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The President Post T H E



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RI Economic Plan Offers Infrastructure Opportunities The President Post/Nandi Nanti

JAKARTA (TPP) – Prominent national and foreign businessmen have warmed to President Susilo Bambang Yudhoyono’s (SBY) grand economic plan with great enthusiasm.


ofyan Wanandi, chairman of the Indonesian Employers Association (Apindo), called on the government and business sectors to join hands for the national interest. “National businessmen must be involved in the development of Indonesia’s economy, we can’t rely fully on foreign investments,” he said. Meanwhile, US-based financial services firm J.P. Morgan plans to team up with the government in the Indonesian Economic Expansion and Acceleration Master Plan, known better as the MP3EI. "I look forward to set up a solid partnership with the Indonesian government in implementing the program," said JP Morgan Chase & Co., Jamie Dimon, after meeting with the President in August. Jamie added that Indonesia is among the prospective emerging countries as regards investment on energy, infrastructures and oil.

called for “de-bottlenecking, acceleration and expansion of Indonesia’s national development” between 2010 and 2015. If executed well, the three main elements of the MP3EI — developing six economic corridors, upgrading infrastructure and strengthening the local talent pool — will reap huge rewards for Indonesia, says Ramesh Divyanathan, president director of BMW Indonesia.

Chief of the Capital Investment Coordinating Agency (BKPM), Gita Wiryawan, said the meeting between the President and J.P. Morgan was aimed at finalizing the implementation of the MP3EI program. In a related development, Singapore Venture Capital Association (SVCA) is ready to invest billions of dollars to help finance projects in the MP3EI, said Amir Sambodo, Special Staff of Coordinating Minister for Economic Affairs. On May 27 the government released an initiative known as the MP3EI, which, at a cost of Rp 4,000 trillion, aims to boost the country’s GDP to $4.5 trillion by 2025. The master plan will establish six economic corridors, each with specific advantages. Sumatra has been pegged as a center for agriculture and energy, Kalimantan for mining and energy, Sulawesi and North Maluku for agriculture and fisheries, Bali and Nusa Tenggara for tourism and food production, Papua and Maluku for natural and human

resources and Java for industry and services. In the program, 17 infrastructure projects valued at Rp 190 trillion are scheduled to start this year, with the government having earmarked Rp 135.8 trillion for capital spending. The chairman of the Indonesian Chamber of Commerce and

Industry, Suryo Bambang Sulisto, said the nation’s private sector stood ready to invest $150 billion in the government’s master plan for growth. “To some extent, an economic blueprint has been on the cards since September 2009 when President Susilo Bambang Yudhoyono

The MP3Eis designed to see the Indonesian economy grow in order to reach "advanced economy" status by 2025. It focuses on 22 economic activities and six economic corridors throughout the country, and outlines strategies to strengthen national and international connectivity while enhancing human resource capacity. The plan is quite ambitious but reflects the current optimism in Indonesia today. It aims to make Indonesia, the 17th largest economy in the world last year, one of the world’s 10 biggest economies by 2025, taking GDP to $4.5 trillion and increasing the per capita income from $3000 now to $15,000. To achieve this, the master plan seeks to raise average annual growth to 8-9 percent between 2015 and 2025, from around 6 percent now. The MP3EI also sets

the target of bringing inflation down from 6 percent now to 3 percent by the middle of the next decade. At the MP3EI launch, Yudhoyono identified 17 projects worth Rp 190 trillion ($22.26 billion) in the plan that are expected to start this year, some of which had already been announced. They include hydroelectric and solar power plants; oil palm developments; a steel mill in East Java; new roads including toll motorways; mining projects; expansion of broadband internet; and nickel, cobalt and aluminium factories. Another major project that the government has pledged to launch this year is the long-awaited Sunda Strait Bridge that would link Java and Sumatra, Indonesia’s most populous islands. The bridge is expected to cost Rp 150 trillion ($17.57 billion) and has been subject to planning delays. “Foreign direct investment has shown positive increases, demonstrating the level of interest from companies looking to capitalise on the growth of the region,” Mike Gundy, the president-director of BlueScope Steel Indonesia, the local wing of an Australian metals company, said.

Hatta Rajasa, the coordinating minister for the economy, said that “with the MP3EI, we hope there will be more jobs available. In 2010 we absorbed 3.3 million more workers.” According to the plan, 44 percent of the funding is expected to come from the private sector. As far as state commitments, the State Enterprises Ministry had pledged $100 billion, but Yudhoyono doubled the target to $200 billion. Hatta said the government and entrepreneurs had agreed on the need for Rp 1,993 trillion in investment through 2014 in four sectors: agriculture; industry and tourism; mining and energy; and 881 regional infrastructure projects. “We are coming out with the MP3EI because we want to accelerate and expand certain sectors of our economy, with clear orientation and timeline – who does what, who invests and how much and where,” Yudhoyono said. “The MP3EI is not a law, but I hope that it becomes our commitment. Let us implement this even though it is not a law. “We should make this plan binding for all, the central and regional governments and the business sector,” the president said.

The President Post

A2 September 12, 2011

Opinion RI Set to Become Asia’s Economic Leader The global and domestic economic dynamism necessitated Indonesia to prepare itself in the face of changes. In 2010, the Indonesian per capita income was recorded at over $3000. This means that it is now time for Indonesia to shift to efficiency driven economy

mean that the country has been included in the group of high-income nations, National Economic Committee Chairman Chairul Tanjung said meanwhile.

Armida Alisjahbana Development Planning Minister

center of growth. "Asia is dynamic so that 2050 will be the Asian Century where 50% of the world economy will be centered in Asia," the minister said.

By Andi Abdussalam


ith a view on developments in both external and internal economic factors, government officials are convinced that Indonesia will in the future become one of the economic leaders in Asia. "Looking at our performance in economic development over the past several years, we believe that we will be one of the seven countries predicted to become the economic leaders in Asia by 2050," Development Planning Minister Alisjahbana said. The minister said the other six other countries were China, India, Thailand, Vietnam, Malaysia and South Korea. This is based on an Asian Development (ADB) study showing that in 2050 Asia would become the

Hatta said that Indonesia at present is ranked 17th on the list of the world`s biggest economies, exceeding the positions of several advanced states such as Switzerland, Norway, Sweden and South Africa. Yet, he said that the target that would be achieved through the master plan was too low because Indonesia could achieve higher than that.

Looking at our performance in economic development over the past several years, we believe that we will be one of the seven countries predicted to become the economic leaders in Asia by 2050."

In order to create the Asian century in 2050, countries in Asia should support it with integrated national policies and regional cooperation. "Indonesia already has a master plan, something that is needed to help realize the Asian Century in 2050.” Chief Economic Minister Hatta Rajasa said that its presence in the global economic gravitation, namely in East Asia and Southeast Asia, necessitated Indonesia to prepare itself to become a new advanced country.

my (MP3EI) that would serve as a guide for economic development until 2025. Among the targets Indonesia has set in the master plan is to achieve a per capita income of about $15,500 in 2025, a big increase from the present $3,000. If the state has reached a per capita income of $10,000 it would

In this context, the government was aware of the need to prepare a plan so that it formulated its Master Plan for Acceleration and Expansion of Indonesia`s Econo-

"If we make serious efforts we can achieve two folds of the target set for the 2025," Tanjung said in a seminar on the national entrepreneurship spirit at the office of the nation`s largest Muslim organization NU recently. Tanjung said that in the MP3EI the government set a target to achieve a per capita income between $14,250 and $15,500. "The per capita income of the Indonesian people in 2010 had reached $3,000," he said. Tanjung, who is owner of Para Group, said that the government`s target of $15,500 could be achieved before 2025. "This is a

The global and domestic economic dynamism necessitated Indonesia to prepare itself in the face of changes. In 2010, the Indonesian per capita income was recorded at over $3000. This means that it is now time for Indonesia to shift to efficiency driven economy, he said.

Hatta Rajasa Chief Economic Minister

The international communities have given Indonesia a positive appreciation for the economic improvement it has made." high income category, before 2025 Indonesia would already have an income per capita of $14,250 15,500," he added Hatta concurred with Tanjung, saying that Indonesia should not wait for 40 years in developing an innovation drive economy. He said that the government needed to formulate steps in order to accelerate the creation of an advanced state with a world-class competitiveness.

"The international communities have given Indonesia a positive appreciation for the economic improvement it has made," the minister said. He said that Indonesia was able to improve the rate of its external debt position which experienced a decline at a time when others` debts were increasing. "But what we have achieved now turned out to take us 40 years if we calculated what we have planned since the 60s," Hatta said. Seeing the dynamism of the Indonesian economy, the coordinating minister for economic affairs said that Indonesia should not wait for another 40 years to achieve its economic goals. After all, external economic conditions such as the slow recovery of the global economy after crisis in the past several years, place Indonesia as one of the countries in Asia

which would attract foreign investors. Economic Analyst of PT First Asia Capital Ifan Kurniawan said the good chance for the Indonesian economy to attract foreign investors to place their funds in the domestic market. Indonesia is predicted to become a basis seen by investors as a good place for their business production relocation, Ifan said. Moreover, foreign investors have made their investments not only in the stock exchange, money market, government bonds and instruments of the central bank (Bank Indonesia) but also in the infrastructure sector, he added. He further said that because foreign investment was projected to increase, it was also predicted that the country`s economic growth would also increase and improve the people`s income. This favorable situation is driven by the conditions in other countries in Asia such as China where production cost is increasing and India which is experiencing high inflation and high interest rates that pose difficulties for investors to make investment. Apart from that Vietnam even underwent inflation up to 11%, Ifan said. (Antara)

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DAY 1, September 21, 2011 T im e 0 8 :0 0 – 0 8 :3 0

DAY 2, September 22, 2011

P re s e n t a t io n / P a p e r

T im e

I n v e s t m e n t a s a K e y F a c t o r t o A c h i e v e E c o n o m ic G r o w t h a n d M in i n g I n d u s t r y S u s t a in a b i li t y

W e lc o m e R e m a r k s C h a i rm a n o f O r g a n iz in g C o m m i t t e e M u h a m m a d H a n a fi C h a i rm a n o f A P I - I M A M a r t io n o H a d i a n t o M in is t e r o f E n e rg y a n d M i n e r a l R e s o u r c e s D r. D a r w i n Z a h e d i S a l e h , S E , M B A * 0 8 : 3 0 -1 0 : 1 5

P r e s e n t a t io n / P a p e r

C o n f e r e n c e R e g is t r a t i o n

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D r. H a m d a n Z o e lf a . S H . M .H ,

K e y n o t e s p e e c h : C h a l l e n g e s a n d O p p o r t u n it ie s o f T h e N e w M i n in g P a r a d i g m f o r A c c e le ra t io n a n d E x p a n s io n o f I n d o n e s i a E c o n o m i c D e v e lo p m e n t M a s t e r P l a n (M P 3 E I ) Ir . M . H a t t a R a j a s a ,

M o d e r a to r : 0 9 :4 5 – 1 0 :0 0

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C o f f e e B r e a k – D ig n it a r ie s V is i t E x h i b i t io n – P r e s s C o n f e r e n c e

1 0 :0 0 – 1 1 .0 0

C h a l l e n g e s in N e w M i n i n g P a r a d ig m

T h e R o le o f D o m e s t ic a s w e ll a s F o r e i g n I n v e s t m e n t s F a i s a l B a s r i , C h ie f o f A d v is o r y B o a rd I n d o n e s i a R e s e a rc h & S t r a t e g ic A n a l y s is

1 1 .4 5 – 1 3 .0 0


1 2 :0 – 1 3 :0 0

V a l u e A d d e d i n T h e M i n i n g S e c t o r : “ T o w a rd a S u s t a i n a b l e R e s o u rc e B a s e d I n d u s t r y ” D r . R o z i k B S o e t j i p t o , I n d o n e s ia M e t a ll u r g y E x p e r t I n f r a s t r u c t u r e I m p e d im e n t , C h a l le n g e s , I n v e s t m e n t & D e v e lo p m e n t f o r M in i n g I n d u s t r y A g u s t i n T e r a s N a r a n g , S H , G o v e r n o r o f C e n t r a l K a l im a n t a n

U n t a p p e d R e s o u rc e s I n d o n e s ia ’ s G e o lo g y a n d M i n e r a l a n d C o a l R e s o u r c e s E s p e c ia ll y i n t h e D em and D r . R . S u k h y a r , H e a d o f G e o lo g ic a l A g e n c ie s , M i n is t r y E n e r g y

C o n t e x S h if t in g i n

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M o d e r a to r : P r o f . D r. S u d a r t o N o t o s is w o y o

1 5 .1 5 – 1 6 .4 5

S tep h en H u g h es,

G e o lo g y a n d E x p l o r a t i o n E n c o u r a g e m e n t a n d

1 4 .4 5 – 1 6 .1 5

L e g a l A s p e c t a n d I m p li c a t io n o f C o W and C C oW R e n e g o t ia t io n M . F a j r u l F a l a k h , S H . M H , M . S c , T h e N a t i o n a l L a w C o m m is io n ( K H N

- R I)

P T T i g e r s R e a lm G o ld I n d o n e s ia

Im p a c t o f F o r e s t M o r a t o r i u m o n M i n i n g I n d u s t r y G r o w t h a n d S u s t a i n a b il it y Ir . B a m b a n g S u p i j a n t o , M M , D ir e c t o r G e n e r a l P l a n o l o g y , M i n i s t r y o f F o r e s t r y

I n n o v a t io n a n d F o r w a r d L o o k in g T h i n k i n g in M i n in g , R e s p o n d in g t o N e w P a ra d i g m P r o f D R I r I r w a n d y A r i f, C h a i r m a n o f A s s o c i a t i o n (P E R H A P I ) C h a l le n g e s R e la t e d t o t h e

o f I n d o n e s i a M i n i n g P r o f e s s io n a ls

D e v e lo p m e n t o f I n d o n e s ia ’s M in e ra l P o t e n t i a l

M o d e r a t o r : S u p r i a t n a S u h a l a – E x e c u t iv e D ir e c t o r IC M A

D R . H . L . O n g , F o u n d e r o f P T G e o s e r v ic e M o d e r a to r : S y a h r ir A B – E x e c u t i v e D ir e c t o r

1 7.00

C o ffe e B r e a k M a n a g i n g P o li t ic a l R is k s a n d G o o d C o r p o r a t e G o v e r n a n c e in M i n in g P r o j e c t D e v e lo p m e n t f o r P e o p l e P r o s p e r it y . H . T e u k u R ie f k y H a r s y a , C h a i r m a n o f C o m m is s i o n V I I , I n d o n e s ia H o u s e o f R e p r e s e n t a t i v e ( D P R R I )

C o ffe e B r e a k I n v e n t i v e a n d I n n o v a t iv e A p p r o a c h e s in G u id a n c e f o r J u n i o r M i n i n g C o m p a n y

M a n a g i n g E x p e c ta ti o n s o f C e n tr a l a nd L o c a l G o v e r n m e n ts P r o f . D r . H . D j o h e r m a n s y a h D j o h a n . M A , D ir e c t o r G e n e r a l o f R e g io n a l A u t o n o m y M o d e r a t o r : P r o f . D r . A r ie f S u d a r s o n o

a n d M in e ra l R e s o u rc e s

I n n o v a t io n in E x p lo r a t io n T e c h n iq u e B a s e d o n M i n e r a l O c c u ra n c e Ir . L a m b o k M . H u t a s o i t P h . D , I n d o n e s ia A s s o c ia t i o n o f G e o l o g is t s

1 5 .0 0 – 1 5 .1 5


S u s t a i n a b i l it y

T h e I m p a c t o f R E D D P r o g ra m s o n t h e I n d o n e s ia n M i n i n g S e c t o r A la n O x l e y , A m b a s s a d o r W o r ld G r o w t h M o d e r a to r : S o n n y S . K o s a s i h , E V P E x t e r n a l R e l a t io n P T F r e e p o rt I n d o n e s ia

1 4 .0 0 – 1 5 .0 0

F i n a n c i n g a n d C h a l le n g e f o r M i n e O w n e r s a n d I n v e s t o r S a n d i a g a S U n o , P r e s id e n t D ir e c t o r P T S a r a t o g a G r o u p M o d e r a t o r : B o b K a m a n d a n u – C h a ir m a n o f I C M A

Lunch T h e S ig n if i c a n c e o f I n d o n e s ia G lo b a l C o m p a c t f o r M in in g I n d u s t r y S h i n t a K a n ia w a t i , S e c re t a r y G e n e r a l o f I n d o n e s ia G l o b a l C o m p a c t N e t w o rk

1 3 .0 0 – 1 4 .0 0

: T o n y W e n a s – P re s i d e n t & C E O P T I N C O

T h e R o le o f B a n k in g a n d C a p it a l M a r k e t in M i n i n g I n v e s t m e n t It o W a r s i t o , P r e s i d e n t D i r e c t o r I n d o n e s ia S t o c k E x c h a n g e 1 1 :0 0 – 1 2 :0 0

B H P B il li t o n I n d o n e s i a

T h e R o le o f G o v e r n m e n t I n s t i t u t io n s f o r M i n in g I n v e s t m e n t G i t a W i r j a w a n , C h a i r m a n o f I n d o n e s i a I n v e s t m e n t C o o r d in a t in g B o a r d ( B K P M ) M o d e r a to r

T h e N e w M i n in g L a w I m p le m e n t a t i o n o f N e w I n v e s t m e n t a n d E x p lo r a t i o n – T h e U p d a t e s D R . Ir. T h a m ri n S ih it e , M E , D ir e c t o r G e n e r a l M i n e r a l a n d C o a l M i n i s t r y E n e r g y a n d M in e ra l R e s o u rc e s

M o d e r a to r : M u l ia w a n M a r g a d a n a

C o ffe e B r e a k

U p d a t e o n t h e R e g u la t o r y C lim a t e P e r t a in i n g t o N e w I n v e s t m e n t a n d G r e e n F ie ld O p e r a t i o n W i n z e n r ie d S a c h a K u r t , P r ic e w a t e r h o u s e C o o p e r s

C o o r d i n a t i n g M i n is t e r f o r E c o n o m ic A f f a ir s

1 0 .4 5 – 1 1 .4 5

J u d g e s o f C o n s t it u t i o n a l C o u r t *

M a r t io n o H a d ia n t o – C h a ir m a n A P I - I M A

E c o n o m ic G ro w t h

O f f ic ia l O p e n i n g a n d E x h i b i t io n T o u r

1 0 :1 5 – 1 0 :4 5

D is h a r m o n y o f L a w a n d R e g u l a t io n o n M in i n g I n d u s t r y a n d it s I m p a c t o n I n d o n e s ia n S o c ia l & E c o n o m ic W e l f a r e

1 6 :3 0


M i n in g B u s in e s s G a t h e r in g & C o c k ta il P a r t y

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The President Post

September 12, 2011 A3


Asia at Center Stage


There are strong indications that the global economy will undergo fundamental changes, with a number of scenarios on how these changes will come about. It is highly important for Indonesia to monitor and anticipate the developments, as it will affect Asia including Southeast Asian countries and in particular such large countries as China, India, and Indonesia. In his book “The New Asian Hemisphere”, Prof Kishore Mahbubeni of Singapore speaks about the historical shift of global power: Asia is returning to the center stage it occupied for eighteen centuries before the rise of the West. It is expected that Asia might continue with Western best practices in the area of economics but adjusted to the Asian situation. The World Bank recently came up with its study on the Multipolar World, describing the emergence of a number of growth poles, possible changing global corporate landscape and multipolarity in international finance. An Asian Development Bank (ADB) paper entitled “ASIA 2050: Realizing the Asian Century” recounts the birth of the Asian Century – Asia may take up the largest share of world GDP, and that Asia may have to face the problem

Figure 1. Asia's share of global GDP, 1700-2050

Figure 1. Asian Century vs. Middle Income Trap Asian Century Scenario


Middle East & North Africa 3%

60% % of global GDP

Indonesia is By Atmono Suryo continuously mentioned as one of the important CHANGING GLOBAL emerging countries. IN THE ECONOMY fact, Indonesia is rated he world is in the among the top ten midst of a historic transformation. emerging countries.


Sub Saharan Africa 2%

40% 30%

Rest of World 2%

Middle Income Trap Scenario Middle East & North Africa 5% Sub Saharan Africa 4%

Asia 31%

Europe 18%


Europe 28%

Asia 52%

10% 0% 1700







Source: Maddison (1700-1950)(2007); Centennial Group International estimates (1951-2050) (2011). Data for 1750-1790 are PPP and data for 1991-2050 are in market prices

of the “middle income trap”. It further clarifies the risks and challenges Asia may encounter. The opinions expressed in all the studies suggest that the fundamental change concerns the shift in economic power from the West to the East. It will basically involve the industrial countries of the West (in Europe and North America) and the developing countries in Asia. The following data of the ADB paper explains that some 310 years ago in 1700 Asia’s share of global GDP amounted to around 60%. It went down to about 15% in 1950. Years ago world wealth was then concentrated in Asia but it went down considerably as it was shifted to the countries of the West. Most likely to Europe and it happened presumably during the colonial times lasting for some 300 years (Figure 1). Those figures may indicate about the possibility of the Asian Century as Asia would take up such a large part of the global economy.

DEVELOPING COUNTRIES ON THE RISE It is not only the countries in Asia such as China which will rise but also countries in other parts of the world such as Brazil and Russia. They are the BRIC countries (Brazil, Russia, India and China) which are the forerunners of the emerging countries. Most likely some countries in the Middle East and North Africa will follow. Asia experienced big changes after the Asian Financial crisis of 1997/98. As a result, Asia’s share of global GDP is rising. Asia’s GDP has reached $17 trillion in 2010. According to estimates made by the ADB, Asia’s share can go all the way up to $174 trillion in 2050, or half of global GDP. The impact of globalization, the historic transfer of economic wealth and the development of the global economy will to a large extend transform the global economic landscape. It is predicted that Asia will take up the largest share with

Latin America & Caribbean 10%

Rest of World 2%

North America 21%

North America 13%

Latin America & Caribbean 9%

Asia GDP: $174 trillion

Asia GDP: $65 trillion

Source: Centennial Group International projections, 2011. Figures use market exchange rates (MER)

52%, followed by Europe with 18%, North America 13%, Latin America & Carribean 10% and Middle East & North Africa 3%. If Asia is caught in the so-called “middle income trap”, Asia’s share will be only 31%, but it still occupies the largest share, followed in the same order by Europe, North America, Latin America and the Middle East and North Africa (Figure 2).

KEY ADVANCED & EMERGING COUNTRIES The top ten economies in the global economy for the year 2010 in terms of GDP are: 1. USA 2. China 3. Japan 4. India 5. Germany 6. Russia 7. United Kingdom 8. France 9. Brazil and 10. Italy. Six of the ten biggest economies are advanced countries and four are rated as emerging countries. There are various ways to determine the developing countries

as an emerging country; among others based on their economic size and their economic growth. The BRIC countriers are rated as the top emerging countries, with Indonesia,Turkey and South Africa on the “waiting list”. According to some leading economists there are about 28-30 emerging countries. The top ten countries are: 1. China 2. India 3. Russia 4. Brazil 5. Turkey 6. Mexico 7. Indonesia 8. Poland 9. United Arab Emirates 10. Thailand.

Asia The ADB report states that Asia’s march to prosperity in the coming decades will be led by seven economies: China, India, Japan, Indonesia, Korea, Thailand and Malaysia. These seven economies have a combined total population of 3.1 billion (78% of total Asia) and GDP of $14.2 trillion. To achieve the promising out-

come Asia’s leaders are recommended to continue with their high growth rates and manage the multiple risks and challenges, which among others include the following: • To cope with the increasing inequality within countries • Rising income disparities among countries • To cope with intense competition (incl. natural resources) • Poor governance and weak institutional capacity • Global warming and climate change It is known that other issues could be added to this short list, such as corruption, rule of law and others. It is important to note that in all the analysis made about emerging countries, Indonesia is continuously mentioned as one of the important emerging countries. IN fact, Indonesia is rated among the top ten emerging countries. The emerging countries, however, are being warned that with their robust growth, they will face rising risks. They are suggested that they have to cope with those risks, which can undermine social cohesion, political and economic stability. And disrupt economic growth in its totality. Indonesia is already being caught with these challenges. Therefore It goes without saying that these recommendations should also apply to the fullest extend to Indonesia. The writer is former ambasaador to the EU

The President Post

A4 September 12, 2011

ASEAN Current Situation and Economic Direction ASEAN has survived and has overcome the many challenges it faced since its establishment. It shows that ASEAN is a resilient regional grouping. By Atmono Suryo


GLOBAL SITUATION loom sets in again as many countries are caught in political-economic trouble, in a small or big way. Notwithstanding the fact that the global economy is suposed to be on the road to recovery, there is even the fear for another recession. It is for sure that 2011 will remain to be uncertain and volatile. The advanced countries, which have been the pillars of the global economy for a long time, are now in decline. Europe and the United States face a number of serious financial problems.. On the other side of the globe, however, emerging countries are better off, particularly in East Asia. They have been steadily on the rise, with China and India in the lead followed by Indonesia and other Asian countries. Against this backdrop, and with Indonesia holding the ASEAN chair for 2011, ASEAN is back in the limelight. However, people would now like to know about ASEAN’s current position in the global economy, and also what ASEAN’s economic direction will be in the years to come. These are reasonable questions, awaiting for some credible answers and real positive actions.

ASEAN POSITION As to the question on ASEAN’s position in the global economy one can say that not much is known in Indonesia the subject. Negative and critical observers tend to dominate public opinion. Indonesia is an important founding member of ASEAN some 44 years ago in 1967, together with Thailand, Malaysia and Singapore, but all this is now being forgotten. ASEAN has survived and has overcome the many challenges it faced since its establishment. It shows that ASEAN is a resilient regional grouping. It has grown in size and has expanded from an association of five to ASEAN-10. Soon it will become ASEAN-11 as Timor Leste is set to join. Looking at its size, ASEAN has grown to become a considerable economic grouping (Figure 1). Since 2008 the indicators have been going up. ASEAN as an economic entity has grown in such a way that it now belongs to the top largest economies in the world, right after the European Union (EU), USA, China and Japan (Figure 2) In geo-political terms ASEAN is well-placed to be an economic partner for the powerful economies in East Asia such as China, India, Japan, South Korea and Australia-New Zealand. Even the European Union, the United States and Russia are keen to have closer relations with ASEAN. Various developing countries, including in Latin America and South Asia, are watching ASEAN with great interest and are keen to establish closer relations with the group.

ASEAN: THE RISING REGIONAL COMMUNITY One must note that Asia, including ASEAN, has changed considerably during the last decades. Two factors have ignited this change. Firstly, it is the historical shift from the West to the

East. Asia, in particular, including South East Asia, is expected to become the epicenter of the global economy.

$1,236 India

Secondly, there was the sudden economic downturn with the onset of the Asian financial crisis of 1997-98 that started in Thailand, with its contagion effect that reached all the way to Russia and East Africa. The crisis has served like a “wake-up call” for countries in Asia, in particular in Southeast Asia. At that time ASEAN had to wake-up instantly, ready to face the economic realities on the ground. It could not continue to be a “talking-shop” only, spending much time in conferences and meetings. A new spirit and a new momentum was then coming to ASEAN. With the arrival of a new momentum, new visions appear in the economic area. Internally much work had to be done to strengthen its institutional structures and to undertake economic reforms. Externally, considerable moves were made to foster its relations with third countries through extensive dialogues, particularly through the ASEAN+3 (ASEAN 10 plus China-Japan-South Korea) and the EAS (East Asia Summit) mechanism, and to intensify trade through free trade agreements (FTAs). As rightly observed by the World Bank and the Asian Development Bank in their recent reports, ASEAN is a region of significant economic, political, social and cultural diversity. This has resulted in a form of ASEAN diplomacy and cooperation, which has been characterized by caution, pragmatism and consensus-based decision making. As is being said this “ASEAN way” can not only induce indecisiveness but also be a strength for building inclusive policies.

MULTI-TRACK POLICIES This change of vision has led among others to what could be called as “a multi-track and multispeed” policy, covering basically four key areas, namely trade, investment, finance, and regional integration as follows: • Trade: A large number of FTA’s has been made starting in the year 2000. The FTA process started with China followed by other dialogue partners Japan, Korea, Australia and New Zealand. Negotations are underway on an ASEAN-EU FTA and many more will follow • Finance: Finance ministers and Central Banks have been constantly in close touch. They have among others produced the Chang-Mai initiative agreement • Investment: Investment promotion is one of the key ASEAN policies, but investment flows to ASEAN has been quite slow. More work has to be done to attract foreign direct investments (FDI) to ASEAN countries • Regional community building: ASEAN is in the process of establishing the ASEAN Community 2015 supported by three pillars: political-security, economic and social culture. The ASEAN economic community (AEC) aims to establish a single-market and productionbase

Economic direction With regard to ASEAN’s eco-

$4,909 China


$833 ROK

$5,068 Japan







$14,256 US



$16,447 EU $1,114 AUS & NZ Figure 2. ASEAN in the Global Economy 2009 (GDP US$ billion)

nomic direction, one can note that the main economic foundations and policies have been laid, supported by all ten ASEAN countries. The necessary infrastructure is being prepared, which includes the project on Asean Connectivity which is of great importance to Indonesia. Within AEC road-maps have been worked out in detail for a number of AEC “implementation items”. They are all spelled out in detail in the impressive AEC blueprints, and ASEAN is committed to have it implemented. One can assume that ASEAN will basically move along the above lines (trade, finance, investment and regional integration) perhaps for the next 5 to 10 years. As explained before ASEAN is a region with great diversity. Therefore, its moves call for typical ASEAN-way approaches (multi-speed and multi-ways), but in the end things will be done. What is still pending concerns the development of the East Asia architecture (including the possibility of an East Asia Economic Community) and the agenda on “ASEAN Community in a Global Community of Nations”. The important meetings in Bali in October-November this year will undoubtedly give us further indications where the ASEAN economy will be heading. An important point to make is that the forthcoming EAS will be attended by the leaders of 18 countries, namely ASEAN 10 plus China, Japan, South Korea, India, Australia and New Zealand. It will also be attended by the United States and Russia. The writer is former ambassador to the EU.

Figure 1. ASEAN INDICATOR, 2008 Total Population


583.7 million

Total Land Area


4.4 million sq. km.

Total Gross Domestic Product


US$ 1,710.4 billion

GDP Growth


4.4 per cent

Total Trade


US$ 1,710.4 billion

Total Exports


US$ 879.14 billion

Total Imports


US$ 831.23 billion

Intra-ASEAN Exports


US$ 242.5 billion

Intra-ASEAN Imports


US$ 215.6 billion

Intra-ASEAN Trade


26.8 per cent of ASEAN total trade

FDI Inflows


US$ 60.2 billion

Intra-ASEAN FDI Inflows


US$ 11.1 billion

Source: ASEAN Finance and Macroeconomic Surveillance Database and IMF

The President Post

September 12, 2011 A5

Around Jababeka The New Role Model of Indonesian Health Center: Jababeka Medical City Medical City will provide its residents with a safe, comfortable, and healthy living environment surrounded by nature.

Alan Ye, Business Development Manager Indonesia Movieland of Jababeka, received a visit from Nanjing, China at Jababeka Golf & Country Club, Cikarang. The visit is follows up the MoU signed by Indonesia Movieland, Castle Production, and Nanjing Zhuque Animation Movie Co. Ltd. for the making of the animation movie “Adventure of Cheng-Ho”. It was agreed that the movie will be made in two versions: Chinese and Indonesian. It is jointly financed by Gulou District Government, Nanjing Cultural Investment Holding (Group) Co., Ltd., Nanjing Broadcasting Group, Nanjing Daily Press Group and Nanjing U-Youth Net Digital Science & Technology Co., Ltd.

By Jeannifer Filly Sumayku


he large number of Indonesians seeking medical treatment abroad should be a concern of the government. In 2009 the amount of money for medical service that fled abroad exceeded $400 million or Rp4 trillion, and in 2010 the figure increased to Rp4.5 trillion. “Many factors cause the situation to remain as such today, as it relates to the quality of teamwork and hospitals’ comprehensiveness,” said dr Tarmizi Hakim, Project Director of Association of Thoracic and Cardio Vascular Surgeons of Asia (ATCSA). Quality of work also means quality of doctors, management, and services of hospitals. Singapore has opened its door to doctors from other countries to perform surgery there. It aims to absorb knowledge from foreign doctors. Now, the transfer of knowledge has been done and local doctors in Singapore have become more excellent. “In Indonesia, foreign doctors are prohibited to practice although it’s actually good if foreigners are willing to work here. Actually there are two ways: inviting foreign doctors to come here or sending our doctors abroad. But based on my own experience, after several years of study and practice in Australia, when I returned to Indonesia I found it hard to apply the knowledge since it was only I who understand,” he explained.

Nanjing Visit to Jababeka

“On hospital services, we can start by checking how long it takes for a hospital in Indonesia to pick up the phone? A hospital must be on alert 24 hours a day.” Another example: Indonesian children usually become traumatic of hospitals because they look scary especially if they must get an injection. In Penang, nurses often offer ice cream and play before the child is examined. The hospital ambience is so much more fun. Another important thing is the completeness of hospitals. Hospitals in Indonesia will never have complete medical tools like other countries have as tax on medical equipment is very high. “If the tax is removed, the rates will be cheaper, and patients won’t flee abroad. The money goes to local hospitals, and the hospitals will be able to buy any kind of tools since they earn a lot of money,” explained dr. Tarmizi, one of

the advisors of Medical City Jababeka. “In fact, there is only one heart hospital in Indonesia. In my opinion we should at least have 20 heart centers. If the government is unable to provide, they should give the private sector the opportunity but still retain control,” he said. Moreover, the cost of medical schools is very expensive. During the time of their study, students are not able to earn money, so not a few students are in lack of protein, thereby becoming less intelligent. Overseas, students are paid to get training. The current situation must be rectified by making changes. Appoint one institution to be a role model that can be emulated in other regions. “We are prepared to build a high-tech, state-of-the-art hospital at Medical City Jababeka,

with the full support of the government. Allow foreign doctors to work in Indonesia and remove tax on medical equipment. If health care in this country is improper, the public will be harmed since they can’t get good health services,” he concluded. Medical City is built on 72 hectares of land. 10 hectares are apportioned for hospital, five hectares for research laboratories, and the rest for President University School of Medicine, student dormitories and hotel. Medical City will also provide its residents with a safe, comfortable, and healthy living environment surrounded by nature. At the same time it will offer all the amenities of modern living, cuttingedge medical care within reach 24 hours a day, a work place within walking distance, and close proximity to spots for entertainment, fine dining, leisure, and sports.

Nanjing Zhuque Animation Co., Ltd. is responsible for detailed work. As for the Indonesian version, Indonesia Movieland collaborates with Castle Production and the Ministry of Religious Affairs. The film recounts the splendid history of over 600 years ago, when navigator Cheng-Ho sailed from Nanjing to the South Seas. On the occasion, the delegation from Nanjing visited the animation training center of 53 students from several boarding schools at Jababeka ICT Korea. 10 of the students will be selected to follow animation training program at Nanjing, China, sponsored by the Ministry of Religious Affairs.

Mr. Alan Ye, B.Sc., M.B.A., Business Development Manager of Indonesia Movieland of PT Jababeka and Mr. Bruce Ji, Deputy Secretary General of Nanjing Culture Industry Association at Jababeka Golf & Club.

Delegates from Nanjing visited the training center of 53 students for the making of animation movie Adventure of Cheng-HoIndonesian version at Jababeka ICT Korea.

Delegation from Nanjing and representatives of the Ministry of Religious Affairs, Castle Production, and Indonesia Movieland at Jababeka Golf & Country Club From Left to Right: Ms. Peng Lin Yun, Program Monitoring for Government Project; Ms. Li Zhen, The Icon of Adventure of Zheng He Animation Movie; Mr. Drs. Mohammad Zen, M.M., Kasie Ketenagaan Subdit Pesantren of Ministry of Religious Affairs of The Republic of Indonesia; Mr. Zhu Yufeng, Creative Director of Adventure of Zheng He Animation Movie; Mr. Du Gang, COO of China Central Television Dream Channel; Mr. Drs. Bambang Setyawan, Kasie Sarana Subdit Pendidikan Pesantren of Ministry of Religious Affairs of The Republic of Indonesia; Ms. Denny D., Business Consultant of Castle Production; Mr. Raymond Wong, Animation Director of Castle Production; Mr. Zhu Yichang, President Director of Nanjing Zhuque Animation Movie Co. Ltd.; Mr. Bruce Ji, Deputy Secretary General of Nanjing Culture Industry Association; Ms. Cherry Feng, Project Manager of Asset Operation Department of Nanjing Cultural Investment Holding Group; Mr. Alan Ye, B.Sc., M.B.A., Business Development Manager of Indonesia Movieland of PT Jababeka;

The President Post

A6 September 12, 2011

The Economy Govt Upbeat on Economy in 2012

ECONOMIC UPDATES RI Set to Produce Bird Flu Vaccine

The government was planning to take advantage of capital spending in 2012 more effectively to support the development of basic facilities and infrastructures to spur economic growth.

Indonesia is ready to produce H5N1 (bird flu) vaccine following the transfer of an H5N1 seed producing vaccine, "A/Indonesia/ Unair/2005" from the Surabaya-based Airlangga University, the welfare affairs minister said. Coordinating Minister for Agung Laksono People`s Welfare Agung Laksono made the statement here early this month, adding that Unair is the only university in the country for avian flu research. Minister Laksono who was accompanied among others by deputy education minister Prof Fasli Jalal and Unair rector Prof Fasich Apt, said seed vaccine production for human beings still relies on state-run pharmaceutical maker PT Bio Farma. H5N1 vaccine is cheaper if it is produced locally, the minister said. Therefore, Laksono hoped PT Bio Farma will soon produce H5N1 vaccine for human beings. In addition, samples from Airlangga University`s research should not be taken abroad, because it is needed for local consumption, and the equipment, buildings, and the research resources belong to the Indonesian people, the minister added.


he government is optimistic that the domestic economy will perform better in 2012 and will always be realistic in setting macro economic targets, a minister said. The government had always taken into account latest developments in the indicators of global and domestic economic performances as well as challenges to the domestic economy in 2012, Finance Minister Agus Martowardojo said in his address to a House of Representatives (DPR) plenary meeting here early this month.

While delivering the government`s reply to House factions` general views on the bill on 2012 state budget and its financial notes, the finance minister said the risks of global economic developments in 2012 would among others come from the fiscal and debt crisis affecting the United States and a number of European countries. The fiscal and debt crisis could threaten the global economic recovery, he said. In addition, the increase in the global prices of crude oil and food commodities

Finance Minister Agus Martowardojo and a sudden reversal of shortterm funds would also pose a challenge to the domestic economy, he said.

Economic growth target of 7.6% for 2012 quite realistic Minister Martowardojo said the economic growth rate target of 6.7% for 2012 is quite realistic in view of external and internal challenges to the domestic econ-

The government was also planning to take advantage of capital spending in 2012 more effectively to support the development of basic facilities and infrastructures which had greater economic function to spur economic growth, he said. He said budget allocations for capital spending next tear would among others focus on de-

Indonesia`s debt servicing ratio in the year ended June 30 reached 21.6%, well below the dangerous threshold of 30%, a central bank (BI) spokesman said. "The ratio suggests that the amount of government and private foreign debts is still safe," the head of Bank Indonesia`s public relations bureau, Difi A Johansyah said here early this month. Debt service ratio is the ratio of debt service payments (principal + interest) to export earnings. A country`s international finances are healthier when this ratio is low. The ratio is between 0 and 20 percent for most countries. Difi said Indonesia`s debt service ratio in the second quarter of 2011 was higher than that of the first quarter which reached 18% but lower than those of the end of 2009 which reached 23.2% and the end of 2010 which reached 22.2%. The ratio would be getting lower if the country`s exports continued to increase and the amount of government and private foreign debts continued to fall, he said.

Government capital spending in the year to early September reached 26.7% of Rp140.95 trillion set under the revised 2011 state budget, Finance Minister Agus Martowardojo said. "It is true that we must make every effort to increase budget absorption particularly capital spending," he said here early this month. He said the capital spending in the first eight months of 2011 was also lower than the same period last year when the figure reached 27.9% The lower-than-expected capital spending had become the center of the government`s attention because it was related to the development of infrastructure projects, he added.

In the balance of payment until the first quarter of 2011, Indonesia`s exports reached a total value of $51.46 billion, causing a surplus in the balance of payment to increase to $11.9 billion from $7.7 billion in the previous quarter. Indonesia`s foreign debts until the first quarter of 2011 totaled $214.5 billion, a 10% increase compared to the end of 2010. The amount consisted of government debts totaling $128.6 billion and private debts totaling $85.9 billion. The government debts increased compared to the end of December 2010 when the figure was $118.6 billion, while the private debts as per December 2010 reached $83.8 billion. As per April 2011, the private debts consisted of $72.5 billion incurred by non-bank institutes and $13.4 billion by banks.

STEEL PRICE RISE: Marketing Director of Krakatau Steel, Irvan Kamal Hakim predicts the increasing price for steel products in the national market after Lebaran. It is because people’s tendency to continue the construction after long holiday. Besides, there are numbers of APBN budget to be absorbed in this second semester.

Moreover, the construction of development projects financed under a government-private cooperation scheme did not run as expected, he said. He made it clear

The President Post/Nandi Nanti

Under the draft 2012 state budget, budget allocations for infrastructure development is expected to reach Rp156.5 trillion. Of the total, Rp30.5 trillion will be used to build roads, Rp12.4 trillion to develop resettlement, Rp16.3 trillion to finance water resource management programs, Rp6.9 trillion to promote sea transportation and Rp8.8 trillion to develop railway system.

that the low capital spending was because many contractors who had completed development projects had not applied for payments for the projects while the government had no problem with the process of disbursing budget funds. The contractors used their own funds to finance the projects, he said. "We will always try to maintain our good payment system. So we have no problem with our financial capacity to pay for the projects," he said. He said a total of 22 ministries and government agencies were still discussing terms of reference with the House of Representatives (DPR) to use budget funds while in fact the revised 2011 state budget had been approved. The 22 ministries and government agencies included those receiving a great chunk of budget allocations this year, he said.

RI to Create Disincentives for Foreign Goods: BKPM

Exports Predicted to Grow 18% The government has made an estimate that the country`s total exports in 2012 would increase 18-20%, Trade Minister Mari Elka Pangestu said. "We are optimistic that the target will be achieved regardless of the fact that economic development in the United States and Europe is slowing down," the minister said here recently.

To attract investment and increase national production capacity the government had provided various incentives including a tax allowance and a tax holiday.

The minister`s optimism was based on the country`s export trend in the first semester of 2011, which based on the data at the Central Board of Statistics (BPS) stood at $98.6 billion, up 36% from the same period a year earlier. "The annual pattern of export development in the country shows that the exports in the second semester were always higher than those in the first semester. So we predict this year the export values will reach $200 billion, or 25%," the minister said. She said that if exports in 2011 rose by 25%, exports in 2012 would at least be maintained at the 18-20% level. The exports would be supported by commodities, among others, coal, palm oil and its by-products, food goods and manufacturing products.

Indonesia will create disincentives for goods consumed on a large scale but not produced in the country, Capital Investment Coordinating Board (BKPM) chief Gita Wirjawan said here last month. "We will take stock of those products," he said following a coordination meeting at the office of the coordinating minister for eco-

nomic affairs, Hatta Rajasa. He said Indonesia needed to address the practice of consuming foreignmade goods in large volumes in the country. "In the spirit of the Masterplan for Indonesian Economic Development Expansion and Acceleration (MP3EI) we will conduct downstreaming of production and increase national production capacity," he said. Gita referred to the case of BlackBerry cellphones which are widely used in the country but have been made in Malaysia where the manufacturer had invested in the relevant production facilities. The BlackBerry manufacturers was targeting the production of four million units next year and market them at the price

The President Post

was also planning to build a solar panel plant in Malaysia while its target market was obviously Indonesia. "This is what I explained at the coordination meeting just now and my explanation was welcomed by coordinating minister Hatta Rajasa, the finance minister, the industry minister and others," he said.

BKPM chief Gita Wirjawan

of $300 per unit while sales in Malaysia reached no more than 400,000 units. "We must take a stand with regard to this issue. It can be in the form of non-tariff, tariff or other barriers," he said. He also referred to Bosch of Germany as another example. He said the German company

Gita said to attract investment and increase national production capacity the government had provided various incentives including a tax allowance and a tax holiday. "We need to think of creating disincentives for those who do not produce goods in Indonesia," he said. He said the government was still formulating the details of the proposed disincentive and hoped it would be ready for discussion


He said the policy would not only apply to Blackberry cellphones but also to others so that more investors would choose to invest in the country. "There will be a kind of incentives and disincentives for such products. We must have a regulation or a barrier with the aim of attracting investors to make goods in Indonesia," he said.

Menara Batavia 25th Floor Jl. K.H. Mas Mansyur Kav. 126 Jakarta 10220, Indonesia Phone: +62 21 572 7337 Fax.: +62 21 572 7338 Email:





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again next week or in the next two weeks. Industry Minister MS Hidayat also expressed the need to produce regulations on consumer products which are not produced in the country such as BlackBerry cellphones made in Malaysia. "There must be an additional tax or an additional tariff for such products," he said.

The President Post - Circulation Departments


The President Post

veloping basic facilities and infrastructures for the benefit of the people`s living standard. "In addition, the budget allocations for capital spending will be used to improve agricultural infrastructures in support of food security as well as to develop energy and communication infrastructures," he said.

Capital Spending Reaches 26.9% of Allocations: Minister

RI's Foreign Debts Safe: Central Bank

Mari Elka Pangestu

omy that may lie ahead. "The government is of the view that the target is higher than what many international agencies have predicted at 6.5%," he said. "The economic growth forecast of 6.7 percent is quite realistic. Not only do we hope the economy to continue to pick up but also try to improve the quality of economic growth to create more jobs," he said.





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The President Post

September 12, 2011 A7

The Economy RI to Increase Oil Lifting Volume The government would strive to reduce imports of oil and gas by maximizing construction of oil and petrochemical refineries in the country.


ndonesia is seeking to increase its oil lifting volume to one million barrels per day in 2013 due to price uncertainty and the tendency of the oil price stabilize at a high level. The country`s chief economic minister, Hatta Rajasa, said at a press conference at the presidential office here recently the decision was made following President Susilo Bambang Yudhoyono`s directives at a cabinet meeting that with regard to anticipating a number of problems in relation to achieving the government`s targets from 2012 to 2014. He said the target of increasing the oil lifting volume from around 900,000 barrels per day at present to one

ready made. This third step if optimalizing production in the existing fields now at 44,000 barrels a day by an additional production of 12,000," he added.

million barrels was set based on a number of calculations and measures to be taken in the field. "The target is to be achieved among others by reducing the rate of scientific explorations from 12 percent to three percent so that production in the existing fields at the rate of 900,000 barrels a day can be maintained," he said. He further said another step to be taken was opening new fields which have already been available and making them ready for exploration. "We will accelerate the opening of new fields. In technical terms it is how to shift from probability reserves to recovering reserves. We have Cepu Block, Banyu Urip and others. The road map is al-

Hatta said other decisions made during the cabinet meeting was completing the 10,000 megawatt power project including the second phase of 10,000 megawatt project and preparing the third phase of the 10,000 megawatt project.

CHIEF ECONOMIC MINISTER HATTA RAJASA: With regard to controlling the rate of exports and reliance on imports, the government would improve domestic trade system, expand domestic market share, put domestic industries in order and maintain people's buying power by controlling inflation.

Govt to Write off Rp5.7 t In Farmers' Credits The government can soon write off farmers` debts in the form of Farmers` Credit Scheme (KUT) worth Rp5.7 trillion early in 2012, a finance ministry official said. "We are now at the end of August and in the coming one or two months the team is expected to be working and finish its work this year. We hope that all would have been settled (early) in 2012," Finance Ministry Secretary General Mulia P Nasution said. He said that not all farmers would have their credits written

off because all must pass through a verification process, after all the credits had been held for a long time by the debtors. "We have to verify it because it has been there for a long time.We have see to it in the banks` books and audit and verify it one by one before it could be proposed to be written off," the finance ministry secretary general said. Mulia said that it had been Bank Indonesia and the government`s commitment to assisting farmers,

particularly those in Yogyakarta, so that they would be bankable again and bank would channel KUT credits without the burden of bad credits. However, he said, not all farmers would get such a privilege to avoid moral hazard, especially debtors who were still able to pay their debts. "It is a problem that has been accumulated. While one problem is not yet settled than an earthquake happens again. There should be no moral hazard. Those

who so far are able to pay will not get the incentive," he said. In the meantime, Chairman of the House`s Budgetary Body Melchias Markus Mekeng said the writing off of the KUT loans could be done by the government it the credits had passed the auditing process of the State Audit Board (BPK). "So, writing off could not be carried out in such away without the passing through the auditing of the BPK," he said.

The meeting also decided measure to meet national rice stock surplus, he said. "To secure 10 million tons surplus in 2014 the President has ordered the creation of a roadmap with its financing plan. The President also asked for increasing employment through increasing economic growth from 6.0 to 6.5%. In February 2011 the economic growth reached 6.1% and it could provide employment

to a total of 3.8 million people. So with the economic growth of 6.6% 4.1 million people should get employment," he said. Hatta said President Yudhoyono at the meeting also called for control of inflation so that in the long term it could be controlled below four percent. "In August the rate of inflation was 0.93%. We hope by the end of the year we could manage it at below 5%," he said.

RI to maximize oil, petrochemical refinery construction Hatta also said the government would strive to reduce imports of oil and gas by maximizing construction of oil and petrochemical refineries in the country. "Our fuel oil imports are very high. Therefore development of petrochemical refineries is an urgent need. This is because we do not want our fuel oil imports to increase all the time," he said.

He said the oil or organic basic chemical refining industry would be one of the sectors that would receive a tax holiday facility. "That is why petrochemical and oil refineries will be one of the sectors to be given a tax holiday. We do not want imports to become bigger and bigger including imports of additives containing a large amount of fossil fuel-based lubricants," he said. With regard to controlling the rate of exports and reliance on imports Hatta said the government would also improve domestic trade system, expand domestic market share, put domestic industries in order and maintain people`s buying power by controlling inflation. "Improving domestic trade is key to reducing burden. Do not let illegal levies on inter-island trade that cause inefficiency and load," he said.

Govt Raises Rp830 b Through Sukuk Auction The government raised Rp830 billion from two of the five series of state sharia bonds (sukuk) put to an auction early this month. The five series of state sharia bonds offered in the auction were series IFR0005, IFR0007, IFR0006, IFR0010, and SPNS24022012, Director General of Debt Management at the Finance Ministry Rahmat Waluyanto said in a statement on Tuesday. The total bids for the five series of state sharia bonds were Rp3.10 trillion. However, only Rp830 billion of it was accepted. The amount

consisted of Rp500 billion from series IFR0010 and Rp330 billion from series SPNS24022012. The series IFR0010 due on February 15, 2036 was issued at a weighted average yield of 8.35% and a yield rate of 10.00%. The bonds were issued on August 25. The series SPNS24022012 due on February 24, 2012 carries a weighted average yield rate of 4.15% with discount yield payments. The bonds were issued also on August 25. The bids totaling Rp3.10 trillion consisted of Rp501 billion for series IFR0005 with the lowest yield of 6.66% and the highest yield of 7.50%.

Bids for series IFR0007 reached Rp2 billion with the lowest yield of 7.88% and the highest yield of 8.50%. Bids for series IFR0007 were Rp2 billion with the lowest yield of 7.88% and the lowest yield of 8.50%. Bids for series IFR0006 were Rp171 billion billion with the lowest yield of 8.38% and the highest yield of 9.00%. Bids for series IFR0010 reached Rp1.13 trillion with the lowest yield of 8.25% and the highest yield of 8.84%. Meanwhile the total bids for series SPNS 24022012 was Rp1.30 trillion with the lowest yield of 4.03% and the highest yield of 5.50%.

The President Post

A8 September 12, 2011

Education Guangxi Economic Management Cadres College Visit President University The visit from Guangxi Economic Management Cadres College, China, has proven once again that foreign universities all over the world have taken interests in getting to know one of the best private universities in Indonesia.

Triputra Group Grants Scholarships The Triputra scholarships are part of the company’s Corporate Social Responsibility (CSR) program and is is given to students who can demonstrate intellectual and leadership potentials.

In August the Triputra Group granted a scholarship to President University’s students as a follow-up to the Memorandum of Understanding (MoU) signed between the university and the business group in March.

By Jhanghiz Syahrivar


ast August, President University had the honor of welcoming Prof. Rao Weiguo, the Vice President of Guangxi Economic Management Cadres College, and his colleagues to visit the University and discuss future possible collaboration between the two institutions. President University was chosen by Prof. Weiguo for catering international students in which some of them were coming from China. Apart from that, President University is located in a very strategic area: Jababeka Industrial Estate where 1,500 local leading and multinationals operate their businesses. As soon as Prof. Rao Weiguo and his colleagues arrived at President University’s main campus in Cikarang, a semi-formal meeting was held in the Workshop Room, 2nd Floor. The friendly meeting was chaired by Mr. Jhanghiz Syahrivar, the Head of Public Relations of President University, who welcomed all delegations of Guangxi Economic Management Cadres College. During the meeting, Mr. Syahrivar was accompanied by two Chinese students of President University who acted as interpreters between both parties. The meeting began by delivering brief histories of both univer-

sities to all participants. Guangxi Economic Management Cadres College opened in 1951 and experienced a historical transformation from Guanxi People’s Revolutionary University, Guangxi Provincial Administrative Cadres School, Guangxi Zhuang Autonomous Region and Nanning City “May-Seven” Cadres School, to Guangxi Zhuang Autonomous Region Economic Cadres School. With the approval of the Autonomous Regional People’s Government and the National Minis-

Indonesian Embassy in China Invites President University To boost TTI (Trade, Tourism, and Investment) developments between Indonesia and China, the Indonesian Embassy in China invited six Indonesian universities to attend a TTI conference in Nanjing, China. The six universities are President University (PresUniv), Parahyangan University (UNPAR), Sanatadarma University, Sriwijaya University, Diponegoro University and Ahmad Dahlan University. The 7th promotion of TTI  in  Nanjing  was conducted on July 22-24 and focused on introducing opportunities for cooperation in education, health and services sectors between RI and China. More than 300 people attended various events in the form of seminars, discussions, forums of investment consultations, tourism  promotion  meetings,  one-on-one  meetings,  exhibition  of products  and  services,  as well as a gala evening of Indonesian culture. It is important to note that there are now 7,500 Indonesians currently studying in China. Meanwhile, 400 Chinese are now studying in Indonesia, 300 of whom are at President University.

international environment in a sense that it caters to students from 22 cities in Indonesia and many countries. Lastly, the University has an internship program which allows the University’s local and overseas students to work in no less than 1,500 local leading and multinational companies in Indonesia and abroad. According to a survey conducted by Internship Career Center (ICC) of President University, the University’s Chinese fresh graduates who decided to work in Indonesia were paid between $750 to $3,000/month. Indeed, working in Indonesia is a very lucrative option after they graduate from President University. Not to mention that more and more companies from China are opening their businesses in Indonesia, such as PT China Harbour Engineering Company (CHEC) Indonesia, which recently donated billions of rupiah to President University’s bright students through its CSR program.

It is important to note that there are now 7,500 Indonesians currently studying in China. Meanwhile, 400 Chinese are now studying in Indonesia, 300 of whom are at President University.

President University has been one of the most favorite studying places in Indonesia for overseas students, especially those from China, for several reasons: First, the University offers its curriculum in English to cater not only to overseas students but also local ones who want to take advantage of the English-speaking environment that the University offers. Second, the University’s curriculum is customized to suit company needs as part of the University’s commitment in aligning its academic program with global business industries. Third, the University is best known for its multicultural and

During the TTI Conference in Nanjing, President University was represented by Mr. Sendy Widjaja MBA, the University’s Vice Rector 3 of Student Affairs, and Mr. T. Manivasugen MBA, the University’s Director of Marketing and Communications Department.

try of Education, it was given the current name (GEMCC) in July of 1983. The meeting discussed many areas, ranging from lecturers exchange program, students exchange program, joint seminar and scholarships to twinning degree program. The most feasible program to be explored further among others was lectures exchange program as President University needed knowledgeable lecturers to teach Manda-

rin courses in the University while the GEMCC needed some knowledgeable lecturers to teach English courses for their approximately 10,000 students. The visit from Guangxi Economic Management Cadres College, China, has proven once again that foreign universities all over the world have taken interests in getting to know one of the best private universities in Indonesia.

The Triputra scholarships are part of the company’s Corporate Social Responsibility (CSR) program and is is given to students who can demonstrate intellectual and leadership potentials. The main purpose of the scholarships is to create future generations that have superior competence not only in academic terms but also in personality, attitude and the potential to be great leaders The awarded scholarship covers tuition fee for four trimesters, thesis registration fee and allowance of about Rp. 5.000.000/trimester. The scholarship will be presented as of the seventh semester in September of the 2011/2012 academic year. After going through a rigorous selection process at the university, 15 students were chosen from 50 who applied for the scholarships. Those students were then re-selected by Triputra Group which decided that three were eligible,

namely Antonius majoring in Industrial Engineering, Marvella majoring in Management and Maria Indri Purnamasari majoring in Accounting. The awardees were selected on the basis of their high quality of leadership, will power and dedication to achieve professional and personal goals and academic skills. The Triputra Group (also known as PT Triputra Investindo Raya) is one of the largest companies in Indonesia. Although relatively new, the company’s businesses have grown rapidly. Since its inception in 1998, the Tripurta Group has more than 10 business units, including agribusiness, financial services, manufacturing, mining and transportation. Globe Asia ranked it as one of 10 Top Business Groups in 2009. The Triputra Group believes in the importance of human resources development, and the scholarship program aims to develop brilliant talents and future leaders in Indonesia. President University is a higher education institution that was established to train future leaders in the era of global competition, both national and international.

Business Cement Producers Revise Upward 2011 Sales Target Domestic cement producers have revised upward their domestic sale target for this year following high consumption in July. “True, we have revised upward our target to 10 percent,” Chairman of the Indonesian Cement Producers Association (ASI) Urip Timuryono said here on Tuesday.

Urip attributed the surge in cement consumption to the growing property and infrastructure sectors as a result of stable benchmark interest rate coupled with government spending on infrastructure projects. “As the interest rate is stable property developers are building property projects which require cement in large quantities,” he said. He expressed his belief that infrastructure and property projects would continue to grow in the fourth quarter of 2011 and therefore, demand for cement would remain high. Cement factories were spurring their production to cater to the growing demand. Even stateowned cement maker PT Semen Gresik was now operating at 100% capacity, he said. “However, the vast majority of cement plants are still operating at 80 percent capacity so they still have a chance of fulfilling the surging demand,” he added.

Display until October 12, 2011 /// N0. 27


Three Bidders Fail to Acquire Bank Mutiara


Data from the association show domestic cement sales rose 6% to 40 million tons last year. The association predicts the figure will increase to 44 million tons this year. Domestic cement sales in the seven months through July climbed 15% to 26.8 million tons. However, cement exports plummeted 54% to 677 thousand tons from a year earlier. In total, cement sales rose 11% to 27.5 million tons. Most populated Java island remained the biggest cement market in the January-July 2011 period with consumption estimated at 14.7 million tons, up 18.2 percent from the year before. Sumatra trailed behind in second place with 6.3 million tons.

The President Post

The divestment of the bank can be carried out until 2013 with a minimal price offer of Rp6.7 trillion.


hree investors had failed to acquire the government`s stake at Bank Mutiara after the Deposit Insurance Agency (LPS) which organized the divestment said they did not meet the requirements. The LPS said here on Thursday that the three investors had submitted their confirming letters of interest and other supporting documents. After conduct-

ing a prequalification process of the three would-be buyers, none of the three investors met the requirements based on the criteria set by Bank Indonesia (BI/the central bank). Based on the provision in Article 42 of Law on LPS, the LPS will reopen a chance and to recall a tender for the publicly listed PT Bank Mutiara. The date for the reopening of the tender will be decided later. The tender process of Bank Mutiara which was formally known as Bank Century was started on July 8, 2011, when the LPS announced a bidding process for it assisted by PT Danareksa Sekuritas as its financial adviser.

The divestment of PT Bank Mutiara is carried out based on Law No. 24 / 2004 on LPS (UU LPS). Through the invitation to the tender of PT Bank Mutiara, nine investors offered participation. After PT Danareksa provided them with teasers on PT Bank Mutiara, only three would-be investors filed confirming letters of interest. Based on the UU LPS, the divestment of the bank can be carried out until 2013 with a minimal price offer of Rp6.7 trillion, or equal to the bailout funds the government provided for Bank Century. If LPS fails to sell Bank Mutiara until 2013, the bank can then be sold at any price.

The tender process of Bank Mutiara which was formally known as Bank Century was started on July 8, 2011, when the LPS announced a bidding process for it assisted by PT Danareksa Sekuritas as its financial adviser.


Bank Syariah Mandiri Plans To Issue Rp900b Bonds

The situation of cargo terminal at SoekarnoHatta Airport Jakarta. PT. Angkasa Pura II SoekarnoHatta branch commencing on September 2011 implements the Regulated Agent (RA) to improve aviation security. The whole cargo to be transported in the aircraft must be inspected by the RA.

PT Bank Syariah Mandiri (BSM), a sharia unit of the country`s largest lender, Bank Mandiri, plans to issue subordinated bonds (subdebts) worth Rp900 billion to meet its capital needs. The plan to issue the subdebts, if approved by its parent company, would strengthen its capital adequacy ratio (CAR) which began to decline, PT BSM President Director Yuslam Fauzi said on Thursday. Bank Mandiri had injected Rp200 billion in funds to BSM in two phases with each amounting to Rp100 billion, he said. Urip said if the capital injection from Bank Mandiri was far from enough BSM would issue subdebts. BSM posted a net profit of Rp270 billion in the year ended June 2011, a 36.64% increase compared to Rp197.60 billion in the same period a year earlier. He said the total financing extended by BSM in the first half of 2011 reached Rp30.06 trillion, up by 51.28% percent from the same period last year when the figure was Rp19.87 trillion. As per June 30, 2011, BSM`s unaudited assets surged by 44.49% to Rp38.25 trillion from Rp26.38 trillion a year earlier. He attributed the increase in total assets to third party funds which rose 45.56% to Rp33.96 trillion in the first semester of 2011 from Rp23.33 trillion in the same period last year.

The President Post/Nandi Nanti

Telkom Prepares Thousands of Hot-spots to Access Internet Telekomunikasi Indonesia Tbk. is preparing thousands of hotspots in various locations across the country to help people access internet services quickly. The executive general manager of Telkom Customer Service for Eastern Area, Sukardi Silalahi, said here on Monday the hot-spots would be set up in cooperation with the company`s subsidiaries such as Telkomsel, Speedy and Flexi. “This shows Telkom`s com-

mitment to easing public information access to make the Indonesian people more advanced and smarter,” he said. Sukardi said the development of the hot-spots was also the followup to the “Indonesia Wi-Fi program” launched by the company`s president director, Rinaldi Firmansyah, recently. The setting up of the installations is done simultaneously in different locations by Telkomsel, Speedy and Flexi. “Lat-

er hot-spots belonging to Telkom will be available in various locations which Telkom product users could use them to access internet service,” he said. He said out of around 5,400 hot-spots to be built by Telkomsel more than 516 have already been installed. Meanwhile, 312 Speedy hotspots are operational out of the planned 2,000 to be set up in East Java and Indonesia`s eatern regions.

Flexi Division for East Java area, Bali and Nusa Tenggara have also set up 36 Flexinet hotspots at campuses and shopping centers. “In the future after all are already installed Telkom will apply `a single sign on` upon which Speedy users at home could also access the hot-spots free of charge. This also applies to users of Telkomsel and Flexinet,” Sukardi said.

To support Speedy`s broadband service Telkom through its Infratel Division and subsidiary Telkom International has prepared a band-with capacity of up 100 Gbps. Telkom meanwhile is just finishing the development of more than 47,000 kilometer long optic fiber network from Aceh to Papua under the “Nusantara Super Highway” project.

The President Post

B2 September 12, 2011

Business Hypermart Eyes 25% Sales Growth Matahari Putra Prima had set 25% sales growth for its Hypermart unit during Ramadan and Idul fitri this year. Matahari Putra Prima Corporate Communication Director Danny Konjongian said sales turnover reached Rp7.6 trillion last year and iti is expected to increase to Rp10 trillion this year. “We expect sales to reach Rp10 trillion this year from Rp7.6 trillion last year, up by 25%,” said Konjongian. He said that sales surged 25% during the holy month of Ramadan to a week after Idul Fitri and attributed the surge to sales of favorite Ramadan products such as syrups. He added that that the retailer had prepared stocks since three months ago and increased syrup stock by fourfold. “The company plans to open 22 Hypermart outlets this year that requires between Rp40 billion to Rp50 billion investment, based on the sizes of the outlets,” he said.

Luxury House Prices Rise in Q2 Prices of houses in posh areas in several cities in Indonesia, especially Jakarta, increased by more than 10% in the second

quarter, according to an international survey agency The Knight Frank Global House Market. A report released recently by agency said prices of houses in all major cities in Indonesia rose by 4,5% on average compared to the same period last year. “Indonesia was among the top 15 countries out of 50 countries in the world that were surveyed in the second quarter for price hikes over the past 12 months,” said the report.

with the biggest price increase in Asia Pacific were Hong Kong with 26.5% surge, followed by India 21.3%, Taiwan 12.7%, Singapore 6.7%, China 6.5%, and Malaysia 6.5%. Countries that suffered the biggest house price plunges in the second quarter of this year were Latvia 63.6%, Dubai 49.7%, and United States 32.3%. In Asia Pacific, Japan suffered the biggest plummet with 41.7%, the lowest since the first quarter of 1995.

The report attributed the price hikes to Indonesia’s economy which became more conducive as it was supported by a stable political condition, thus enabling almost all areas in Indonesia to enjoy price hikes. Indonesia ranked 6th among other Asia Pacific nations in terms of the highest house price increases in the second quarter of this year. Knight Frank recorded 0.1% average global price increase in the second quarter with annual growth rate of 1.7%, the lowest price rise since 2009. “House prices in 23 out of 50 countries in the global index showed negative growth in the second quarter,” said the report. However, house prices in Asia posted positive growth amid the sluggish global property market with 8% rise. Countries

Garuda, Lion Enjoy Load Factor Rise Garuda Indonesia and Lion Air saw an increase in their load factor by 27% and 20% respectively during the Idul Fitri holiday compared to the same period last year. Garuda Indonesia Commercial Vice President Agus Priyanto said the total number of Garuda’s passengers from seven days ahead of and six days post Idul Fitri reached 655,576, an increase of 27% compared to last year’s Idul Fitri holiday. Priyanto added that the 27% passenger hike exceeded Garuda’s expectation which expected to see a 15% rise. Priyanto also said that Garuda’s strategy to encourage passengers to conduct city check-in or web check-in turned out to

be effective as it helped prevent passenger pile up at the airport. With regards to its punctuality or on time performance, Garuda claimed it had improved from 85% to 89.4% during 23 August - 6 September 2011 period. Meanwhile, Lion Air President Edward Sirait said the airline saw a 20% passenger hike during the Idul Fitri holiday to 1.2 million passengers. This year Lion Air provided 30,000 additional seats for Idul Fitri. Sirait said the airline’s busiest routes were Surabaya-Balikpapan, Surabaya-Banjarmasin, Jakarta-Yogyakarta, Jakarta-Solo, and Jakarta-Padang. “These routes experienced a significant increase of more than 15% compared to normal days,” he said. Lion Air claimed that its OTP during the Idul Fitri holiday increased to 82% from its initial target of 80%.will result among others from a 20 percent increase in production capacity,” he said. Last year, the company had a production capacity of 3,000 tons which came from its two plants located at Cimareme industrial complex, Padalarang, Bandung district, West Java.

PAL Seeks Strategic Partner PAL Indonesia is looking for a strategic partner to develop its commercial division. The state company is planning to sell 20% of its stake to a strategic partner and has conveyed the plan to the State Ministry of State Enterprises as the shareholder of the company. PAL President Director Harsusanto said recently that as a strategic company, PAL is prohibited from selling its shares to other parties. However, the plan may be

“We will sell 20% of the commercial division to the public to Korea or the Netherlands, for example,” said Harsusanto at the parliament building.

PAL President Director Harsusanto possible in line with the expansion of its commercial division.

PAL management has discussed the matter with the deputy minister but they need to work out the method to realize the plan. The company also continues to develop its core business. PAL is preparing to produce three ships with rudals for Armed Forces.

PT TWC Prambanan, Borobudur and Ratu Boko Ranks High Among State-owned Companies

The President Post/Nandi Nanti

(Billion) Rp






Own Capital



Operating Revenue





Assets Liabilities

Net Profit

PT Taman Wisata Candi (TWC) Prambanan, Borobudur and Ratu Boko has been ranked 24th in the list of 48 state-owned companies compiled by Infobank magazine (Sep 2011). The company manages three major temples that are

SMEs TURNOVER INCREASE: A craftsman is making shoes and sandals. The values of SMEs’ perpetrators in Indonesia rise significantly around 200-300% in recent years due to the rise of consumer trust on domestic product.

located in Central Java. The criteria are growth assets, operating revenue, and net profit, short-term liabilities, solvability, operational cost, and profitability.

remains optimistic about the future prospects of the tourism industry. Until December 2010, the company’s revenue reached Rp 103.14 billion.

Despite a correction in net profit (minus 16.81%), Purnomo Siswoprasetjo, the president of TWC,

The company also won the PATA Gold Award 2011 in the Cultural Heritage category.

The President Post

September 12, 2011 B3

Investment Govt to Boost Local Salt Production New investments in the salt industry are hoped to boost domestic industry’s capability to meet domestic industry and household demand for salt and at the same time reduce the country’s dependence on imported salt.


he government will boost domestic salt production by facilitating investments on new salt plants to reduce import dependence for industry needs. “Currently, almost 100% salt for industries are imported and we want to reduce dependence on imported salt by facilitating investments on new salt plant development,” said Industry Minister MS Hidayat in Jakarta, recently. Hidayat said that several companies are planning to build new salt plants for industry needs, including Cheetham Garam Indonesia, a subsidiary of Australiabase Cheetham Salt, which will build a plant next year in Nagekeo regency, East Nusa Tenggara. “They will cooperate with the local administration for a $21 million investment to build a salt plant on a 1,050 hectare land in Nagekeo. They have already secured 700 hectares of land,” he said. Cheetham will initially produce 300,000 tons of salt per year. Hidayat added that state salt producer PT Garam is also planning to invest on a new salt field in Teluk Kupang, East Nusa Tenggara. The state company previously asked the government to place

Industry Minister MS Hidayat: Several companies are planning to build new salt plants for industry needs, including Cheetham Garam Indonesia, a subsidiary of Australiabase Cheetham Salt, which will build a plant next year in Nagekeo regency, East Nusa Tenggara.

Rp421 billion capital to build a salt field which is expected to produce 345,000 tons salt per year in Teluk Kupang. The new investments in the salt industry are hoped to boost domestic industry’s capability to meet domestic industry and household demand for salt and at the same time reduce the country’s dependence on imported salt. Industry Ministry data showed that domestic salt demand last year reached 2.8 million tons comprising 1.2 million tons of consumer salt and 1.6 million tons salt for industry needs. Total domestic salt demand this year is estimated at 3.4 million tons consisting of 1.4 million tons for household consumption and 1.7 million tons for industries.

Pertamina Upbeat on Completing Senoro Project by 2014 State oil and gas company Pertamina is confident it can complete the Donggi-Senoro liquified natural gas refinery project in Banggai regency, Central Sulawesi, by 2014. Pertamina Upstream Director

Muhammad Husen claimed that both upstream and downstream projects were running well. “Given the progress in both upstream and downstream projects, I am confident we can make our first LNG shipping in 2014,” Husen was quoted as saying by Antara. He acknowledged that the company was still facing problems related to land clearing, especially for the upstream project which will become the site for exploration and production activities. The Senoro gas development project covers development in Blok Senoro-Toili which is operated under a Joint Operating Body (JOB) between Pertamina and Medco and the Matindok area which is operated by Pertamina. Gas from both fields will be processed into liquefied natural gas at the Donggi-Senoro refinery. The Donggi-Senoro project is the first LNG development project in Indonesia that adopted the downstream scheme. The LNG Senoro refinery project will have a capacity of two million tons per year.

East Natuna Block Investment to Reach Rp320t The investment needed to develop East Natuna’s oil and gas block in Riau Islands is estimated at Rp160-320 trillion or $2040 billion. Pertamina Upstream Director Muhamad Husen calculated the value to be above US$20 billion but not more than $40 billion with estimated development period of between 6-10 years and onstream by 2021-2022. Husen attributed the high investment value in East Natuna to the high carbondioxide gas reserve in the block that reaches

71%. The $20 billion investment estimation is the lowest using a scenario that gas production is distributed through pipes to Sumatra or Java to be exported to Malaysia. He added that Pertamina will further discuss the investment development scheme of East Natuna with three other contractors who have obtained cooperation contracts (KKKS) namely Esso Natuna Ltd, Total E&P Activities Petrolieres, and Petronas. The discussion will cover the scenarios for East Natuna development,

gas production and distribution with options to distribute gas through pipes or by building a new LNG plant. “We don’t know whether we will build an LNG plant yet, it depends on the outcome of the discussion,” he said. Pertamina and three other KKKS signed principles of agreement on 19 August 2011 for exploration and exploitation on East Natuna block. Pertamina expects to sign the Production Sharing Contract on 28 October.

JCI IMPROVED BACK: Jakarta Composite Index (JCI) rose 38 points on the accumulation on leading shares by local and foreign investors, particularly in mining stocks that continue soars. Index also gets the positive impact of the improvement of Asian and European markets. The President Post/Nandi Nanti

Food, Beverage Industry Absorbs Highest Investment in H1 The food and beverage industry absorbed the highest domestic investment in the first half of the year, accounting for a quarter of the total investment in the manufacturing sector. Investments in the food and beverage industry reached Rp4,569.1 billion in the first half from 159 projects.

Industry Ministry’s Head of Industry Policy, Climate, and Quality Assessment Agency Arryanto Sagala said foreign direct investments and domestic direct investments had focused on three industrial sectors. “The most dominant were metal, machineries and electronic, food beverage and chemical and pharmaceutical industries,” said

Sagala during a recent press conference. He added that domestic direct investment realization in the manufacturing sector reached Rp18,624.8 billion in the first half. “The biggest was contributed by food and beverage, followed by metal, chemical and pharmaceutical industry,” he said.

Meanwhile, total foreign direct investment in the manufacturing sector reached US$3.25 billion from 871 different projects. “The biggest FDI was made on metal and machineries industries, followed by pharmaceutical and chemical industries and food and beverage industry,” he said.

The President Post

B4 September 12, 2011

Executive Highlights President Yudhoyono announced the government’s draft 2012 budget and macroeconomic assumptions in his state-of-the-nation address to parliament on 16 August. Emphasizing Indonesia’s ability to maintain fiscal resiliency at a time when many countries are facing debt crises, SBY asserted his intention to cut the deficit to 1.5% of GDP in 2012 compared to a projected 2.1% this year. He said the nation’s overall debt level would also be reduced to 24% of GDP from 25% currently. Government spending is projected to reach Rp1,419 trillion in 2012, up 7.4% from this year. Capital expenditures, meanwhile, are forecast to rise 19.3% to Rp168 trillion, including funding for 150km of new railways and 14 airports. Notably, spending for subsidies in 2012 is projected to fall Rp28.3 trillion from this year to Rp209.9 trillion, implying a possible increase in fuel and electricity prices. The subsidies comprise Rp123.6 trillion for fuel, Rp45 trillion for electricity and Rp40.3 trillion for non-energy subsidies like food, fertilizer and social services. 2012 GDP growth is forecast at 6.7%, up from 6.5% this year. Inflation is projected at 5.3%, unchanged from this year; the benchmark interest rate at 6.5% from 5.6% this year; the RpUS$ exchange rate at Rp8,800 from Rp8,700; average oil prices at US$90 per barrel from US$95 currently; and oil production at 950,000 barrels per day versus 945,000 this year.

Finance Minister Agus Martowardojo said new regulations have been finalized for tax holidays and tax allowances in a bid to boost investment. Industries that will be eligible for a tax holiday include base metals, oil refining, petrochemicals and renewable energy. The minister said the project investment also needs to be at least Rp1 trillion to qualify for a tax holiday. The tax holiday will cover a period of five years from the time the project begins commercial operations. According to investment board (BKPM) chairman Gita Wirjawan, five companies have so far submitted requests for a tax holiday: Kuwait Petroleum Corp. (Rp6070 trillion project), South Korea’s steel maker Posco (Rp60 trillion project) and tire maker Hankook (Rp5 trillion project), heavy equipment manufacturer Caterpillar (Rp5 trillion project) and local textile firm Indorama (Rp3-5 trillion project). The new regulations will also expand the business sectors eligible for tax allowances, which reduce the amount of tax stemming from a project. Priority sectors for tax allowances include infrastructure development and projects in remote areas. Companies will need to invest at least Rp50 billion to qualify for a tax allowance.

The rupiah has strengthened to around Rp8,520 to the dollar over the past several days, after falling to a six-week low of Rp8,610 to the dollar in the first week of August amid concerns over the escalating debt crisis in Europe and the U.S. ratings downgrade by S&P. Bank Indonesia governor Darmin Nasution said capital inflows into the country would likely continue following the U.S. federal reserves’ recent decision to keep interest rates near zero through mid2013. The rupiah has appreciated around 5.5% year-to-date, one of the strongest in the region, on capital inflows. Foreign investors have bought a net total of US$2.1 billion in Indonesian stocks yearto-date. Foreign ownership of Indonesian government bonds, meanwhile, totaled Rp241.5 trillion as of 12 August, up 23% yearto-date.

U.S. Energy giant Exxonmobil has awarded a US$750 million contract to Samsung Engineering and local firm Tripatra Engineering to help develop the Cepu block in East Java. The deal marks a milestone for ExxonMobil as the first of five engineering, procurement and construction contracts for work on major facilities at Cepu. The remaining for contracts will likely be awarded before the end of the year. Terry McPhail, president of the ExxonMobil unit operating the block, said with the latest contract the Cepu project was now at a point that development will likely lead to peak production estimated at around 165,000 barrels per day (bpd). He added that that major challenge at Cepu, land acquisition, was also at a stage where ExxonMobil could proceed with full field development. The Cepu block has recoverable resources estimated at 450 million barrels. ExxonMobil has operatorship of the block with a 45% interest, with state-owned oil and gas firm Pertamina owning a 45% stake. The remaining 10% interest is held by four local government companies.

stake in coal miner Golden Energy Mines in a deal estimated at US$500 million. As part of the deal, GMR will be entitled to purchase coal from Golden Energy in a 25-year offtake agreement. Completion of the acquisition is expected before the end of the year. GMR senior executive Raaj Kumar said the deal represented a unique opportunity to invest in a high quality asset with strong growth potential. The acquisition will help provide GMR fuel security for power plants now under construction in India. Golden Energy currently owns four producing and six nonproducing thermal coal concessions in Kalimantan. It has coal reserves estimated at 860 million tons and coal resources estimated at 1.9 billion tons. The miner’s annual coal production is expected to rise to 10 million tons over the coming years. Golden Energy is affiliated with the Sinar Mas Group.

Selected Instant Indicators %

The purchase, worth US$2.2 billion, realizes an MoU signed in June with Airbus. The deal covers 15 standard A320s and 10 of Airbus’ new fuel-efficient A320neos. Delivery will start in 2014. The A320s will be operated by Garuda’s low-cost carrier unit, Citilink, as part of a major expansion plan for the latter. Citilink currently operates a fleet of six Boeing 737-300/400s, two more 737-300/400s due next year. It currently serves 10 domestic routes connecting Jakarta to Surabaya, Denpasar, Medan, Banjarmasin, Balikpapan and Batam, and routes connecting Surabaya to Balikpapan, Banjarmasin and Makassar. Citilink has plans to expand domestic services to eastern Indonesia and add short-haul routes to Malaysia, the Philippines, Thailand, Singapore and Australia. The low-cost airline aims to carry more than eight million passengers over the next several years from two million passengers currently.

The bank consortium was led by Bank CIMB-Niaga, HSBC Indonesia, Bank Permata and Standard Chartered Bank. The facility comprises a three-year, US$500 million loan for working capital and US$100 million in investment credit. Kirana has the option of upsizing the facility by an additional US$200 million. The company will use the funds to expand 14 existing rubber processing facilities and build six new facilities by 2013. The expansion is aimed at boosting Kirana’s output to one million tons per year from 550,000 tons currently. Kirana is owned by Teddy Rachmat, a former Astra International president director who has business interests in mining and palm oil. The company supplies a range of major tire producers including Bridgestone, Michelin, Goodyear, Hankook and Kumho.

in Bekasi. The state power utility will provide the electricity under its special premium contract. Under this premium contract, Hankook will pay Rp745 per kilowatt hour (kwh) compared to an average Rp605 per kwh for PLN’s standard industrial clients. In return, PLN will compensate Hankook for any electricity outage. PLN president director Dahlan Iskan said the company would be investing Rp200 billion in new equipment to support its contract with Hankook and expand its premium services. He said PLN would start delivering an initial 30 MVA to the South Korean tire maker by March 2012, with the remaining 30 MVA to be provided by August 2015. According to Dahlan, 27 major companies have signed up for PLN’s premium services, including cement producers Semen Gresik and Holcim and steel maker Krakatau Steel. PLN began introducing its premium services to business clients last year to deal with rising costs.

PLN has signed Rp5.5 trillion, 20-

National carrier Garuda Indonesia has finalized its purchase of 25 Airbus A320 aircraft.

Top rubber producer Kirana Megatara has secured a US$600 million loan facility from a syndicate of 12 banks.

year deal with South Korea’s Hankook Tire to supply up to 60 mega volt amperes (MVA) to the latter’s manufacturing facility


Index* 2000=100

By Quarter

Year on Year 8

















95 07 06


09 10





Q2 Q4







Q3 Q2













General Food WPI


105 104.6 102

The bank syndicate was led by Bank Mandiri and also included Bank Central Asia (BCA), Bank Rakyat Indonesia (BRI), and regional development banks BPD Kaltim and BPD Jabar Banten (BPJB). The loan, which includes a rupiah-denominated portion and a dollar-denominated portion, will have a 10-year term and a threeand-a-half year grace period. Pupuk Kaltim president director Aas Asikin Idat said the new facility, known as Kaltim-5, will have an annual production capacity of 1.2 million tons of urea granule and 850,000 tons of ammonia. Construction of the facility is scheduled to start before the end of the year, with commercial operations slated for 2014. The fertilizer will be fueled by 80 million cubic feet of natural gas per day supplied by gas producers such as Pearl Oil, Total ERP Sebuku and Inpex South Makassar.

State miner Aneka Tambang (Antam) has mandated seven financial institutions to help arrange US$1 billion in funding for a ferronickel smelter in North Maluku. The financing consortium comprised Bank Mandiri, Bank Rakyat Indonesia (BRI), Mandiri Sekuritas, Goldman Sachs, Deutsche Bank, Sumitomo Mitsui Banking Corporation and Standard Chartered Bank. The cost of the smelter is estimated at US$1.6 billion, and Antam president director Alwin Syah Lubis said the firm would also issue bonds to help fund the project. He said the ferronickel smelter was a strategic project for the company as it would enhance the value of the miner’s nickel reserves through processing. The smelter will have a production of 27,000 tons per year. Alwin said he expects to start construction of the project before the end of the year, with commercial operations slated for end-2014.

99 J 10





Jan 11




Mar Apr M




EXPORT AND IMPORTS (US$ Million) Exports Imports

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0








Dec Jan 11


Mar Apr May Jun 2011

*Q4 2000=100


Sumatran Light US$/barrel

Mal$ per metric ton 4,250



108 103

3,750 $96.0

98 93

3,500 3,250

88 M$ 3,100 3,000

83 $78.36 78

Indian infrastructure group GMR has entered an agreement to acquire a 30%

State fertilizer manufacturing plant producer Pupuk in Bekasi, West Java. Kaltim has secured a The facility will have a production syndicated loan worth capacity of 50,000 vehicles and function as a manufacturing Rp4.4 trillion to help will hub for GM’s Southeast Asia marMartin Apfel, GM’s president fund construction of ket. for Southeast Asia, said the decia major new facility in sion to invest in Indonesia reflected the country’s favorable growth East Kalimantan. trajectory in terms of market eco-


Crude Oil-LHS Palm Oil-RHS





2,250 J







Jan 11


Mar Apr M 2011



General Motors (GM) is investing US$150 million in reopening a

nomics, market dynamics and demographics relative to other countries in the region. The company is scheduled to start production of a seven-seat “people mover” van by 2013 to reestablish its presence in an Indonesian market dominated by multi-purpose vehicles. GM Indonesia chief executive Marcos Purty said the firm may also introduce GM trucks in the coming years. GM sold 2,500 vehicles in Indonesia in the first half of the year, up 18% y-o-y. Sales jumped 72% y-o-y to 4,500 vehicles in 2010.

Global consumer goods giant Procter & Gamble (P&G) began construction of its first manufacturing facility in Indonesia. The plant, worth an estimated US$100 million, will produce P&G’s popular baby diapers brand Pampers. The facility will be located in Karawang, West Java. Mohamed A. Ismail, president director of P&G Home Products Indonesia, asserted that baby care products would be a key driver of growth for P&G in the country. He noted that Indonesia had one of the world’s largest baby populations, with 12,000 babies born every day and with an estimated 17 million babies currently aged 48 months or younger. The firm said the plant would begin commercial operations in early 2013. Regi Aalstad, P&G vice president for ASEAN, Australasia and India, said the new facility would cater mostly to Indonesia’s lucrative domestic market but would also be set up to serve the regional market.

Consumer foods maker Tiga Pilar Sejahtera Food has acquired Taro snack brand from Unilever Indonesia in a Rp200 billion deal. Under the agreement, Tiga Pilar will also get production facilities located in Gunung Putri, Bogor and Medan, North Sumatra. Tiga Pilar corporate secretary Yulianni Liyuwardi said the acquisi-

tion of Taro Snack was a strategic move given that the brand targeted mainly middle and upperend consumers. Tiga Pilar’s main products like Ayam 2 Telor noodles and Gulas candy currently cater to middle and lower-end consumers. Unilever Indonesia corporate secretary Sancoyo Antarikso said the divestment of Taro Snack was in line with the parent company’s global portfolio of products, where food snacks was no longer part of the composition. He said the divestment would not have a major impact on Unilever Indonesia revenue given that Taro Snack contributed less than 2% of the firm’s overall sales.

Global real estate firm Jones Lang Lasalle (JLL) has acquired local property consultant Procon. No financial details were provided. The combined firm will make it the largest real estate services company in Indonesia. JLL country head Todd Lauchlan asserted that the decision to acquire Procon was driven by the long-term prospects of Indonesia’s real estate market. He said there were significant opportunities in Indonesia, and noted that a number of JLL’s global clients, including major oil and gas, banking and consumer goods firms, were focusing aggressively on the country. According to JLL, this has led office rent to grow faster than any place in Asia excluding Beijing. Lucy Rumantir, the president of Procon who will serve as chairwoman of the new merged firm, said the deal would provide JLL with substantial local expertise that would enable it to better penetrate the domestic property market.

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

The President Post

B6 September 12, 2011

Property Tips on Buying into an Under-construction Project

It’s ‘Old World’ versus ‘New World’ on Overseas Property Investment London has the highest rents and Mumbai the lowest out of the top 10 cities in the new ‘World Class Index’ of premier global residential property locations recently published by international real estate adviser Savills. The top five most expensive rental cities are London, Paris, Hong Kong, Tokyo and Singapore, where demand is fuelled by domestic, as well as corporate demand as would-be purchasers are pushed into the rental sector due to credit restrictions. Rents have moved, on average, across all cities at a slower pace than capital values, thereby suppressing yields.

Buying into an under-construction property can have its advantages but also involves significant risks, says Santhosh Kumar, CEO of Operations, Jones Lang LaSalle India. Advantages/Disadvantages The primary advantage would be that an under-construction property will invariably come cheaper than a ready-for-possession property. Depending on the stage of construction and also the response that the project has already elicited from other buyers/ investors, the rates can be from anywhere between 15-30% lower. Also, its value often appreciates even if it is not completed. It is incorrect to assume that property value may not appreciate while it is being developed. It has been observed in a number of cases that property prices usually appreciate once they are nearing the phase of completion. This aspect is usually inherent to the property, and is attributed to the stage in its lifecycle. The market is likely to read a lesser risk in a project nearing completion. Consequently, it may be willing to pay a slight premium on account of this aspect. Therefore, it can make a lot of sense to invest in a under-construction property by a credible and reputed developer. The primary disadvantages would be that the property cannot be immediately used for occupancy or renting out, that one’s money is locked into a non-performing asset and that there may be delivery delays or sometimes even defaults. that can have serious financial repercussions.

What To Check Before Buying An Under-Construction Property To begin with, if one is buying into an under-construction project, the developer’s bona fides and market standing should be carefully researched and verified • A buyer is entitled to ask for a copy of the project’s drawings, duly stamped by the municipal authorities • Locations should be chosen for future appreciation potential • Check on option to choose a construction linked payment plans, which are usually structured on a project-to-project basis

Changes In The Original Development Plans Certain necessary changes are usually permitted and also mentioned in the agreement. Once actual construction begins, there may be grey areas on the blueprints that come to light only later. Sometimes, this may involve new regulations with regards to parking space or other aspects beyond the developer’s control.

Failure To Hand Over The Property On Time There are certainly such incidences, as can be expected in a largely disorganized market. Generally, reputed builders deliver on time and as per promised specifications. Small developers, however, often default by stretching

The President Post/Nandi Nanti

their projects beyond the promised delivery date – sometimes by as much as a year or more. Often, this is caused by funding issues. They may also skimp on construction costs, banking on the buyer’s ignorance of quality parameters. Sometimes, the drawings they submit to the municipal authorities are not sufficiently detailed, leading to nonapproval of their projects. There are also fly-by-night operators who pocket their clients’ up-front payment and then disappear altogether.

utations to protect. The incidence of gross defaulting on promises there is less than 10%. It can, however, be as high as 15-20% in emerging suburban areas because there is a fairly large incidence of small developers. Many developers who respond to sudden property booms in suburban areas are simply traders who are putting up the only project they ever will in their entire lifetimes. They have no experience or technical knowledge and often do not have banks backing them. Most emerging suburbs are also defined by unclear land titles.

Most developers operating in city centres are well-established and experienced players with rep-

• A prospective buyer should check into the developer’s credibility, past projects and perfor-

mance and delivery record • The buyer is perfectly entitled to ask for copies of all necessary permissions prior to making a financial commitment • He should also ensure that the project is funded by a known bank and that the project has all the correct approvals. If there is any reason for initial doubt, conducting a property purchase through an attorney qualified and experienced in handling real estaterelated issues is certainly advisable. Source: Property Report

There is an old world/new world difference in the growth of rents but it is not as pronounced as with capital values. This highlights that strong capital-growth-motivated investment activity is driving capital values in the ‘new world’ and means that yields are moving in much faster in these cities. In consequence, it could be argued that there is a stronger case for rental-returnmotivated investment in the cities of the ‘old world’. The Savills Research says a clear gap can be seen between what might be called the ‘old’ economies of Tokyo, London, Paris, Sydney and New York - which grew by 32% since 2005 - and the ‘new’ or emerging economies of Shanghai, Singapore, Hong Kong, Moscow and Mumbai. These economies grew, on average, by 123% over the same period. Within the ‘old world’ the more cosmopolitan cities have fared much better than those that restrict foreign purchasers. It becomes apparent that the debt-induced crisis of 2008 was suffered most by the ‘old world’ cities and not the ‘new world’ ones,” said Yolande Barnes, head of Savills Residential Research.

“The biggest ‘old world’ value rebounds have been experienced in the cities most open to new world investment, notably London and Paris.” A shift has occurred in the global real estate premier league since 2005 according to Savills. Hong Kong remains the most expensive and values are now 107 percent above the 10 cities index average, and 63% more expensive than second place London, which is grouped alongside Tokyo, Singapore and Paris. Singapore has seen growth over the last five and a half years at 123% cent, so it has come up the ranks from 7th position in 2005 to fourth in 2011 At the other end of the scale, Mumbai is the least expensive world class city, costing 43% less than the average of all the 10 cities. But it is the great pretender having grown by 154% off this low base, and recording the highest rate of growth over the period, - marginally ahead of Shanghai’s 143%. Barnes concluded: “Increasingly, our cities have more in common with each other than with the domestic, mainstream markets in which they operate. Their future performance will depend upon their continued appeal as places to live and work as well as to invest. “Meanwhile, ‘old world’ cities like Tokyo and Sydney are geographically very well placed to benefit from investment from frustrated Chinese and other Far Eastern investors but they will need to open up their markets to such investors to trigger this. “It seems likely that, for wealthy, globally-footloose investors, prime residential property in London and Paris will remain a favoured safe haven for wealth created in the ‘new world’ economies.” Source: Fly2let™

The President Post

September 12, 2011 B7

Technology Mislicensing and Misversioning of Softwares Equal to Use of Illegal Software Many computer users in mature or developing countries are unaware that the software they use are not genuine and can be categorized as illegal software.


he term software piracy is commonly considered as the act of buying or using pirated or counterfeit software. However, not purchasing pirated software does not guarantee the software to be legal and genuine. According to Business Software Alliance (BSA) in 2010, many computer users in mature or developing countries are unaware that the software they use are not genuine and can be categorized as illegal software. Then, what defines genuine software? Genuine software is the software that is officially published by its developers, has a proper license and also supported by its developer. This term is often misunderstood by the users and usually happens when customers purchase software in bulk of amount or known as Volume Licensing (VL). Volume Licensed customers consider it legal to install a software product in a naked computer or in a computer equipped with a different operating system. Despite this ignorance, it is actually considered as the use of illegal software or called ‘mislicensing’. On the other side, ‘misversioning’ is misconduct when users are

upgrading their computers which are already equipped with a particular operating system software, with a non-qualified version. Sudimin Mina, Anti Piracy Lead from Microsoft Indonesia, is aware that the public does not understand and is not familiar with the term ‘mislicensing’ and ‘misversioning’. “Misversioning occurs when a customer purchases a low-end product that is a nonqualified version, for upgrade purpose, using their VL agreement. For example: purchasing Windows 7 Home Basic and upgrading to Windows 7 Business. These licensing terms are covered in the Product List that governs VL agreements,” he added. Sudimin also explained that many enterprises consider it legal to make changes on their computer units, since they own Microsoft license through Volume Licensing Agreements. This act includes installing an operating system on a naked PC, even though the operating system license is different from the upgrade license included in the agreements. Ideally, every PC should have a Certificate of Authenticity (COA) before an upgrade version is installed although it is covered in the Windows Volume Licensing. “Mislicensing is underrated,

5 Important Facts About g Microsoft Windows Licensin 1. 2.

Each PC needs its own full license

ows desktop software Volume Licensing agreements cover Wind upgrades only version of Windows are two ways to legally buy the initial full 3. There for a new PC : facturer • Pre-installed on a PC through a PC manu Full Packaged Product • As boxed software, also known as a (FPP) from a retailer. agreement can’t ercial customers with a Volume Licensing 7 Professional ows Wind or ess 4. Comm Busin Vista upgrade to Windows ows 7 Home Premium. from Windows 7 Home Basic or Wind esses and don’t count as Windows Home aren’t designed for busin e Licensing upgrades. qualifying operating systems for Volum ons available to help soft has a portfolio of legalization solutiPCs. Pre-installed ng existi for ows 5. Micro Wind customers get genuine ze existing PCs. (OEM) licenses CAN’T be used to legali

even though it is actually categorized as the use of illegal software, and needs a thorough education in order to prevent this type of practice from happening again in the future. Using counterfeit or improperly licensed software puts your organization’s systems and intellectual property at a serious risk,” he added. In order to legalize a PC which has been equipped with counterfeit, pirated, illegal, or unlicensed software, Microsoft provides The Get Genuine Kit which can be found in official Microsoft resellers. The resellers will help to determine if The Get Genuine Kit is suitable for the PC.

On the other hand, by using the genuine and fully-licensed software, customers will be guaranteed to benefit from the usage of all software features, options and necessary capability, in order to maximize productivity. Other than that, it provides protection from Trojans, spyware and other dangers that come with counterfeit software. Customers can also enjoy a wide access to important updates, product enhancements, technical supports and many more.

nesia the country with the highest rate of software piracy (87%) in Southeast Asia in 2010, according to Business Software Alliance (BSA) report. The most common way people in developing countries engage in piracy is to buy a single copy of software and install it on multiple computers, including in offices, where software is highly valued. Nearly half of PC users (45%) assume it is legal to install software lent to them by a friend or co-worker.

Lack of education, especially on the various terms of pirated and illegal software, has made Indo-

“A thorough education from all parties, including government, law enforcers, intellectual proper-

ty owners and other related parties, as well as users, is needed to create a better understanding about the use of illegal software in all kinds and forms,” said Representative and Spokesperson of Business Software Alliance (BSA) Indonesia, Donny A. Sheyoputra. ”However, besides education, awareness is also important, in which legal regulations play a truly essential role in Indonesia to reinforce the use of legal software. In addition to protect intellectual property owners, law enforcement is also expected to give a deterrent effect for those who broke the law while also reducing the use of illegal software.”

A thorough education from all parties, including government, law enforcers, intellectual property owners and other related parties, as well as users, is needed to create a better understanding about the use of illegal software in all kinds and forms.” Donny A. Sheyoputra Representative & Spokesperson of BSA Indonesia


The President Post


Display until October 12, 2011 /// N0. 27




Komodo Island

Indonesia’s 100 Wonderful Destinations As Recommended by PATA In the past, travelling to Indonesia was driven by the world’s largest archipelago’s natural beauty. Today, cultural attractions will attract millions of visitors as hundreds of sultans and kings feature every angle of their regions’ cultural charms to international tourists.

By Gresya Natalia


nternational tourists will, in the not-so-distant future, have a longer list of attractive destinations to visit—thanks to an aggressive tourism industry expansion taking place in Indonesia these days. In fact, the Indonesia Chapter of Pacific Asia Travel Association (PATA) has recommended up to 100 wonderful destinations that have for so many years eluded the attention of uninformed tourists. In the past, travelling to Indonesia was driven by the world’s larg-

est archipelago’s natural beauty. Today, cultural attractions will attract millions of visitors as hundreds of sultans and kings feature every angle of their regions’ cultural charms to international tourists. Apart from natural and cutural beauty, Indonesia is getting increasingly popular as a good destination for global business leaders, scientists, and the educated community at large to visit, given its fast transformation into a peaceful democracy—the world’s third largest after India and the United States. That democratic status has

earned Indonesia the reputation of a peaceful tourist destination, because the fast expanding civilian society gives bigger room now for preservation of human rights, which is another good reason for international tourists to feel secure travelling in this vast archipelago. These encouraging developments provide reason for Chairman of the Indonesia Chapter of PATA, SD Darmono, to be optimistic about the country’s ability to attract more than 20 million international tourists annually by 2020, way above the current average of seven million. He exspects

an average 15% increase per annum through 2020. “This target is within our reach and we are optimistic about it,” Darmono said during a recent interview with The President Post. “Indonesia is preparing 100 destinations by reviving the attractions of local cultures through sultanates and kingdoms.” A Japanese businessman contacted this week by The President Post greeted the idea with enthusiasm. “This should have taken place many years ago. Many people know only Bali, but now you said there will be 100 other destinations like Bali. So I think this

is good for tourists, including from Japan where we have high respect for cultural activities.” Darmono himself is opimistic about Indonesia’s ability to transform itself into the largest tourist paradise in this part of the AsiaPacific region in the not-so-distant future, given the fact that 150 kings and sultans are determined to raise the country’s tourism profile on the global map by reviving the charm of historical relics and cultural activities. Darmono recalled an opinion poll in Perth, Western Australia, which concluded that many Australians said they had visited Bali



����������������������� �������������������������������


several times but had not been to Indonesia yet. That is not the only instance of misperception about Indonesia being a tourist destination. The writer was in Sydney a few years ago when a shopowner said she and her husband would “travel to Bali in spring and from there we will stop over in Indonesia on our way to Thailand.” Darmono says “such stories will no longer be heard in the future because these kings and sultans are determined to promote their respective local cultures on the global stage.” continue to page C2

The President Post

C2 September 12, 2011

Tourism How to Return Lost Opportunities in the Tourism Industry With more than 17,000 islands, the world’s largest archipelago—Indonesia—should have become the number one maritime tourism paradise. That isn’t the case—as yet. Surprisingly, Indonesia loses out against smaller neighboring countries in terms of tourism charms. By Widya Sanjaya


Indonesia last year attracted only half of the number of foreign tourists Malaysia did 10 years ago. Malaysia was able to draw in more than 15 million tourists that contributed $10 billion in revenue while Thailand attracted 12 million tourists and garnered $8 billion in foreign exchange. Over the past couple of years, both Malaysia and Thailand have seen tremendous increases in the number of foreign tourists and their spendings. Malaysia allocated $150 million while Thailand gave out $200 million for overseas promotion alone. Thailand went so far as to use then Prime Minister Taksin Shiwanatra as the primary icon for overseas television commercials, billboards, and print media ads, including in TIME magazine. Malaysia aggressively campaigned across Asia including placing ads in Indonesian mass media and billboards in strategic places in Indonesia’s big cities. Jakarta’s Glodok and Kelapa Gading malls were dominated by

“Visit Malaysia Year” billboards at a time when Indonesia was not doing enough to address the onslaught. As a result, great numbers of Indonesian students and migrant workers flocked to Malaysia while Indonesian tourists put Malaysia high on their priority destinations list. Tourism campaign is but one of the many factors that boost a country’s tourist attractions. Another important factor is domestic stability. Malaysia has not become the target of Al-Qaeda-related terrorist bombs even though bomb experts such as Noordin M. Top and Dr. Azahari—both have been killed—were Malaysian nationals. Their involvment in a series of bomb blasts in Indonesia has seriously downgraded Indonesia’s tourism rating, but their own country’s image in the eyes of international tourists has remained unaffected. Another factor that determines a country’s tourism charm is the factor of collective awareness toward the importance of social stability. In Mayalsia and Thailand, people are well aware that social instability endangers small and

medium-scale businesses because many of them rely on tourist arrivals. This is the reason why even on the grass-root level, social stability is well preserved. For instance, in Malaysia and Thailand, you can see even female tourists go shopping alone at traditional markets without being haunted by robbers and pickpockets. International tourists are assured—and they experience it— that anywhere they go, they will be safe. The government and security apparatus will take very stern measures against any element in society that disturbs security and order. Such a situation is very rare in a country like Indonesia, which has yet to be taught that such a phenonemon is much more powerful than any message in the mass media. The government allocated $13.7 million for overseas marketing and promotion activities including millions of dollars for TV commercials on CNN and BBC. However, the main issue is not that Indonesia has not done enough, but that others have done more and have done so more aggressively. A lesson we can learn from tourism development in Malaysia and Thailand is that in those two countries, tourism development has become a need even on the grass-root level. In other words, it is not just a duty of the government but it is a need of the society to develop tourism; thereby people have a sense of ownership toward tourism development programs.

A lesson we can learn from tourism development in Malaysia and Thailand is that in those two countries, tourism development has become a need even on the grassroot level. In other words, it is not just a duty of the government but it is a need of the society to develop tourism; thereby people have a sense of ownership toward tourism development programs.

Indonesia’s lack of awareness over these facts have caused the country millions of dollars in lost revenue. The lost opportunities need to be brougt back and there are any ways to do it, according to tourism analysts. The following are some of the efforts Indonesia can make to regain the lost opportunities:

Bali.” In the 1990s Joop had actually launched a massive campaign to promote other tourist destinations across the archipelago in order to balance out the charms of Bali. The idea was excellent but it lacked support from other government departments. Today, however, according to the perception of many tourists abroad, even in Australia Bali remains as a “beautiful paradise near Indonesia.” People overseas know Bali better than they know Indonesia as a country.

First, set up a joint plan to synergize the action plans of different government ministries. For instance, in order to boost tourist arrivals, there must be tourist attractions. These attractions are not only in the form of tourist destinations like nice beaches and restaurants, but cultural activities and supply of local souvenirs. That would involve millions of small and medium scale businesses that provide various products and services. So the Ministry of Industry, the Ministry of Cooperatives and SMEs, and the Tourism and Culture Ministry need to cooperate on a joint plan to encourage production of more attractive tourism programs, events, products, and services. For these to run well, they need to involve the local governments especially the turism offices on district or mayoralty level.

Given the fact that Indonesia’s tourism industry promotion is heavily centered on Bali and a handful of cities on Java, other potential destinations in Sumatra, Kalimantan, Sulawesi and the eastern islands are somewhat neglected. Consequently, small and medium-scale businesses that rely on income from selling tourism-related products and services have difficulty growing in islands other than Bali. Third is the issue of social and poilitical stability—not as perceived by Indonesian government officials, but as perceived by international travellers. Certain places in Indonesia may be considered stable and safe by Indonesian governent officials, but such may not be the perception of tourists wishing to enter Indonesia who are fed daily with reports about the country.

Second is the issue of equitable distribution of tourism development. The biggest problem in Indonesia that has remained untouched for more than two decades is the inability to promote what former minister of tourism Joop Ave called “The Other Side of

Even the slightest bit of information that arouses suspicion to-

ward social stability could divert tourists to other destinations in Asia. On the contrary, if tourists feel that their destination, though being a foreign country, is as comfortable as—or better, more comfortable than—their home country, they would prolong their stay here. So the next duty of the Ministry of Tourism and Culture is to study the characteristics of tourist attractions in foreign countries and encourage development of better attractions in Indonesia. In this way Indonesia can compete with those countries because it has many things to offer that those countries do not have. This should include development of “beyond-nature” tourism such as educational tourism, convention tourism, religious tourism, historical tourism and others under which tourists would flock into the country for purposes other than being attracted by natural beauty of the archipelago. Tourism analysts believe that Indonesia has a treasure trove of tourism potentials yet to be developed in the years ahead. What is needed now is better cordination among government departments to increase the country’s charms while encouraging small and medium-scale businesses to grow as supporting elements. How soon this will become reality depends largely on the amount of priority the current government gives to this potential sector.

Indonesia’s 100 Wonderful Destinations

from page C1 And now that Indonesia has decentralized its government power down to regency level, the regents in those 497 districts and regencies will support the cultural tourism campaign in an effort to raise people’s wellfare level. With kings, sultans, and local government leaders working together, while business actors investing aggressively in this sector, the Indonesian tourism sector is well on track not only to become a prolific revenue generating machine, but an industry that will expand endlessly. As the largest tourist paradise in Sotheast Asia, Indonesia is offering a good array of destinations international tourists can bookmark now. Some of them are as follows: Aceh: The regency on the northernmost tip of Sumatra island has for centuries been recognized for its historical charms including the epic war against Dutch occupation forces which saw Cut Nyak Dhien leading a fearless battle against the Dutch for 25 years following the death of her husband Teuku Umar. Aceh

is also known as the Mecca of Asia. One of Aceh’s best attractions is the Saman Dance which symbolizes unity of thought, words, and deeds. This dance is often performed in international events and has even been learned by students in Singapore, Malaysia, Australia, and Europe. Nias: This tiny regency off the western tip of North Sumatra is famous for its so-called Lompat Batu or “stone jumping” skill. Male residents must be able to jump over a pile of stones of about two meters high before being acknowledged as adults. The population here is a mixture of Malay, Japanese, and Indochinese ancestries, quite a distinction from that in the rest of Sumatra island. Nias’ pristine beaches and very clean coasts are indeed worth visiting. Its exposure to the Indian Ocean makes adventure here more exciting. North Sumatra: This is home to one of Indonesia’s largest tribes, the Batak. Given its proximity to neighboring countries, the province is also a good internationl

gateway which has over the past decade seen tremendous increase in the number of international visitors, including tourists, businesspersons, and people from other professions. This province is as popular as its world-famous Lake Toba. The Batak tribal rituals are always a good attraction for international tourists. Souvenirs you can buy here include traditional sarongs which are beautifully handwoven, and are commonly used as part of traditional marriage rituals. West Sumatra: This province is very rich in a mixture of Malay and Islamic traditions. The major tribe and tradition here is called Minang. Its natural beauty, cultural relics and performances, martial arts—especially pencak silat—and even food are famous everywhere, including the Padang restaurants you can find in almost every corner of the country. This major tribe embraces a matrimonial tradition due to which respect for women is very high and well preserved.

known for its natural fertility including white beaches and—in recent years—pachydermic attraction. Lampung has an “elephant school” where the pachyderms are trained originally by trainers from Thailand and now by Indonesian instructors. The elephants once attracted world attention when they were deployed in the opening

Space is too limited to describe every one of the 100 wonderful destinations in Indonesia today. But for sure, you will soon find “the other side of Bali” namely other such beautiful places to visit that have skipped the attention of many for so long.

Lampung: Here is a place

ceremony of National Games. Two teams of elephants were playing soccer and in the midst of cheers from enthusiastic spectators, the goal keeper of the losing team, apparently upset by what it saw as an unfair decision by the referee, angrily pulled down the goal posts and walked away.

attracting a good number of international tourists ever since it was launched some time ago. Its firstclass hotel and recreational facilities including sailing club and related activities are now the talk of the town, especially among foreigners wishing to get a different atmosphere of the Indonesian paradise.

South Sumatra: This was the seat of the former Sriwijaya Kingdom which covered all of Southeast Asia and even beyond. Palembang, the provincial capital city, still stores thousands of historial relics and objects worth seeing. This province is famous for a mixture of local and Chinese cultures from food to dress, dances to songs. The main theme of traditional weaving still reflects royal tradition of centuries ago with red and gold the dominant colors. This region is famous for traditional dances and food. This is a place where you can eat submarines—well not the battle ship under the sea, but a special dish locally known as “mpek mpek.” Tanjung Lesung: This newly developed tourist resort on the western tip of West Java is surprisingly

Komodo Island: Though the govenrment has withdrawn the candidacy of Komodo Island from the race of new wonders of the world, this unique island on the western tip of Flores remains a powerful magnet attracting international tourists. This island of the dragons is winning the hearts of many. An increasing number of global visitors including scientists are still wondering how on earth have the ancient animals managed to survive and reproduce when other ancient animals such as dynosaurus have all disapeared. Morotai: Little do people know that this group of islands was chosen by Commander of U.S. Pacific Fleet General Douglas McAr-

thur as the basis for Allied Forces to liberate Mindanao in southern Philippines after his forces defeated the Japanese and controlled North Maluku in September 1944. The military airbase is still there and will now be turned into an international airport to become the main gateway for the Pacific region. In 2012 the government will organize Sail Morotai festival where hundreds of sailing boats from many countries in participate. This international event is expected to draw in a countless number of visitors. Space is too limited to describe every one of the 100 wonderful destinations in Indonesia today. But for sure, you will soon find “the other side of Bali” namely other such beautiful places to visit that have skipped the attention of many for so long. But should you need further information, please feel free to visit the website of PATA, or that of the Indonesian Ministry of Culture and Tourism. In the next edition, we will publish more stories on Indonesia’s 100 wonderful destinations.

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The President Post

September 12, 2011 C3

Tourism Is ACFTA Really a Threat? More than a year after ASEAN-China Free Trade Area (ACFTA) went into effect, Indonesian tourism authorities are wondering whether local travel agents can compete in their own market. But while officials are worried about it, the operators are making money. By Widya Sanjaya


The regional free trade arrangement that came into effect on Jan. 1, 2010 opened up to 49% of the travel industry to foreign business institutions to operate inside Indonesia. That is enough to facilitate foreign travel agents to establish offices in Indonesian cities and towns. In the process, local travel operators will find it hard to compete for lack of capital and network. Sapta Nirwanda, the director general for tourism marketing, says this situation “must be approached carefully but seriously,” to ensure the survival of local travel oprators and at the same time comply with the ACFTA agreement. He says, “ACFTA means the market is opened wide. If our travel industry cannot compete, foreign travel operators will step in deep into our regencies.” Availability of human resources and investment capital will become a problem, he says, but an influx of foreign travel operators especially in regencies may pose a serious challenge to local operators who lack experience and network. Indonesian travel operators focus more on domesitc rather than overseas travel. This is why their existence could

be threatened when foreign operators stream in to compete right there with better experience, the official argues. To overcome the problem, the official proposes that the travel industry paradigm be changed to focus not on domestic but on overseas travel. He suggests that Indonesian operators need to look at the region with well over 2 billion people (580 million in ASEAN alone) as a huge market with numerous opportunities to tap and not just stay home worrying about foreign competitors threatening their existence. There are myriad opportunities you can tap within the CAFTA region, the official says, urging local travel operators to find new market niches abroad. “I want to see our travel operators market their packages in Malaysia, the Netherlands, Germany, Italy and France,” he says, adding the globalized world requires a more sophisticated approach to business. ACFTA’s initial framework agreement was signed on Nov. 4, 2002 in Phnom Penh, Cambodia. This is the world’s largest free trade area in terms of population and third largest in terms of nominal GDP. ASEAN members and the People’s Republic of China had a combined nominal gross domestic product of approximately $6 trillion in 2008. In that year

the free trade area had the third largest trade volume after the European Economic Area and the North American Free Trade Area (NAFTA). While members of ASEAN have a combined population of more than 580 million, Indonesia accounts for more than 40 percent of the group, and its people have voiced the greatest amount of opposition to the agreement, fearing inability to compete. One may still remember that several days following the implementation of the free trade scheme, Indonesia announced plans to renegotiate tariffs on 228 product categories. In exchange, it would accelerate implementation of the agreement on 153 categories. The People’s Republic of China first proposed the idea of a free trade area in November 2000. Following that, between 2003 and 2008, its trade with ASEAN grew from $59.6 billion to $192.5 billion. China is also the world’s largest exporter. The overall scheme of this free trade agreement reduced tariffs on 7,881 product categories, or 90 percent of imported goods, to zero starting from January 2010. This reduction took effect in China and the six original members of ASEAN: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The remaining four countries will follow suit in 2015. The average tariff rate on Chinese goods sold in ASEAN countries decreased from 12.8 to 0.6 percent on Jan. 1, 2010 pending implementation of the free trade area by the remaining ASEAN members. Meanwhile, the average tariff rate on ASEAN goods sold in China decreased from 9.8 to 0.1 percent. The six original ASE-

AN members also reduced tariffs on 99.11 percent of goods traded among them to zero. The tourism sector, meanwhile, is among the first to be affected by this regional arrangement. But rather than complaining about inability to compete, ACFTA signatory governments have seen tremendous surge in many areas from trade to industry and the services sector. The right way for Indonesian business actors to look at ACFTA is that this is a huge market one must grab quickly before others do. There is no turning back.

prefer to travel abroad for holidays and various other purposes. dent during the just-ended Ramadan celebration. The Australian Immigration office in Jakarta reported that it had issued more than 16,000 tourists visas for Indonesians to spend the Ramadan holiday in Australia. Imagine how many Indonesians travelled to Asian coutries, Europe, the Middle East, and the Americas! One estimate put the total number of Indonesians travelling abroad during Ramadan at 120,000. Imagine how much they contributed to foreign airline companies,

The right way for Indonesian business actors to look at ACFTA is that this is a huge market one must grab quickly before others do. There is no turning back.

Indonesia still has enough time to improve its performance before the five other of ASEAN member countries join ACFTA in 2015. There is a lot going on in the private sector that does not get published by the local media. But Indonesia’s SMEs are bagging bigger revenues from increased exports inspite of worries from government circles. In the sub-sector of special-purpose tourism, for instance, Indonesia is not just a destination, it is now home to tens of thousands of big spenders who

hotels, restaurants, and souvernir shops in those many countries! So, while government officials are worried about the possibility of local travel agents not being able to compete in the ACFTA era, the plain fact is that a huge number of Indonesians are travelling abroad, using their services—not to mention more than seven million foreign tourists who use the services of local travel operators. In 2010 alone the government said some seven million foreign

tourists were visiting the country, and this year the number is expected to increase beyond 8 million—thanks to better political stability in place. Firmansyah Rahim, the director general for tourism development says travel destinations are now well prepared to welcome millions of tourists from abroad, through air, sea, and land transporation routes. In order to make tourists stay longer and spend more, the government has launched a program called Sapta Pesona (seven charms). The purpose is to keep tourists longer because they enjoy Indonesia’s “beauty, safety, orderliness, comfort, cleanliness, hospitality, and memorable activities.” The next step is to build a sustainable tourism industry that is based on people instead of natural beauty. In this way, tourism activities will contribute significantly to the development of every regency. At the same time, Indonesia will be able to improve its international standing, after having been ranked at the 81st place from 133 countries polled by World Economic Forum. For Indonesia to climb the ladder of fame, a better interministerial coordination is needed. Only 15 aspects of WEF evaluation fall under the auspices of the Tourism and Culture Ministry, the rest must be handled by other ministries, the official says. For instance, Indonesia’s global tourism ranking is also deteemined by the availability of hopsital beds for tourists, the rate of street accidents and other aspects that actually are not the responsibility of the tourism ministry.

Meanwhile, there must be a clear definition of what is meant by the term “international tourists”, otherwise it is difficult to correctly assess the growth of the industry. The definition that the government uses for this corresponds to the recommendations by the International Union of Office Travel Organization (IUOTO) and World Tourism Organization (WTO) which cover any person who travels to a country other than that in which she/he has his/her usual residence but outside his/her usual environment for a period not exceeding 12 months and whose main purpose of visit is other than the exercise of an activity remunerated from within the country visited. Implied in this definition are cruise passengers who arrive in a country on a cruise ship and return to the ship each night to sleep on board even though the ship remains in the port for several days. The government apparently prefers to count on foreigners who visit tourist destinations without maintaining permanent residence inside this country. That being the case, local travel operators still have innumerable opportunities to tap, given that such tourists are flocking into the country in big numbers every day. So, in other words, the worry about Indonesian travel operators not being able to compete is perhaps not very well-grounded. Officials are worried, but the operators are making money, sending tens of thousands of Indonesians abroad and catering to the needs of millions of foreign tourists every day.

Morotai Set to Shine Once Airbase Becomes International Airport

The government of Indonesia is talking about rebuilding Morotai as an international gate, given its strategic proximity to many international trading centers. By Natasya Graciela

In 2012 when Fadel Muhammad, the Minister for Maritime and Fishery Affairs, launches the Sail Morotai festival, the message he will send out to the world is that Morotai is not just a worth-visiting destination, it is Indonesia’s next international gateway. It is here on Sept 15, 1944 that this part of Indonesia’s eastern region drew the wold’s attention when American and Australian forces stormed and defeated the Japanese occupation army and developed naval and airbases for liberating Mindanao. Since then the Battle of Morotai sank into history as did the military airbases therein. Very little was left of these area even in the memory of its own nation. But 67 years later, the government of Indonesia is now talking about rebuilding Morotai as an international gate, given its strategic proximity to many international trading centers. For starters, local authorities have called on the government in Jakarta to turn the military airstrips into an international airport for commercial purposes. In so doing, they expect international tourists to flock in to see the island’s natural beauty. Morotai would then be able to attract many international investors as well. The Sail Morotai event next year is, therefore, expected to draw in thousands of enhusiasts from many different countries, like the previous Sail Banda festival which attracted a good number of sailors and tourists. Given the strategic position of the Morotai island and its historical imortance, the regent of Morotai, Imam Lastori, has renewed his appeal to President Susilo Bambang Yudhoyono to develop this region as a new Eastern In-

donesia gateway for international tourists and businesspersons. “Let Morotai not remain only on the dead pages of Pacific War history; let it become part of our pride,” the regent says. The regent has a reason for saying that, as it only takes three hours of flight from Morotai to Taiwan, five hours to Jakarta, and 10 hours to Hawaii. So the existence of an international commercial airport in Morotai would mean a lot for development of Indonesia, he says. Minister for Developent of Least Developed Regions Helmy Faishal Zaini supports the idea and says that the government needs a comprehensive plan to build this part of Indonesia, especially ways to maximize economic potentials of the region. There are two options, the minister says—one is to turn Morotai into an international gateway, the other is to do so on Halmahera which is a bigger island in North Maluku. But the local government of Morotai wants the seven military airstrips there be turned into a huge international airport for commercial purposes instead of developing likewise facilities on Halmahera. Therefore, they have started to discuss this with the Indonesian military headquarters in Jakarta. Morotai is a small island located in the Halmahera group of eastern Maluku Islands. Most of the island’s interior is rugged and covered in thick jungle. The Doroeba Plain in Morotai’s southwest corner is the largest of the island’s few lowland areas. Prior to the outbreak of the Pacific War, Morotai had a population of 9,000 and had not been commercially developed since. The Japanese occupied Morotai in early 1942 during the Netherlands East Indies (NEI) campaign but did not garrison or develop it. It formed part of the NEI and was ruled by

General Douglas MacArthur

Wama Drome airstrip: Morotai Island was the site of a major battle in World War II. The landing strips in Morotai built by the Allied forces led by General Douglas MacArthur, could handle today’s jumbo jet. It was an important airbase during World War II. Many wrecks of aircrafts and rusting guns still lie abandoned in the bushes. the Dutch through the Sultanate of Ternate. The former territory of Netherlands East Indies is now the Republic of Indonesia. In early 1944 Morotai emerged as an area of importance to the Japanese military when it started developing the neighboring larger island of Halmahera. It was General Douglas MacArthur, the commander of the South West Pacific Area, himself who selected Morotai in July 1944 as the location for Allied Forces’ air bases and naval facilities. The Allied Forces’ occupation of Morotai was designated “Operation Tradewind.” The landing took place on September 15, 1944, the same day as the US 1st Marine Division’s landing at Peleliu. As little opposition was expected, Allied planners decided to land the invasion force close to the airfield sites on the Doroeba Plain. Two beaches in the south-west coast of the island were selected as suitable landing sites. At the time of the Allied landings, Morotai was defended by approximately 500 Japanese sol-

diers. Understandably, the Allied forces outnumbered the island’s defenders by more than one hundred to one. The Tradewind Task Force also included large numbers of construction and other line of communications units whose role was to swiftly develop the island into a major base. The 6th Infantry Division was designated the force reserve but remained on the mainland of New Guinea. General Douglas MacArthur accompanied the force onboard USS Nashville, though he was not in direct command of the operation. When the Battle of Morotai began, Allied warships conducted a two-hourlong bombardment of the landing area to suppress any Japanese forces there. This bombardment set some native villages on fire but caused few Japanese casualties as they did not have many troops in the area. Work began on base facilities before Morotai was secured. Survey parties began transit surveys of the airfield sites on Sept 16 which determined that their planned alignment was unworkable. Plans to complete the Japa-

nese airfield were also abandoned as it would have interfered with the larger airfields which were to be built to the east. It was instead cleared and used as an emergency “crash strip”. Work on the first new airstrip (called Wama Drome) began on Sept 23 after the site was cleared. By Oct 4, Wama Drome’s runway was operable for 5,000 feet (1,500m) and was supporting heavy bomber raids on Balikpapan in Kalimantan. Construction of the even larger Pitoe Drome, which was to have two runways parallel to Wama Drome, began in late September and by Oct 17 that year it had a usable 7,000feet (2,100m) runway. Construction work was accelerated henceforth after the United States Third Fleet withdrew from providing direct support to the planned landing at Leyte. When the two airstrips were completed in November that year, they boasted three large runways and hardstandings for 253 aircraft, including 174 heavy bombers. Although the air base construction required the destruction of native villages,

the American and Australian airfield engineers were assisted from Oct 1 by about 350 native laborers recruited by the NICA detachment. Other base facilities were erected concurrently with the construction of the airstrips. Work on fuel storage facilities began shortly after the landing, and the first was ready on Sept 20 that year. A jetty for oil tankers and a larger tank farm were completed in early October, and storage facilities continued to be expanded until November, when capacity for 129,000 barrels of fuel was available. Several docks capable of accommodating liberty ships were constructed on Morotai’s west coast, and the first was completed on Oct 8. In addition, twenty LST landings were constructed on Blue Beach to facilitate the loading and unloading of these ships. Other major construction projects included an extensive road network, a naval installation, 28,000 square feet (2,600sqm) of warehousing, and clearing land for supply dumps and bivouacs. A 1,000-bed hospital was also built after the original plans for a 1,900-bed facility were revised. The main difficulties encountered were overcoming the mud caused by unusually heavy rains and finding sufficient water supplies. A revision to Allied plans meant

that Morotai played a much greater role in the liberation of the Philippines than had been originally envisioned. The invasion of Mindanao was postponed in September 1944 in favor of a landing at Leyte in the central Philippines in late October. The air bases at Morotai were the closest Allied air strips to Leyte and fighters and bombers based on the island attacked targets in the southern Philippines and NEI in support of the landing at Leyte on Oct 25. The Japanese force subsequently withdrew into central Morotai where many soldiers died from disease or starvation. The last Japanese supply barges from Halmahera reached Morotai on May 12, 1945. Morotai remained a significant Allied base in the months after the war. The Australian force responsible for the occupation and military administration of the eastern NEI was headquartered at Morotai until April 1946, when the Dutch colonial government was reestablished.The island was also one of the sites where the Australian and NEI militaries conducted war crimes trials of Japanese personnel. With so many memories of the past, there is only one option left for Indonesia to revive Morotai’s strategic position on the Pacific map: Rebuild the island as a good international gateway for economic purposes.

The President Post

C4 September 12, 2011

Tourism West Lampung Set to Be International Tourism Destination Lampung Barat (West Lampung) district in Lampung Province can be turned into an international tourist destination in Indonesia. It is possible for the district to compete with other tourist destination areas in the country because of its tourism potential in abundance.


ampung Barat (West Lampung) district in Lampung Province can be turned into an international tourist destination in Indonesia. It is possible for the district to compete with other tourist destination areas in the country because of its tourism potential in abundance. Lampung Barat Culture and Tourism Office spokesman Hudaibi said in the district town of Liwa recently that the district deserved to be turned into both domestic and international tourist destination in the country. “Its potential richness of nature and the beautiful panoramic view serve as an important asset of the district to be turned into domestic and foreign tourist destination besides Bali,” Hudaibi said. According to him, a lot of foreign tourists who ever visited Lampung Barat said that with its abundant natural beauty, the district could compete with Bali as international tourist destination. He said that besides natural tourism, Lampung Barat also presented cultural tourism that could be studied by both domestic and foreign tourists. “Therefore the local government continues to develop tourist

areas including tourist villages in the district,” he said, adding that the marine and natural beauty in Lampung Barat was able to attract more than 100 foreign tourists to visit the district every year. Meanwhile, Lampung provincial government is making every effort to step up its international tourism potential to increase foreign tourist arrival in 2011. “We will involve various private parties in our effort to step up the international tourism potential here,” provincial culture and tourism department`s investment promotion agency spokesman Gatot Hudi Utomo said in Bandarlampung early this year. According to Gatot, Lampung province has more than 150 tourism objects but most of them have yet to be optimally managed. “Therefore we are going to optimize the international tourism potential in the province,” Gatot said, adding that the coastal area in Lampung Barat district was good surfing. To optimize and to promote the international tourism potential in the province, he said the infrastructure facility should also be improved.

nesia with great potential to attract international tourists. The Elephant Rehabilitation Center in Way Kambas, where wild, rampaging elephants are domesticated and taught useful skills, also offers special attraction to visitors. Shaped in many ways by the impact and eruption of Krakatau volcano eons ago, its attractive beaches of Merak Belantung, Pasir Putih, and tourist resort like Lalaan waterfall and Mount Rajabasa are also worth visiting.

With its white sandy beaches, pristine waterfalls, and lush nature preserves, Lampung is one of many many provinces in Indo-

Meanwhile, Lampung Barat`s culture and tourism office chief for promotion section Riady Andrianto said in Bandarlampung recent-

ly that a number of tourist objects in the district have been prepared to attract as many holiday makers as possible this year. In a bid to make the holiday makers feel at home, Riady said a number of tourist objects in Lampung Barat have increased the number of their workers to give an optimum service, sense of comfort, and security to the visitors. Riady said one of tourist attractions in Lampung Barat was Tanjung Setia Beach in Pesisir Selatan sub-district. It has has natural panoramic view and challenging waves for foreign tourists to go surfing. As Riadiy sees it, the

coolness and crystal clear sea water at Tanjung Setia also offered additional attraction for the foreign holiday makers. Besides Tanjung Setia, Lampung Barat also has other tourists objects such as Labuhan Jakung Beach, Pulau Pisang, Lake Ranau, Way Besai rafting resort, and Sekura Cakak Buah cultural festival. He said that in 2010, more than 400,000 tourists visited West

Lampung tourism objects and 10,000 of them were from Australia, New Zealand, the United States, and other Asian countries. “Lampung Barat has a river with good potential for rafting and



The Sultan Hotel Jakarta introduces Royal Javanese hospitality to make your stay a memorable amd enjoyable experience. With 694 room and extensive facilities, The Sultan Hotel Jakarta maintains its reputation as a one of premium and prestigious five star hotels. Located at the famous “Golden Triangle” of Semanggi interchange the hotel has easy access from and to the airport, central business district, government office , Senayan sport complex and major shopping mall. Formerly known as the Jakarta Hilton International Hotel for 30 years, the hotel was rebranded as The Sultan Hotel Jakarta in August 2006 and managed by Singgasana Hotels & Resort (Management Company which also manage the Ayodya Resort Bali, Singgasana Hotel Surabaya, Singgasana Hotel Makassar, Jakarta Convention Centre, The Residence and Lombok Golf Kosaido). With a combined touch of Royal Javanese hospitality, international 5-star service standard plus extensive facilities, The Sultan Hotel Jakarta ready to compete with other five star hotels in Jakarta. The Sultan Hotel Jakarta is the only 5-star hotel in Jakarta that has two lobbies with different ambiences, at the Lagoon Tower (modern ambience) and the Main Tower (traditional ambience). As one of premium five star hotels in Jakarta, The

“The Sultan Hotel Jakarta” Sultan Hotel equipped with complete of facilities. There are many type of room from deluxe, grand deluxe, suite,executive floor, President Suite and Penthouse. The room is equipped with TV (with 59 channel), broadband internet, coffee/tea facility, amenities, and mini bar. For the MICE facility from the glorious Golden Ballroom, ASEAN room and meeting room at Business Centre equipped with latest technology. F&B facility with various types of restaurant bar and lounge. Gourmets will appreciate the culinary delights served in its restaurants, serving a wide range of traditional Indonesian cuisine to exquisite French fine dining, which will definitely satisfy your taste. The extensive range of fitness and recreation facilities is another distinctive feature of the hotel. You are welcome to enjoy the game in tennis courts. Plunge into any of the swimming pools to beat the heat or exercise in gyms with modern latest fitness equipment. Life spa fitness is the newest facility at the hotel, providing various fitness classes, latest equipment from USA, and spa treatments. The Sultan Hotel Jakarta with its strategic location has been chosen for the venue to host the accommodation for various important events such as Java Jazz music festivals and various other international music concerts. The easy access to the Senayan Sport Complex and government buildings also make it the Sultan as preferred location for the accommodation of international sport group, conferences, convention and government meeting. As the service industry, the facilities would be not enough without the excellent service delivered by experience and professional employees, said the Hotel Manag-

er I Nyoman Sarya. “We conduct continuous training to update their skills and knowledge, campaign and implementation of Sultan roots in day to day work, and create the service culture by giving the award/ recognition to the employee for the excellent services delivered to the guest, he added. The Sultan also have Sultan Care (Sultan Peduli) program, a series of activities to show its awareness to the community and environment. In 2010, The Sultan was awarded one of the “Green Hotels in Jakarta” by CSR mag-

Hotel Manager I Nyoman Sarya azine. To promote traditional culture from around the country,The Sultan Hotel will continue to hold cultural festivals like the one it did in 2008, the Jawa Timur Food, Fashion Festival.

The Sultan Hotel Jakarta is the only 5-star hotel in Jakarta that has two lobbies with different ambiences, at the Lagoon Tower (modern ambience) and the Main Tower (traditional ambience).

therefore we offer it to both domestic and foreign tourists who love water sports,” he added. “The swirling current of the river offers special attraction for tourists to try their surfing skills.”

The President Post

September 12, 2011 C5


North Maluku:

Rich in Marine and Natural Resources HALMAHERA

Rich in marine and natural resources, the islands of Halmahera and Morotai in North Maluku are to be be developed into industrial centers in East Indonesia. Halmahera is host to under-ground high-grade gold mines and abundant natural resources, and Morotai has plentiful fishery resources.


he Ministry of Culture and Tourism plans to promote North Maluku as a potential tourists destination. Promotion official at the Ministry of Culture and Tourism, Diah Widiati said in Denpasar, Bali, recently that the provinces in eastern Indonesia had the potential to lure a lot of local and foreign tourists if they were promoted properly. “Thus, we are promoting North Maluku in the hope of attracting more tourists,” she said, adding that the local government should prepare proper transportation and accommodations to the tourists. Meanwhile, rich in marine and natural resources, the islands of Halmahera and Morotai in North Maluku are to be developed into industrial centers in East Indonesia. Halmahera is host to underground high-grade gold mines and abundant natural resources, and Morotai has plentiful fishery resources. North Maluku provincial administration spokesman Abubakar Abdullah said in Ternate recently the local government was

planning to develop the two islands into industrial centers. He said Halmahera island could be a center of agriculture and mining industry and Morotai island a center of fishery processing industry. Abubakar said mining companies such as PT Aneka Tambang and PT Nusa Halmahera Minieral have been operating in Halmahera for a long time. Morotai island, Abubakar said, would be integrated with the Maritime Affairs and Fisheries Ministry`s program to make it tuna processing center.The Morotai island waters is huge, consisting of 160 different fish species of significant economic value and of 31 different commercial value, with a volume reaching 148,473.8 tons per year. General Chairman of the Indonesian Industrial Estates Association, under the Indonesian Chamber of Trade and Industry (Kadin), Hendra Lesmana said in Jakarta early this year that the abundant fishery resources made Morotai island to have a high potential for Japanese investment.

Maritime Affairs and Fisheries Minister Fadel Muhammad has said that Morotai island has a great potential of fishery resources and that the island has been offered to investors to invest in seafood processing industry. “Morotai is quite well known in the world, and if its potential natural resources can be promoted with supporting data, it is quite possible that Japan and some other countries would be interested in doing business there,” he said. Meanwhile, Maritime Affairs and Fisheries Minister Fadel Mu-

Sail Wakatobi Participants Enjoy Underwater Beauty

Sail Wakatobi-Belitung participants and tourists divers at Wakatobi Diving Resort would experience a highly enjoyable moment that they would never forget. Several crew members of yachts arriving in Wakatobi to participate in Sail Wakatobi-Belitung (SWB-2011) in July have enjoyed the magnificent diving facilities in the waters at Hoga island. Wakatobi Culture and Tourism Office spokesman Tawakal said all participants of the SWB-2011 as well as divers from around the world have undeniably a great opportunity to go diving in the superb diving sites and the most pristine reefs at Wakatobi Diving Resort. Therefore the Wakatobi district administration and local coral reef youths will guide Sail Wakatobi-Belitong participants when they all arrive at the location. According to Tawakal, the Sail Wakatobi-Belitung participants tried to arrive in Wakatobi much earlier because they wanted to enjoy the underwater natural beauty and the hospitality of Wakatobi people as much as possible. Wakatobi district head Hugua has ever said at least 1.3 million hectares of Wakato-

In the Wakatobi Diving Resort there are a lot of beautiful diving sites with incredibly colorful marine diversity which could be reached easily.

bi are part of Wakatobi National Marine Park with Karang Mari Mabo, Onemobaa, Pulau Hioga, and Pantai Patuno diving sites. Therefore the Wakatobi Coral Reef Youths will guide the SWB2011 participants wherever they want to go diving at the center of the world`s coral reefs triangle in Wakatobi. “Divers, tourists, and guests will have an excellent diving holiday and enjoy every moment of it to see the colorful and magnificent underwater life because the area is tremendously rich in marine heritage,” Hugua said. Wakatobi is one of the protected marine national parks in Indonesia. According to Hugua, Sail Wakatobi-Belitung participants and tourists divers at Wakatobi Diving Resort would experience a highly enjoyable moment that they would never forget. In the Wakatobi Diving Resort there are a lot of beautiful diving sites with incredibly colorful marine diversity which could be reached easily. Known for its builtin Beach and a house reef just twenty meters from the dive center, Wakatobi attracts many pro-

fessional divers from around the world who want to go diving there. The Wakatobi Diving Resort is surrounded by stunning and pristine drop-offs, walls and slopes to ridges, caverns, caves and sea-mounts. “Here at Wakatobi, the beauty of the marine life is waiting to be discovered and explored by the Sail Wakatobi-Belitung participants,” Hugua said. Besides, Wakatobi Diving Resort is also offering premier and luxurious accommodation with modern comforts to tourist divers and guests in Bungalows, Garden Bungalows, Beach Bungalows, and Cliff Villas. There are still many beautiful diving sites with pristine reefs, stunning colorful corals and tropical marine life that are in remote sites and not accessible from the Wakatobi Diving Resort that are waiting to be explored and discovered by SWB-2011 participants. Wakatobi Diving Resort also offers a very comprehensive diving package holiday for tourists and Sail Wakatobi-Belitung participants to have an opportunity to explore its underwater marine life.

hammad has said that Morotai island has a great potential of fishery resources and that the island has been offered to investors to invest in seafood processing industry. According to Fadel, Morotai island would also be the center of national tuna processing in-

dustry, because Taiwan has expressed interest to invest in the island, located at the Pacific Ocean. Fadel said Morotai was known to have high fisheries potential because the island was a stopover point of tuna from the Pacific Ocean to Indonesian waters. Abubakar said that the North Maluku provincial government program to turn Morotai and Halmahera into the center of industrial development was fully supported by central government, and has even been put on

the concept of national economic development acceleration. He said both domestic and foreign investors had expressed interest to develop Halmahera and Morotai islands into industrial center. According to him, investment value to develop the two islands in North Maluku was estimated to be more than Rp1 trillion. Therefore the local government has taken various concrete steps to support industrial development in the islands of Halmahera and Morotai by constructing basic infrastructure facilities such as Halmahera

ring road and Morotai ring road. Abubakar said North Maluku provincial government has expressed hope that all related parties including the local community would support the realization of Halmahera and Morotai as industrial center in East Indonesia. “If the two islands have become the centers of industrial development, it will have a great positive impact on the improvement regional economy and the the local people`s welfare,” Abubakar said.

C6 September 12, 2011

The President Post

Photo Essay

Flying High The airline industry is currently booming as the number of passengers, new routes are opened, and many airlines are expanding by adding up new aircrafts two or three times more than they have today. Text & Photos by Nandi Nanti


he consistency of Indonesia’s economic growth as well as the country’s geographic condition as an archipelagic country bring optimism to the future growth of the national aviation industry. Chairman of Indonesia National Air Carriers Association (INACA) Emirsyah Satar said that the airline industry is currently booming as the number of passengers, new routes are opened, and many airlines are expanding by adding up new aircrafts two or three times more than they have today. Official data show that in 2009 domestic passengers reached 43.8 million and 5 million international passengers. On 2010, the figures rose to 51.6 million for domestic and 6.6 million for international passengers. For this year, it is estimated national airlines will transport as many as 58.9 million domestic passengers and 7.5 million international passengers. The data show rapid growth in Indonesia’s aviation industry. In six to seven years the number of passengers is estimated to reach 100 million, with the assumption of 15% growth per year. The estimate comes from the number of Indonesian citizens travelling by air, 20 million, each flying five times a year. According to Emirsyah Satar, who is also Garuda Indonesia’s CEO, the margin of this industry is only about 4%, due to the high cost of operation: fuel cost 35-45%, maintenance 18%, aircraft leasing 18%, and others 12%. Nevertheless, the airline business will keep flourishing and is considered prestigious.

The President Post

September 12, 2011 C7


Thrill Seekers:

Experiences to Try Before You Die 5 2 There’s no excuse for being bored with so many adrenaline-pumping adventures out there. Here are 25 heart-pounding, life-affirming things to try before you die – just don’t do them all in the same week or they may be the very thing that kills you.

Be a jet fighter pilot for a day, worldwide “Top Gun” references aside, these day you really can fly a fighter jet. Choose from the MiG29, L-39 Albatross and Hawker Hunter to finally realize those childhood, Tom Cruise-inspired dreams. MiGFlug is available in various locations from Russia, the United States, the United Kingdom and other European countries.

Go volcano boarding, Nicaragua The live volcano, which erupted as recently as 1999, has become a hot spot for extreme boarders. Boarders can reach speeds of up to 80 kilometers per hour as they course down the volcano’s sides.

Enter the Cage of Death, Australia Stare into the faces of some of Australia’s biggest saltwater crocodiles for 15 minutes, separated by nothing more than a couple inches of perspex. Luckily the cage can house two people at one time, so there’ll be someone there to hold your hand.

Cling to a cliff, China Here’s a trek with a difference: at 2,160 meters, the majestic South Peak of Mount Hua is one of the most popular among climbers in the mountain range, and, some say, the most treacherous.

Ride Insanity, United States Hovering 270 meters above the ground and 20 meters over the edge of Las Vegas’ Stratosphere Tower, these spinning mechanical arms are sure to get your heart pounding and your hands sweating.

Perform an Everest skydive, Nepal The self-proclaimed “world’s most elite skydiving adventure” allows adventurers to jump from 29,500 feet, higher than the Everest summit.

Jump the Nevis Bungy, New Zealand You can travel 134 meters in 8.5 seconds, if you have a go on the Nevis Bungy, New Zealand’s highest. The adventure starts before you get to the pod, 134 meters above the Nevis River, with a 4x4 jeep journey across the kiwi backcountry.

Ride the world’s steepest roller coaster, Japan The world’s steepest steel roller coaster opened at the Fuji-Q Highland Amusement Park in Tamanash, Japan this year. The near-vertical free fall is the 14th Guinness World Record set by Fuji-Q, one of the leading

amusement parks in the world for thrill seekers.

Go water buffalo racing, Indonesia Balancing on small, wooden chariots while wading through shin-deep wet rice fields, racers have to control both their own nerves and not one but two charging bullocks. You won’t be able to compete, but just watching these animals careering almost out of control through mud and water will got your blood pumping.

Run with the bulls, Spain Fifteen bulls charge through the streets of the old city, to be herded from off-site pens into the bull ring. 15 people have died since 1924.

Take a motorcycle cab ride, Thailand In places like Krabi and Bangkok, tourists and locals alike often enjoy the thrill of snaking through crowded streets at high speed, inches away from buses on either side. Motorcycle_taxi

Run (or limp) the Marathon des Sables, Morocco Six days, 50 C, 254 kilometers – just some of the reasons this ultra marathon across the Sahara Desert in Morocco is known as the world’s toughest foot race. In 2007, two competitors died on the way.

Go hot air ballooning, Turkey Enjoy the sweeping vistas of the Cappadocia while you float silently in clear skies above the region’s villages. www.hotairballooncappadocia. com

Swim with great white sharks, South Africa There are countless places where you can swim with sharks (50 of which are listed here), but one of the best is on offer in Cape Town.

Go ice swimming, Finland If the thought of plunging right into an icy hole sends shivers up your spine, heat up with a sauna session first. The freezing climes that you encounter afterward may be a slight relief.

Paraglide over Neuschwanstein Castle, Germany Paragliding anywhere is going to be a thrill, but we were inspired by a video of a flight over the fantastical Neuschwanstein Castle in Germany.

Ride the world’s longest

zip line, South Africa Travel 280 meters in less than 10 seconds. Become a human torpedo on the world’s longest and fastest zip line. At a height of 280 meters and two kilometers long, riders can hit 100 kilometers per hour.

Take part in a Rickshaw Run, India With these threewheeled, half-a-horsepower contraptions, dozens of gallant travelers race from one end of India to the other three times a year. Each edition is different from the last and is “the most stupid and probably the best thing you could possibly do with two weeks”, according to The Adventurists website.

Go dog-sled racing, United States Dog sledding may not sound exciting, but think about it -- you’re on dog-powered transportation whistling past trees at speeds that humans weren’t really designed for. dog-mushing

Do the Death Drop, Zambia Feel four glorious seconds of terrified regret as you walk off a 53-meter high cliff and free fall at 180 kilometers an hour.

Cycle the Death Road, Bolivia The road connects Bolivia’s main city, La Paz, and the Yungas region. Some reports say it claims up to 300 lives each year.But such is the beauty of the scenery through which it passes, thousands of people flock to ride this route every year.

Walk a wing, United Kingdom Strap into the top wing of a vintage biplane and get swept through the skies at 220 kph. Originally a functional role during war time to aid in-air refueling or to transfer fuel tanks from plane to plane, wing walking is now purely a thrill seeker’s pursuit.

Drive the Himalayas, India You have to drive above an altitude of 4,572 meters for two days of the five-day adventure. That turns this rally from one of pure driving skill, to one of intense endurance and physical and mental toughness as you battle oxygen depletion and icy cold temperatures.

Go cliff diving, Mexico This extreme form of getting into the water started in Hawaii and has now spread across the world. But it’s the divers in Acapulco, Mexico, that are most famed. Watch them from the safety of your restaurant.

Rescue a hostage, United Kingdom From the comfort zone of your couch in the liv-

ing room to the danger zone of a live hostage extraction -witness how negotiations, intelligence gathering and finally rescue attempts take place with ex-U.K. Special Forces troops. Picked up by armored luxury car from your chosen meeting point, you’ll learn about real-life events including the successful assault on the beseiged Iranian embassy in London. (CNN)

The President Post

C8 September 12, 2011


Will You Have a Heart Attack?

Hair Can Indicate Your Risk of a Heart Attack Many of us have felt that stress was causing us to lose our hair, but a recent study shows that the amount of stress one has experienced can actually be measured in our hair and can be correlated with heart attack risk. Lead researcher Gideon Koran, professor of pediatric medicine and toxicology at University of Western Ontario, had been studying hair samples of children whose mothers had used cocaine and heroin while pregnant. Fellow researchers measured cortisone levels in the hair samples of body builders who used steroids. Koran began to think that if cortisone from drug use could be measured in hair, then couldn’t cortisone from the results of stress be detected the same way.

These Tests Might Tell Most heart attacks strike with no warning, but doctors now have a clearer picture than ever before of who is most likely to have one, says Dr. Arthur Agatston, a Miami cardiologist and author of the best-selling South Beach diet books.


gatston says relatively new imaging tests give real-time pictures showing whether plaque is building up in key blood vessels, alerting doctor and patient to an increased risk of a potentially deadly heart attack. “Unless you do the imaging, you are really playing Russian roulette with your life,” he said. Agatston invented one of the imaging tests, the coronary calcium scan, which looks at plaque in the arteries leading to the heart. Plaque in these arteries is a red flag for a potential heart attack. (Agatston does not make any money from the coronary calcium scan.) The other imaging test Agatston recommends is an ultrasound of the carotid artery, looking at plaque in the main blood vessel leading to the brain. Plaque in the carotid artery is a sign of increased risk for a heart attack and stroke. Both tests are non-invasive and outpatient, although the calcium scan does expose the patient to the equivalent of several months of normal background radiation.

Agatston consults with Judy Willner about her checkup in his Miami office. One large federally funded study found the coronary calcium score a better predictor of coronary events like a heart attack than the traditional Framingham Risk Score, which considers age, cigarette smoking, blood pressure, total cholesterol and HDL, the “good” cholesterol. Agatston thinks the coronary calcium scan should be routinely scheduled at age 50, like a colonoscopy, or earlier for people with family histories of heart disease. Most hospitals now offer the imaging tests, some at less than $100 for both, and they are often covered by insurance. Cardiologists now generally use the calcium scan only for patients considered at intermediate risk for heart disease, determined by traditional measures such as cholesterol, blood pressure, lifestyle and family history. High-risk patients already receive such aggressive treatment as cholesterol-lowering statin medication, but many doctors don’t think low-risk patients need to incur the expense or small dose

of radiation that comes with a coronary calcium scan. “There is a large group in the middle called intermediate risk, which may be as much as 50% of the population,” said Dr. Erin Michos, a cardiologist at the Ciccarone Center for the Prevention of Heart Disease at Johns Hopkins University. A good candidate for a coronary calcium scan, she says, would be a 50-year-old man with slightly elevated cholesterol and a father who had a heart attack. “Do you put this 50-year-old who has this family history on a statin medication with potential expense (and) side effects for the next four decades of his life, or do you further refine how far at risk he is?” she asked. A calcium score would answer that question, she says. There’s a third test Agatston likes: a $65 blood test that looks

A ‘Heart Attack Proof’ Diet?

Dr. Caldwell Esselstyn Jr. didn’t become a doctor to change the way America eats. He was a general surgeon. But researching cancer, he stumbled on a fact that changed his career: Certain cultures around the world do not suffer from heart disease, the No. 1 killer in the Western world. Esselstyn’s practice took a dramatic turn – from performing surgery to promoting nutrition. For more than 20 years, the Cleveland Clinic doctor has tried to get Americans to eat like the Papua New Guinea highlanders, rural Chinese, central Africans and the Tarahumara Indians of Mexico. Follow his dietary prescription, the 77-year-old Esselstyn says, and you will be “heart attack proof” – regardless of your family history. “It’s a foodborne illness, and we’re never going to end the epidemic with stents, with bypasses, with the drugs, because none of it is treating causation of the illness,” Esselstyn says. The Esselstyn diet is tough for most Americans to swallow: no meat, no eggs, no dairy, no added oils. Esselstyn has written a book to spread the word, “Prevent and Reverse Heart Disease – The Revolutionary, Scientifically Proven, Nutrition-Based Cure,” and he has given talks around the world. He is also a focus of the new documentary “Forks Over Knives.” Esselstyn has won some highprofile allies – such as Dr. T. Colin Campbell, co-author of “The China Study,” and Dr. Terry Mason, chief medical officer at Cook County Hospitals in Chicago and the city’s former health commissioner. “We’ve eaten ourselves into a problem, and we can eat ourselves out of it,” Mason says. But Esselstyn’s prescription goes against conventional wisdom, which considers diet only one factor in preventing heart disease. “Diet alone is not going to be the reason that heart attacks are eliminated,” says Nancy Brown, CEO of the American Heart Association. Other key factors include physical activity, cholesterol, blood pressure and weight, she says. The meat, dairy and egg industries defend the benefits of their protein-rich foods, all of which remain on the U.S. Department of Agriculture’s MyPlate dietary guidelines for healthy eating.

The Esselstyn diet is tough for most Americans to swallow: no meat, no eggs, no dairy, no added oils. Esselstyn’s plant-based prescription also runs up against a culture where meat is served at most meals. “Most doctors eat meat because most Americans eat meat, and if they don’t really see for themselves or for their family why it might be a good idea to cut down or even cut meat out of their diet altogether, they might not be so inclined to recommend it to their patients,” says Michele Simon, author of “Appetite for Profit.” Even doctors who see the benefits of Esselstyn’s diet may not prescribe it for their patients. “Anyone who is able to do that diet can have dramatic success. The problem is that many people are unable or unwilling to make these changes so in my practice, I try to take baby steps -- one step at a time,” says Dr. Erin Michos, a cardiologist at the Ciccarone Center for the Prevention of Heart Disease at Johns Hopkins University. To help heart patients and others make the leap to his diet, Esselstyn holds a monthly, five-hour seminar at the Cleveland Clinic Wellness Institute to explain the science behind “plant-based” nutrition. Esselstyn’s wife, Ann, offers practical advice on how to prepare kale, bok choy, collard greens and other foods that may not be on the typical family’s shopping list. Esselstyn began recruiting patients in 1985 and says his diet has worked even on people deemed too sick for surgery. Esselstyn has published results from a small group of patients showing how his diet either halted the progression of heart disease or reduced the blockages in the blood vessels leading to the heart. “We

know if people are eating this way they are not going to have a heart attack,” says Esselstyn, whose father had a heart attack at 43. Anthony Yen, an entrepreneur who emigrated from China and came to love the fried foods, meat and desserts of the American diet, adopted the Esselstyn program in 1987 after undergoing bypass surgery. “I’m still alive because of this diet,” Yen says, now 78. Esselstyn says people shouldn’t hold off on starting his diet until after they develop symptoms of heart disease because most heart attacks strike with no warning. “The reason you don’t wait until you have heart disease to eat this way is often, sadly, the first symptom of your heart disease may be your sudden death,” he says. Esselstyn says his diet works because it keeps the lining of the blood vessels free of the dangerous blisters or bubbles or cholesterol-laden plaque that causes heart attacks. Two decades after Esselstyn started trying to spread the gospel of his plant-based diet, the American Heart Association says 83 million Americans have some form of cardiovascular disease and many of the traditional risk factors for heart disease, such as obesity, are at all time highs. The association says the cost of treating heart disease tops $270 billion and is expected to more than double by 2025. Esselstyn, a member of the U.S. gold medal rowing team at the 1956 Olympics, is not someone who gives up easily. “We are on the cusp of what could be an absolute revolution in health -- not dependent on pills, procedures or operations, but on lifestyle,” Esselstyn says. (CNN)

at a patient’s LDL, or bad cholesterol. LDL particles come in different sizes, and patients with a lot of small-particle LDL are more likely to build up plaque in their blood vessels, Agatston says. Alternately, patients with large LDL particles do not tend to accumulate plaque. “There are a lot of little old ladies in their 80s with very high cholesterol who have squeaky clean vessels. They have very large particles, and they don’t get into the vessel wall,” Agatston says.

These new tests give patients a chance to make major changes in their diet and lifestyle, and give doctors an opportunity to treat them with medication. “One of the best-kept secrets in the country in medicine is the doctors who are practicing aggressive prevention are really seeing heart attacks and strokes disappear from their practices. It’s doable,” Agatston says. (CNN)

The study, printed in the online issue of Stress magazine, tested 56 males who were admitted to Meir Medical Center in Israel for acute myocardial infarctions (heart attacks) and 56 control patients admitted for other medical conditions. Hair grows approximately 1 cm a month so the researchers tested the 3 cm of hair that had grown closest to the scalp to correlate with the most recent 3 months of stress exposure. Gideon says, “Hair (can) tell me what happened to you in the last 10 months.” After controlling statistically for other risk factors, such as cholesterol levels, “We demonstrated that elevated hair cortisone concentrations in patients with AMI (acute myocardial infarction). This suggests that chronic stress, as assessed by increased hair cortisol in the 3 months prior to the event,

may be a contributing factor for AMI.” Only men were tested in this study because it was felt that hormone difference in men and women could affect the results. While cortisol levels are not the only factor that may predict risk of heart attacks, “it could be an noninvasive way to measure stress over time,” Kideon said. Another study reported on also showed that cortisone levels can be useful in diagnosis. Dr Laura Manenschijn and her team in The Netherlands collected hair samples of patients with Cushings syndrome, a disease where the adrenals in the body produce too much cortisone causing long term chronic health problems. In their study, they also found they could accurately track higher levels of cortisol in the hair of the Cushings syndrome patients as compared against the hair samples of those without the disease. Researcher Dr Laura Manenschijn said: “We have suspected for a while that cortisol may be implicated in the development of many common conditions, such as heart disease, diabetes and depression. However, until now, doctors have not been able to accurately measure cortisol exposure over the long-term and so research into this has been limited.” Since cortisol levels have traditionally been tested using saliva and blood the fact that it could be accurately monitored using this new, non-invasive technique might provide a new way to increase early detection and monitoring of many medical conditions. (CNN)

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the target of bringing inflation down from 6 percent now to 3 per- cent by the middle of the next de- cade. Chief of the Capital Investment...

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