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Singapore (PP) – Indonesia is set to host the 21st Asia Pacific Economic Cooperation (APEC) summit in 2013, President Susilo Bambang Yudhoyono said here on Monday at the Marina Mandarin Hotel before leaving for Jakarta after attending a series of APEC meetings.

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he next APEC meeting will be held in Japan, and then consecutively in the United States, Russia, and in Indonesia in 2013,” President Yudhoyono said. President Yudhoyono arrived in Singapore on Thursday from Kuala Lumpur for a state visit ahead of the Asia-Pacific Economic Cooperation (Apec) Leaders meeting this weekend. He met with Singapore President SR Nathan as well as Minister Mentor Lee Kuan Yew and Prime Minister Lee Hsien Loong. Singapore’s Foreign Affairs Ministry says this visit underscores the close ties between both countries. It was not all business at the APEC meeting to the president, who expressed the view that Thailand and Cambodia should solve their border conflict bilaterally without referring it to an ASEAN forum. In statements at the Marina Mandarin Hotel here on Monday morning before returning to Jakarta, President Yudhoyono said, “There are still opportunities for Thailand and Cambodia to solve their border issue bilaterally.” “Indonesia would wait and see how things between Thailand and Cambodia developed.” He said said he had met and talked with both Thai Prime Minister Abhisit Vejjajiva and Cambodian Prime Minister Hun Sen separately on the sidelines of the APEC Summit in Singapore. Tensions on the disputed border between Thailand and Cambodia have existed for some years but they increased since July last year, after Unesco granted world heritage status to the ancient Preah Vihear temple. The dispute led to violence last April when soldiers of the two countries clashed twice near the ancient temple where two Thai soldiers and two Cambodian soldiers died in the fighting while

US President Barack Obama and Indonesia President Susilo Bambang Yudhoyono took bilateral relations to a new and higher level.

SBY: Indonesia Hosts APEC Summit in 2013 nine Thai soldiers were wounded. “The APEC economic leaders actually did not plan to discuss the target of gas emission reduction, because it was an economic forum where we have China Taipei and China Hong Kong,” President Yudhoyono said. He said he never heard that in the APEC declaration a certain figure of gas emission reduction would be mentioned. “Even in the summits of G20, ASEAN, EAS, and APEC there was no agreement to mention a particular figure in gas emission because it is discussed in the United Nations Framework on Climate Change Convention (UNFCCC) forum,” the president said. “Although we talk about cli-

mate change at APEC, G20, or ASEAN meetings, they are not the forum to produce a communique with the target of gas emission reduction,” he said. He added that the APEC declaration on climate change could not be said to have failed because APEC was not a forum to negotiate climate change. Meanwhile, President Yudhoyono said US President Barack Obama was “a friend of Indonesia”. President Yudhoyono said they had a very good discussion on a wide range of issues of common interest, according to a US Embassy release. He said he told the US president that he really appreciated the latter`s fresh new approach to the world, to many international is-

sues, including his positive outreach to the Islamic world. President Obama in his remarks after the meeting with President Yudhoyono said he was extraordinarily impressed with the progress that Indonesia had made in developing its democracy. President Obama said Indonesia was not only regionally important but as a member of the G20, as one of the world`s largest democracies, as one of the world`s largest Islamic nations, Indonesia really had enormous influence. “I think, it is a potential model for the kind of development strategies, democracy strategies, as well as interfaith strategies that are going to be so important moving forward,” he said. Both also announced their in-

“Aceh a Model for Conflict Settlement”

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he International Crisis Group in Southeast Asia has said that the Aceh conflict settlement could provide a model for similar conflicts in the region. Sydney Jones of ICG recently at the President University, Kota Jababeka stressed on the importance of both sides to have a strong commitment to seek a peaceful solution and to always have “one person stand by at the end of the phone to address an issue” when he or she is needed. Southeast Asia is seeing a range of conflicts that come from guerilla insurgencies confronting the state such as the Muslim Malays in Pattani (BRN-C, PULO), Bangsamoro in Mindanao (MILF, MNLF) and Aceh before 2005, she noted. “However, the handling of insurgency in Aceh is considered a

success compared to what s happening in other countries in the region,” she said “The difference between the Aceh conflict and Minandao is that Aceh reached an agreement in 2005. In Thailand, there is not even a single discussion yet about a political solution. In Minandao they talk all the time but never reached a final agreement,” said Jones. “In Aceh, they have a very clear idea of what the boundaries were of the areas they want independence for. That is not the case in the Philippines. In Aceh there are newcomers from Java and others coming into Aceh who are not politically powerful. In Minandao we have a lot of people coming in from north Philippines to the south and they control the politics and the land, and so it becomes much, much more

difficult to find a solution,” she said. She also attributed the success to the facilitators, and in the case of Aceh, there was former Finnish President Martti Ahtisaari as the mediator who was backed by the European Union instead of NGOs. Unlike the mediators in Aceh, President Gloria Arroyo brought in Malaysia to help with the peace negotiation process while at the same time both countries had an issue over Sabah. “There was a lot of distrust among the political elites in Manila about the real motives of the Malaysian government brokering the conflict. When you don’t have trust, that is a recipe for failure,” Jones elaborated. She further explained that there were also different strategies between the two situations that

were very important. Ahtasaari had made it clear to all the people from GAM that they had to agree to every single part of the agreement or there would be no agreement at all. “In the Philippines they would make incremental agreements related to easier issues with the hard ones left until the end. The strategy to adopt the “all-is-agreed-or nothing-is-agreed” was very effective,” she said.

VIEWPOINT

THE REGION

MARITIME

EDUCATION

Power Crisis

China: A Truly Asian Powerhouse

Back to Sea

“Think Big, Start Small, Move Fast”

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“The power deficit is hurting the industry because it is disrupting production. If production is disrupted, they cannot deliver on time. They feel really disadvantaged by this and I have apologized to them” PAGE 2

Photo: www.presidensby.info

A people with natural business instincts wrapped under a remarkable culture and now entering the modern age in which commerce takes center stage.

In every development policy, the maritime sector must be given special emphasis because of the very fact that we are an archipelago.

A World Bank study shows that 44% of all peacefully resolved conflicts end up returning within five years. However, Jones is optimistic that Aceh will be safe so long as the government addresses potential sources of conflicts such as the issue of land. However, sustaining the peace is an ongoing challenge, she concluded.

Students also have to build their own individual characters to become leaders with K.A.S.H., which stands for Knowledge, Attitude, Skills, Habits.” PAGE 7

tent to re-establish a Peace Corps program in Indonesia. “We are honored that Indonesia will host the next generation of Peace Corps volunteers inspired by President Kennedy`s legacy of service,” Peace Corps Director Aaron S. Williams said after the announcement. According to Williams, the first group of Peace Corps volunteers was expected to arrive in Indonesia by mid-2010 to work as English teachers in high schools and teacher training institutions. “Aside from bringing welcomed English language teaching expertise, the relationships that the volunteers will make with their Indonesian hosts, both friends and colleagues, will promote people-to-people ties and cross-cultural understanding and

communication between our two nations,” said US Ambassador Cameron Hume, who served as a Peace Corps volunteer in Libya from 1968 to 1969. President Yudhoyono and New Zealand Prime Minister John Key held a bilateral meeting here on Saturday morning to step up already good relations between the two countries. Presidential spokesman Dino Patti Djalal, after accompanying the president at the meeting, said “Trade between Indonesia and New Zealand from 2006 to 2008 grew by 30 percent.” He added that President Yudhoyono on the occasion also expressed his gratitude for New Zealand`s support for the Bali Democratic Forum in December and cooperation to hold an inter-

faith dialog. “Indonesia will next year host a `Regional Asia Pacific Interfaith Dialog`, and it will be a typical cooperation between Indonesia and New Zealand,” Djalal said. He said the two leaders also discussed developments in the run-up to the climate change conference in Copenhagen, Denmark, and agreed on the need for a breakthrough. Besides the bilateral talks with the New Zealand prime minister, President Yudhoyono also held similar meetings with several other heads of state/government, among others with Singapore Prime Minister Lee Hsien Loong, Chinese President Hu Jintao, and Papua New Guinean Prime Minister Sir Michael Somare.


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The President Post

November 13, 2009

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Viewpoint Power Crisis Feared to Slow Down Growth, Drive Away Investors The power crisis that has been hitting the capital city in recent weeks is feared to slow down the country’s economic growth and drive investors away, a prominent business association has warned. By Vidya Dahlan

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he Indonesian Young Entrepreneurs Association (HIPMI) Chairman Erwin Aksa said the power crisis could undermine efforts to accelerate national economic growth and prompt foreign investors to flee the country for other ASEAN countries such as Vietnam and Malaysia. Aksa warned that the government could miss the economic growth target if it failed to overcome the crisis soon. He said that power shortage could trigger investors to relocate their plants to countries that are considered more efficient and provide cheap and sufficient energy supplies. He added that Indonesia is poised to post strong growth with the success of the presidential election and its entry into the G20 as well as growing foreign confidence in the country’s economy. “It is unfortunate that this momentum is marred by insufficient electricity supplies both for household and industrial needs,” Aksa said in a press release last week. Aksa pointed out that various problems still impede investment such as red tape, unneccessary regulations, infrastructure, and legal uncertainties that made investors to think twice before doing business in Indonesia. Insufficient energy supplies would also make national industries become less competitive as it will stop them from meeting production target and thereby disrupt the distribution of goods. This will in turn swell the production cost that would eventually be passed on to consumers, making it difficult for Indonesian products to compete both domestically and overseas. Foreign investors in the country have also expressed their disappointment over the power crisis. The Japanese business delegation Kankeiren told Industry Minister MS Hidayat in a meeting on 9 November 2009 that the power outage has disrupted production of Japanese companies. “The power deficit is hurting the industry because it is disrupting production. If production is disrupted, they cannot deliver on time. They feel really disadvantaged by this and I have apologized to them,” said Hidayat. Textile producers in Jakarta and Tangerang alone will be facing up to Rp1 trillion in losses if the government fails to overcome the power shortage by the end of the year.

Apindo Chairman Sofyan Wanandi said businessmen in Jakarta are incurring up to Rp10 billion loss each day. To find solution to the problem, Vice President Boediono has called a meeting between State Minister for State Enterprises Mustafa Abubakar, state electricity power company PLN President Director Fahmi Mochtar and Energy and Mineral Resources Minister Darwin Zahedy Saleh. During the meeting, Boediono asked PLN directors to quickly respond to the public’s complaints over insufficient power supplies. He also apologized to the public for the inconvenience and vowed to do his best to overcome the crisis. Energy and Mineral Resources Minister Darwin Zahedy Saleh called on PLN to be more transparent regarding the blackout rotation in Jakarta and the surrounding areas. “Rotating blackout in the short term is unavoidable but we will work hard to prevent this from recurring,” he said. PLN Chief Fahmi Mochtar said he expects to overcome the energy supply deficit by the first week of December. The Cawang Baru electricity substation exploded on Sept. 29 after fire razed two output transformers. Police are still investigating the cause of the fire. The state utility company is currently fixing its infrastructure. PLN has ordered for two gas insulated lines (GIL) from France and Japan and bought electricity from Cikarang Listrindo, Bekasi Power Jababeka and Argopantes. For the medium-term solution, PLN needs to strengthen the network structure in Jakarta and its surrounding areas by bolstering the capacity of its substations. The program is estimated to cost about Rp5.6 trillion and PLN has allocated Rp800 billion of its own funds to finance the project, with the remaining supplied by the government and Rp3 trillion from export credits. SOE Minister Abubakar threatened to take disciplinary action if PLN’s management fails to address the problem in one month. He said the disciplinary actions would vary, with the harshest being demotion. However, the minister promised to reward those who meet the deadline target, including a bonus in the form of promotion. Meanwhile, Japanese giants Mitsui & Co. Ltd. and Marubeni

“Power shortage could trigger investors to relocate their plants to countries that are considered more efficient that provide cheap and sufficient energy supplies”. Erwin Aksa Chairman of Indonesia Young Entrepreneurs Association (HIPMI)

“The power deficit is hurting the industry because it is disrupting production. If production is disrupted, they cannot deliver on time. They feel really disadvantaged by this and I have apologized to them”.

“Disciplinary action will be taken, if PLN management failed to address the problem in one month. The disciplinary actions would vary, with the harshest being demotion”.

“Rotating blackout in the short term is unavoidable but we will work hard to prevent this from recurring”.

“We expects to overcome the energy supply deficit by the first week of December”. Wimar Witoelar

Darwin Zahedy Saleh Energy and Mineral Resources Minister

Mustafa Abubakar SOE Minister

M.S. Hidayat Industry Minister

Corp. have expressed interest in constructing two power plants to help the Indonesian government address the electricity deficit. Industry Minister Hidayat said Mitsui plans to build an 800megawatt power plant in Paiton, East Java, while Marubeni would

electricity supply in North Sumatra. “This is an addition to another 105-MW power plant which is also expected to be operated in the same year,” he was quoted as saying by Antara.

Japanese giants Mitsui & Co. Ltd. and Marubeni Corp., have expressed interest in constructing two power plants to help the Indonesian government address the electricity deficit. build a 600-MW power plant in Cirebon, West Java. He added the companies will become independent power producers (IPPs) and hoped that the projects can start by the end of this year. Meanwhile, PLN’s thermal power plant (PLTU) in Labuhan Angin, Sibolga, North Sumatra, will also start operation at the end of this year.

He said that the additional power supply will be able to overcome power outage in North Sumatra, although the electricity supply is actually still not sufficient. Murtagi said in February next year, the 2x90 MW Asahan I hydro power plant (PLTA) would also be integrated into the North Sumatra electricity power distribution network system.

PLN director for outside JavaBali distribution networks, Murtaqi Syamsuddin, said that the 2x115 MW PLTU Labuhan Angin would increase the volume of

The other one, namely the PLTU Bangkalan Susu, which is part of the 10,000 MW power project, is also expected to come on stream.

PLN electricity substation

Photo: www.vivanews.com


The President Post

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November 13, 2009

3

Opinion I

t needs to steer the course for the country’s security, defense, political development and foreign policy. Indonesia’s foreign policy affects almost every aspect of our daily lives. The prices of consumer goods, job creation, and supply of gasoline, to mention just a few, are subject to how we interact with the rest of the world. As an instrument to promote and articulate our national interests abroad, our post-2009 election foreign policy must be built upon pragmatic, realistic and rational thoughts. These should be translated into a foreign policy agenda oriented toward overcoming our domestic problems. Thus, the new foreign policy team must understand the importance of international links with regards to the search for solutions to our domestic problems. The foreign policy agenda must cover the wide spectrum of our national and international interests; it should be able to accommodate the current and future needs of our country and a variety of interests. That is to say, the future foreign policy agenda must reflect the national commitment to tackle effectively our domestic problems and promote long-term interests. But such a policy agenda is reliable, acceptable and qualitatively good only if it is comprehensive in scope, realistic and modest in its objectives and reflects the country’s longterm needs. What the new government needs beyond 2009 is perhaps a stronger sense that what happens inside the country, as well as in our immediate region, affects our destiny too. Thus, our foreign policy beyond such a timeframe should not only demonstrate our political existence and credibility in dealing with national and international problems, but also our commitment to continually be a part of international collaboration in establishing a more secure and stable international environment. Significant policy initiatives on the regional as well

STRENGTH, CAPACITY AND CREDIBILITY:

Indonesia’s Foreign Policy 2009-2014 The new government will definitely face more severe, if not new, challenges - both domestic and international - given the continued financial global crisis. By Bantarto Bandoro

on the global level have been taken by the government in the past five years. But a more proactive and well thought out foreign policy should be initiated if Indonesia is to be continually seen as meaningful, both strategically and politically, for the stability of its immediate region and the globe. It is therefore imperative for the new to formulate a new foreign policy in such a way as to help promote domestic political stability and strengthen our international position. Therefore, the foreign policy of our new government must be as adaptive as possible to the changed external environment as well as unpredictable events. Foreign policy challenges do not arise in five-year cycles. Every administration inherits problems it must manage. Ours is no different. We have a host of unresolved national issues which have to be addressed immediately by way of collaborating with other members of the international society. We should not be too complacent with what we have gained from the positive image within the international community, but rather show confidence in our approach to global problems that could have immediate and longterm impacts on the stability of the country. It is especially important for Indonesia to remain pragmatic but cogent in its for-

eign policy. As our foreign policy challenges are set to become even more enormous in the future, Indonesia needs to make constant adjustments to reflect the realities of tomorrow’s challenges, including on domestic, regional and global scenes. What must remain unchanged is Indonesia’s international engagement. Indonesia’s membership in G20 is a clear reflection of the country’s attempt to be continually part of the global collaboration in solving global economic problems.

ity of international relations and the severe problems we might face in the international arena in the next five years, it is perhaps wise to remind the new government of the nature of change that surrounds us, in the sense that in a rapidly changing and interdependent world the separation of national and international affairs is becoming blurred if not problematic. A more severe global financial crisis and a serious impact it might have on the country’s stability is

stated national goals and changes in the international milieu. Leadership in foreign policy is imperative. It means more than responding to current global economic crisis and problems of the day. This leads us to the stage that the next government’s foreign policy team would need to craft a strategic plan in anticipating the problems the country will face down the road. Herein lies the importance of identifying strategic issues in our

The main programs of our foreign policy referred to in the Mid-term National Development Plan year 2004-2009 are the strengthening of foreign policy and maximizing Indonesian diplomacy; pursuing international cooperation to maximize opportunities and reaffirming the country’s commitment to maintain world peace. It is against such a background that the new government should subscribe to a foreign policy that brings hope and light to pertinent policy areas. The economy is definitely one of them and perhaps also health, education, food and energy security. The new government must draw a clear plan on how to spread prosperity and security around the world, often referred to as a free and active foreign policy. With the increasing complex-

bound to slow, if not halt, the execution of our national economic programs already in place. It is therefore highly important for the new administration to really touch upon the strategic issues in our foreign policy in a way that will help solve the country’s economic problems, strengthened its international standing and ensure that Indonesia would not be follow but lead changes. The essence of such an assumption is national interest because of the considerably close link between

foreign policy in order for the new administration to deal comprehensively with Indonesia’s external relations in the next five years. The next administration should be aware that the greater regional and global complexities of the 21st century demand strategic, outside-of-the-box thinking. Strategic issues are strategic by nature and have a major impact on the course and direction of the country’s international relations. It probably relates directly

to one or more of our foreign policy’s fundamental strategic questions: what and to whom are we going to promote, and how will Indonesia in the next five years compete in a more severe strategic milieu. The main programs of our foreign policy referred to in the Midterm National Development Plan year 2004-2009 are the strengthening of foreign policy and maximizing Indonesian diplomacy; pursuing international cooperation to maximize opportunities and reaffirming the country’s commitment to maintain world peace. Assuming that the 20092014 program of our foreign policy remains or at least continues to reflect its basic ideas, it is not wrong to suggest that strategic issues lies at the heart of that program. Here are just some of the foreign policy (related) strategic issues the new administration would have to deal with: • Democratic transition; • Border diplomacy; • Political history of a certain provinces, specifically referred here as the Papuan problem; • Sustain international links so as to better and effectively secure our resources abroad; • Building a stronger shield against forces of destruction. The steps dealing with such strategic foreign policy issues lies

at the heart of foreign policy planning, meaning that the new government needs to design longterm strategic plan in the field of foreign policy for the country to survive or what President Yudhoyono describes as “navigating the turbulent ocean”. There are still unresolved problems to be addressed by the next administration. The foreign policy of the new government cannot serve to protect the country’s interests and to strengthen its international position unless the new government is pursuing more strategic, creative and forwardlooking foreign policy goals. This is not an option but a strategic necessity if Indonesia is not to “sink” in the turbulent ocean. At the time when we are highly praised by the international community for our constant contribution to maintaining international peace and stability and for our development toward a full-fledged democracy, the foreign policy team of the new government should demonstrate its ability to discuss convincingly foreign policy and other Indonesian-related international affairs. This helps the public to understand better how important it is for the country to maintain international links, both for the sake of our economic recovery and to support our new administration, particularly at the time when we internationally come under the spotlight due to our democratic process. Indonesia is now an outward looking country eager to shape regional and international order and intent on having its voice heard. History has destined the country to lead; it needs the capacity to lead be taken seriously. Indonesians want to see the country become a participant with strong principles in world politics. Bantarto Bandoro is a Researcher of Indonesian Institute for Strategic Studies (IISS) and a Lecturer at President University


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The President Post

November 13, 2009

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The Region

China: A Truly Asian Powerhouse

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All photos by Duta Images

Editor’s notes: President Post contributor Taufik Darusman last month visited Hong Kong, Shenzhen and Macau in a blitz five-day visit that left him very much impressed with China’s rapid economic progress. It was his first visit to China which led him to the belief that Indonesians have much to learn from their northern neighbors in terms of human resolve, work ethos and discipline. The following are his general impressions from the (very) short visit to what many have predicted will soon overtake Japan to become the world’s second most powerful economic power after the US.

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n the day I was about to leave Hong Kong for Jakarta in some time midOctober, the city’s major dailies reported in their front pages that the once British colony has 38,000 US-dollar millionaires whose combined net worth is US$181 billion. In fact, the number used to be higher. As The Standard wrote, “Hong Kong millionaires have been hard-hit by the financial crisis, with their numbers falling more than 60%.” But, as Merrill Lynch pointed out on the same day, “the average net worth of Hong Kong millionaires still tops the Asia-Pacific region at US$4.9 million, with the average Asia-Pacific at US$3.1 million and the global average at US$3.8 million.” Meanwhile, China is reported to have 139 US-dollar billionaires, one of whom is Wang Chuanfu, the founder of the company BYD that makes rechargeable batteries and electric cars. His net worth: US$5.1 billion. Not bad at all for a businessman whose country only last October celebrated 60 years as a modern republic. Wang’s feat is even more remarkable as it was only four decades ago that China, under paramount leader Deng Zhaoping, introduced a hybrid economy of combining market capitalism with the principles of communism. The decision by Deng proved to have far-reaching global implications, as China managed to emerge within a short period of time as an economic and political powerhouse. So strong is its economy; last year’s financial crisis that caused a global financial downturn has had little effect on the country. Bloomberg recently reported that by the end of the third quarter China’s growth rate has already reached 7.7%, not too far from its projected annual rate of 8%. China’s statistics bureau has disclosed that household consumption contributes 4% of that figure. The figure outpaced the average rate of any other country, thanks to the Chinese government’s quick response to the global crisis by unleashing a series of economic stimulus packages. Just how pivotal the role of consumers in the nation’s economy is can be gauged by the fact that

in one month alone (September) over one million cars were sold in China. If you factor in the sale of buses and trucks, the figure is 1.33 million. Not surprisingly, many economic experts are already predicting that China will soon leave Japan behind and become the world’s largest economy after the US. They vividly recall that during the period of 2003-2007 the World Bank recorded China experienced double-digit growth figures. In the first quarter of last year, in fact, the country also repeated that fantastic feat as its GDP reached US$4,3 trillion. (The US and Japan last year recorded GDPs worth, respectively, US$14.2 trillion and US$4.9 trillion.) But as China is all set to enter the full recovery phase, officials are at the same cautioning against “excessive growth” in order to rein in inflation.

2 largest coal mining company in terms of production and a member of the Bakrie Group that is owned by a former minister and now chairman of the Golkar Party, Aburizal Bakrie. China Investment Corp., the country’s investment arm, last month agreed to lend US$1.9 billion to Bumi mainly to help the company refinance its debt. Bumi is also Indonesia’s largest thermal coal producers, while Indonesia is the world’s largest thermal coal exporter. Last year, the international financial crisis caused the company’s shares to fall by about 90%. This year, with the gradual recovery in the global economy, the company’s shares are up nearly 270%, far beyond the Indonesian stock market’s gains. Another company that has benefited from the Chinese economic miracle is PT Dayaindo Resources International, which

Indeed, Macau is not just about business only but also culture. And that, perhaps, sums up succinctly what the Chinese are: a people with natural business instincts wrapped under a remarkable culture and now entering the modern age in which commerce takes center stage. The country’s chief economist at the state statistics bureau, Yao Jingyuan, last week told Bloomberg that the focus should be more on “rebalancing and restructuring of the economy” now that its desired growth rate is assured. China’s foreign exchange reserves of US$2.1 trillion (and still increasing at a rapid pace) has allowed it to embark on a global buying and lending spree. According to reports, China has within the past decade spent US$115 billion on foreign acquisitions. In 2008 alone the country spent US$50 billion to buy foreign companies and lent Brazil’s oil company US$10 billion. How does all this relate to Indonesia? The situation is not so encouraging, actually, as Indonesian businessmen seem rather late in recognizing China’s potential as a market as well as a source of funds. But this does not include PT Bumi Resources, the nation’s

in September signed a 10-year contract with the Chinese company Guangdong Zhenrong Energy, requiring the former to supply one million tons of coal as of 2012. This is the second contract the two companies signed, the first of which is in force for five years. “Shipment commenced in October amounting to 125,000 tons of coal,” the company’s corporate secretary, Endang Wiijaya, told Kontan recently. Shenzhen is a city of sub-provincial administrative status in southern China’s Guangdong province, situated immediately north of Hong Kong, from where a 20-minute train ride brings you to one of China’s most modern cities. Its exciting and modern cityscape owes a lot to the vibrant economy due to rapid foreign investment since the late 1970s, when it was a small fishing village. “No one wanted to live here, as

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4 the place was desolate and unlivable” says Kenny Lai, an Indonesian who became a Chinese citizen some four decades ago and now manages the Hong Kongbased travel agency Kent Holidays, told me. “Then the Chinese government sent in troops to work together with the local people and turned the place into an embryonic city that later developed into one of the most modern cities in China.” Foreign companies have since invested over US$30 billion on factories and joint ventures, making it one of the fastest growing cities in the world. It is home to the headquarters of numerous high-tech companies, and the second busiest port in mainland China after Shanghai. “Shenzhen was chosen by the late Chinese leader Deng Xiaoping to be the first of the Special Economic Zones (SEZ) in China. It was formally established in 1979, due to its proximity to Hong Kong, to be an experimental site for the practice of market capitalism within a community guided by the ideals of socialism with Chinese characteristics”, Kenny recalls. “The concept proved successful and encouraged the Chinese leadership to further open up the country and continue economic reform.” Shenzhen (population: nine million) is ranked fourth in GDP among mainland Chinese cities, and in the 1990s was known as a city that “builds one high-rise a day, one boulevard every three days”. The skyline abounds with at least 13 buildings with a height of over 200 metres, including the Shun Hing Square, the ninth tallest building in the world. Taiwan’s largest company, Hon Hai Group, has a manufacturing

plant based in Shenzhen which makes most of the iPods, iPhones and notebooks for Apple Inc. Lenovo, the Chinese conglomerate that bought the personal computing division of IBM in 2005, manufactures its line of ThinkPad notebook computers in Shenzhen. If that is not enough to impress you, the Sichuan Tengzhong Heavy Industrial Machinery is set to take over General Motors’s (GM) Hummer SUV brand for US$150 million. Meanwhile, the second tallest building in Shenzhen is SEG Plaza at a height of 356 meters. Shenzhen also has some of the largest public projects in China. The International Trade Center, built in 1985, was the tallest building in China when built, and the aforementioned Shun Hing building was also the tallest in Asia when it was built (now still the tallest steel building in the world). The Macau Special Administrative Region is one of the two special administrative regions of China – the other being Hong Kong – and thrives on industries such as textiles, electronics and toys, and tourism, making it one of the richest cities in the world. Situated 60 kilometres southwest of Hong Kong and 145 kilometres from Guangzhou, it borders the Zhuhai Special Economic Zone in mainland China. “The clothing industry has provided about three quarters of export earnings, and the gaming, tourism and hospitality industry is estimated to contribute more than 50% of Macau’s GDP, and 70% of Macau government revenue, says Kenny, who accompanied me to Macau the former Portuguese colony. The World Bank classifies

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6 Macau as a high income economy and the GDP per capita of the region in 2006 was US$28,436. Its tourism sector is booming, with 9.1 million visitors in 2000, rising to 18.7 million in 2005 and 22 million in 2006. In 2007 the figure reached 24 million visitors, as Indonesia, which is endowed with natural beauty, exotic culture and upscale resorts, struggles to attract seven million foreign tourists. In 1962, the gambling industry made its entry under a government-issued monopoly license by tycoon Stanley Ho’s company. The monopoly ended in 2002, and with the opening of the Sands Macau, the largest casino in the world in terms of total number of table games, in 2004 and Wynn Macau in 2006, gambling revenues from Macau’s casinos were for the first time greater than those of Las Vegas (each about $6 billion), making Macau the highest-volume gambling centre in the world. Now, 16 casinos operated in Macau, making it an industry in its own right. But that is not Macau’s only ‘charm’, as what is known as the old part of the city – clean and

Photos: 1. China’s infrastructure takes center stage as the country builds its economy. 2. Consumer spending level in China is among the highest in the world. 3. Office buildings rise in every corner of China’s major cities. 4. Shenzhen features their version of Miniature Indonesia Park (TMII) 5. Macau is a good example of how cities preserve their heritage 6. The Venetian is a hotel cum casino with classical characteristics

well-maintained – is a tourist attraction in its own right. Indeed, it could be a model for municipal officials of, for example, Jakarta and Semarang, to copy in their never-ending but failed quest to preserve their’ cities’ respective heritage. Indeed, Macau is not just about business only but also culture. And that, perhaps, sums up succinctly what the Chinese are: a people with natural business instincts wrapped under a remarkable culture and now entering the modern age in which commerce takes center stage.


The President Post

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November 13, 2009

5

Maritime

Back to the Sea: Redefining the Spirit of Nation Building Sunda Kelapa Waterfront Proposed Plan

Image: URBANE Indonesia

Cultural right of a nation is the right of every nation to maintain its culture. It is always associated with the preservation of identity, personality and noble character of a nation’s ancestors. By Martono Yuwono

Every nation has the right to maintain its culture. It is always associated with the preservation of identity, personality and noble character of a nation’s ancestors. In the context of the preservation of maritime history of the Republic of Indonesia, the nation’s cultural right is related to efforts to maintain dignity according to the mandate of the founding fathers. In fact, this has its roots in cultural values and practices of the Kingdom of Sriwijaya, the Majapahit Empire as well as Pasai, Goa Talau, Ternate, Demak, Cirebon, and many more. Indonesia used to consist of many kingdoms and historical relics are prevalent, a testimony to the greatness of the nation’s past. Now, behind every nation’s vision of development emerges a new phenomenon, emphasizing the need to uphold human (cultural) rights. This is apparent in almost every corner of the globe. Globalization is now a fact of life in human civilization. National borders are being slowly torn down as if no border should exist to separate even big nations. Amidst that situation there now emerges an aura of competition for world status. Nations compete against each other to retain their world status by strengthening their respective competitive positions. This is part of their survival strategies. But the simple historical fact is that globalization will in turn give birth to national pride, as the rise of the spirit of patriotism in Asia, Europe and America attests.

European Phenomenon

The Japanese phenomenon deeply affected global tendencies. In a different form after Word War II, Poland came into being through the restoration of nationalism in the aftermath of the collapse of the Warsaw Pact in 1960s. A similar situation occurred in England in the 1980s. Under the spirit of British patriotism, the country, long recognized as a maritime power, rebuilt the London Dockland in order to perpetuate the memory of British maritime supremacy of the past. “The British rule seven waves,” they say. Apart from the restoration of London Dockland, there were also the Albert Dock (in Liverpool) as well as Black Country, Cardiff, Teeside, Trafford Park, and Tyne. All these magnificent projects were planned by Margaret “Iron Lady” Thatcher under a crash program marking “the Decade of Achievements 1980-1990.” American Phenomenon

American history has perpetuated the memory of the restoration of the Inner Harbor Baltimore as a way to arouse patriotism in facing economic recession in the 1970s. This was recognized as a successful project which tells of the revival of the American economy. It also was seen as the laboratory for the revival of states as it then became the barometer of success. Not surprisingly, similar projects

Asian Phenomenon

During the early part of Japan’s modernization drive, known as the Meiji Restoration, the nation opened itself up to the outside world by sending off many of its students to the United States. Initially, this policy was staunchly opposed by the shogun samurais who maintained that sending the younger generation off to a foreign culture would result in the degradation of Japanese cultural values, and this would in turn weaken Japan’s national resilience. Katsumoto, a patriotic shogun, committed suicide while returning his samurai to the emperor in protest against the policy. He refused to take part in a move to overthrow Japan’s dignity and national identity through the Meiji Restoration.

The Phinisi Ships at Sunda Kelapa Harbor

emerged afterward in Port Vell, Barcelona, Kop van Zuid, Rotterdam, Darling Harbor, in Sydney, Alloha Tower in Honolulu, Boat & Clarke Quay in Singapore, Minato Mirai in Yokohama, and many others. Twenty years later the patriotic spirit reemerged as marked by the destruction of the Twin Tower but this was the work of terrorists that recognized no national boundaries.

In every development policy, the maritime sector must be given special emphasis because of the very fact that we are an archipelago. In the process there must be emphasis on the promotion and execution of cultural rights as a moral force.

In order to restore its image in the aftermath of the 9/11 attacks, the United States rebuilt the landmark at Ground Zero called The Freedom Tower, mea-

suring 1,776 meters, representing the year of America’s establishment as a sovereign nation. Then President George W. Bush launched the Patriot Act in 2001 as a way to ensure non-recurrence of the tragedy. All these phenomena teach us that the spirit of nationalism is needed as a last resort, an incomparable national asset to strengthen our national identity and character and in the process ensures our national dignity. Development efforts based on patriotism are needed to strengthen our resilience as a nation. We need such efforts to meet tough global challenges ahead. Universal Phenomenon

Cultural right is a political soft power to promote the strategic aspirations of a nation. Indonesia has the unparalleled moral strength to preserve such rights. As the largest maritime nation in the world, Indonesia has a strong social capital to foster selfconfidence and optimism of the future. The Archipelago Concept (Wawasan Nusantara) was born from the experience of seven centuries of struggle to build and maintain the unity of the Indonesian Archipelago. This has now been transformed into a spirit of national power that is “sustainable” and long-lasting. I have been proposing the dis-

course to enhance awareness for the spirit of going back to the sea because we are an archipelago. Our nationhood is built on the concept of a nation sitting on an archipelago; this must be accommodated as a grand strategy for national unity. Cultural Rights Approach

In every development policy, the maritime sector must be given special emphasis because of the very fact that we are an archipelago. In the process there must be emphasis on the promotion and execution of cultural rights as a moral force. Sunda Kelapa Old Harbor

The position of the old port of Sunda Kelapa is strategic in every sense of the word—it is a silent witness to Indonesia’s long patriotic struggle to maintain pride and dignity. The fort or castle of Batavia and Fort Iacatra at the old harbor need to be refurbished as precious cultural heritage that stores memories of many centuries of Indonesia’s experience with colonial powers. This includes four layers of work, the most prominent being the fourth, which is the site

marking the liberation from Dutch colonialism. It is about the memory of Indonesian independence fighters’ attacks on the Castle of Batavia during which time the commander of the Castle, Jaan Pieterzoon Coen, died. This is also the place where Sukarno landed to prepare for the Indonesian struggle for independence. I would propose restoration of all historical sites to rekindle the spirit of patriotism from Sabang to Merauke, thereby making Indonesia a country with a “patriotic belt” of historical struggle that serves as a “wake-up call” for the nation to return to the sea. Indonesia is indeed a maritime nation. It has been so since many centuries ago; we need to give more emphasis to development of the maritime sector, including all the cultural values that link our many islands into a chain of harmony. We need to realize the mandate of our ancestors to elevate Indonesia into a global maritime power. For this, our motto remains the same: Jalesveva Jayamahe (on land we are the winners; at sea we are the victors).

“Our nationhood is built on the concept of a nation sitting on an archipelago so this must be accommodated as a grand strategy for national unity”. Martono Yuwono


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The President Post

November 13, 2009

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The Economy

By Atmono Suryo

I

These factors contribute to the rise of the Indonesian economy. But it should not be forgotten that Indonesia has one important asset aside from sound economic policies, namely, the philosophy of “ketahanan nasional “(national resilience) which has kept Indonesia afloat since its independence 64 years ago. People’s resilience, particularly in the rural areas is remarkable. Indonesia’s resilience come to the fore at times when the country is hit by disasters or in times of crisis. It is amazing to note that in the wake of the recent West Sumatra quake, President Barack Obama cited Indonesia’s resilience in overcoming critical situations. This is quite an encouragement to the government and

Indonesia Stock Exchange Building

people of Indonesia. In the past few years Indonesia found itself in a crisis cycle. Natural disasters continued to hit parts of the country: from the Aceh tsunami to the Yogyakarta, Sukabumi and Sumatra quakes. In the area of economics was the Asian financial crisis of 1997/98 which started in Thailand to the present global recession commencing in the United States. Despite all the hardships the people managed to withstand them and continued with their daily lives. The fact that the country continues to struggle

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been chosen to be in the G20 and among emerging countries it is in the Top Ten with BRIC (Brazil, Russia, India and China as the core countries). Now, Indonesia and South Africa are set to become a part of BRIC. These are positive developments which take the country to a highly respected place in international economic and political forum. DOMESTIC CONSUMPTION

It seems that never before was consumption regarded as a plus factor but more as a minus one, reducing our wealth or our assets. It is better to safe than to

Despite its many challenges, Indonesia is rated (16th) by the World Bank among the 20 largest economies in the world in terms of GDP. and grow shows that it, especially in rural areas, still retains a high degree of resilience. However, in this modern world marked by different lifestyles and different dogmas, the old philosophy of resilience is easily forgotten. Only senior citizens and people in rural areas still recognize the old philosophy of maintaining national resilience. Such philosophy is needed to keep the country alive in times of hardship; to develop the right mindset and the strong spirit (which is now lacking) to move the country ahead in this competitive world. Good rating Despite its many challenges, Indonesia is rated (16th) by the World Bank among the 20 largest economies in the world in terms of GDP. In terms of politics the country is the third democratic country after the United States and India. In the area of global policies the country has

consume as the people in Asia usually argue. But, presently the consumption factor can be of critical importance to the country’s growth. To cope with the global crisis it is strongly recommended by the G20 to work out stimulus programs to increase global demands which, in fact, mean to increase world consumption and consumers spending. In the case of Indonesia, domestic consumption continues to grow though this is not the case for the poor. On the other hand, in urban areas and in big cities people’s spending is amazing. The impact of world recession on consumption is hardly felt in this country. This in turn is stimulating economic recovery during the first part of 2009. As can be seen in the graph, Indonesia’s domestic consumption has supported the services sector which has increased at high-

er rates than the industrial sector, agriculture and mining. It is rather unfortunate that the three sectors are not growing as they should, as they represent strategic and real sectors of the economy. These three sectors are important from the point of view of production, exports, employment and, most importantly, contributors to central and regional government revenues. The term domestic consumption refers to the private and public (government) sectors, with the private sector consisting of the people’s and business sectors. Their spending power has stimulated growth, preventing the country from being incapacitated by the global downturn. In other words, Indonesia’s resilience is, for the greater part, supported by the people’s purchasing power and small and medium enterprises. As shown by China and India, large populations can be a great asset. These countries and other countries in Asia, including Indonesia, are now considered to be the driving force to pull the world towards recovery and growth. For that matter, it is important for Indonesia to retain the people’s confidence and to increase their purchasing power. Domestic demand and consumption are strong, retail and vehicle sales, in particular motor cycles, are going up. Soon computers will be found everywhere in the country. Progress is being made in this country, but it is not spread evenly. The upper class is swimming in wealth but the very poor are suffering. One weakness of globalization is that the problem of disparities is increasing, not only at the international level but also at the domestic level. This is causing envy among the people, which

An important development to watch is exports. In 2009, the value of merchandise exports went down significantly, but in 2010 the skies are clearing up for exports and are expected to reach 9% and 11.4% in 2011. It appears that the new government can look forward to good years ahead, at least in 2010-2011. With the domestic economy on good track Indonesia will have the opportunity to take advantage of the recovery of the global economy in the areas of trade, services and portfolio investment as well as, hopefully, the inflow of foreign direct investment to strengthen the real sector of domestic economy.

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Source: BPS, CEIC, and World Bank

FIGURE 2: consumers indicators up ���

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n its quarterly report of September 2009 on the Indonesian economy, the World Bank mentioned the “Clearing Skies” of the country. As the report states, Indonesia has made a solid recovery and has gained steam following the turbulence at the start of the year. This trend of gradual recovery is projected to continue into 2011. ADB (Asian Development Bank) also states that Indonesia’s economy is edging up while other financial institutions also predict better years for the country. The reasons of Indonesia’s solid recovery (compared to many other countries) are, among others, as follows: • Domestic demand and consumption remain robust although prices have increased. The large domestic market has remained active, which implies that domestic purchasing power has not been affected by the global downturn. • The banking sector is generally in good health; in many countries, especially in the United States, more than 100 banks have collapsed and needed to be bailed out, costing trillions of dollars. There was only one case of failure in Indonesia, namely Century Bank. • At the beginning of the crisis Indonesia’s stock market suffered big losses due to huge outflow of funds. But soon it recovered and progress in financial markets is taking place. Portfolio and direct investments have returned. • Government and private sector spending is supporting growth. Stimulus programs in the area of infrastructure are on track, but they face difficulties due to, among others, land clearings which are often rejected by local people. • Lately the improved external (international) environment has had a positive impact on the country’s growth, in particular in the area of trade. This is an important development as the world needs to be back on track.

The world economy will start to approach the normal levels of growth in 2011. Indonesia’s economy is also expected to approach the potential levels of around 5.4% in 2010 to around 6 to 6.5% in 2011. The following World Bank projections on Indonesia’s macroeconomic indicators are presented below to serve as a comparison to the government’s indicators. As can be seen in the table, several points of growth are: • GDP growth is expected to continually increase, distributed equally in agriculture, industry, and services. From 2009 to 2011, GDP growth is projected at 4.3%, 5.4%, and 6%. Nevertheless, this is still below the average level of national GDP growth before the 1997-1998 Asian Crisis. • Growth in agriculture is expected to rise from 3% in 2009 to 4.3% in 2011. • Industry’s growth is expected to gradually increase from 2.8% 2009 to 3.8% 2011. • Growth in services will reach 6.2% in 2009, 8% in 2010 and slightly increase to 8.7% in 2011.

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MACROECONOMIC INDICATORS

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Indonesia has made a solid recovery and has gained steam following the turbulence at the start of the year. This trend of gradual recovery is projected to continue into 2011.

FIGURE 1: indonesia’s growth (annual percentage change)

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Source: BI via CEIC

FIGURE 3: services is the largest contributor to gdp growth Contribution to YoY Growth �

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The Skies are Clearing

in turn brings social unrest. The old theory of trickle-down effect is not working. There is the need for improvements in our development strategies by giving propoor policies high priority.

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Source: BPS via CEIC

indonesia’s macroeconomic and fiscal indicators (% change unless otherwise indicated) Annual 1.

2.

3.

2009

2010

2011

2008

2009

2010

2011

Total consumption expenditure

5.9

5.2

5.0

4.9

6.4

3.2

5.4

5.2

Private consumption expenditure

5.3

4.5

4.7

5.0

4.8

3.4

5.1

5.1

Government consumption

10.4

10.8

6.2

4.7

16.4

3.8

7.5

5.8

Gross fixed capital formation

11.7

2.7

8.1

6.8

9.1

2.8

8.7

5.7

Exports of goods and services

9.5

-12.2

9.6

11.4

1.8

-4.0

7.7

13.6

Imports of goods and services

Main economic indicators

10.0

-18.4

13.2

11.7

-3.5

-7.0

9.3

12.9

Gross Domestic Product

6.1

4.3

5.4

6.0

5.2

5.2

5.0

6.1

Agriculture

4.8

3.0

2.8

4.3

4.7

2.3

4.4

3.5

Industry

3.7

2.8

3.4

3.8

2.6

3.5

3.9

4.0

Services

8.9

6.2

8.0

8.7

7.8

5.8

8.0

10.3

External indicators Trade balance (USD bn)

10.2

16.9

11.9

11.2

n/a

n/a

n/a

n/a

Merchandise export (values)

26.8

-11.4

10.4

19.8

14.9

-8.1

14.3

23.0

Merchandise import (values)

41.3

-18.6

13.6

22.8

26.6

-15.5

16.0

26.5

Balance of payments (USD bn)

-1.9

12.0

8.0

2.2

n/a

n/a

n/a

n/a

Financial account balance (USD bn)

-1.6

3.5

5.5

3.1

n/a

n/a

n/a

n/a

Other economic measures Consumer price index

4.

Year to December Quarter

2008

9.8

4.7

5.6

6.5

11.5

2.4

6.8

6.0

Poverty basket index

11.6

5.7

5.7

6.3

13.5

2.9

6.4

6.2

GDP deflator

18.2

9.0

11.3

10.0

17.1

9.2

12.9

7.2

Nominal GDP

25.4

13.8

17.2

16.5

23.1

14.8

18.5

13,7

9,757

10,516

10,000

10,000

11,365

10,000

10,000

10,000

8.7

7.4

7.0

7.0

9.4

7.0

7.0

7.0

97.0

60.2

74.1

75.8

52.8

70.4

75.6

75.6

2.1

-1.8

3.3

3.4

-1.6

1.7

3.0

3.6

Economic assumptions Exchange rate (IDR/USD) Interest rate (SBI, 1 month) Oil price (Indonesian crude price) (USD/bl) Major trading partner growth

Source: Asian Development Bank


The President Post

www.thepresidentpost.com

November 13, 2009

7

Education SBY Government Moves to Create Job Creators In a move that demonstrates his vision for the future, President Susilo Bambang Yudhoyono has instructed Minister of Education Prof. Mohammad Nuh to revamp the teaching methodology in Indonesian schools in order to empower graduates to become job creators instead of job-seekers. By Robert Pede

A

s of this month, according to official statistics, more than 600,000 university graduates are still unemployed because their qualifications—as stated on their diplomas—do not meet the requirements of various institutions they wish to work for. Indonesian graduates’ low level of employability is caused by many factors. Firstly, the teaching-learning process in most schools has for decades been characterized by teacher-centered activities. Teachers impart knowledge onto students and the latter accept it even blindly, regardless of whether or not it suits their need and environment. As a result, the rhythm of teaching is nothing more than the teacher being the speaker, the students the listerners; the teacher is active, but the students remain passive. Rote memorization dominates the entire teaching-learning process. Consequently, at the end of the process, graduates emerge as gatherers of data and information, but not as people who understand and make use of the process of learning to suit their orientation of study. Secondly, changes in education policy have been so frequent that it is not easy to plan a child’s education based on a clear vision. For one thing, every child needs—as of the day s/he enters elementary school—at least 16 years to complete undergraduate studies, but during the period s/he will come under, and be influenced by, the policies of four government cabinets which could mean four dif-

of employers. Universities and industry do not commonly talk to one another. Universities don’t know what market and industrial needs are and industry leaders don’t know what universities can offer. Only in recent years have there been scant attempts to set up the so-called “link-andmatch” schemes, but the results are still limited. All these unhelpful situations emerge from one source: wrong methodology of education. In short, the longer Indonesia holds on to such teacher-centered education, the bigger the number of incapable graduates it will produce only to lengthen the queues of frustrated job-seekers. The longer Indonesian schools hold on to rote memorization methods, the fewer job creators the nation will have.

“Entrepreneurial education is needed now. Students must be trained to become creative and innovative and not just to focus on results of the final exams.” President Susilo Bambang Yudhoyono

ferent people sitting in the chair of the Minister of Education. If these four successive policymakers execute programs under a unified long-term plan, there wouldn’t be a problem, because there will be consistency and clarity in the direction, emphasis, orientation, and priority of education policy. The problem is, they usually don’t do so. Indonesia’s tradition is that whenever a new minister takes office, s/he will almost certainly introduce new policies and

refuse to carry on with previous programs. Because of frequent policy changes, the logical outcome is that education output suffers a lack of quality, market adaptability, and capability in adjusting to market needs. This is the reason why many university graduates have difficulty finding a suitable job. The third culprit to blame is a tragic lack of synergy between school curricula and actual needs

The need of the hour today— according to education analysts—is not to produce more job-seeking scholars, but to produce scholars who can create jobs for themselves and for others. So, in essence what President Yudhoyono is trying to do is to turn Indonesian schools into institutions which can empower graduates to live as independent citizens who can support themselves and in the process build a better future for the nation. With this in mind, Minister Mohammad Nuh is working hard to redefine the curricula from kindergarten to high school level of education. Even from kindergarten level, children will be trained to be creative so that as they grow older

have to build their own individual characters to become leaders with K.A.S.H., which stands for Knowledge, Attitude, Skills, Habits.” The second session was about “How to a Get Better Income”, which was for senior students who plan to undergo internships and are about to graduate. Pak Darmono reminded them that many universities in Indonesia produce graduates that are not ready to work. In contrast, President University is committed to provide students with jobs once they have graduated. However, they need to be well-prepared for that. To be prepared, he emphasized, “is to keep constantly in mind the issue of “jobs” after graduation”. Being well-prepared is not just about learning from books and following classes in one’s major but also to reach out to other fields. “Do not wait until you are asked to do new things”, Pak Darmono said.

One of the founders of President University, Juwono Sudarsono

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“Think Big, Start Small, Move Fast”

T

he President Director of PT Jababeka, Tbk, S. Darmono, recently paid a visit to his ‘beloved son’, President University, to deliver speeches to students, something that he does annually since the university was first set up several years ago. Top leaders, managers and lecturers together with hundreds of students attended the seminar. The seminar was divided into two sections, with two different topics for each batch of students. The first section was dedicated to those who just became President University students in September. As they have just started a whole new university life, Pak Darmono had prepared a lecture

that they would not be able to find anywhere outside President University: “Learning to Win”. In his speech, Pak Darmono emphasized that President University is the land of opportunities for students to become tomorrow’s leaders. However, he

he pointed out. The first thing that students have to achieve is knowledge, which can be obtained from books, lectures or other sources. He told students stories on “The art of killing dragons” and “Hands follow the mind” to

“Furthermore, students also have to build their own individual characters to become leaders with K.A.S.H., which stands for Knowledge, Attitude, Skills, Habits.” added, the final result is up to them. “Learning to be a winner means that students need to have the will to learn and to achieve,”

open their minds on the virtues of learning and achieving. “Learning always goes together with doing,” he said. “Furthermore, students also

He also expressed his concern about Indonesian students who seemed not as eager as their Chinese counterparts who work while studying. He encouraged students to work and study at the same time in order to gain experience. “And while at work, students should like and love their jobs so that they can learn more,” he said. On entrepreneurs, Pak Darmono stated “that they are not born, but made”. He shared his own experiences and points of view on how to be a successful entrepreneur, saying that “Think Big, Move Fast” is the motto of success. According to Pak Darmono, an entrepreneur is a professional who is able to recognize opportunities to create new things and implement it. An entrepreneur is also meant to be a lady/gentleman and a superman. “The answer to the question, “How to Be a Successful Entrepreneur”, could be found right here in this university, as students do not just live and study in an academic environment, but also right in the heart of the industrial zone,” he said. The seminar did really open students’ minds and inspired them to start thinking and choosing the right way to become tomorrow’s leaders.

they will have the ability to come up with new inventions and practices that may benefit their future and that of the society at large. “I want the Minister of Education to conduct an overhaul of teaching methodology from KG to high school levels, so that it is the students instead of the teachers who will be the center of activities at school,” President SBY says. “Entrepreneurial education is needed now. Students must be trained to become creative and innovative and not just to focus on results of the final exams,” the President adds. President SBY believes that if entrepreneurial education can replace rote memorization methodology, Indonesia will in the not-so-distant future see new generations emerge as job creators to strengthen the economy and society at large. The good news is that the new direction the President wants schools to take is in fact in line with the aspirations of Indonesia’s private sector leaders. Before making the remark recently, President SBY had in fact received a letter from two public figures—Jacob Oetama, the chairman of Kompas-Gramedia Group, and Dr. Ciputra, the chairman of Ciputra Group. The duo had urged the President to give more emphasis on entrepreneurial education as a way to boost Indonesia’s ability to compete in the global market. Ciputra, whose many schools specialize in entrepreneurial education, believes that “an entrepreneur is a person who can turn

garbage into gold.” Likewise, an entrepreneurial scholar is an intellectual who can create great sources of income for himself as well as for others—even from scratch. The government’s resolve to enhance entrepreneurial education is best understood in the remark

“We want university graduates to emerge as part of the solution; therefore they must be empowered with entrepreneurial ability in order to reduce unemployment and poverty.” Prof. Dr. Ir. Muhammad Nuh Minister of Education

presented recently by the education minister: “We want university graduates to emerge as part of the solution; therefore they must be empowered with entrepre-

neurial ability in order to reduce unemployment and poverty.” To realize this, the Ministry of National Education (MONE) has established at least 300 centers for entrepreneurial studies across Indonesia. In 2009 the government spent at least Rp100 billion for this and the year 2010 will see a similar amount of fund being allocated for this project. The fund goes for both stateowned and private universities. The government has included entrepreneurial study in the curriculum of every state-owned university so students are free to take it as either a major or minor subject. In this way, students from non-economics faculties can also learn to become entrepreneurs. Given this big dream, a big challenge the government has to overcome is to provide a sufficient number of entrepreneurial teachers and empower them with facilities and networks needed to groom Indonesia’s new generation of entrepreneurs. The Indonesian president may not see the desired results during his term of office that will end in 2014, but the foundation and new direction of education he has now laid down will mean a lot for Indonesia’s future. The reason, observers say, is that emphasis on entrepreneurial education will transform Indonesian society in a very remarkable way. And SBY will some day be remembered as Indonesia’s “father of transformational education” if he can push the endeavor forward and make it a national movement.

“Indonesia is a Very Strong Country” China’s Ambassador to Indonesia, H.E. Mrs. Zhang Qiyue has said Indonesia has a golden opportunity to develop and that it is set to surge ahead in the coming years.

“I

always say to visitors from China that Indonesia is a very strong country in this part of the world,” she said during a recent visit to the President University at Kota Jababeka. Meanwhile, Morgan Stanley said Indonesia is ready to become the fifth BRIC country, and predicted that as of 2011 Indonesia will grow by 7% annually.

role not only in Southeast Asia but also in the world as Indonesia is a full member of the G20, the group that deals with important issues such as the international financial crisis and climate change. On China-Indonesia relations, the ambassador said it offers many golden opportunities due to the very long years of relationship between the two countries. “In recent years, especially after 2005 when we signed the declaration on the establishment of a strategic partnership, our relationship has started to soar very high.”

BRIC stands for Brazil, Russia, India and China and is a term used to refer to new industrial powerhouses. The Chinese ambassador added that Indonesia today accounts for 45% of the population in Southeast Asia and is the strongest economy in the area, accounting for about 41% of its total economic strength.

“With more than 10 years of reform, we should be very proud that Indonesia is developing steadily. When the world was hit by the international financial crisis, Indonesia was still able to achieve a positive growth of 4.5%, behind China and India.”

“With more than 10 years of reform, we should be very proud that Indonesia is developing steadily. When the world was hit by the inH.E. Mrs. Zhang Qiyue ternational financial criChina’s Ambassador to Indonesia sis, Indonesia was still able to achieve a positive growth of 4.5%, behind She also noted that education is China and India,” she said. She added that “Indonesia taken very seriously in this counhas every reason to be a strong try as there are many excellent fadeveloping country in this re- cilities such as President Univergion, in fact in the world, due sity. to its large population, which She added that Indonesia also is number four in the world.” has an increasingly growing

She noted that bilateral trade between the two countries reached US$31.5 billion last year, a record high that is set to reach new heights due to the vast potentials of the economies of both countries. Last year, about 2,000 Chinese tourists came to Indonesia but the ambassador hoped to boost the figure through joint efforts. “There are a lot of good places to see in this country such as Bali, Jakarta, Surabaya, Medan, Manado and many others,” she said. Meanwhile, both countries are set to mark the 60th anniversary of bilateral relations next year.


8

The President Post

November 13, 2009

8

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Education Government Sets Foundation for Further Reform of Education President Susilo Bambang Yudhoyono has spelled out eight priority programs to be implemented in the sector of education during the first 100 days of his second term. By Robert Pede

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ducators have welcomed this plan as it proves the government’s seriousness in upgrading the quality of human resources and promoting national equity in the sector of education. The hundred-day period actually began on November 1 and will end on January 1, 2010. During the period the Ministry of National Education (MONE) will make strenuous efforts to improve educational facilities, set up strategic plans for the 2010-2014 period, and conduct an overhaul of the system of education in order to “contribute much more” to national development, says Minister of Education Prof. Mohammad Nuh. The following are the eight priority programs being implemented by Minister Mohammad Nuh’s office: 1. Provision of massive Internet connections at as many schools as possible; 2. Upgrading of the capacity of school headmasters and inspectors; 3. Provision of scholarships for talented high school students from poor families to enter state-owned universities; 4. Provision of special incentives for teachers in frontline and remote areas; 5. Adoption of a comprehensive 2010-2014 strategic plan for national education; 6. Adoption of guidelines for developing national culture and character; 7. Overhauling of teaching-learning methodology; and 8. Adoption of a synergy of policies of the ministry of education and ministry of religious affairs on one hand and synergy with the need of institutional employers on the other. In this way it is hoped that high school and university graduates will have a higher level of employability once they have completed their studies. But what the SBY Government aims to do is more than just to launch the attractive politically-oriented measures. It actually aims to lay the right foundation for what Minister Nuh refers to as “the second chapter of Indonesia’s educational reform.” The education minister is well aware of the fact that in order to promote quality in education, key is to promote the quality of teachers, followed by a focus on ways to distribute teachers more evenly across this sprawling archipelago.

8

Education Priority Programs

1. Provision of massive Internet connections at as many schools as possible; 2. Upgrading of the capacity of school headmasters and inspectors; 3. Provision of scholarships for talented high school students from poor families to enter stateowned universities; 4. Provision of special incentives for teachers in frontline and remote areas; 5. Adoption of a comprehensive 20102014 strategic plan for national education; 6. Adoption of guidelines for developing national culture and character; 7. Overhauling of teachinglearning methodology; and 8. Adoption of a synergy of policies of the ministry of education and ministry of religious affairs on one hand and synergy with the need of institutional employers on the other. In this way it is hoped that high school and university graduates will have a higher level of employability once they have completed their studies. simplify the procedures for entering university. This is why he says, “If we can make it simple, why make it so complicated?” But education observers say the minister needs to work very hard to realize this idea given that the recruitment standards differ from one university to another. The minister believes that in simplifying the procedures, the country will save a great deal of money. To students from poor families, perhaps the biggest news today is that the government will provide 10,000 scholarships for general and vocational high school students who are academically outstanding. This will be disbursed during 2010-2012 academic years, the minister says. Prof. Mohammad Nuh is Indonesia’s first education minister to have announced that there must be no discrimination between state-run and private schools. He also opposes discrimination in treatment of teachers in urban and rural areas as well as discrim-

But what the SBY Government aims to do is more than just to launch the attractive politicallyoriented measures. It actually aims to lay the right foundation for what Minister Nuh refers to as “the second chapter of Indonesia’s educational reform.” Under this, qualification of teachers will be upgraded so teachers will have at least an S1 (university degree) to be accepted in any school. Teachers’ certification program—a tight process to screen professional teachers—will be enhanced for the purpose. In another development, Minister Nuh has made it clear that the government will abolish the entrance tests requirement for state-run universities and will replace this with an integrated system of evaluation that combines the results of exams conducted at lower levels and the results of state-sponsored exams at the high school level. This, educators say, is a good maneuver to terminate commercialization of campus seats by brokers and at the same time provide easier access for students from all walks of life to enroll at state-run universities. Minister Nuh’s policy on this issue represents a daring move to

ination based on gender and primordial considerations. With all these important items on his agenda, Minister Nuh is believed to be very well positioned to deliver greater results than what he saw during SBY’s first cabinet. His previous assignment as Minister of Communication and Information (Com-Info) should have given him all that is needed to bolster the performance of Indonesian schools through utilization of the Information and Communication Technology (ICT). In fact, even when he was still Com-Info Minister, he already had launched a pilot project to terminate isolation of Islamic boarding schools in Malang, East Java, by providing broadband Internet connection which is now very useful for teachers, students, and even local residents. As former rector of Surabayabased Sepuluh November Tech-

nology University (ITS), Prof. Nuh knows very well what to do to upgrade university output during his cabinet term. Nevertheless, educators say that the most difficult part of the SBY government’s short-term program is how to set up a comprehensive set of guidelines for building national culture and character at a time when the nation has neither the precedent nor the clear vision on the very definition of ‘national culture’ itself. In an address to an internation-

al audience attending the 10th anniversary of The Habibie Center in Jakarta on November 10, former president Prof. B.J. Habibie acknowledged that it is very difficult to define what is meant by ‘Indonesian culture’ as every ethnic group has its own culture and traditions. Apart from that, Indonesian society is becoming increasingly exposed to globalization to the extent that there are hardly any more barriers that could prevent the influx of cultural information

President University Graduation Day

from every corner of the globe. All these foreign values affect the behavior of Indonesian society, including students at all levels of education and the younger generation at large. Therefore, the government is trying to set up some kind of guidelines to pro-

Photo: President University

tect the nation’s culture from being overthrown by negative practices. We have yet to wait for the minister to provide further details on this particular topic. Many would agree that this is a significant part of the national

character building measures being undertaken by the SBY government. It remains to be seen whether this noble idea will make any headway henceforth. But at least the government’s resolve to tackle this long-neglected area is worth applauding, educators say.


Business Krakatau Steel to Sign JV Deal with Korea`s Pohang State-owed company PT Krakatau Steel will sign a joint venture agreement with South Korea’s steel giant Pohang Iron and Steel to build a US$5 billion steel plant in the country. Krakatau President Fazwar Bujang said the country’s largest steel maker would take up to 45% stake in the venture. The US$5 billion plant will be built in its vast Cilegon Industrial Complex, Banten, and is said to boost Krakatau’s production capacity to 3.5 million tons a year from 2.5 million tons at present. The deal is expected to be finalized by the end of the month, The Jakarta Globe reported.

Summit to Boost Tourism Investment The Association of the Indonesian Tour & Travel Agencies (Asita) has said tourism investment in Indonesia is set to grow after the holding of last month`s national summit. “The investment in the tourism sector will grow but not as rapid as expected,” Asita Vice Chairman for Jakarta Jongki Adiyasa said here over the weekend. He said that significant growth could be expected from certain tourism sectors such as hotels and MICE (meeting, incentive, conference and exhibition) programs. The Asita chairman said he was convinced that the investment in the hotel and MICE sectors would grow significantly in line with the improvement of the country`s economic business climate. Jongki told Antara that many investors were waiting for consistent official policies before going ahead with making serious investments in Indonesia.

Bappenas: Economic Growth Rate Set to Reach 6% in 2011 State Minister of National Development Planning/ Head of the National Development Planning Agency (Bappenas) Armida S Alisjahbana has said that in 2011 the government will step up economic growth to 6%. She made the statement at a meeting between the media and Bappenas in Bogor Friday. She said that the acceleration in 2011 was made as the world economy may have been restored to normal, increasing exports and investments. In the meantime, most economic obstacles may have been overcome in 2010, meeting the initial targets of the new government, so that in 2010 economic growth may at least reached 5.5%, she said. The minister further said that the acceleration can be successful if no external shocks occur such as the price of oil increasing up to US$160 per barrel. Armida said she will focus on creating a synergy of national development as well as intensifying synergy between the different regions.

Newmont, NTB Sign Equity Agreement The regional government of West Nusa Tenggara (NTB) and PT Newmont Nusa Tenggara (NNT) have signed a sales and purchase agreement (SPA) on the 10-percent divestment of the company`s equity. “It was signed just now,” NTB Governor Zainul Majdi told Antara last week. The signing of the agreement was carried out in Jakarta between Newoment and PT Multi Daerah Bersaing, a joint venture between PT Daerah Maju Bersaing and PT Multi Capital Indonesia, a subsidiary of the Bakrie Business Group. Daerah Maju Bersaing is a joint venture firm of three regional governments, namely the regional government of NTB, the regional government of West Sumbawa district and the regional government of Sumbawa district. Zainul said that the value of the 10% SPA transaction was US$391 million and was paid in cash, “but Newmont agreed to provide an additional corporate social responsibility (CSR) fund amounting to US$38 million.” NNT is US mining company which mines copper and gold deposit in Batu Hijau region, West Sumbawa district, West Nusa Tenggara province. A total of 80 percent of the company`s stake was controlled by Nusa Tenggara Partnership which consisted of 45% under Newmont Indonesia and 35% of Nusa Tenggara Mining Corp and Sumitomo of Japan.

Govt Sets Aside Rp1 trillion To Revitalize Sugar Mills The government is set to earmark Rp 1 trillion as initial support for the revitalization of sugar mills under a subsidized interest scheme, a minister said. “The subsidized interest scheme will allow sugar mill companies to obtain commercial credits from banks,” State Owned Enterprises Minister Mustafa Abubakar said here last week, news media reported. Mustafa said revitalization of other sectors, namely fertilizer and salt industries, is also in the plan. “But we will pay relatively greater attention to the sugar and fertilizer sectors,” he added. The minister said there are seven sugar factories under the coordination of the State Enterprises Ministry that needed to be revitalized by renewing their equipment or rebuilding their factories. The aim of the fertilizer industry`s revitalization is to increase production of urea and organic fertilizers, he added.

9

The President Post

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Display until November 26, 2009 // No. 03

Broad-based Recovery on Track

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conomic growth during the quarter was contributed in part by a good crop harvest season, as well as an increase in nonoil and gas mining production. The latter is probably related to the rise in exports of coal (+27% YTD) and iron ore (+21.4% YTD) during the year, as shown by customs trade data. With regards to manufacturing industries, q-o-q growth was slightly lower compared to the same period last year. But this was mostly due to a decline in food and beverages production, which is probably the residual effect following the legislative election campaigns in April. What’s more important is that output growth from high-value industries such as motor vehicle manufacturing continues to rise. Industries such as textiles, cement and metals manufacturing also show further recovery. On the other hand, these industries extensively use imported raw materials. As such, imports may continue to rise, increasing the risk to a drop in the trade surplus. Meanwhile, growth in the construction sector was surprisingly high but consistent with the improved figures for domestic cement consumption, along with the year-on-year rise in fixed capital investments on expenditure breakdown (Chart 3). A closer look at the expenditure breakdown shows that yearon-year household consumption growth was marginally lower. The growth in government expenditure also slowed down during the quarter, as less was spent on goods and services spending. The good news is on the investment side. Although the pace of fixed capital investment growth was still lower compared to pre-crisis (2008) levels, it has started to rise on a year-on-year basis. Apart from increased construction activities, this was due to rising purchases of machinery and vehicles. Nonetheless, most of the capital goods were imported, which again underscores the risk to a drop in trade surplus.

The economy grew by 4.21% year-on-year in 3Q09, faster than our forecast and prediction. Similar to 2Q09, employment-absorbing industries (excluding agriculture) remain on the path of positive growth.

Policy Implications and Market Significance

GDP by expenditure (% y-o-y)

With year-to-date GDP growth also at 4.2%, there is the possibility that in the entire year of 2009 the GDP will slightly exceed our 4.3% forecast. However, the 3Q09 GDP numbers ared more or less in-line with BI’s expectations. Thus, we don’t think today’s numbers justify any substantial change in the BI rate outlook. Economic recovery remains on track, with inflation pressures so far remaining muted and inflation expectations still rising at a manageable pace. Our view remains that BI will probably raise the rates next year (Mar-10) as inflation pressures reemerge amid a spate of administered price adjustments (e.g. electricity & LPG prices). With implications on interest rates expected to be minimal, the GDP release may have a limited direct impact to the bond and FX markets. Bond yield and FX movements currently seem

By Helmi Arman

more correlated to global risk appetites and broad dollar trends. And with the Fed recently having reiterated its resolve to keep interest rates low, the dollar index has started to decline again. This may provide support for the rupiah in the near term; the IDR bond yield curve may see a parallel shift downward. The writer is an economist at Treasury & Capital Markets, PT Bank Danamon Indonesia, Tbk.

Forecast* FY09

Actual 3Q09

Forecast* 3Q09

Consensus 3Q09

2Q09

FY08

Real GDP (% y-o-y)

4.3

4.2

4.05

4.17

4.0

6.06

Consumption (% y-o-y)

5.1

4.8

5.0

n/a

4.8

5.3

Government (% y-o-y)

16.6

10.2

18.5

n/a

17.0

10.4

Fixed Investments (% y-o-y)

3.9

4.0

5.4

n/a

2.6

11.7

Net Exports (% y-o-y)

13.9

39.8

27.2

n/a

22.5

7.3

Source: CEIC, Bloomberg, *Danamon Estimates

chart 1: indonesia gdp growth, by expenditures

chart 2: indonesia merchandise trade

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chart 3: cement consumption, commercial vehicle sales, investments

chart 4: idr sovereign yield curve

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Source: Bloomberg

Source: CEIC, BPS

GDP

Consumption

Government

Fixed Investment

Exports

Imports

Domestic Demand

Net Exports

1Q08

6.2

5.7

3.6

13.7

13.6

18.0

7.5

-1.7

2Q08

6.4

5.5

5.3

12.0

12.4

16.1

7.1

-1.9

3Q08

6.4

5.3

14.1

12.2

10.6

11.0

7.9

9.0

4Q08

5.2

4.8

16.4

9.1

1.8

-3.5

7.1

25.5

1Q09

4.4

6.0

19.2

3.5

-18.7

-26.0

6.3

12.1

2Q09

4.0

4.8

17.0

2.6

-15.5

-23.9

5.3

22.5

3Q09

4.2

4.7

10.2

4.0

-8.2

-18.3

5.0

39.8

GDP by industry (% q-o-q) GDP

Source: CEIC, BPS

Agriculture

Mining & Quarrying

Manufacturing

Utilities

Construction

Trade, Hotel, & Restaurant

Transport & Communication

Financial

Other Services

3Q07

3.7

8.6

-0.7

3.0

3.6

3.7

4.6

6.1

1.9

0.7

4Q07

-2.5

-23.8

0.0

-0.2

1.7

3.8

0.1

4.5

3.1

2.9

1Q08

2.4

19.2

-0.6

-0.1

1.6

-1.9

-0.1

1.4

1.9

0.5

2Q08

2.8

6.3

0.8

1.4

4.4

2.4

3.4

4.3

1.5

2.5

3Q08

3.7

7.2

1.9

3.1

2.3

3.2

4.9

4.5

1.8

1.1

4Q08

-3.6

-22.9

0.0

-2.5

0.8

1.9

-2.6

4.8

2.0

1.7

1Q09

1.7

19.8

-0.2

-0.5

3.6

-1.3

-4.8

2.5

0.8

1.3

2Q09

2.4

3.5

1.6

1.5

8.1

2.5

2.5

4.7

0.6

3.1

3Q09

3.9

7.3

5.1

2.8

1.6

5.5

4.6

5.1

1.4

-0.3


The President Post

10 November 13, 2009

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Property THE PROCON REPORT Q3-2009:

Upbeat and Encouraging With the sound economic condition expected to continue in line with stronger confidence on the economy, property developers will start playing their role in the property business.

Economic review

“Indonesia’s improving economy in the third quarter 2009 is attributed to the positive impact of the global economic condition which is showing a recovery” Bank Indonesia projected the economy to grow by as much as 4.2% this quarter in line with the global economic recovery, especially in Asian countries like China and India. In terms of domestic economy, sound economic growth is mainly driven by higher domestic consumer demand, spurred by the seasonal Idul Fitri demand and consumer confidence on expectation that the economy will post higher growth and export revenues will increase compared to the previous quarter. The rupiah appreciated 5.6% during the third quarter to 9,681 against the US$ from 10,225 in the second quarter, contributed by positive global development, thus luring foreign investors back into the country. The condition is also helped by Indonesia’s stable economic condition that contributed to the rupiah appreciation. The strengthening of the rupiah plus the sluggish global commodity trading brought the inflation rate down to 2.83% (yoy) from 3.65% in the previous quarter. Based on this positive domestic economic condition and BI’s inflation projection of 4+1%, the central bank slashed its benchmark rate in August 2009 to 6.5% from 7% in the second quarter. For 2009-2010, BI predicted the economy to grow by 4-4.5% at the end of 2009 and 5-5.5% in 2010, higher than its previous projections. Meanwhile, Economist Intelligent Units projected the economy to grow by 4.2% in 2009 and 4.5% in 2010 on the prospect that the national economy could still post more positive growth. The economy would still be propelled by stronger domestic consumption, higher export revenues, and the government’s stimulus package. In addition, growth in the development sector is expected to reach 6.1-6.6% in 2009, in line with stronger public purchasing power, improved consumer confidence, and low BI rate. With the sound economic condition expected to continue in line with stronger confidence on the economy, property developers will start playing their role in the property business.

CBD office market

”Improved business confidence has led to increased office leasing activities in the CBD area in Jakarta, marked with the growing number of tenants expressing their intention to expand and relocate.” Additional supplies in the third quarter reached 110.700 m2 with the completion of two new buildings, Cyber II in Kuningan and The Plaza in Thamrin. The completion of the two new buildings brings the total number of office space supplies at CBD to 4.03 million m2, up by 2.8%. New supplies until 2011 are expected to reach 367.000 m2, of which about 60% of the total will be available in 2010. Office space demand continued to rise in the third quarter, continuing trends from the second quarter. Net occupancy rate reached 56,000 m2, the highest occupancy rate since the global crisis at the end

due to low occupancy rate and tight competition among office buildings at CBD both for buildings that have long existed and those that have just entered the market. In the next two years, demand is predicted to continue rising, but new supplies that will soon be available will make leasing prices to remain stable. Retail market in Jakarta

”Leasing prices of shopping centers in the third quarter 2009 remained stable due to moderate demand growth and tight competition....” Additional space supplies for shopping centers are contributed by Central Park, Podomoro City in West Jakarta and Senen Jaya Wholesale Market in Central Jakarta with total new supplies reaching 120,000 m2. The new addition brings the total cumulative supplies to 3.45 million m2.

Market absorption is mainly seen in class A office segment marked with the large number of tenants wanting to increase the quality of their office buildings. In terms of width, demand in the third quarter ranged from small to medium. of last year. Despite higher occupancy rate, additional supplies slashed the occupancy rate by 1% to 85.6%. Market absorption is mainly seen in class A office segment marked with the large number of tenants wanting to increase the quality of their office buildings. In terms of width, demand in the third quarter ranged from small to medium. Similar to the previous quarter, business expansion and relocation became the biggest contributor for office space demand at CBD Jakarta. Leasing activities were also seen more active during this quarter in line with the growing potential for companies to expand and relocate. Companies that previously put their decision to lease office space on hold have started to materialize their plans. Big demands from several foreign companies whose leases will expire in the next two to three years have also contributed to the growing leasing activities. They are hoping to make pre-commitment in projects that are still under construction and even for those still being planned. Leasing prices did not increase

The biggest supply is contributed by the retail space in CBD and North Jakarta by as much as 734,600 and 766,480 m2 respectively, representing about 21% - 22% of the total supplies. Shopping centers that are up for lease take up the biggest portion of the total supplies, accounting for 60% with the remaining being supplied by the retail space in strata-title shopping malls. One new project that is slated for completion at the end of 2009 will be contributed by Rasuna Epicentrum (Epi-walk) at the CBD area. Occupancy rate in Jakarta reached 76.5%, down 1.5% in the previous quarter. Leasing activities for shopping centers fell slightly to 84.1% in contrast with strata-title retail space that enjoyed growth of up to 65.1%. During July to October 2009 period, the total number of retail space supplies that were occupied was dominated by old and new F&B retail players, while several major tenants preferred to take retail space in newly operated shopping centers. Overall, retail projects in Procon’s research basket offered leasing prices in rupiah. Estimated gross leasing price

transaction in the retail market was relatively unchanged compared to the previous quarter, at Rp590,000/m2/month in Jakarta. The number of new supplies available from the fourth quarter 2009 until 2011 will be quite significant at about 44%, which are expected to be ready in 2010. Mix-use construction is expected to dominate the retail market for the 2010-2011 period from Gandaria City, Kota Kasablanka, Kuningan City and Ciputra World. Occupancy rate in this period is predicted to increase to 76% and 77% respectively with expected net occupancy rate of 80,000 m2 each. Condominium market

“In line with improved economic condition and low interest rate, demand for condominium in the medium segment increased significantly.” Total condominium supplies in Jakarta in the third quarter this year reached 69,900 units, up 2.6% compared to the previous quarter with 1,740 additional units from condominiums in the CBD area, South Jakarta and Central Jakarta. Newly launched condominium projects in this quarter include Pulomas Park and Signature Park which are slated for completion in 2012. Overall, condominium sales soared by up to 96.9% with only 2,240 units still remained to be sold. The biggest demand contribution came from the newly finished Thamrin Residence project which has entered the handover phase with the owner. Market absorption for condominiums that were still under construction in the third quarter 2009 reached 2,420 units, up by more than 30% compared to the previous quarter. A significant jump was seen in the upper segment with the biggest contribution from two condominiums in the CBD area and South Jakarta. The medium class segment contributed the biggest to condominium market absorption, mainly from the Bellmont Residence and Signature Park that were launched in the last quarter. The high sale in the third quarter was also helped by Bank Indonesia’s rate cut policy, thus boosting consumer capacity in using bank loans to buy condominiums. Developers were also active in providing payment ease to boost

Artist impression of a high rise building

sales through flexible long term payment method. Occupancy rate for condominiums increased to 66.8% from 66% in the previous quarter. The largest contribution came from the medium segment, contributing 54% to the rise from two condominium projects in the premium segment at the CBD area, namely the Da Vinci and Oakwood Premier Cozmo. Condominium supply from the fourth quarter this year until 2011 is 9,580 units, with the biggest contribution dominated by the medium income bracket, accounting for 63% of the total units available. With the high supply, developers are predicted to hold the property prices steady until the end of 2009. The government’s policy to keep the key interest rate under control is also expected to help boost condominium sales, especially in the final quarter of 2009 and 2010. Housing market in Jakarta and the expansions

“New supplies and sales increased significantly in the medium segment due to higher developers’ confidence and cheaper bank lending rate”

Photo: www.procon.co.id

The projects monitored by Procon on the housing market outside Jakarta comprised 45 large housings in Jakarta, Bekasi, Bogor, and Tangerang that are still active and not categorized as low cost houses. In the third quarter 2009, cumulative supplies reached 346,300 units, with Tangerang as the biggest contributor accounting for 42%. New supplies in this quarter reached 3,820 units or up 80% compared to the previous quarter. New supplies are dominated by the medium segments which are mostly found in Bekasi (44%) and Bogor (23%). In general, market absorption increases sharply by about 75% where sales reach 2,560 units, from only 1,400 units in the previous quarter. The sale increase is attributed to: • 42% of the new supplies are sold out with Bogor taking up around 35% of the new supplies • Stronger consumer/buyer confidence on the economy • The low BI rate brings a positive impact on housing loans, mainly for medium income brackets in Bekasi and Bogor which dominated sale by about 62% of the total units sold in this quarter.

“New supplies and sales increased significantly in the medium segment due to higher developers’ confidence and cheaper bank lending rate”. Overall, sale rate reached 83.3%, slightly lower than 83.6% in the previous quarter following the high number of new supplies. The residential market is predicted to continue to improve, marked with higher supplies and sales. Around 1,500 housing units will be marketed in the final quarter of 2009, lower than the units sold in the third quarter. This is due to shorter marketing period (long holiday in December), thus would likely affect sales. Several banks will continue to be selective in giving out housing loans despite aggressive competitive lending rate promotions in this quarter in collaboration with developers.


The President Post

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November 13, 2009 11

International Trade

By Atmono Suryo

T

he three factors are considered to be the main engines of growth for the country. Among developing countries, Brazil, South Africa and Indonesia are endowed with abundant natural and human resources. It is of strategic importance to Indonesia to unlock these large potentials, trade and exports in particular. The time has now come for the country to make the big push by mobilizing all available resources and potentials to speed up Indonesia’s recovery, and to take the country to higher levels of growth in order to achieve higher prosperity. In this globalized competitive world, Indonesia is racing against time. Indonesia has always been a trading nation and a reliable source of commodities with the following traits: • Trade is the bloodline of the resources-based country. Last year exports accounted for 20% of GDP. • Internally trade is directing the flow of resources and merchandises from one place of the country to another. • It is a source of income for many traders and workers. • It brings in much-needed foreign exchange: US$130 billion in 2008. • Trade not only stimulates the development of small and medium enterprises but also large multi-national companies.

• Importantly, its multiplier effects are widespread and quite significant. • In the area of abundant human resources, the objective now is to stimulate the development of entrepreneurship as suggested by Dr Ir Ciputra in a seminar recently held by ICWA, the Financial Club and EY. As the WTO (World Trade Organization) explains, the manufacturing of many products is increasingly outsourced around the world. In this process trade plays a vital role. But as world demand falls, so will trade with its multi-effect. This causes job losses, decline in foreign exchange earnings and imports and increases unemployment and poverty, which are Jakarta International Container Terminal what happening since 2008 until today. On the positive side, the WTO widespread than anticipated beis of the view that trade can be a fore. All regions in the world are potent tool in lifting the world slowing simultaneously, which from the present economic dol- have had a massive impact. drums not only for the globThe G20 is therefore right in al economy, but also for the de- proposing Stimulus Programs to veloping and emerging countries stimulate the domestic econosuch as Indonesia. mies to cope with the global falldown. For many countries such GLOBAL TRADE as China, and to a certain extent There are a number of factors Japan, the stimulus programs are impeding the growth of global working. In Indonesia the impact trade. The fall in demand is more is rather limited, as it focused its

Photo: www.vivanews.com

attention on its problematic infrastructure. The problem of finance is another impediment, in particular the shortage of trade finance. Measures are being taken, especially in Asia, to ensure the availability and affordability of trade finance. There is also the problem of protectionism although all countries have made their commitment to combat protectionism. This problem, however, is

Indonesia’s exports is mostly composed of oil & gas, commodities and mining. Indonesia is therefore less affected by the downturn of consumer goods. Boosting exports

As we require huge amounts of foreign exchange, there is an urgent need to boost exports, one of the key potentials of the country that needs to be unlocked and mobilized. According to data in the media the composition of exports for the year 2008 and 2009 is as follows: Exports of agriculture is only 3,9%, oil & gas 14,5%, mining 14,8 but industry takes the lion’s share with 66,6%.

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The reasons behind our relatively weak exports are among others: • The problems of high-cost economy leading to the domestic economy being flooded with imported goods, especially from China, whose products are cheaper. • Labor problems and all of its ramifications. • Shortage of raw materials for production. • Problem of incentives, taxation and many more. • Very competitive overseas markets abroad and aggressive traders from other countries. • In many markets, including in lucrative Asia, Indonesia is pressured to explore unknown markets. One key weakness in Indonesia’s trade is its very low competitiveness—technically, financially and commercially. There may be one other problem that needs further consideration: the lack of the right kind of entrepreneurship, as highlighted by prominent businessman Ciputra, and the lack of resilience. We need to have the right kind of mindset and a strong spirit to take part in the economic battle amidst a highly competitive world.

FIGURE 1: indonesia’s balance of trade (in us$ billions) �

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Trade is one of the important potentials of Indonesia and a significant policy instrument to achieve economic growth aside from investment and consumption.

According to WTO data, Indonesia ranks 31th out of 146 countries in terms of exports value. Developing countries ranked higher than Indonesia are, among others, China, South Korea, Taiwan, Mexico, Singapore, Brazil, India, Thailand and Malaysia.

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Unlocking Indonesia’s Trade Potentials

still on the rise. It is predicted that the collapse in global demand will drive world exports down by about 9% in volume terms in 2009, the biggest contraction since World War II. Consequently, world output growth is also down compared to that of the year before except in Developing Asia (excluding Japan, Australia and New Zealand) led by China, which is registering the fastest growth rate among any major economy. Globalization has stimulated growth in East Asia, one of the key players in the global economy. One of the key instruments of Asia’s growth is trade, and it presently continues to be the potential force of East Asian countries. Growth of East Asia’s merchandise exports was as high as 18.8% in 2006. 16.8% in 2007, reaching 25.2% in July 2008. Since then trade in the region, including Indonesia, has continued to go down in the first part of 2009. The hardest-hit countries are the ones which depend on trade of manufactures. Indonesia’s exports is mostly composed of oil & gas, commodities and mining. Indonesia is therefore less affected by the downturn of consumer goods. 2008 was a record year for exports: a record high of US$136.76 billion. But 2009 could be a most difficult year for the country, as a contraction of about 15% is expected. Minister of Trade Mari Elka Pangestu, however, is confident that the year 2010 will be better, with exports expected to grow by 5%. For the years 2009-2014 the Department of Trade has made the following program: • Diversification of markets and products. • Strengthening external and domestic trade. • Improving the investment climate. • Safeguarding Indonesia’s interests in the international arena. • Improving the country’s image; undertaking bureaucratic reform.


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12 November 13, 2009

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Human Capital HR Organizations Must Better Support Their Organization in Strategy Implementation Naresh Makhijani

For HR organizations to play a role in strategy implementation they must first have a grasp of the principles of strategy management. A business strategy comprises three parts, an operating strategy, a financial strategy and a people strategy.

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common expression in business circles is that ‘strategy must be everyone’s job’. When this happens, the day-to-day activities of each employee, wherever they sit within the corporate hierarchy, is fully aligned to the strategic goals of the enterprise. As few would argue with this goal, it is somewhat shocking to find that just about all business leaders canvassed for a major research program by the Jakarta-headquartered management consultancy OTI said that implementing strategy was not a key role for HR. Shocking because aligning people with strategic goals is exactly the role HR professionals should be playing within their organizations.

For HR organizations to play a role in strategy implementation they must first have a grasp of the principles of strategy management. A business strategy comprises three parts, an operating strategy, a financial strategy and a people strategy. For HR to become strategic, it must understand all three (and not just the people strategy component) and how they interrelate in value-creation. However, understanding what strategy is does not in itself guarantee success. Repeated research over the last decade suggests that upwards of 70% of strategies are not fully implemented – however well crafted. Failure occurs in implementation. Of the strategy implementation frameworks available to organizations none is more widely deployed that the Balanced Scorecard, which many companies have used successfully to buck the strategic failure trend. And although all functions and operations must play their part in a scorecard implementation program, perhaps none has such a direct impact as the Human Resource (HR) function, as we shall explain. But first we shall describe the scorecard: A Balanced Scorecard is a strategy implementation framework that comprises four components: 1. A Strategy Map, which de-

Krishnan Rajendran

scribes the key objectives that, if delivered to, will mean the successful implementation of the strategy. 2. The metrics used to monitor progress toward the objectives. 3. The targets for the metrics. 4. The strategic initiatives that are launched to drive performance toward the targets and so ultimately the delivery of the strategic objectives. Each component comprises a financial perspective and the three non-financial perspectives of customer, internal pro-

James Creelman

spective (which many organizations re-label as ‘people’) takes us directly into HR territory. It is success in the learning & growth perspective that, through a causal relationship, delivers success in the other perspectives – most importantly financial. Although responsibility for agreeing on the content of an enterprise Strategy Map rests with the senior team (and therefore its ownership), enabling the delivery to the objectives that are found within the learning & growth perspective is usually the mandate of HR. Therefore, HR typ-

The framework breaks human capital down into five areas of strategic importance: strategic competencies, leadership, culture and strategic awareness, strategic alignment and strategic integration and learning. cess and leaning & growth. Figure 1 shows an example Strategy Map while figure 2 is a schematic of the Balanced Scorecard four component system. But four perspectives is not mandatory, some organizations might opt for 3, 5 or 6 perspectives depending on their own strategic needs or relabel the perspectives to reflect their own culture. The learning & growth per-

ically assumes custodianship of this perspective. As custodians, HR facilitates the process by which the senior team debates and agrees upon the high-level learning and growth objectives and measures, etc. In doing so, they should ask their business partners focused questions such as, ‘what skills and competencies do we need at

managerial and general employee levels to deliver to our strategy? ‘How should performance management processes best be strategically aligned?’ and ‘what culture should we be looking to create?’ The answers to the questions are translated into strategic objectives and measures. Many organizations have found the following human capital framework (created by the scorecard co-creators Harvard Business Professor Dr Robert Kaplan and management consultant Dr David Norton) to be useful in helping them identify their people requirements and therefore populate the learning & growth perspective of the corporation. The framework breaks human capital down into five areas of strategic importance: strategic competencies, leadership, culture and strategic awareness, strategic alignment and strategic integration and learning. Strategic Competencies: The availability of skills, talent and know-how to perform activities required by the strategy Leadership: The availability of leaders at all levels to mobilize the organization towards its strategy. Culture and Strategic Awareness: Awareness and internalization of the shared vision, strategy and cultural values needed to execute the strategy. Strategic Alignment: The alignment of goals and strategy at all organizational levels and that encourages Strategic Integration and Learning: The sharing of knowledge and staff assets with strategic potential. These five categories can be seen as a human capital vision. And as with a corporate strategic vision, it must translate into objectives, measures, targets and initiatives. This translation can be achieved through a Human Capital Readiness Report and a supporting Human Capital Development Program. Essentially, the readiness report describes the objectives, measures and targets that must be achieved to deliver the overall enterprise-level strategy. The development program details what HR must do to better manage the development of human capital and so deliver to those objectives, etc. For example, consider the category of strategic alignment. This may have an objective to ‘create an organization where personal goals and incentives are aligned with strategy and that encourages personal contribution’. Measure of strategic readiness may be (%) goal alignment, and (%) incentive alignment. Appropriate targets will be set. From the perspective of the human capital development program the strategic alignment/motivation category impacts the HR programs/functions of performance management, compensation and reward and positive work environment/culture. Measures may be (%) personal goals aligned to the Balanced Scorecard, (%) receiving incentive compensation, as examples. If historically there has been an imprecise language to describe human capital there has also cer-

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Source: Translating strategy into action by Robert Kaplan and David Norton

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tainly been a shortfall of strategic people measures. Therefore, from a people perspective, what we see is organizations spending a lot of time measuring administrative activities and these are often placed in a learning and growth quadrant. HR professionals should bear in mind that a Balanced Scorecard describes the strategy of the organization and should not outline everything the organization does. So, the learning & growth perspective must, through objectives, describe the competencies, etc that are strategically critical for the organization and not simply paint a picture of the everyday work of HR. Once the HR leaders are clear about the role of objectives, they

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Importantly, for the scorecard to work effectively it’s crucial to have rigor around the definition, the calculation and the data collection process. Quantifiable, trending type measures are critical to securing a precise understanding of the required initiative interventions. Unfortunately organizations often fail to put enough rigor around ‘people’ measures. Yet when companies are rigorous in their approach they often find weaknesses in the measures. For example, they find that metrics do not provide the information that provides an accurate steer towards strategic goals. A powerful example of this is that over recent years a number of leading companies have found there to be significant shortcomings in the universally used measure of employee satisfaction. These organizations have found that satisfied employees are not necessarily delivering value to the enterprise. An employee might be satisfied but doing little more than going through the motions. A much more useful measure is employee engagement. Such a measure will consider areas such as the employee’s willingness to recommend to other people the company as being a good place to work and willingness, outside of work hours, to recommend the organization‘s products/services to potential customers. ‘Making strategy everyone’s job’ is a complex task. Through the Balanced Scorecard HR can play an instrumental role in making this happen within their organizations. In doing so the function will be elevated to the position of strategic business partner and, in the best cases, will become corporate heroes.

These organizations have found that satisfied employees are not necessarily delivering value to the enterprise. An employee might be satisfied but doing little more than going through the motions. must then make sure that designated measures are actionable. For instance, if on the strategy map there’s an objective around retaining talent and the talent measure shows that strategically critical people are walking out the door, then the HR organization must institute remedial action. This takes us to the importance of strategic initiatives, which serve to close the gap from current to desired performance levels, as understood through the data collected to inform the measures and strategic targets.

This article is extracted from the book: Managing Human Capital in Indonesia: Best Practices in Aligning People with Strategic Goals (Azkia, Indonesia, 2009)

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Source: Balanced Scorecard Collaborative (BSCol)


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Tourism

Tanah Lot: A Balinese Landmark One of the most important must-visit places in Bali is Tanah Lot, a temple perched on a large offshore rock shaped relentessly over the years by the ocean tide. It offers a magnificent view of the majestic Indian Ocean. Text and Photos by Taufik Darusman

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isitors to Tanah Lot in the afternoon get a double visual treat: a view of a temple built in the 15th century and a stunning sunset that leaves you breathless. One of the most favorite tourism destinations in Bali, Tanah Lot also offers a magnificent view of the majestic Indian Ocean. Tanah Lot means “Land in the Middle of the Sea” in Balinese, and lies in Tabanan, about 20 km from Denpasar. The journey leading to Tanah Lot is a pleasant experience in itself; it allows you a glimpse of the island’s rich and colorful hinterland with green rice fields on both sides of the road. Tanah Lot has always been a

eateries that do well to quench your thirst with ice-cold local and imported beer. Tanah Lot is also fast gaining a reputation as one of the best places around to host business meetings, seminars and conventions in executive class accommodations offering professional services. It also boasts a golf course considered to be one of the world’s top ten and world-renowned spas that blend the best of modern technology with the island’s bestkept secrets in rejuvenating one’s physical being. Tanah Lot is said to be the brainchild of the 15th century wandering priest Nirartha. During his travels along the south coast he saw the rock-island’s beautiful setting and became enamored of it. Indeed, the allure of Tanah As legend would have it Lot is such that it cuts Nirartha spent the night across the wide spectrum on the little island and in the course of time befriendof nationalities and age ed local fishermen who brackets. helped him build a shrine on the rock. Nirartha felt part of Balinese mythology and he was amidst a holy place and is one of the seven sea temples went on to to worship the Baliaround the Balinese coast, each nese sea gods. set up within eyesight of the next The main temple building to form a chain along the south- serves as a place to worship the god Dewa Baruna or Bhatara Sewestern coast. They are, among others, Batu gara, the sea power, while anothBolong Temple, Batumejan Tem- er part is reserved for paying tribute to another god, Dang Hyang ple and Enjung Galuh Temple. In the 1980s the temple’s rock Nirartha. On any given day Tanah Lot is started to crumble, rendering the surrounding area perilous to vis- a nice and windy place to stroll; a itors. The Japanese government manicured park above the shrine then provided a loan to conserve allows you a panoramic view of the time-honored temple and what is certainly one of ‘the hotother beach locations around the test’ tourist spots in Bali. The place is obviously packed island of Bali. As a result, over one third of the rock which can with tourists, mostly Japanese be seen is actually artificial. who arrive in huge buses, midThe path leading to Tanah Lot dle-age Europeans and young is strictly business: loud and busy Australian couples. souvenir stalls on both sides of a Indeed, the allure of Tanah Lot lane leading towards the Indian is such that it cuts across the wide Ocean, selling traditional handi- spectrum of nationalities and age craft and paintings and fake but brackets. credible-looking Starbucks and Reproduced by permission from Hard Rock Cafe t-shirts. On the sidelines are modest Garuda Inflight magazine.

The President Post

November 13, 2009 13


The President Post

14 November 13, 2009

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Technology

Through a series of collaborative efforts from seemingly diametrically opposed visions, open source and commercial software applications now interoperate in government environments to drive business outcomes.

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Customers choose the best product for the job at hand and that means they increasingly rely on products from a variety of vendors, combining traditional commercial and open software, as well as open and proprietary standards.

ebates around the pros and cons of Open Source versus Commercial Software have gone quieter. Instead, people start to realise there is room for both, and the practical solution is to deploy whichever better suits their business needs in particular areas. The reality of most modern IT environments – private and public -is that it is made up of devices, software and technology from a myriad of vendors. Open source is not a fad, nor is it a magic bullet; it is just a licensing choice which provides an additional option for governments trying to modernise internal operations and deliver better services. Open source solutions are now typically deployed in scenarios of either point solutions, niche applications or at the infrastructure level. Chris Levanes, Microsoft’s Regional Platform Strategy Manager for Asia Pacific, believes that what appears to be preventing Open Source gaining more widespread adoption relates to general areas where Open Source is commonly regarded as needing to improve upon. “That typically includes areas of manageability, integration, and enterprise functionality desired of applications further up the solution stack,” Levanes elaborates. Therefore a government that is looking to adopt more sophisticated open source needs to be conscious of the critical success factors to integrating the software into their current environment. Customers choose the best product for the job at hand and that means they increasingly rely on products from a variety of vendors, combining traditional commercial and open software, as well as open and proprietary standards. The same challenge applies to e-government services. Traditionally each department deploys its own system to offer webbased services. While they may work very well vertically, citizens demand integrated services with multiple agencies. The UN’s eGovernment Readiness Index, a bi-annual global assessment of government’s online presence, identifies the highest stage of egovernment as “transformation/ connected”. This stage allows ‘a great variety of transactions to be integrated’ and new services can be easily offered at lower cost. Studies have shown that an integrated or interoperable egovernment system is estimated to be able to reduce the time citizens spend on government web sites and thus improve the ICT efficiency of inter-agency workflow, as well as between agencies and the citizens they service. Additionally, increased agility and better data quality also improves the government’s perceived image by its citizens. A flexible approach predicated on choice is particularly appropriate in the rapidly converging IT world. Customers choose the best product for the job at hand and that means they may rely upon products from a variety of vendors; Combining traditional commercial and open source software, as well as open and proprietary standards, to develop an interoperability strategy that delivers maximum functionality with the lowest total cost of ownership. Governments’ role

“Many Public Sector IT decision makers and CxOs have interoperability as a top-of-mind consideration as they look to im-

plement IT systems to service their citizens,” Levanes comments. “It is increasingly recognized that focus upon interoperability can lead to overall objectives of providing lower TCO, better security and improved reliability to their Public Sector customers across their entire IT infrastructure.” Fuelled by expanding e-government initiatives, and a need to connect and exchange data between legacy and new systems – Governments have a unique ability to encourage interoperability. They are significant consumers of enterprise IT products and services whose purchasing decisions influence the ICT marketplace. Additionally, it benefits Governments to foster a computing and business environment that advantage their citizens and economy. Some people argue for a “one standard, government mandated” approach to these issues. But the majority of governments around the world, as well as leading scholars and institutions, have increasingly concluded that procurement preferences for spe-

“We’ve always had a pro-choice position, our advocacy has always been to build enough skills that will benefit the government regardless of what platform is used.” Tim Diaz de Rivera - Commissioner, Commission on Information and Communications Technology, The Philippines

cific technology solutions or software licensing / business models, whether overt or implicit, is public policy that does not reflect the realities of the marketplace. Such preferences arbitrarily force product uniformity and vendor lockin, and may compel governments to select technologies that are not optimal for the job at hand, that are not the most up-to-date, and that may not provide the lowest total cost of ownership. All of which are desired outcomes -- especially in today’s economic landscape. A better approach is for governments to establish a level playing field for procurement decisions, Chris Levanes Regional Platform Strategy Manager Asia Pacific, Microsoft one where all vendors are judged by the same objective criteria. This open and transparent approach is inclusive, not exclusive, and enables all companies large and small to compete on an equal footing. A level playing field in procurement helps government obtain the best technology for the specific intended goals . This open and inclusive approach creates healthy competition, drives down costs to government and citizens, whilst also opening the door to economic opportunity and fostering innovation. “We’ve always had a pro-choice position,” says Tim Diaz de Rive-

ra, Director General of the National Computer Centre (NCC) of the Philippines. “Our advocacy has always been to build enough skills that will benefit the government regardless of what platform is used.” As an industry leader

As a significant manufacturer of software, it has been essential for Microsoft to ensure there aspects of interoperability to its software, however, recognising that some frustrations have existed with customers, as well as concerns about vendor lock-in, Microsoft appreciates it could have done more in the past to listen to customers about their needs for greater interoperability and choice. Responding to those needs, Microsoft has been actively stepping up its interoperability efforts with all Industry vendors, including engaging the open source communities.” “One of the strengths of Microsoft is our Integrated Innovation stance to software development,” says Levanes, commenting on the company’s recent efforts to step up its support and interoperability. “In the increasingly interconnected computing landscape, enabling interoperability between products from different vendors has become more important than ever. Recently Microsoft outlined our committed to developing our software in accordance with the principles addressed to open connections to its high-volume products, support for industry standards and data portability.” The efforts also include collaboration with Open Source communities and vendors to ensure their software can also be easily integrated with Microsoft technologies, and likewise take advantage of the significant benefits of a platform approach to IT. One of the most notable instances of vendor engagement being the agreement that Microsoft signed with Novell – a major Linux vendor – to build, market, and support a series of new solutions which aimed at making Novell’s Linux and Microsoft’s Windows products work better together. The collaboration includes establishment of a joint research facility where developers will focus mainly on areas of virtualisation, managing web services mixed environments as well as bridging the gap between Microsoft Office and OpenOffice.org’s document formats. “Our bilateral engagement with Open Source vendors and communities such as Novell, Red Hat, Eclipse, Zend PHP, Mono project, Xensource -just to highlight a few - has been to focus on the particular pain points of many customers who use Open Source,” says Levanes. The areas these collaborative efforts address include: running virtualised Linux/Windows environment, Identity Management across Linux/Windows platforms (including federated scenarios), and focusing on Next Web crossplatform technologies. “Working with open source vendors is a natural extension of the work we have done partnering with commercial software developers,” Levanes comments. Microsoft’s latest set of productivity tools – Office2007 – uses an open document format called OpenXML, and the company has sponsored a number of open source projects to make it easily compatible with Open Document Format that OpenOffice. org uses as well as proprietary document formats.

“The bottom line is, any large environment in public sector definitely run technologies from different sources; and rather than spending their own time and money to get them interoperating efficiently, governments want the vendors to do it,” comments Levanes. “Government want vendors to get the systems interoperable while they can focus on their core business which is serving the citizens,” he adds. Interoperability Labs

In addition, and perhaps more importantly, the company has been partnering with key stakeholders of the open source movement – governments, universities, Open Source Independent Software Vendors (ISVs) and open source developer communities – through a number of Open Source Interoperability Labs (OSILs) across the world, including Asia-Pacific The OSILs are essentially centres of innovation designed to promote efforts of running open source software on Windows technologies and helping open source software interoperate with the Windows platform. The company provides hardware, software and technical support to developments that take place at these innovation centres. There are currently four OSILs in Asia Pacific, which are located in the Philippines, Australia, Indonesia and India respectively. One of them, housed at the NCC in the Philippines, was launched in 2008. To date, there are two ISVs who have signedup to use the facilities to develop open source projects. “We’ve done an inventory of existing infrastructure and we found that most government servers are running on Windows,” says NCC’s Diaz de Rivera. “Thus, NCC is hoping that Microsoft’s interoperability stance will encourage open source developers to create applications for the government that can run on existing resources.”

“The University of Indonesia is really excited to get technology support in the form of Open Source Interoperability Laboratory. University and IT industry collaboration in creating top talents is a must to answer future challenges of the nation.” Prof Dr Gumilar Rusliwa Somantri - Rector of University of Indonesia

interoperability, multi-platform compatibility and integration are the common requirements of their clients. “Our partnership with Microsoft allows for combining the experience and expertise from both [Open Source and Microsoft] camps and ensures that the market is provided what it requires.” Damarillo adds that the partnership will facilitate “collaboration and innovation on existing platforms, which helps customers become better as they get flexibility with their software environments.” There is also another ISV, D3S, which works on an Open Messaging Gateway project under the OSIL umbrella. “The interoperability lab is essential to the industry in that it encourages IT professionals and enthusiasts to explore the possibility of interoperable technology,” comments Diaz de Rivera. “This will be a good venue for them to be creative and imaginative, and to explore technology without boundaries.” Where innovations happen regularly

“Government want vendors to get the systems interoperable while they can focus on their core business which is serving the citizens.” Chris Levanes -Regional Platform Strategy Manager Asia Pacific, Microsoft

Exist Global, a local open source software engineering company, is one of the two. The company inked a deal to focus on developing plug-ins for NPanday – a project to integrate Java-based Apache Maven with Microsoft’s .NET development environments. Exist will also join the NFixture project, a .NET open source initiative centred around data integrity and testing. Winston Damarillo, CEO of Exist Global, expresses that as the enterprise computing industry is evolving,

Interoperability Labs are also built in universities. Tertiary science and engineering institutions are hot beds where interests around open source spring and innovations around it appear. “It is really to empower people to innovate in places where innovation happens regularly,” comments Levanes. One lab was recently inaugurated at the University of Indonesia (UoI) for students to explore how Microsoft technologies can interoperate with open source applications. The Rector of UI, Prof Dr Gumilar Rusliwa Somantri believes that a nation’s competitiveness not only depends on natural resources or low cost human resources but also the power of technological innovation and a knowledge-based society becomes the backbone of economic sustainability and national welfare improvements. “The University of Indonesia is really excited to get technology support in the form of Open Source Interoperability Laboratory,” said Prof Dr Gumilar, announcing the opening of the OSIL. “University and IT industry collaboration in creating top talents is a must to answer future challenges of the nation.” He added that the lab offers big potential to foster creation of innovations, which had never been

possible before. “Students have a lot of time, energy, and most importantly, wild ideas. With technology support like OSIL, they will be able to create genuine innovations.” Often, developers of certain open source projects are within a loose community, who are not located in a central location, nor are they employed or formally employed to work on these projects. As such, there might not be a formal way of communication for them to better collaborate. This is the case for Strawberry Perl community, a group of developers from Australia who work on pure open source CPAN-capable Perl for Windows computers that works exactly the same as Perl everywhere else. In conjunction with the Strawberry Perl community, Microsoft launched a virtual Lab in February 2009 to provide a development and testing environment for the developers of the community. “Community-based projects account for a significant portion of all the open source activities,” comments Levanes. “We need to offer a mechanism to empower these individual developers to have the same opportunity of developing great applications.” “For a long time, there was not much collaboration between open source and commercial software, which impacted the ability for some technologies to work together,” says Levanes. “By partnering with commercial software vendors and building bridges with Open Source communities and vendors, Microsoft is working towards providing a platform whereby all software can integrate in a holistic manner. Significant steps have been taken in recent times, and progressing forward, Microsoft is committed to solving the real-world interoperability challenges of our customers, developers, and partners.” With all these collaboration efforts from different camps, interoperability is no longer a distant dream but a functioning reality. Ultimately, what governments are looking for are solutions which deliver the best results at an optimal cost; and to deploy technologies which integrate seamlessly into their existing environments. To encourage this end goal, governments should keep an open mind and have a pro-choice approach – which will help ensure their ICT infrastructure runs more efficiently and serves their citizens much better.


The President Post

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November 13, 2009 15

Infrastructure Lessons from the U.S. Transcontinental Railroad By Thomas W. Shreve

The U.S. Transcontinental Railroad is one of the greatest achievements in the history of the public-private partnership model of infrastructure development.

The Golden Spike

O

ne hundred forty years ago, on May 10, 1869, at Promontory Summit, Utah, a railroad track built westward from the Missouri River was joined with a railroad track built eastward from California. Thus the North American Transcontinental Railroad was born, the culmination of over six years of construction and many more years of planning and surveying. The railroad’s construction and development involved thousands of workers and some of the largest engineering and financing efforts ever undertaken up to that time. The photograph of the occasion and related engraving, shown here, were among the most famous pictures of the 19th Century. The Union Pacific Railroad and the Central Pacific Railroad, which constructed the line, were the two largest corporations of their time, even though they were new companies formed for the sole purpose of owning and constructing the railroad. The line crossed territories which had never even been mapped, and were not yet settled or safe. The project began during the Civil War when resources were scarce. The U.S. Transcontinental Railroad is one of the greatest achievements in the history of the public-private partnership model of infrastructure development. How did they do it? And what lessons can be drawn for Indonesia today?

in the West, illustrates the problem. He died in 1863 of yellow fever contracted while trekking across the Isthmus of Panama. Why did designing and financing the Central Pacific Railroad require hiking through the Central American rain forest? Because the footpath across Panama was part of the fastest route between San Francisco and New York. Judah took many business trips between San Francisco and the East Coast for lobbying and financing, and on this occasion his luck ran out.

ary accomplishment by which he wanted to be remembered. There Is No Substitute for a Government Guarantee

The primary forms of Government support used to induce the private sector to build the project were Government loans and land grants. The loans were extended under a structure equivalent to a Government guarantee, in which Government bonds were issued directly to the railroad companies and sold by them in the secondary market. The railroads

Many commentators and lawmakers thought the Government bond subsidy was overly generous, even labeling it a form of corruption. The railroads were often accused of making the line longer than necessary in order to qualify for more bonds. However, it is now understood that the bonds covered only a fraction of the construction cost, and were not well structured because the mortgage granted to the Government potentially interfered with other financing sources. Land for Infrastructure Can Spur Economic Development

Infrastructure Is Geopolitical

The Transcontinental Railroad was considered a geopolitical necessity. In 1848 the United States had taken California from Mexico in a war of aggression. However, the newly conquered territory was remote and indefensible. The American President Abraham Lincoln knew that an efficient means of transportation to California had to be built, or the Pacific Coast would eventually be lost to a foreign power. From New York, it was easier to reach Buenos Aires than San Francisco. The fate of Theodore Judah, the leading promoter of the Transcontinental Railroad

after releasing the bonds to the railroad companies played no further role in the fundraising process. Selling the bonds was not always easy for the railroads, and they often had to accept a significant discount to par, both because the market could not absorb the amount of bonds on offer, and because the Union had a poor credit rating during the Civil War.

Abraham Lincoln, The Father of the Transcontinental Railroad

President Abraham Lincoln was one of the great leaders of the 19th Century, and like Bismarck, saw the world in geopolitical terms. While Lincoln is mainly remembered for freeing the slaves and winning the Civil War, Lincoln’s own view was that these accomplishments were dictated by political expediency, while the sponsorship of the Transcontinental Railroad was a vision-

were entitled to receive a stipulated amount of bonds for each mile of track, after the track was laid and passed Government inspection. The railroads were obliged to repay the Government for all principal and interest at the maturity of the bonds. Interestingly, the Government set the interest rate (at 6%) and tenor (at 30 years) without reference to market conditions, and

Land acquisition was critical to the success of the project, but it was not a problem because the Government already owned almost all the land west of the Missouri River. Wherever the tracks were built, the railroad automatically received ownership of a right-of-way 400 feet wide. No advance approvals were required. In addition, the Government uti lized its control over the land to spur economic development. Because the Government lacked the ability to put its immense tracts of land to productive use, it also granted to the railroads half of the land within a certain number of miles on either side of the tracks, in a “checkerboard” pattern. In total, the land granted to railroad companies reached an astonishing magnitude. The Government and the economy benefited both directly and indirectly from the railroads’ efforts to realize value from the land grants. An Attractive Concession Is Not Enough To Make the Financing Easy

Despite Government support, the difficulties encountered in raising the financing required

brought both the Union Pacific and the Central Pacific to the brink of bankruptcy more than once. Financing difficulties resulted from engineering risks, questionable management, cumbersome financing conditions imposed by the Government, and poor market conditions. Among the biggest impediments to fundraising were security concerns re-

Transcontinental Railroad project were begging for additional partners, and could find no takers. The Result Is More Important Than the Process

The selection of the Central Pacific Railroad and the Union Pacific Railroad as concessionaires was rife with questionable proce-

President Abraham Lincoln was one of the great leaders of the 19th Century, and like Bismarck, saw the world in geopolitical terms. And the sponsorship of the Transcontinental Railroad was a visionary accomplishment by which he wanted to be remembered. lated to terrorist attacks. In the Old West, terrorists rode horseback and took scalps. Both railroads formed relatedparty construction companies to take advantage of lucrative contracts. The Union Pacific’s construction company, Crédit Mobilier, later became the subject of a sensational bribery scandal. In both cases, however, the construction companies were formed because equity investors were not sufficiently interested in the longterm investment prospects of the railroads, and wanted a vehicle from which they could see more immediate profits. When the Union Pacific brought its financing problems to Congress, one of the remedies adopted was to reduce the minimum share subscription amount. It was a delightfully anachronistic move, in which policymakers effectively gave up on institutional investors and encouraged the solicitation of small retail investors to take their place. In the end, the courageous businessmen who funded the Transcontinental Railroad became fabulously wealthy. The wealth created included the famous Stanford and Huntington fortunes of California. Even today, over 100 years later, there are political groups which still campaign for the rescission of concessions granted to railroads by the Government. At the time, however, the lead investors in the

dures. It would never have garnered the approval of the World Bank. The Central Pacific was appointed by Congress because it had already commenced work on the line. The Union Pacific was formed by an Act of Congress, with a founding board selected

Railroad Land Grants in California

by the Congressional leadership. Following adoption of the Pacific Railroad Act in 1862, the law had to be revised in 1864, mainly for the purpose of retroactively sweetening the terms of the concessions. Thus, the Transcontinental Railroad was built without aidfunded foreign consultants, best procurement practices or environmental impact statements. Arguably, it was instrumental in the establishment of the United States economy as we know it today, the greatest economic power in the history of mankind. Let us hope that Indonesia’s political leaders will treat infrastructure development with the same respect and sense of urgency as Abraham Lincoln did. Thomas W. Shreve is Commissioner of PT Glendale Partners, www. glendalepartners.com. Some of the background information for this article was obtained from Stephen E. Ambrose, Nothing Like It in the World, ©2000.


The President Post

16 November 13, 2009

Health

FASHIONABLE HEALTH HAZARDS It is inevitable that we are judged by the way we dress. People often make judgments on others, about who they are, their line of business and their competencies from their physical appearances. However, many trendsetters are unwittingly paying the high price of fashion with their health.

W

hile we all want to look professional, it is important to remember that dressing up for work does not imply sacrificing your personal comfort or putting your health at risk. Here are some common fashion health hazards office workers should be cautious about committing.

Constricting Clothes

Some people tend to choose fashion over comfort. This is the reason why they can put up with the discomfort that comes hand in hand with tight clothing. Many males suffer from itchy groin or itchy scrotum, with or without rash, because of ill-fitting clothes and non-cotton based clothes. “Tight fitting jeans or pants often aggravate their problems as the groin is more humid and warm and there is increased rubbing and friction between the fabric and the irritated skin,” said A/ Prof Wong Soon Tee, a Consultant Dermatologist with Raffles Aesthetics. Tight belts also interfere with breathing and this result in breathlessness and giddiness. One may also suffer from heartburn as a result, as digestion is restricted when the belt wrapped too tightly around the waist. Tip: Wear pants or underpants that are cotton based, more airy and not so tight fitting.

Killer Shoes Does your choice of footwear leave your feet protesting in pain? Do not simply ignore painful corns, calluses and blisters as they are warning signs that you are not making the best choice for footwear. Put your best foot forward by listening to them, instead of fashion guidebooks. High heels put a lot of pressure on the toes and are especially demanding on the spine and muscles that support it. Your spine suffers as a result and you experience serious back pain. “As a doctor, I would advise women to minimize the occasions they wear heels. High heels cause quite a lot of problems over the long term. By the time you get knee, ankle and back pains from wearing heels, the damage is already done,” said Dr Lim Lian Arn, Consultant Orthopaedic Surgeon of Raffles Orthopaedic Centre. Even wearing a pair of twoinch heels subjects the balls of you r

feet to 50 percent more pressure as compared to wearing flats. The increased pressure can lead to bunions, bone deformities and osteoarthritis of the knee and lower back pain. On the other hand, shoes that are too flat are also not ideal for the feet. “Wear shoes with two to three centimetres of elevation,” Dr Lim advised. Dr Lim also explained that high heels increase knee joint pressures by up to 25 percent. Over time, this increased pressure can lead to osteoarthritis and that causes long-term pain and problems. Pointy shoes are another cause of bunions and blisters. Cramping of the toes may also cause hammertoe, the condition where one or both joints of the toes are bent. The joint may become dislocated over time, causing great pain.

Tip: If you experience signs such as hair breakage around the scalp or random bald patches, stop wearing the offending hairstyle immediately and observe to see if the situation improves.

you will inevitably fill it. Men are just as likely to commit this health hazard as they often carry their laptops and documents around in sling-bags. The key issue here is not the size of your bag, but the weight of it. Heavy bags could give you arm, neck and shoulder pain. Carrying the bag on one Also, while some side causes neck, shoul- hairstyles may make der and arm muscles to stretch as the shoulder you look neat and takes the strain. Stress professional, pulling can build in our necks and this lead to tension, your hair back too aches, pain and stiffness. tightly can hurt your “In severe cases, the pain scalp. Any hairstyle will extend from the neck to the back of the head, that pulls on the i.e. the occipital area, scalp for a long to cause genuine headache. Such severe cases period of time can are considered cervico- also cause hair loss. genic headache,” said Dr Alvin Seah, Consultant Neurologist with Raffles Internal Medicine Centre Dr Seah also explains that carrying heavy loads for a long time unbalances the load on the spine and causes imbalanced pull of the muscles on the spine. This can cause spasm of the neck muscles which can lead to painful sensation. Tip: When buying a bag, take note of the weight of the empty bag. Some materials or charms make the bag heavy even when it is not filled.

Heavy Bags Super sized bags are made stylish by the likes of Kate Moss and Lindsay Lohan. While big bags are fashionable this season, they can also be huge fashion hazards. The trouble with carrying a big bag is that

Tip: Keep the duration of wearing high heels to the maximum of three consecutive hours.

Hair-Dos (And Don’ts)

All of us have bad hair days. In our quest to ensure that our hair looks good, we pile on different hair products on our hair. These products include hair sprays, mousse, gels, and a variety of hair enhancers. “Products which contain alcohol may dry the hair shaft, leading to easy breakage due to fragility.” Said Dr Chris Foo, Consultant Dermatologist with Raffles Skin Centre. “If one were to use high-hold stiff styling products, this may precipitate hair breakage when trying to restyle the hair with combing.” The usage of hair products is generally considered safe for most individuals. However, some may develop allergic contact dermatitis to them due to the chemicals found in such products. Dr Foo explained that this condition will manifest as an itchy red rash on the scalp. Also, while some hairstyles may make you look neat and professional, pulling your hair back too tightly can hurt your scalp. Any hairstyle that pulls on the scalp for a long period of time can also cause hair loss. This is a medical condition known as Traction Alopecia. Said Dr Foo, “The pattern of hair loss is often very distinctive and reflects the distribution of the traction. Therefore, the diagnosis is often not difficult for the dermatologist.” While such instances of hair loss are reversible in the short term, p r o - longed and continued periods of wearing such hair-styles can also lead to permanent hair loss and scarring. Styles to be careful with include tight ponytails, buns and braids.

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PUBLISHED BY Yayasan President University CEO & EDITOR IN CHIEF Ali Basyah Suryo CONTRIBUTORS Atmono Suryo Cyrillus Harinowo Hadiwerdoyo Naresh Makhijani Taufik Darusman Thomas W. Shreve Wuryastuti Sunario Vidya Dahlan

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