether Wirjawan’s liberalization strategy will change the overall landscape of the hospital business here remains to be seen.
hospital because one seeks to make profit. That is wrong. We do this because we feel we have a calling,” Tahir says. Health observers say that Thahir’s philosophy is rare in a country where hospitals are often known more as a business entity than a social institution. In many parts of the country, lots of patients from poor families have complained on being rejected and evicted by hospital management for failing to guarantee payment. In spite of his close family relations with Mochtar Riady, Mayapada is proud to be an independent business empire; its hospitals have no plan as yet to cooperate with Siloam Group of Hospitals—at least to date. “Just put it this way: we are in the Lippo family group. That is sufficient,” Tahir said.
For now, Tahir is concentrating on the development of the Mayapada General Hospital in Lebak Bulus area, South Jakarta, which will have 11 floors plus three basements covering 50,000 square meters and is aimed to cater to the needs of low-income patients. Mayapada’s care for the poor is the reason why Coordinating Minister for Social Welfare Agung Laksono welcomes this project as it will bring hope to an estimated six million poor families in need of medical treatment. Tahir’s philosophy of fulfilling one’s calling to help others through healthcare services forms part of the tradition of the healthcare division of his father-in-law’s Siloam Group of Hospitals. So even though they do not have a formal cooperation agreement in healthcare development, many believe that Siloam and
Mayapada can contribute a great deal to the improvement of health standards of Indonesia. This project had been planned since 2009 and was to be built by PT Sejahterajaya. According to the original plan, the hospital in Lebak Bulus would be built in 2011, so Tahir has apparently moved faster than the original time schedule called for. Tahir founded the Mayapada Group in 1986. He started his empire with a garment and textile manufacturing business, and four years later founded Bank Mayapada. While the garment business is no longer in existence, the bank has grown steadily throughout the years. It went went public at the Jakarta Stock Exchange, weathering the 1997 economic crisis and managed to expand even more aggressively after the difficult period.
With foreign investment partners from the US, UAE and Singapore, the bank now has over 80 branches throughout Indonesia. In 2007 it was voted as the second best public bank outside state-owned banks by InfoBank magazine, an influential banking magazine in Indonesia. Besides the banking business, Mayapada also has interests in the retail industry through a partnership with Duty Free Shoppers owned by LVMH, with outlets in Jakarta and Bali. The business group has two office towers in the CBD area, namely Mayapada Tower and Sona Topas Tower, and development projects in both Jakarta and Bali. Tahir is a member of the Board of Trustees of the University of California, Berkeley, the first Southeast Asian to hold the position.
Plastic, Reconstructive and Cosmetic Surgery Photo: www.cnn.com
Plastic, reconstructive, and cosmetic surgery refers to a variety of operations performed in order to repair or restore body parts to look normal, or to change a body part to look better. These types of surgery are highly specialized. They are characterized by careful preparation of a person’s skin and tissues, by precise cutting and suturing techniques, and by care taken to minimize scarring. Recent advances in the development of miniaturized instruments, new materials for artificial limbs and body parts, and improved surgical techniques have expanded the range of plastic surgery procedures that can be performed. Although these three types of surgery share some common techniques and approaches, they have somewhat different emphases. Plastic surgery is usually performed to treat birth defects and to remove skin blemishes such as warts, acne scars, or birthmarks. Cosmetic surgery procedures are performed to make persons look younger or enhance their appearance in other ways. Reconstructive surgery is used to reattach body parts severed in combat or accidents, to perform skin grafts after severe burns, or to reconstruct parts of person’s body that were missing at birth or removed by surgery. Reconstructive surgery is the oldest form of plastic surgery and was developed out of the need to treat wounded soldiers in wartime.
Most Popular Surgical and Non Surgical Procedures
For the last ten years, the consensus has been that
breast augmentation was the most popular plastic surgery procedure. The ISAPS Global Survey reveals a new trend with liposuction representing 18.8% of all surgical procedures, followed by breast augmentation at 17%, and blepharoplasty (upper or lower eyelid lift) at 13.5%, rhinoplasty (nose reshaping) at 9.4% and abdominoplasty (“Tummy Tuck”) at 7.3%. The popularity of surgical procedures varied by country with Brazil, the United States, China, Mexico, India and Japan being the dominant countries for the top five procedures. Reflecting both advances in cosmetic surgery innovation and the desirability of less expensive treatments, the number of non surgical procedures performed by plastic surgeons actually topped surgical procedures. While there is no previous baseline of information
against which to compare these figures, there can be no doubt that this is a dramatic turn of events. The top five non surgical procedures are: toxins or neuromodulators injections (Botox, Dysport) (32.7%), hyaluronic acid injections (20.1%), laser hair removal (13.1%), autologous fat injections (taking a patient’s fat from one location and transferring it in the same patient in another location) (5.9%) and IP Laser treatment (4.4%). There are few things to be considered before any kind of plastic surgery: • Do you really need it? Especially for those who willing to do plastic and cosmetic surgery, please think again what is the real purpose. Almost everyone wishes there were a thing or two that could be changed. A lot of this selfconsciousness goes away with time. Ask yourself if you’re considering
plastic surgery because you want it for yourself or whether it’s to please someone else. • Have you try another way? Getting in good shape through appropriate weight control and exercise can do great things for a person’s looks without surgery. It’s never a good idea to choose plastic surgery as a first option for something like weight loss that can be corrected in a nonsurgical manner. Gastric bypass or liposuction may seem like quick and easy fixes compared with sticking to a diet. Both of these procedures, however, carry far greater risks than dieting, and doctors should reserve them for extreme cases when all other options have failed. • Where is the best place to do the surgery? According to dr. Teddy O.H Prasetyono from Sahid Sahirman Memorial Hospital, a person should have to choose wisely the place to do plastic surgery and cosmetic surgery, because there are several place that claim able to do surgery though it is illegal. One important thing to remember is a doctor doesn’t work outside hospital or clinic. So, be wise before decide to do a surgery. Sahid Sahirman Memorial Hospital (SSMH) provides plastic surgery service with the most advanced technology and excellence doctors who able to understand the needs of patient considering plastic surgery. Source: surgery.com and International Society of Aesthetic Plastic Surgery (ISAPS) For more info: Sahid Sahirman Memorial Hospital Jalan Jenderal Sudirman 86, Jakarta Pusat - Indonesia T. +62(21) 578 53 911 F. +62(21) 578 53 922 email : email@example.com
The President Post
September 12, 2010 C5
Pictorial Events International Seminar on Indonesia’s Future Photo: The President Post/Rachmat Wirasena
S.D. Darmono, CEO of Jababeka Tbk., and Edward Lee (advisor), founders of the President Executive Club (PEC) discuss with Foreign Minister Marty Natalegawa regarding an international seminar on Indonesia’s future. PEC was founded by President Susilo Bambang Yudhoyono, Edward Lee, and S.D. Darmono in 2004. At the time SBY was a presidential candidate.
International Mining Forum Indonesia will host the 9th Asia Pacific Mining Conference & Exhibition (9th APMCE) on October 13. Secretary General of Asean Federation Mining Association (AFMA) Priyo P. Soemarmo (center) is shown in discussion with the chairman of APMCE, Tony Wenas, after a press conference in Jakarta.
Photo: The President Post/Nandi Nanti
Informal Farewell Reception of Dino Patti Djalal
Conference & Exhibition
Photo: The President Post/Nandi Nanti
Photo: The President Post/Nandi Nanti
Messe Munchen International (MMI) in cooperation with Ekonid (Perkumpulan Ekonomi Indonesia Jerman) organised press conference to deliver a presentation on “Renewables 2011” and “Conbuild 2011” which will be held in 13-16 April 2011 in Indonesia. The event consists of a conference that focuses on renewable energy and environment technology and an exhibition that will showcase construction machinery, heavy vehicles, technology, equipment, and services.
From left to right: Ronald Untenburger, Paula Yahya and Eugen Egetenmeir from MMI
Dino and his lovely wife, Rosa Ray Djalal, are soon off to Washington, DC where Dino will serve as Indonesian Ambassador to the United States.
Linking Business & Culture International Seminar International seminar on Linking Business and Culture to Create Friendship and Prosperity was held at Mataram Ballroom Sheraton Hotel Yogyakarta and puppet shadow performance comemorating the story of Raden Bambang Gunung Romo Pran Soeh (Wasi Palam Bratalaya) A Javanese sage to mediate world conflict in modified epic story of Ramayana at Tri Murti theater Candi Prambanan. The International Seminar was organised by Tidar Heritage Foundation in cooperation with Indonesia Australia Business Council, MST UGM, and PT. Jababeka Tbk.
World Town Planning Day
MOU Jababeka & PPIT
Minister of Public Works Djoko Kirmanto and Governor of DKI Jakarta Fauzi Bowo opened the 3rd commemoration of World Town Planning Day at Taman Impian Jaya Ancol last August.
CEO of PT Jababeka S.D. Darmono in cooperation with Perhimpunan Persahabatan Indonesia Tiongkok (PPIT) are set to build a Chinese Traditional Medicine Institution. The program will take three years of study in Jakarta and two years in China, and focuses on Herbal health, Acupuncture, Massage, and Traditional Medicine. The lecturers are from China, and the programs are open to the public. The MOU hopes to produce doctors who will be able to help society by using Chinese traditional methods.
The Indonesia Australia Business Council held an event at Hotel Mandarin Jakarta attended by national businessman and professionals, among others (from left) Ebb Hinchliffe, Will Angove (President Director of Ford Indonesia), Sarah Howe (American Chamber of Commerce in Indonesia) and Andrew J. Abram (General Manager of Mandarin Oriental Hotel Jakarta).
The peak of the commemoration will take place on 6-8 November in Bali. The event was attended by CEO of PT Jababeka S.D. Darmono, PT Taman Impian Jaya Ancol directors, and Ministry of Public Works and Ministry of Environment officials, who planted trees at the Ancol biological garden Ecopark.
The President Post
C6 September 12, 2010
Living Photo: www.ibebek.net
QUESTIONS TO ASK YOURSELF WHEN INVESTING
Don’t overdo it, though. The potential for adding extra value diminishes as you add more and more investments -- and the possibility of snafus increases.
Most investors spend too much time focusing on returns (over which they have little to no influence) and not enough on investment costs (which they largely can control).
uestion: I just sold my house and have $300,000 to invest. Everyone has suggestions, but what do you think I should do? -John, Pacific Palisades, Calif. Answer: I’m sure you’re getting all kinds of suggestions about where to invest your money from relatives, friends, co-workers and, of course, from people who peddle investments and financial services. And, who knows, some of the recommendations may even be helpful. For example, maybe some sensible person has already intimated that before you invest a dime, you may want to check out IRS Publication 530 to see how much, if any, of the sale proceeds you may want to set aside for taxes. The problem, though, is sorting out the truly useful suggestions from those that are worthless, impractical, harmful and self-serving. So rather than just contribute to the din of voices tossing out specific investments -- Buy gold! Energy stocks! No, currencies are the place to be! -- I’m going to recommend a way to sort through the information overload. With that aim in mind, I’ve come up with three questions that I believe all investors, from neophytes to veterans, should ask themselves. If you think about these queries and give serious and thoughtful answers, I think they can sharpen your focus and help you make more reasonable decisions when investing your three hundred grand. Question 1: What am I investing this money for? Forget about investing for a
moment and think instead about what you would do if you were in the market for a car. How would you sort through the hundreds of choices? Undoubtedly you’d consider factors like safety ratings, price, resale values, and dependability. But that’s not how you would start. No, you would begin by thinking about how you plan to use the car. If you know you’ll need a vehicle to shuttle your kids, their friends and their athletic gear to and from little league and soccer games, you would know to not even bother looking at a muscle car like a Chevy Camaro. If, on the other hand, you want something that’s sleek, a blast to drive and that might act as a chick magnet to boot, you’re not going to buy an eight-passenger minivan. You should be going through a similar thought process when it comes to investing. How are you going to use the money once it’s invested? Any part of your stash you think you might need to tap within the next couple of years -say, for emergencies or perhaps to make a down payment on another house -- should be invested where the principal and earnings won’t be at risk. As I’ve noted before, that largely relegates this portion of your 300 large to secure investments like FDIC-insured savings accounts, moneymarket accounts, and short-term CDs. The money you know you can leave invested longer-term you can afford to take some prudent risks with, which means divvying it up between stocks and bonds (or, more likely for someone with the amount of money you have,
stock and bond mutual funds). The longer you plan to keep the money invested, the more you can tilt the mix toward stock funds, the idea being that you can ride out short-term fluctuations in stock prices in hopes of earning equities generally higher (although by no means guaranteed) long-term returns. The sooner you think you may have to dip into your investments, the more you’ll want to emphasize bond funds. Question 2: What investments do I need to achieve my goal? When Socrates strolled through the marketplaces of ancient Greece, he would look around and remark, “How many things of which I have no need!” I think he’d feel much the same way if he were alive today and looking at the vast array of investments competing for investors’ attention and dollars. Which is to say that just because there are thousands of choices available doesn’t mean you need them, or for that matter, even need to consider them to be a successful investor. In fact, research shows that an overwhelming number of choices can add more confusion and complexity than value. So don’t even waste the mental effort of evaluating exotica like leveraged ETFs or single country funds or the hundreds of sector funds and ETFs that dabble in narrow niches of the market. Instead, you should aim to build a portfolio of stock funds that covers the main segments of the stock and bond markets. For equities, you want large- and smallcap stocks and growth and value shares. As for the bonds, you want funds that give you access to both government and high-
How Much Water Do You Need? Summer temperatures are soaring, and that scratchy dryness in your throat makes you crave a glass of water. What you might not know is: If you feel thirsty, you’re likely to be already dehydrated. “If you drink only when you’re thirsty, you’re probably behind the 8-ball when it comes to drinking water and to staying hydrated,” said Dr. Sylvia Morris, assistant professor at the Emory University School of Medicine. Dehydration can lead to your becoming overheated, exhausted and lightheaded, experts say. You could also develop an electrolyte imbalance, muscle cramps and an increased risk of heatstroke. The old adage recommending “eight glasses of water a day” still holds to some extent -- but people need more than this, some doctors say. Men should have more than 13 eight-ounce glasses of water a day, and women need nine, Morris said. Pregnant women and nursing mothers need more water than just the eight glasses
of eight ounces each, she said. Sodas do not count toward the eight glasses a day, said Heather Nettle, coordinator of exercise physiology services at the Cleveland Clinic in Ohio. “Whatever you’re drinking, you’re going to be adding calories if you’re drinking something else besides, and with that, it’s going to be negative, particularly if you’re doing exercise for weight management,” Nettle said. Fruits and vegetables such as watermelon, tomatoes and celery
help give you more water but do not count toward daily recommendations for glasses of water, Morris said. Keeping up with your hydration helps quash appetite, which is good for those who are trying to lose some pounds or maintain a healthy weight, she said. Morris recommends drinking two glasses of water between meals, in addition to one to two glasses with each meal. Drink two cups of water before you exercise -- the first one, one to two hours beforehand, then have the second cup up to half an hour before the workout. Have another two cups 10 to 15 minutes before. During exercise, you should drink on average a half a cup every 15 minutes, Nettle said. Afterward, drink two cups or more if you’re thirsty, for every pound you lost through sweat. “Unfortunately, I think that we are all a little bit dehydrated, and we’re not getting nearly as much water as we need, but certainly it’s something that is easily rectified,” Morris said. (CNN)
quality corporate issues (and, depending on your tax bracket, municipal bond funds for bonds held outside tax-advantaged accounts). You can do this by picking individual stock and bond funds that cover these areas. Or, to make it simpler, you can get pretty much all you need (except munis) with just two funds: a total stock market index fund and a total bond market index fund. Frankly, if you stopped there, I think you would do fine. But if you like, once you’ve covered the basics, you can branch out further by adding a diversified international fund and, for inflation protection, a real estate or natural resources fund to your stock holdings and a TIPS, or Treasury Inflation-Protected Securi-
ties, fund to the bond portion of your portfolio. Don’t overdo it, though. The potential for adding extra value diminishes as you add more and more investments -- and the possibility of snafus increases. Besides, the more your portfolio looks like one of those multicolored pie charts of a dozen or more investments, the more time and effort you’ll have to devote to managing it. Question 3: What am I paying for my investments? Most investors spend too much time focusing on returns (over which they have little to no influence) and not enough on investment costs (which they largely can control). I contend you’ll dramatically improve your chances
of investing success if you do the opposite. That’s especially likely to be the case if we’re in an era, as many people believe, of generally lower expected returns. Why home in on costs? Well, not only are expenses more predictable than returns, they also reduce dollar for dollar the amount of return that you get to keep. And the amount of money fees and costs suck away over the long term can be substantial. How substantial? Well, to gauge the effect of costs for a Money Magazine storyearlier this year, I revved up Morningstar’s Principia program and sorted all large-cap mutual funds with 15-year records into four groups based on their annual expenses. I then compared the average annualized 15-year re-
turn of each group. Result: the higher a group’s average fees, the lower its average return. Indeed, the 7.6% average annualized gain for the lowest-cost group was fully 1.3 percentage points higher than the 6.3% average for the funds that charged the highest fees. On a $50,000 initial investment that disparity translates to having $150,000 vs. $125,000 after 15 years. Obviously, every fund with low expenses won’t outperform every one saddled with higher fees. There will always be exceptions. But why try to buck the odds when it’s so easy to identify cost friendly funds using Morningstar’s Fund Screener or by perusing the low-fee options on the Money 70. So I recommend you tune out the suggestions and set aside some time to think about your answers to the three questions above. Or you can keep listening and evaluate each new pitch as it comes in -- and hope that all those disparate ideas will somehow gel into a coherent whole. (MONEY magazine)
The President Post
September 12, 2010 C7
So far, 10 major cellphone makers, including Apple, Motorola, Samsung and Research In Motion, have signed on to the agreement to have a one-size-fits-all charger starting in 2011
Cellphone battery dead? No problem: Just borrow a charger from a friend. Oh, wait -- you can’t, because your friend doesn’t have the same phone as you, and his charger won’t work with your phone.
hat annoyance will end next year, for Europeans at least. Thanks to the efforts of the European Commission, most cellphones sold in Europe will have a one-size-fitsall charger starting in 2011. So far, 10 major cellphone makers, including Apple, Motorola, Samsung and Research In Motion, have signed on to the agreement. Americans will have to wait. Without a government agency setting a deadline, it’s up to handset makers to make the switch to a single standard. All consumers can do is let their old chargers gather dust in a drawer, while hoping manufacturers will eventually converge on a standardized charger. “For the FCC, this is probably number 5,000 on their list and it is legislative priority number 10,000 at this point,” says Joe Banos, chief operating officer for Wilson Electronics, which makes cellphone boosters and antennas. “We believe the U.S. will ultimately follow Europe here, but
the question is when.” Today each cellphone ships with its own charger. Different companies use different connectors -- and often different models from the same company do too, making it difficult for users to borrow a charger. And when it’s time to toss the phone, the charger also goes into the bin. A universal charger means consumers don’t have to get a new charger with every mobile phone. As a bonus, it’ll be easier to borrow a charger when in need. And if all that isn’t enough, there’s the green aspect. One-sizefits-all means fewer chargers will wind up in the landfill, less electronic waste, and fewer resources consumed in manufacturing chargers. In 2009, the European Commission said it reached a voluntary agreement with handset manufacturers to use the microUSB connector for the charger. Starting in 2011, all phone models sold in Europe would then have compatible chargers. Now,
that agreement is taking effect. Smartphone makers in the United States are moving toward something similar, but more slowly. Motorola and Samsung have said they will offer a standard charger here but haven’t committed to a deadline. It’s a complex game where each handset maker is optimizing for itself, but collectively those decisions might help realize the goal of having a universal charger, probably centered on micro-USB. “For the most part it is already happening here with smartphones,” says Michael Gartenberg, an analyst at the Altimeter Group. “An HTC Evo charger will charge a Nexus One or Incredible, as long as it has a micro-USB connector.” The major holdouts in the U.S. are Apple and Research In Motion. Apple uses a proprietary 30-pin connector for its iPhone, while many BlackBerry chargers and devices are engineered so they will work only when paired together, says Wilson’s Banos. But even among companies
The Dream of All Cellphones Single Charger Realized
that use micro-USB, it’s still not a standard. “There’s the flat, wide miniUSB connector; the short, squat micro-USB; and different versions in between,” says Allen Nogee, an analyst at In-Stat research. “They are all still using different versions of the USB connector.” But if you can get a connector to fit into the phone, it doesn’t matter which model it is for or which company made it, because
all USB-based chargers deliver the same voltage, say experts. The push to change the situation in the U.S. could come from accessories makers for smartphones, says Nogee. Today, when you buy a new battery pack or car charging kit, it comes with a little bag stuffed with connectors so users can pick the right ones for their phones. “It is much more expensive for
these companies to support different phones and connectors,” says Nogee. “But the problem is that so far, accessories makers haven’t had enough say in the phone manufacturing process.” Ultimately, economics will force handset makers in the U.S. to change, say industry experts. As companies move to a universal charger in Europe, they will bring the same connectors to
U.S. models. It’s not clear how Apple will make the change, but it is certain that if the company moves to a micro USB-based connector for its new iPhone model in Europe, U.S. customers can expect the same. “It makes so much sense that I believe the U.S. will follow,” says Banos. “It would be insane not to.” (Wired.com).
The President Post
C8 September 12, 2010
TWO IN ONE Text and photos by Taufik Darusman
A former government official has parlayed his private three-villa compound in a small village in Gianyar, Bali, into a quiet place suitable for writers or researchers to ponder their work and at the same time to admire the work of new and established local painters.
n hour’s drive from Kuta towards Ubud lies the Sudarmadja Residence at Bedulu Village, Gianyar, Bali, which houses three villas of different sizes and shapes in ways that attract those who wish to temporarily get away from the world. It is also a site many wish to be in order to contemplate the irreversible past and the ongoing present while making grand plans for the uncertain future, as well as an ideal spot for solitude usually favored by writers or social researchers in need of quiet moments to reflect on their work in progress. Such lofty goals are made possible with the availability of basic amenities one finds in many typical traditional Balinese places of stay, such as cable TV, safe deposit boxes, private kitchens, minibars, swimming pool and 24hour security service. A temple nestled between the three villas and nearby rice fields give the place an even stronger Balinese character. “I and my family used to spend our weekends here after I had retired from public service,” says
Wayan Sudarmadja, a Jakartabased Balinese lawyer who is now involved in a number of businesses. “Over time I decided to lease the place out to anyone seeking quietness amidst typical Balinese greenery.” He said former government officials, even ministers, and Japanese scholars have leased his villas as they prefer the calm ambience offered by Gianyar over the hustle-bustle of other regencies. In April Wayan decided to give the Sudarmadja Residence added value by setting up an art gallery in the very same premises. Called Rumah Lukisan Dua Likur (The Dua Likur House of Paintings), the premises cover an area of about 2000sqm of land adorned with manicured lawns and exotic plants. It has on display, in all three villas and a small gallery, some one hundred works by established as well as over 30 up-and-coming local painters. At the entrance, Wayan has made available a small studio and living quarters to new talents whom he discovered and deemed worthy of his patronship. “The entire Gianyar area abounds with painters and craftspeople, but the majori-
ty of them are at a loss on how to channel their creative works,” says Wayan. “It is a pity to see these new local talents wasted. That’s why I decided to make space and materials available to these artists. Their works are displayed and can be viewed by the public in the Dua Likur House of Paintings.” Indeed they can, as well as works by such famous painters such as Ide Bagus Made Togog, I Ketut Tungeh and, most of all, I Gusti Nyoman Lempad. Lempad was not only a famous painter who designed temples, but also a much respected figure in the international art community. When he passed away in 1978 at the age of, yes, 106, no less than Paloma Picasso, the daughter of Pablo, came all the way from Spain to attend his Balinese traditional cremation (ngaben). “Providing basic facilities to fresh talents from Gianyar and sharing their work and that of their seniors in my modest gallery is the least I can do to pay tribute to this regency,” says Wayan. Reprinted courtesy of Garuda Inflight Magazine.
“It is a pity to see these new local talents wasted. That’s why I decided to make space and materials available to these artists. Their works are displayed and can be viewed by the public in the Dua Likur House of Paintings.”
Called Rumah Lukisan Dua Likur (The Dua Likur House of Paintings), the premises cover an area of about 2000sqm of land adorned with manicured lawns and exotic plants.