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Nation Pins Hopes on Hard-working Dahlan Iskan In his capacity as minister for state enterprises, he often made field trips to state companies around Indonesia to inject motivation and spirit to the managements. At the same time, he is also not reluctant to scold managements whom he considered lazy and lacking efforts to improve their performances. Dahlan Iskan refuses to accept his salary and facilities offered by the state; he even pays his assistant with his own money and uses his own car to carry out state duties. He is a hard worker who stays in his office until late at night. The President Post/Nandi Nanti

JAKARTA (TPP) – State Minister for State Enterprises Dahlan Iskan visited three East Javanese cities on 13 January, namely Magelang, Solo and Madiun—in less than 24 hours.

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e took off from Jakarta to Semarang on a 6 a.m. flight. Upon arriving in the Central Javanese capital, he went straight to Banaran and arrived there at 8 a.m. He visited the Borobudur temple at 11.30 and went to Solo at 3 p.m. and continued with his journey to Magetan via Madiun at 5 p.m. using a train. Dahlan Iskan visited the Borobudur temple to see prospects for development of the tourism area that will provide wider job opportunities for residents living in the surrounding area. On that occasion, the minister also inaugurated Banaran Resort in Bawen, Semarang, and visited Muhammadiyah 2 Borobudur vocational school, the school in Solo that successfully assembled the Kiat Esemka car. In Madiun, he went to see the state railway company PT INKA.

His visit to Ungaran was the first leg of his trip to Central Java to inaugurate a new resort built by state plantation company PTPN IX. The inauguration was attended by among others the Central Java governor. On that occasion, Dahlan Iskan expressed his appreciation to the company’s president director over his initiative to build the resort. Meanwhile, Jababeka President Director SD Darmono who accompanied the minister, said he learned a valuable lesson during the trip. “My journey with State Minister for State Enterprises Dahlan Iskan, from Semarang to Borobudur, is a valuable experience,” said the boss of Jababeka, a company that owns and operates the biggest industrial estate in Southeast Asia. “I am very impressed with him. He is a very practical person, whom we can pin our hopes on to bring

this country forward,” he added. Dahlan Iskan regularly writes for Rakyat Merdeka in a column called “Merekayasa Harapan” (Reengineering Hopes”). His writings mostly depict his meetings with managements of state enterprises which are now under his supervision. He would wisely listen to the views of the top management and even the office boys. Dahlan Iskan (61), was born in Magetan, East Java. He started his career in journalism in 1975 as a reporter of a newspaper based in Samarinda; in 1976 he moved to Tempo magazine and has headed Jawa Pos in Surabaya since 1982. He successfully bolstered the paper’s daily circulation from 6,000 to 300,000 copies in just five years’ time. Five years later, he set up the Jawa Pos News Network (JPNN) which comprises a total of 134 newspapers, tabloids, and magazines, plus a printing network which consists of 40 printing houses across the country. In 2002, he founded a local TV station called JTV in Surabaya, then Batam TV in Batam and Riau TV in Pekanbaru. In 2009, he was named commissioner of PT

Fangbian Iskan Corporindo (FIC), which initiated the development of Submarine Cable Communication System (SKKL) to connect Surabaya, Indonesia with Hong Kong. At the end of 2009, he was put at the helm of state electricity company PLN and made several breakthroughs, including a sixmonth program to free Indonesia from power outages and a one-day movement to bring electricity into one million houses. On 17 Oktober 2011, Dahlan Iskan was appointed the state minister for state enterprises, and set up SOE asset restructuring program and slashed the number of companies. Dahlan Iskan is a person with a humble background who climbed the ladder of success, marked with his achievement to become a media mogul and head of several companies. It was his management skill that got President Susilo Bambang Yudhoyono to choose him to lead PLN. He made drastic changes within PLN and made the state electricity company able to supply electricity needs for the country. In his capacity as minister for state enterprises, he often made field trips to state companies around Indonesia to inject moti-

Foreign Consultants Eye Soekarno-Hatta Railway Project A number of foreign consultants have been eying Indonesian infrastructure projects, including the project of state railway company PT KAI linking Soekarno-Hatta airport and Manggarai. "After we held a tender on the Soekarno-Hatta airport, five foreign investors showed an interest in the project. They are from United States, France, Spain, Cana-

OPINION

Towards a Closer Relationship with Singapore The Indonesian embassy in Singapore and its entire staff have an important role as the spearhead of strengthening diplomacy and cooperation between Indonesia and Singapore in terms of national interests. PAGE A2

da and Japan," President director of PT Sarana Multi Infrastruktur (SMI) Emma Sri Martini told a discussion about Indonesia Infrastructure Outlook 2012 in Jakarta Thursday. Earlier, Emma said, on November 10, 2011 SMI has signed an MoU with the cooperation project authorities to accelerate the implementation of the project. "We

BUSINESS

PTDI to Produce N-219 Planes

Several regency administrations have expressed their interest to operate the N-219, which is very suitable for flights between the different regencies and remote places in the country. PAGE B1

estimated that the building of the project can be started in 2014. Right now we are still waiting for a proposal from the consultant," Emma said. On the funding, Emma said she offered two choices, public private partnership and e-procurement. "It is not for us to make the decision, but the relevant authorities. We are merely helping with mak-

INVESTMENT

Foreign Investment in 2012 Predicted at $19.2 billion

Economic growth in the fourth quarter of 2011 may reach 6.5%, with the support of the still strong household consumption and investment with exports still being PAGE B3

ing the preparations of the infrastructure project, including a railway project," Emma said. Emma hoped the chosen consultant would be able to help valuate the coalition status, legality and land license which will become the location of the location of the Bandara Soekarno-Hatta-Manggarai railway project.

INTERNATIONAL

“Taiwan and Indonesia to Enhance Economic Relations” Statistics show that Indonesia’s trade volume with Taiwan from January to August 2011 reached $8.3 billion, an increase of 24% per year. Indonesia’s exports value to Taiwan reached $3.3 billion, up by 14%. PAGE C1

State Minister for State Enterprises Dahlan Iskan (2nd from right) along with President Director PT. Jababeka SD. Darmono (2nd from left) and Directors of PT. Taman Wisata Candi Borobudur visited the temple to see prospects for development of the tourism area that will provide wider job opportunities for residents living in the surrounding area. vation and spirit to the managements. At the same time, he is also not reluctant to scold managements whom he considered lazy and lacking efforts to improve their performances. Dahlan Iskan refuses to accept his salary and facilities offered by the state; he even pays his assistant with his own money and uses his own car to carry out state duties. He is a hard worker who stays in his office until late at night.

“He wears very modest clothes and uses sports shoes to the office. He is a role model for other cabinet ministers to remain humble, work hard and fully dedicated to building the country. I only have praise for him,” said SD Darmono, who is also the president comissioner of PT Taman Wisata Candi Borobudur, Prambanan and Ratu Boko, the company that operates the areas in the vicinity of the temples.

RI Doubles Exports in Five Years' Time: Minister Trade Minister Gita Wirjawan said Indonesia was able to double its overall exports in only five years` time from $100.79 billion in 2006 to $203.62 billion in 2011, "This is a remarkable achievement as many other countries needed more than five years to do it," Gita said in an expose on Indonesia`s export performance at his office here Wednesday. Gita said Saudi Arabia needed 26 years to double its exports, Singapore 10 years, South Korea 9 years, Malaysia and China seven and six years respectively. Countries that equalled Indonesia in this respect were Belgium, Russia, Switzerland, the United States and Brazil. He said the constant increase in Indonesia`s exports

Trade Minister Gita Wirjawa

"This is a remarkable achievement as many other countries needed more than five years to do it." was fueled by an upward trend in the value of its oil/gas and nonoil/non-gas commodities. Within the last five years, the value of Indonesia`s oil/gas exports rose 96.09%, from $21.21 billion

in 2006 to $41.59 billion in 2011 while that of non-oil/ non-gas exports increased 103.59%, from $79.58 billion in 2006 to $62.02 billion in 2011. The minister noted that Indonesia`s exports over the past five years mainly consisted of natural-resourcebased commodities such as coal, crude palm oil, rubber and rubber goods. "But we are now striving to increase the proportion of commodities with added value by pushing export of industrial goods such as footwear, electronic goods and textiles," he said. He was optimistic that within the next five to 10 years Indonesia`s exports would no longer be dominated by raw materials but by products with high added value.


The President Post

A2 January 12, 2012

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Opinion Towards a Closer Relationship with Singapore www.goodviewtravel.com

The Indonesian embassy in Singapore and its entire staff have an important role as the spearhead of strengthening diplomacy and cooperation between Indonesia and Singapore in terms of national interests. By Ageng Wibowo

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he Indonesian government is preparing to further strengthen bilateral cooperation with neighboring Singapore, which has existed officially since September 1967, by performing various steps of diplomacy, an official said. According to Indonesian Ambassador to Singapore who has just been inaugurated on December 21, 2011, Andri Hadi, Indonesia-Singapore relations in entering the 21st century is expected to be able to build a stronger friendship. Andri said that Singapore is a friendly country and one of the nearest neighboring countries that has significant meaning for Indonesian national interest. "Geographically, the two countries have a direct border, thus promotes the establishment of relations and cooperation in various fields," Andri Hadi told ANTARA. But on the other hand, the geographical proximity also poses many challenges that can directly affect Indonesian national interest, he said. "Geographical proximity also often raises frictions due to divergence of interests that could potentially be a hurdle, even an interruption to our bilateral relationship if not addressed immediately," he said. Andri said that the Indonesian Ambassador of Singapore also needs to act as the government`s eyes and ears to detect any thing that occurred in Singapore and to be addressed carefully. It is intended that all these things that became Indonesia`s national interests can be well protected, and can be further promoted, as well as taking concrete steps in the development of new

Encourage the optimization of the Batam, Bintan, Karimun (BBK) Free Trade Zone (FTZ), which is potential as a business development area and business relocation target for a number of multinational companies in Singapore.

cooperation opportunities of mutual benefit based on the principle of equality and mutual respect. Andri also stated that in terms of national interests, the close, balanced, productive and mutually beneficial bilateral relations also needed and should continued to be pursued, "Especially in order to create a supportive external environment for development Indonesian national purposes," he said. The Indonesian embassy in Singapore and its entire staff have an important role as the spearhead of strengthening diplomacy and cooperation between Indonesia and Singapore in terms of national interests. In accordance with the 20102014 National Mid-Term Development Plan (RPJMN), the Indonesian Government states that one of the priority focus of increasing diplomacy and international cooperation is the "Consolidation of Strategic Partnership in the Aspasaf Area (Asia-Pacific and Africa) and Amerop (America and Europe)".

Singapore is a friendly country and one of the nearest neighboring countries that has significant meaning for Indonesian national interest.

Vision and mission

Andri also describes his vision in the term of his official duty (2012-2014) as Indonesian ambassador to Singapore, covers areas such as the Political and Security, Economic, Socio-Cultural and the Protection of Indonesian citizens and Legal Entities). In the field of Political and Security Affairs, Andri confirmed to continue to maintain support for the Singapore Government on the sovereignty and territorial integrity of the Unitary Republic of Indonesia, formal or informally improve communication and relationships between officers and members of both countries parliaments. Then to continue and strengthen the legal and police cooperation, among others, to provide optimum protection to Indonesian citizens in Singapore as well as in

efforts to return individuals wanted by the Government of Indonesia. Besides, the Embassy also helps promote measures to support the process of follow-up enforcement of extradition treaties and agreements DCA (Defense Cooperation Agreement) Also the embassy is to encourage the acceleration of the process of resolving Indonesia-Singapore maritime boundary’s delimitation negotiations in Eastern of the Singaporean Straits segment. Maintaining and enhancing security cooperation between the two countries, including joint military exercises and patrols in the Malacca Straits as well as maintain and enhance cooperation training and education for military officers of both countries.

Geographically, the two countries have a direct border, thus promotes the establishment of relations and cooperation in various fields." Andri Hadi Indonesian Ambassador to Singapore

While in the economic sector, Andri said that as the representative of Indonesia in Singapore, the embassy will strive to increase trade volume between the two countries, particularly the ex-

The President Post

port value of Indonesia to Singapore, including the increase in exports of agricultural products for Singapore domestic consumption needs. Also, encourage the optimization of the Batam, Bintan, Karimun (BBK) Free Trade Zone (FTZ), which is potential as a business development area and business relocation target for a number of multinational companies in Singapore. Not to mention to leverage Singapore`s strategic location as a transportation hub and popular tourist destination in Asia in order to encourage an increasing number of foreign tourists to Indonesia. Increase synergies programs in promotional form of Tour-

ism Trade and Investment (TTI) with the local business association partners for the implementation of business trips, business meetings, seminars, or networking session. In the socio-cultural field, the Indonesian Embassy will also increase People-to-People (P2P) contacts to strengthen the image of Indonesia in Singapore and bridging both countries people`s common interests. "This may be done through the utilization of a number of new opportunities, such as human resource development, scholarships, student and youth exchanges, cooperation among institutions of culture and education in the form of inter-university research and sister schools," he said. The embassy is also expect-

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Andri also asserted that the implementation of this vision would require a strong support and close cooperation with various parties and stakeholders in Indonesia, particularly the House of Representatives Commission I. Antara

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ed to enhance cooperation in the health field including cooperation between hospitals and hospital management, also to promote soft-power Indonesia in Singapore through the annual promotion of Enchanting Indonesia, Gastrodiplomacy (traditional food diplomacy) , and the development of Indonesian Cultural Centre and library at the Embassy. In the field of citizen protection, Andri said that the embassy would carry out various activities to provide services for citizens and entities residing and working in Singapore, such as improving the quality, effectiveness, accountability of services and protection of Indonesian citizens and legal entity in Singapore.

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The President Post

A4 January 12, 2012

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The Economy Fitch Projects 6% GDP Growth in 2012 The rise in the investment rate to 32.5% of GDP in 2010 from 24.9% in 2007 had been key to this strong growth outlook.

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lobal rating agency Fitch Ratings has projected Indonesia`s GDP growth at 6% in 2012 and termed further growth difficult to achieve until 2013 due to global economic conditions. "Fitch expects sustained economic growth and fiscal discipline to allow the credit profile to strengthen during 2012 and 2013. Indonesia`s economy is on course to grow by 6.5% in 2011 and by 6% in 2012," Philip McNicholas, Fitch Ratings Asia Pacific on sovereign debts said here on Tuesday. Fitch upgraded Indonesia`s debt rating from "BB" to "BBB-" last December 15, 2011 as reflected in Indonesia`s strong and resilient economic growth, low and declining public debt ratios, strengthened external liquidity

and a prudent overall macro policy framework. Fitch considered Indonesia`s domestically oriented economy and success in delivering growth without creating external imbalances or a reliance on shortterm financing suggests economic growth prospects should prove resilient to external shocks as in 2008. The rise in the investment rate to 32.5% of GDP in 2010 from 24.9% in 2007 had been key to this strong growth outlook. Substantial reserve accumulation that reached $111.3 billion at endNovember 2011 from $69.6 billion in January 2010 had insulated the sovereign debts during periods of intensified portfolio capital flow volatility. Andrew Steel, Managing Director, Head of Asia Pacific Corporate

Ratings Group Fitch Ratings, added that foreign investors became really interested in Indonesia after improvements in Indonesia`s economy in 2008. "The investors are really interested in Indonesia, 1 or 1.5 years ago they were just interested in China but now they see the scale of Indonesia`s economy," said Andrew. But to attract more investors, Indonesia needs to focus on infrastruture improvement, he said. "Infrastruce is the key to attracting investment, investors` demands from time to time tend to focus on utilities companies, since to invest in infrastructure means a lot of capital expenditure and long term payments," he said. But Indonesia still had structural weaknesses, including underdevelopment, and low per capita income at $3,600 compared with a `BBB` range median of $9,700, deficiencies in physical infrastructure and corruption. These conditions were weighing on Indonesia`s economic funda-

Infrastruce is the key to attracting investment, investors' demands from time to time tend to focus on utilities companies, since to invest in infrastructure means a lot of capital expenditure and long term payments." Andrew Steel Managing Director, Head of Asia Pacific Corporate Ratings Group Fitch Ratings

mentals and sovereign credit profile. Indonesia`s fiscal revenue was also still 15.9% of GDP in 2010 and this was below the `BBB` group median of 33%. Low revenue and heavy budgetary commitment to subsidy programmes constrained capital spending, di-

minish fiscal flexibility and expose the budget to risks from commodity price vitality. At the same time, the Indonesian government needed to be more effective in allocation and implementation of expenditures that may bolster economic growth and give an additional lift to revenue collection. Indonesia`s GDP growth projection however was still above that of the US (1.8%), Hong Kong (3.2%), Australia (3.5%), Japan (2.2%), Thailand (4.0%), Taiwan (3.4%), Singapore (2.5%), the Philippines (4.5%), New Zealand (3.0%) and South Korea (4.0%). Fitch`s projection on Indonesia`s GDP growth is higher than that of Standard Chartered Bank at 5.8%. The national statistics agency BPS on November 7, predicted Indonesia`s economic growth in the third quarter of 2011 would reach 6.5%. The country`s GDP based on the basic price in the third quarter of 2011 would reach Rp1,923.6 trillion and so cumulatively at Rp5,482.4 trillion.

Rp 965b Allocated for Fuel Oil Conversion The Indonesian government has allocated Rp 965 billion for the conversion of fuel oil (BBM) to gas fuel (BBG) in view of the control of BBM as of April 1, 2012. "We have allocated Rp965 billion for the gas conversion program and the comple-

mentary fund is being prepared," Finance Minister Agus Martowardoyo said at the Presidential Palace in Jakarta Monday. He said the money is enough for the initial stage of the fuel oil conversion program. In the near future, he said, a Presidential Regulation on fuel oil volume control

would soon be issued by the government. The finance minister hoped the public would consider gas fuel (BBG) as an alternative replacing premium which is being restricted following subsidized fuel oil control. In this context, familiarization of fuel oil to gas fuel would be started earlier than the

implementation of the subsidized fuel oil volume control on April 1, 2012. The finance minister guarantees that the converter distributed free by the government would still prioritize quality and safety. The converters will be produced by domestic industry but in the early stages imports would still be

necessary. Agus said control of subsidized fuel oil volume would still be prepared by the government under the coordination of the Ministry of Economy and also involving the ministry coordinator for politics, law and security or people`s welfare.

Govt Hails Moody's Debt Rating Upgrade Indonesia hailed Moody`s Rahmat said the improved ratdecision to raise its debt rat- ing would also increase the poing from Ba1 to Baa3 with tential of cheap long-term financa stable outlook, a finance ing for the government to finance ministry official said. its infrastructure projects. "In"The upgrade this time frastructure development will inis extraordinary because it crease because a cheap long-term goes directly from stable out- financing is available to boost look to investment grade. higher economic growth," he said. Usually only after it is in a The improved rating also proves positive outthat the governlook will the ment had been credit rating pursuing posibe raised," tive policies in the Rahmat Mumidst of crisis like lyanto, direcbond stabilization The upgrade this tor general of framework and time is extraordinary debt manthe fiscal stimubecause it goes agement at lus in 2012. the finance directly from stable m i n i s t r y, Moody`s views outlook to investment Indonesia`s ecosaid here on grade. Usually only Wednesday. nomic growth after it is in a positive shows the outlook will the credit country`s resilRahmat ience towards said with rating be raised." global economthe higher ic crisis while the investment grade status the yields of government`s policies could overstate securities in rupiah and come financial vulnerabilities and foreign denominations would the country`s banking system was go down so that demand for stronger than the pressures it was state bonds would increase. exposed to. He added the domestic finanIndonesia's economic power in cial market would be more the midst of external financial stable so that global inves- crisis is shown by the country`s tors` confidence would rise capacity to conduct investment, and the possibility of a cap- increase infrastructure developital flow reversal would be ment and manage its financial system. small. The economic growth has also "This is shown by the success of the 30 years Global been followed by the country`s caBond issuance which is the pacity to pay its external debts, inbiggest in Asia with the low- crease direct investment and keep est yield. Global investors inflation rates low and stable. who buy the bonds are qualThe government`s prudent fisified and sophisticated institutions that could see the cal management had produced good long-term prospects of a low deficit and reduced the Indonesia`s economic funda- government`s debt burden on the mentals," he said. Gross Domestic Product (GDP).


The President Post

www.thepresidentpost.com

January 12, 2012 A5

The Economy Rp 9t t Set Aside to Create New Rice Fields Rice production had been ignored so far. Besides the ministry of agriculture no other institutions has specially cared for rice production and as a result, Indonesia still imports rice and to curb inflation has to supply almost 500,000 tons to the market.

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the fields by 200,000 hectares more to make the total to reach 300,000 hectares.

he government plans to invest Rp9 trillion to create new rice fields in East Kalimantan to increase production as of 2012, State Enterprises Minister Dahlan Iskan said. "If the atmosphere is not conducive or the investment is disrupted we will leave," he said before East Kalimantan Governor Awang Faroek Ishak, district heads/city mayors and deputy district heads and city mayors of the region here on Tuesday night. He said the investment would be made through PT Pupuk Sriwijaya (Pusri), PT Pertani and PT Sanghyang Seri (SHS). The three state-owned companies would create 100,000 hectares of new rice fields with PT SHS being responsible for creating 40,000 hectares of them, PT Pusri 30,000 and PT Pertani 30,000. He said as business entities their capital must be accounted for before their shareholders and so the companies should use a business approach for the project. In view of that, his office would first conduct an evaluation for a month to assure whether or not the investment could be implemented there. "If East Kalimantan is considered not feasible we still have land in other regions such as Jambi, South Sumatra and Papua," he said. To acquire the land, Dahlan said the president directors of the three companies had to reach out to districts in the region. He said the land would be owned by the state-owned companies to assure continuity of production. "It must not be like in the case of sugarcane production in Java where state-owned companies only own factories," he said. Dahlan said rice production had been ignored so far. Besides the ministry of agriculture no oth-

East Kalimantan Governor Awang Faroek said he hoped the implementation of the program would involve the people because investors that entered the region so far tended to ignore them. Awang had said the region had prepared around 200,000 hectares of land for the food estate program. Even based on the latest developments 300,000 hectares of land had already been made available for it spreading in 10 districts including Penajam Paser Utara, Kutai Kartanegara, Kutai Barat, Kutai Timur, Berau, Bulungang and Nunukan.

If East Kalimantan is considered not feasible we still have land in other regions such as Jambi, South Sumatra and Papua." Dahlan Iskan State Enterprises Minister

er institutions has specially cared for rice production and as a result, Indonesia still imports rice and to curb inflation has to supply almost 500,000 tons to the market. "Indeed our inflation rate last year was the best recorded at only 3.7%, but we have also supplied the biggest ever rice supplies in the period and it was very expensive," he said. He said "we must also be ashamed for importing rice. We are an agrarian country, have vast land but how could we still have to import rice. Therefore in time of rice crisis we lose our economic and political pride meaning the government is unable to provide food for its people." He said if the program is successful his office would increase

RI to beat Spain economically in 2013

Dahlan said he was optimistic Indonesia would surpass Spain in terms of economic progress in 2013 considering the good national economic conditions at present. "The economy is growing at a rate of 6.5%. This is very good," he said at a discussion titled Financial Lecture: Post-Investment Grade at the Ritz Carlton Hotel here on Wednesday. He said Indonesia`s economy was now generally better than the Netherlands`. If Indonesia`s economy continue to grow, it was not impossible it would surpass Spain`s next year, he said. "Right now we have the potentials to beat Spain. This is a big mission. And next year we must be able to realize that," he said. Dahlan said Indonesia was now entering a new phase, namely one that really separates business and politics. "When we listen to news reports it seems the country`s economy is messed up and the country is suffering huge losses. But in reality Indonesia`s economy is making progress," he said.

Rp29t in KUR Funds Distributed in 2011 Chief Economic Minister Hatta Rajasa said the government had provided Rp29 trillion in smallholders` business credit (KUR) funds to small enterprises in 2011. "The total number of KUR recipients in 2011 reached six million. Some 600 thousand of the recipients have changed and become commercial businesses. They were previously non-bankable but have now become bankable. We hope their number will continue to increase," Hatta Rajasa said here on Tuesday. Hatta made the remarks in a press conference after attending a coordination meeting with Industry Minister MS Hidayat, Cooperative and Small and Medium Enterprise (SME) Minister Syarief Hasan and other relevant state officials. The total KUR credits which were channeled in 2011 exceeded the target which was set in 2011 at Rp20 trillion.Therefore, the government set a target of KUR provision in 2012 at Rp30 trillion, the coordinating minister for economic affairs said. "Of the total KUR allocation in 2012, about 50% will be channeled to the people by bank BRI, Therefore, we ask Bank BRI to continue to increase the credit extension coverage up to villages in rural areas," Hatta said.

NIK PROBLEM. The government extended the deadline for exporters and importers to register their Customs Identification Number until January 19, 2012. The extended deadline was given to businesses that were facing constraints. Custom registration via NIK was launched in July 2011 and should have ended in December 2011. However, the NIK policy only came into effect on January 19, 2012. Up to January 2011, there were only a total of 16,539 exporters and importers that have registered and have NIK. The President Post/Nandi Nanti

“Property Business to Thrive in 2012” The property business sector is expected to continue growing on increasing demand in 2012 as was the case in 2011, an industry player said. "Demand for property this year is predicted to continue going up," Artadinata Djangkar, director of PT Ciputra Property, said here on Thursday. He said the growth was related to a downward trend in the interest rate on credit for property development which began in 2011 and was expected to continue in 2012. Robust growth in the property sector was also predicted to occur as a result of solid national economic growth. "The global economic slowdown has not reached Indonesia," he said. Artadinata said a property

Rp31 million in early 2012. Artadinata also said PT Ciputra Property was focusing on developing commercial properties in Indonesia`s major cities and it was now implementing three projects, namely Ciputra Jakarta Mall and Hotel in Jakarta and Semarang, and the Somerset Grand Citra Service Residences. Artadinata Djangkar Director of PT Ciputra Property

business boom occurred in 2011 experienced not only by Ciputra Property but also by other property development companies. Citing an example, Artadinata said Ciputra World Apartments in Jakarta was valued at Rp22 million per square meter in 2011 but the figure had increased to Rp28million by the end of the year and to

Besides, the company also had a 12-hectare plot of land on Jalan Prof. Dr. Satrio in Jakarta to be developed in four phases, starting from the Ciputra World Jakarta 1 (5.5 hectares) and continued with the Ciputra World Jakarta 2 (3.1 hectares ). "Ciputra World 2 will become a superblock with more green space areas that are different from Ciputra World one that is very commercial," he said.

“Car Market to Grow 5% in 2012” In 2011, the Indonesian automobile market increased 17% with 894,180 cars sold, compared to 764,710 in 2010. The Indonesian automobile market is estimated to grow by 3-5% in 2012 after a 17% increase in 2011, Astra Daihatsu Motor President Director Sudirman MR, said here Thursday. The estimate was made after considering two factors, namely the European crisis that had an impact on liquidity, and gasoline restriction and conversion in April 2012. "We have several considerations, especially the effect of gas-

Sudirman MR Astra Daihatsu Motor President Director oline restriction and conversion which is still unclear. But we will feel the impact after the policy is applied," Sudirman said. In 2011, the Indonesian automobile market increased 17% with 894,180 cars sold, compared to 764,710 in 2010. Retail sales also increased 20% to 890,569

units from the previous year`s 745,390 units, he said. Daihatsu sales in 2011 increased by 18% to 139,544 units compared to the previous year`s 118,590 units. "By exceeding Daihatsu`s wholesales targeted at 125 thousand units in 2011, the company was the second largest in national car sales," Sudirman said. Largest contributors to Daihatsu sales in 2011 are mini MPV Xenia with 67,292 units, or 49%. Meanwhile, the Industry Ministry`s director general of hightech priority industries, Budi Darmadi, on the same occasion made similar statements of production figures ranging from 920 to 930 thousand units, or 10%.

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The President Post

A6 January 12, 2012

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Economic Highlights Invesment Upgrade by Moody’s: Expect BI to Widen Lower Rate Corridor Entering the year 2012, inflation is at a relatively moderate level with potential pressures coming from government’s decision to reduce fuel subsidy and also a possible hike in the electricity rate.

The President Post/Nandi Nanti

Short term bonds shows larger decline in yields than the longterm bonds.

By Dian Ayu and Anton Gunawan

M

oody’s Rating Agency, as we expected, granted Indonesia a sovereign rating upgrade to an investment grade level at Baa3 with stable outlook on 18 January 2012. This rating is equivalent to the BBB- rating level given by Fitch Ratings a month earlier and by Japan Credit Rating Agency (JCRA) in July-10. Moody’s also raised the longterm foreign currency bond ceiling to Baa2, long-term foreign currency deposit ceiling to Baa3, and short-term foreign currency bond and deposit ceilings to P-3, all with stable outlook. Moreover, the local currency bond and deposit ceilings were also upgraded to A3 from Baa1. The move on these rating ceilings have opened the windows for non-sovereign debts to get an investment grade rating as well, e.g. quasi-government/state company’s bonds, and even private company’s bonds; and thus expanding the global investor base and reducing the borrowing costs for corporate and cheaper costs of funds for banks. The fact that Moody’s did it from a stable, but not yet positive, outlook showed their strong confidence on the Indonesia’s economic performance. Key drivers of the

However, continued external shocks due to the ongoing debt crisis (especially in Europe) and the global economic slowdown may reduce the positive impact of having an investment grade rating. Downward revisions of global growth by the IMF and the World Bank increase pessimism in the global market, which makes it harder to rely on massive investment inflows with a tighter global liquidity. Higher volatility in the financial markets looks imminent this year, especially in the first half of the year.

decision are (1) Indonesia’s risilience to large external shocks, (2) the presence of policy buffers and tools that address financial vulnerabilities and (3) a healthy banking system capable of withstanding stress. We think that the passing of the land acquisition bill and the government’s plan to at last reduce the fuel subsidies systematically have influenced the decision to upgrade.

Post-announcement, most of Indonesia’s financial markets was still impacted positively, despite the fact that the upgrade to investment grade has been widely expected and priced in.

IDR government bond yields were down by around 12-18bps, Indonesia’s USD bonds also traded up by more than 50cents, stock prices up by 0.6%, and the Rupiah strengthened by 0.52%.

Recent Indonesia’s global bond issuance (RI0142) was well demanded and the yield is not that much above the investment grade rated peers (the yield was 5.375% for 30-year bonds). The day of the rating upgrade, the longer tenor

Indonesia 5-year CDS spread was also down by around 7bps. This rating upgrade by Moody’s definitely receive well response as seen in the appreciation of the IDR and lower yields for almost all tenors, compared to a month ago.

Entering the year 2012, inflation is at a relatively moderate level with potential pressures coming from government’s decision to reduce fuel subsidy and also a possible hike in the electricity rate. Declining prices of major commodity export prices and strong domestic demand will likely create pressure on exports and imports, and eventualy threat the already narrowing current account surplus to a small deficit. On the other hand, rating upgrade both by Fitch and Moody’s creates positive prospects that will likely make IDR bonds to become more attractive to an increased number of long-horizon offshore investors. Hopefully, this will eventually reduce the price volatility risk associated with

short-term foreign fund flows. The possible forthcoming upgrades to investment grade by two other major rating agencies, i.e. S&P’s and R&I (Japan), hopefully in 1H12, may help increase the capital inflows, especially the ones from Japan. We reiterate our view that a combination of this rating upgrade by Moody’s and relatively calm Euro-area driven world financial markets, may trigger a relatively sizable January effect to happen, and thus a 25bps rate cut to be done by BI in February. If BI does not cut the BI rate in February due to very volatile markets, we expect BI to widen their lower rate corridor (reduce the Deposit Facility rate) again by 50bps. If this move is accompanied by a change in the formula of LPS (deposit guarantee) rate, from using BI rate as the benchmark into a more flexible and market-based rate (say JIBOR or PUAB rate), we expect the deposit rates, and then the lending rates to come down as well. We expect the financial markets may be very volatile and investors may become more risk aversed due to EU’s debt and banking sector problems, although the upgrade to investment grade may bring some new investors to offset some of the outflows. Therefore, we expect IDR/ USD appreciate slightly to 8,950 at year-end (2012) from 9,068 in the previous year.

6Zgd[ddY68Hd[[ZghVjc^fjZheZXigVd[h`^aahVhVeVgicZgl^i]^ci]Z]ZVai]hZXidg#LZ\dWZndcYh^beaZXViZg^c\!Zchjg^c\ i]VidjgXa^ZcihWZcZÒi[gdbdjgZmeZg^ZcXZ^c[ddYhV[ZinVcY]n\^ZcZ#HiVcYVgYhVgZbZi^Xjadjhan^beaZbZciZYidZchjgZ i]ZdeZgVi^dcd[VhV[ZVcYZ[ÒX^Zci[ddYWZkZgV\ZYZeVgibZci!i]Vije]daYhdjgg^\dgdjhhiVcYVgYh!VhlZaaVh>HD''%%%# 6Zgd[ddY68H^hbdgZi]VcV[ddYhjeea^Zg#LZVXiVhVeVgicZgVcYVXdchjaiVci!d[[Zg^c\djgZmeZgi\j^YVcXZidi]Z Hospitals,Oil Mining & Gas industries and Townsite catering^cVaabViiZghgZaViZYid[ddYVcYcjig^i^dc# Aerofood ACS Aerowisata Park Jl. Prof. Dr. Soepomo No. 45 IZWZi!?V`VgiV&'-&%™>cYdcZh^V Tel. +62 21 8370 5076 Fax.+62 21 8370 5012 :bV^a#^c[d5VZgd[ddY#Xd#^Y lll#VZgd[ddY#Xd#^Y


The President Post

www.thepresidentpost.com

January 12, 2012 A7

Around Jababeka Jababeka Obtains ISO 14001 & OHSAS 18001

50 SMIs Set to be Opened in Jababeka The ministry is also opening a business center in Qatar. The Industry Ministry is planning to open a Small and Medium Industries (SMIs) center in the industrial area of Jababeka early this year. Director General of Small and Medium Industries Euis Saedah said the ministry will place 50 small and medium industries in the industrial area of Jababeka Bekasi. She said the Ministry of Industry will cooperate with Jabebeka and the Astra Foundation. She went on to say that the ministry will provide training, machinery and land for the SMIs. There will also be a main engine to support SMIs to produce components for large local industries. "It will supply for Jababeka and outside Jababeka if production is excessive," added Euis. Euis explained that it will be a two-year program, start-

Jababeka

The ISO certificate shows that Jababeka can maintain its “Green” concept commitment by continuously applying good environmental management system, thus maintaining safety and prevent environmental pollutions to create a healthy city.

J

ababeka city management PT Jababeka Infrastructure has obtained the ISO 14001 certification for environmental management system and the OHSAS 18001 for occupational health and safety in December 2011. ISO (International Organization for Standardization) is a system management used to control and prevent environmental pollutions caused by activities or production process by industries / factories. ISO also requires companies to pay attention to K3 (Kesehatan/ health and Keselamatan Kerja/work safety). K3 aims to prevent, reduce, and nullify the risk of workplace accidents (zero accident). The application of this concept should not be taken lightly as a preventive measure of work accidents and occupational diseases, and should be considered as a long-term investment that offers benefits in the future.

ing from this year. The SMIs will have to stand on their own two feet whether or not they are successful once the two-year period is over, she said. Furthermore, she said this is the first of such model made by the Ministry of Industry. If successful, the model can be applied in other industrial areas. The ministry is also opening a business center in Qatar. It has chosen a premium location for it as business in the area is considered prospective. The fact that Qatar will host the World Cup in 2020 also played a part in the decision to open the center. The focus of activities there will not merely be trade, but also training of local SMIs, as well as communication with industries from Middle East countries. www.ukmsentral.com

PT Jababeka Tbk is a property company which presents since 1989 and brought the philosophy of 'Beyond Property'. It successfully developed industrial area into an eco-friendly township in Indonesia.

The ISO certificate shows that Jababeka can maintain its “Green” concept commitment by continuously applying good environmental management system, thus maintaining safety and prevent environmental pollutions to create a healthy city. Jababeka vows to continue to improve service quality and excel-

lence for its customers as the company is fully aware that customer satisfaction can help bolster relations between them. The company also finds public trust in business as crucial and therefore intends to continue to maintain it. PT Jababeka Tbk is a property company established in 1989 and carries the philosophy of 'Beyond

Property'. It has successfully developed an industrial area into an eco-friendly township in Indonesia. It has received numerous accolades and continues to innovate to become the best and to provide more value to society and the environment by presenting a wide range of facilities. PT Jababeka Tbk is the only

property company that has a power facility, called Bekasi Power, and the first to launch a Dry Port in Indonesia called Cikarang Inland Port, which accommodates the needs of industries in Jababeka and outside the Jababeka industrial area.

The ministry will place 50 small and medium industries in the industrial area of Jababeka Bekasi.

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Cikarang Industrial Zone

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The President Post

A8 January 12, 2012

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Education Foreign Investors to Tap Indonesia’s Education Sector A growing middle class with money to spend on education, and current reforms to improve educational standards in Indonesia has made Indonesia’s big market very attractive to capture.

FIGURE 1. INDONESIA GDP GROWTH RATE

FIGURE 2. PUBLIC SPENDING ON EDUCATION

Percent Change in Gross Domestic Product

Total (% of government expenditure) in Indonesia

3.79

4 2.69 2

3.82

3.74 2.41

2.05

3.45

3.5

2.86

2.77

2.33

2.9

1.94

1.68

1.5

20 18 16 14

0

12

By Jhanghiz Syahrivar

I

n a report prepared by UK Trade and Investment in 2011, Sector Briefing: Education Opportunities in Indonesia, Indonesia as signified by its strong economic performances and steady young population growth, and is predicted to become the world’s 5th largest economy in 2050 behind the BRIC nations (Brazil, Russia, India, and China). Indonesia’s Gross Domestic Product (GDP) expanded 3.5% in the third quarter of 2011 compared to the previous quarter (see Figure 1). Historically, from 2005 until 2011, Indonesia's average quarterly GDP Growth was 1.50%. It reached its historical high of 3.82% in September of 2009 and record low of 3.57% in December of 2008. Indonesia is the biggest economy in Southeast Asia. It has a market-based economy in which the government plays a significant role by owning more than 164 state-owned enterprises (TradingEconomics.com/Indonesia Statistics).

-1.45

-2

-4 2007

-2.68

-3.57

2008

2009

2010

One of few potential sectors that have brought both international attention and appreciation to Indonesia is the education sector. An increasing number of rich people who can afford international education abroad (the richest Indonesian, according to Forbes 2011, amassed as much as $14 billion!), a growing middle class with money to spend on education, and the current reforms to improve educational standards in Indonesia have made Indonesia’s big market very attractive. Hon Anne Tolley, New Zealand Minister of Education, after attending a training event for Indonesian education agents on 14 July 2011 in Jakarta said that the New Zealand education sector has made Indonesia a priority country for promoting education sector links. This reflects Indone-

sia’s rapid development and growing demand for education services abroad. The World Bank even described Indonesia’s school system as immense and diverse. With over 50 million students and 2.6 million teachers in more than 250,000 schools, it is the third largest education system in the Asian region and the fourth largest in the world (behind only China, India and the United States). Further, it stated that education spending in Indonesia had increased significantly in the years since the economic crisis. In real terms, education spending doubled between 2000 and 2006. In 2007, spending on education was more than in any other sectors, reaching an equivalent of $14 billion, or more than 16% of total government expenditure. As a share of GDP (3.4%)

Support from Business Players on Indonesia–Sub-Saharan Africa Countries Relations Needed

Sub-Saharan Africa as a geographical term refers to the area of the continent of Africa that lies south of the Sahara. A political definition of Sub-Saharan Africa, instead, covers all African countries which are fully or partially located south of the Sahara. It contrasts with North Africa, which is considered a part of the Arab world. The region is a major exporter to the world of gold, uranium, chrome, vanadium, antimony, coltan, bauxite, iron ore, copper, manganese, and produces 49% of the world's diamonds. Sub-Saharan oil is viscous and has very low sulfur content. This

2011

Source: www.tradingeconomics.com/Badan Pusat Statistik Indonesia

”The Development of Indonesia Bilateral Relations with Sub-Saharan Africa Countries and the African Union” seminar held at UPH (University of Pelita Harapan) campus.

Indonesian businessmen are urged to aggressively tap opportunities in the Sub-Saharan Africa countries and to take advantage of both sides’ historical relations. Indonesia’s Ambassador to Senegal Andradjati said Indonesia should not lag behind Singapore and Malaysia that have already aggresively tapped business opportunities there. Sub-Saharan Africa countries have developed rapidly over the past 10 years, thanks to its natural wealth.

10

-2.4

requires less refining and is less costly. New sources of oil are being located in Sub-Saharan Africa more frequently than anywhere else. Of all new sources of oil, 1/3 are in Sub-Saharan Africa. Ambassador Andradjati said during a recent seminar titled ”The Development of Indonesia Bilateral Relations with Sub-Saharan Africa Countries and the African Union” held at UPH (University of Pelita Harapan) campus that this condition offers a great opportunity for Indonesian businesses to invest in Africa. Other speakers in the seminar were Prof. Zainuddin Djafar (University of Indonesia), Prof. Aleksius Jemadu, (Dean of FISIP UPH), and Dr. Talib (Kadin Committee). Prof. Djafar Zainuddin, in his presentation reminded that Indonesia is behind that of Singapore and Malaysia in terms of business expansion to Africa despite its remarkable bilateral relations history with Africa due to the Asia-Africa Summit. Meanwhile, Prof. Aleksius stated that it is for Indonesia to aim its foreign policies at economic in-

terests. "Indonesia’s foreign policies have so far been led to politics. It is no wonder that exports’ contributions to GDP is only 3%," said Aleksius. Indonesia has a chance to improve its bilateral ties with African countries. Aleksius said despite being the member of G-20, Indonesia is one of the emerging economies with the potential to boost the economy of both parties. Indonesia could become a model in solving ethnic and separatist conflicts which frequently occur in Africa. Indonesia and Africa also share a common interest in championing the concept of green economy that will be brought up during the Earth Summit. Aleksius added, "We need to learn China’s strategies and policies in Africa.” China’s commitment and concrete actions are supported by the economic power. The participation from Indonesian business players is needed to explore various opportunities and utilize the African market as an alternative way to bolster exports. Participations from Indonesian universities are also needed to develop a center of African studies.

this was comparable to other similar countries (see Figure 2). Despite the hype towards international education, studying abroad is still out of reach for the majority of Indonesians due to the high tuition fee and living expenses. It can also be a daunting experience in a country where being close to the family as well as keeping a strong hold on its culture are still of great importance. Therefore, an opportunity for international universities to set up branch campuses that offer the same level of education and resulting qualifications coupled with scholarships was thought at first to be a good solution to accommodate, let’s say, 1.2 million high school graduates who were unable to enter public universities in 2011. Other countries have been very

Jan/02

Jan/04

Jan/06

Jan/08

Source: www.tradingeconomics.com/The World Bank

active in attracting foreign universities to set up such branches, to name some are Qatar and Malaysia where incomes are much higher than in Indonesia but where the number of students is only a fraction of Indonesia’s total tertiary education population as cited by Global Business Guide Indonesia 2011. Malaysia with its current population of approximately 28.6 million is one good example of countries that had successfully attracted foreign reserves through its education sector. The education sector in Malaysia grew 6.8% annually from 2000 to 2009, making it the fastest growing industry in the country. In 2008, the education sector contributed 8% to the services sector. Education also accounted for 4% of the Gross National Income in 2009. In 2010, it had achieved its target of 80,000 international students in public and private

higher education institutions, with the majority of international students enrolled in private colleges and universities. Currently, Malaysia is ranked eleventh globally as a preferred study destination and Malaysia’s aspiration is to move up to the sixth position by 2020 with a total enrollment of 200,000 international students. Foreign countries started showing positive reactions to Indonesia’s big and lucrative education market after the government revised the Negative Investment List through Presidential Decree No. 36/2010 in 2010. The revision allows up to 100% foreign ownership in formal education (subject to certain approvals) and up to 49% in non-formal education. Previously, the 2007 regulation only allowed foreign ownership of up to 45% in formal and non-formal education sector (White & Case, 2010). Howev-

The World Bank even described Indonesia's school system as immense and diverse. With over 50 million students and 2.6 million teachers in more than 250,000 schools, it is the third largest education system in the Asian region and the fourth largest in the world (behind only China, India and the United States). er, setting up as a single entity in the form of a foreign university or branch campus could be a challenge when taking into consideration the non-profit form those foreign universities must assume. So, twinning programs or joint researches with few local universities which assume international-standard education, such as President University, are more visible for the time being.

Jhanghiz Syahrivar is the Lecturer in Faculty of Economics cum Head of Public Relations Division at President University, Indonesia


Business

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BUSINESS BRIEFS Pertamina Subsidiaries to Go Public in 2012 Two subsidiaries of state oil and gas company Pertamina will make an initial public offering of their shares in the first semester of 2012, State Enterprises Minister Dahlan Iskan said. “The two subsidiaries of Pertamina engaged in the upstream sector are ready to go public this year,” he said at his office here on Tuesday. The two companies are PT Pertamina Geothermal Energy (PGE) and PT Pertamina Drilling Services (PDSI). He said the two subsidiaries would make an initial public offering of their shares this year, along with state cement maker PT Semen Baturaja, state pawnshop PT Pegadaian, and PT Garuda Maintenance Facility, a subsidiary of national flag carrier Garuda Indonesia.

GARUDA CANCELS OPENING NEW ROUTES TO EUROPE Garuda Indonesia Airlines is canceling its plan to open new routes to Europe this year due to the European economic crisis. Garuda cited that Europe’s sluggish economy has affected the airline’s load factor. The national airline opened the route to Europe that linked Jakarta with Amsterdam in late 2010 but hasn’t opened a new one since.

He said the State Enterprises Ministry would continuously encourage state-owned companies, including their subsidiaries, to float their shares in the public. “Not only will the step speed up the improvement of the companies` financial performance but also the step has proven capable of improving companies` performance because they are required to implement GCG (good corporate governance), he said. Deputy for strategic industries and manufacturer to the state enterprises minister Irnanda Laksanawan shared Dahlan`s view, saying the initial public offering of the two companies was one of the efforts to improve the work performance of the companies concerned.

PT Pembangunan Jaya Ancol Enters Creative Industry PT Pembangunan Jaya Ancol is to engage in the creative industry as part of its service product innovation progran in 2012, the company`s president director, Budi Karya Sumadi, said here on Wednesday. “We have made t our service product innovation program in light of the various instances of progress and improvements in the national economy,” Budi said. The creative industry PT Pembangunan Jaya Ancol would engage in was convention tourism or otherwise also known as MICE (meeting, incentive, conference, and exhibition); production of films and creative character imagery , indoor music stadium, Ancol Beach City development, Ocean Ecopark, and Ancol promenade. Budi said the various government policies on development of tourism and creative industry were giving the company greater opportunities to grow. “For example, the construction of a great wall and the plan to dredge 13 rivers in Jakarta by the Jakarta city government will make the Ancol Dreamland area more strategic and attractive,” Budi said. He said Ancol Dreamland was in the process of transforming itself into a complete and modern tourism resort in North Jakarta. “We are currently constructing various facilities and in the next two to three years the appearance and the nuance of the Ancol recreational area will be different in that it will reflect an environmentally friendly concept,” he said.

Batavia Air to Serve Manado-Guangzhou Route Batavia Air will serve direct flights between Manado in North Sulawesi and Guangzhou in China starting January 22, 2012, North Sulawesi Governor Sinyo Sarundajang said at Sam Ratulangi airport here on Tuesday. “Starting January 22, Batavia Air will serve Manado-Guangzhou rote and I hope other national airline companies such as Lion Air will do the same in the near future,” Sarundajang said. The governor expressed optimism that following the opening of Batavia Air`s Manad-Guangzhou direct flights would stimulate the tourism sector in North Sulawesi and its surrounding areas. “The number of domestic tourists visit to North Sulawesi exceeds the the number of foreign tourists, but it will increase quickly if there are direct flights from Manado to three more overseas cities,” the governor said. “It is only one-hour flight from Manado to the to Davao and Cebu.” He said direct flights from Manado to the Philippines which were suspended would soon be reopened this year because a regional company has made a cooperation with Silk Air to serve the route.

The President Post/Nandi Nanti

PTDI to Produce N-219 Planes www.inilahjabar.com

Several regency administrations have expressed their interest to operate the N-219, which is very suitable for flights between the different regencies and remote places in the country.

P

T Dirgantara Indonesia (PTDI) will soon start producing the latest type of N-219, which is a STOL (short-take off and landing) plane. This year PTDI will build two prototypes for test flying and status tests on land, Technology and Development Director of PTDI Dita Ardonni Jafri said in Bandung Saturday. She said the basic framework of N-219 was started in 2006 and in 2008 has completed various basic tests, including wind tunnel tests. PTDI had carried out various tests with cooperation of the Technology Study Development Agency (BPPT). The plane has a capacity of 19

passengers and equipped with two engines and planned to fly to pioneering destinations in remote places. N-219 is still making other tests like aircraft static test, production engine test, and eventually flying test. In 2014 it may obtain a flying certification from the Ministry of Transportation and in 2015 planned to enter the market to replace planes of similar class which have become too old. Several regency administrations have expressed their interest to operate the N-219, which is very suitable for flights between the different regencies and remote places in the country. Besides, PT Merpati Nusantara Airlines (PT MNA) has also expressed interest to operate it and

speed of only 213 Kts (395 km per hour), while the price is much lower than other planes of the same class and operational costs.

The market survey by PTDI shows that Indonesia now needs 202 planes like the N-219, including 97 civilian planes, and 105 for military purposes and other special purposes.

planned to buy 20 of the planes like it has told the State Enterprises Minister following a working session with Commission VI of the House of Representatives in July 2011. The market survey by PTDI shows that Indonesia now needs 202 planes like the N-219, including 97 civilian planes, and 105 for

military purposes and other special purposes. It is not only very suitable on not very smooth landing strips, the airplane can also take off in only 600 meters with high stability, and is very suitable for isolated air strips in Indonesia without too much land. The plane is also designed for short distances (1,200 km) with a maximum

PTDI has earlier successfully produced planes widely used in the world like the CN-235 with cooperation of CASA, Spain, and had also built bigger planes like the N-250 in mid-1990. With regards to the CN-235, several countries such as Turkey (60), Korea (20), French airport (190) and Malaysia (eight) have purchased them. The other CN-235 operators are Saudi Arabia, Azerbaijan, Bophuthatswana, Brunei Darussalam, Burkina Faso, Chile, Colombia, Equador, Irland, Jordan, Mexico, Morocco, Pakistan, Papua Nugini, South Africa, Senegal, United Arab Emirates, Venezuela and the US. In 2011, PTDI has sent three N-235 of the maritime survey type to the South Korean coastal guard and another in March 2012.

Huawei to Manage XL’s Networks The appointment of Huawei as XL`s partner was based on the evaluation of the tender participated in by a number of leading communication network companies.

Publicly-listed cellular operator PT XL Axiata Tbk (XL) has appointed PT Huawei Tech Investment as a partner in the management of telecommunication networks under a seven-year contract ending in April 2019. “The cooperation is aimed at enabling XL to better focus on its core business as a service provider,” XL President Director Hasnul Suhaimi said in a press statement on Monday. By focusing on its core busi-

ness, XL hoped it would be able to answer future industrial challenges and get assurance of quality networks which were very vital to ensure the continuity of its business, he said. He said the appointment of Huawei as XL`s partner was based on the evaluation of the tender participated in by a number of leading communication network companies. “Huawei meets all the qualifications set by XL, in-

cluding its experience in managing networks and its capacity to maintain the quality of XL`s reliable networks so that the quality of XL`s telecommunication services for its customers can be increased,” he said. Under the contract, Huawei which specializes in providing solution to information and communication technology will manage the operation of XL`s 2G/3G mobile network services includ-

ing network operations center (NOC), field of operations (FOP), network performance management (NPM) and spare parts management service owned by XL. The contract also requires the transfer of 1,200 employees from XL to Huawei. XL gave the assurance that the employees` rights would be fulfilled according to the existing regulation, he said.


The President Post

B2 January 12, 2012

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Business Barata, Boma Bisma to Be Merged The decision was taken solely for effectiveness reasons.

S

tate Enterprises Minister Dahlan Iskan said he would merge PT Barata Indonesia and PT Boma Bisma Indra (BBI), two big state-owned engineering companies. “Actually the right term would be acquistion, not merger. The result of my meeting with 12 president directors of state-owned companies operating in engineering on Friday night is the plan to merge Barata with BBI. Our conclusion was Barata will acquire BBI,” he said to newsmen at Hotel

Merdeka Kota here on Saturday. He said the decision was taken solely for effectiveness reasons. Dahlan said PT Barata has now been on the phase of consolidation while PT BBI is in the period of crystallization. So, it would be better if the two are merged. Following the acquistion PT Barata will focus on sugar factory and steel construction while PT BBI on provision of palm oil factories. “So the two state-owned companies would focus on things needed by Indonesia at present,” he said. He said Indonesia would need hundreds of palm oil plants because so far the palm oil processing is still being carried out abroad.

Actually the right term would be acquistion, not merger.” Dahlan Iskan State Enterprises Minister

He said the target to achieve was PT BBI must have capability in the engineering of palm oil plants and marketing them meaning it must be able to convince palm oil companies to order palm oil plants to process their production so that they would not do it abroad. He said this was a big opportunity for PT BBI as oil palm plantations in

Indonesia reach millions of hectares while the number of factories is minimum now totalling only 100 units. Regarding PT Industri Kereta Api (INKA), he said he did not as yet wish to merge the train manufacturer with other state-owned companies because PT INKA has been considered to be out of critical periods. “I think PT INKA has been on a take-off stage. It has been able to surpass its critical periods namely crystallization and consolidation. So, I think it will not be merged with other state-owned companies and will continue to focus on train manufacturing industry,” he said.

He said what he wished to do on a number of state-owned companies in Indonesia was making changes on a number of sugar companies which are now facing a difficult situation and also on a number of shipbuilding companies that have so far not yet been able to build ships by themselves. “There are now four shipbuilding companies that need to be advanced. They must unite to produce ships needed by Indonesia,” he said. Dahlan arrived in Madiun on Friday by train and immediately visited PT INKA upon arrival. He then visited his home village in Magetan where he also made a visit to the Sabilul Muttaqin Islamic Boarding School.

Garuda’s Income Rp 27.1t in 2011 State airline company PT Garuda Indonesia (Garuda) has announced an unaudited income of Rp 19.5 trillion in 2011, a 39% increase compared to the Rp 19.5 trillion gained in 2010. Garuda`s president director Emirsyah Satar said in Jakarta Thursday the performance was made by operational expansion of the company by way of the Quantum Leap program, efficiency and asset utilization. Therefore he said in 2011 Garuda managed to carry 17.1 million passengers consisting of 13.9 million domestic and 3.2 million international passengers. “The number was also a 36.8% increase compared to the 12.53

million passengers in 2010,” he said. Not only that, availability of seats per kilometer (ASK) in 2011 increased 26% to 32.5 billion compared to 25.77 billion in 2010. In the meantime, the passenger yield increased 12.4% to $9.63 compared to $8.6 in 2010. In 2011, Garuda`s flight frequency (domestic and international) also increased by 27% to 130,043 flights compared to 102,724 flights in 2010. In the meantime the Seat Load Factor had been raised by 5% to 74.7% from 71.7% in a year earlier. The utilization of planes also increased from 9:23 hours in 2010 to 10:40 hours in 2011. In the meantime the On Time Per-

16%, but Garuda`s passenger market increased 36%. “This is higher than those of other airline companies with only an average of 9%,” he said. In the meantime, the number of international passengers increased 12%, and the market of Garuda increased 29.5%. Emirsyah Satar Garuda’s President Director formance (OTP) also increased to 85.68% compared to 80.15% last year. “Our domestic market share also increased to 28.3%, from last year`s 23.7%,” he said. He also said that the domestic air passenger market in 2011 increased

More planes

With regard to the increase in the number of planes, Emirsyah said last year Garuda received 11 new planes, namely two A330200 and nine 9 B737-800 Next Generation aircraft. “In 2011, the total number of our planes reached 88 with an average length of service of 6.5 years, higher than the rate of 2010 with 8.1 years,” he said.

In 2011 Garuda inaugurated Makassar as the third hub following Jakarta and Denpasar. As a hub, Emirsyah said, Makassar links 15 cities in Sulawesi, Maluku, Papua and Singapore. “We have also opened seven new routes in 2011, namely Makassar-Gorontalo, Surabaya-Ambon, Makassar-Balikpapan, Makassar-Singapore, Makassar-Ternate, Surabaya-Balikpapan, and Balikpapan-Jogjakarta,” he said. In the meantime, in 2011, Garuda increased flight frequency to various domestic and international cities. The routes included Jakarta-Shanghai, Jakarta-Seoul, Denpasar- Seoul, and JakartaSydney from 5 to 7 times a week.

www.arabnews.com

CIMB Niaga Syariah had set itself the target of maintaining its CAR at above 14%

CIMB Niaga Boosts Sharia Unit with Rp 100b Bank CIMB Niaga Tbk said on Wednesday it had injected Rp 100 billion in funds to its sharia unit to support its sharia banking business particularly financing. The fund injection raised CIMB Niaga Syariah`s capital to Rp450 billion as per December 31, 2011, the bank said in a press statement. “The fund injection is part of the CIMB Niaga`s commitment to support the growth of sharia banking business particularly financing as well as to maintain its CAR (capital adequacy ratio),” CIMB Niaga retail banking and sharia director Ferdy Sutrisno said. He said the fund injection was important to support the growth of the bank`s sharia banking business as capital was an essential factor to support the growth of financing business. Therefore, he added that

CIMB Niaga Syariah had set itself the target of maintaining its CAR at above 14%, he said. CIMB Niaga Head of Syariah Banking U Saefudin Noer said meanwhile the bank three times injected funds to its sharia unit in the past two years. The bank injected Rp135 billion in March 2010, Rp100 billion in June 2011 and Rp100 billion on December 9, 2011 to CIMB Niaga Syariah, he said. According to a Bank CIMB Niaga report published in September 2011, the amount of financing channeled by the sharia unit rose 95% to Rp2.82 trillion in September 2011 from Rp1.45 trillion in September 2010. The amount of third party fund placement in the sharia unit also increased 95% to Rp3.44 trillion from Rp1.76 trillion.


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January 12, 2012 B3

Investment Kujang Invests Rp6.8 t in Fertilizer Plant www.detik.com

State fertilizer company PT Pupuk Kujang is planning to build another unit of its plants called Kujang IC at a cost of Rp6.8 trillion ($800 million), its president director said. “The plant Kujang IC will replace the plant Kujang IA which is more than 30 years old,” Achmad Tossin said on the sidelines of a function marking the signing of an agreement on refinancing Kujang`s debts to Japan Bank for International Cooperation (JBIC) here on Wednesday. The plant IC is scheduled to start operating in 2017, he said, and would have a production capacity of 900 thousand to 1 million tons, or higher than the combined production capacity of the plants Kujang IA and IB which reached 570 thousand tons per year. Feasibility and technical studies for the construction of the plant IC had been completed, he said, adding the company was now waiting for the results of a financial study to determine the financing aspect of the project. “Nearly 70% of the financ-

Economic growth in the fourth quarter of 2011 may reach 6.5%, with the support of the still strong household consumption and investment with exports still being maintained although rather sluggish.

B PT Pupuk Kujang President Director Achmad Tossin (left) and BRI Institutional Business Director Asmawi Syam. ing source will likely come from banking loans and the remaining 30% from the company`s internal cash,” he said. But he added that the financing of the project would depend on the company`s debtto-equity ratio. Therefore, domestic banks` role in the development of the fertilizer industry was badly needed. The plant IC would be built in Cepu, Central Java, so that it would be close to the Block Cepu gas source, he said. “It is most likely the plant will be built in

Cepu but it can also be built in Bojonegoro (East Java), depending on the decision of Pusri Holding because Kujang is a subsidiary of Pusri Holding,” he said. Kujang operations director Yuni Suryanri said once the construction of the plant IC was completed the company would have a combined production capacity of 1.1 million to 1.4 million tons per year. The plants IA and IB now have a production capacity of 570 thousand tons each.

South Sumatra Eyes Rp13.5t Investment South Sumatra province has set itself a target to have an investment of Rp13.5 trillion in 2012, a local government official has said. “The target of investments with such a considerable value in 2012 is because this year`s regional budget has been set at Rp5.1 trillion,” South Sumatra Regional Investment Permit and Promotion Body spokesman Permana said. Permana said that if the amount of regional budget was big, the investment value would be three folds bigger than the budget or around Rp15.3 trillion, but he added that his side has only set a

target of Rp13.5 trillion in investment in 2012. He was optimistic that the target could be reached because South Sumatra has for many times hosted various national and international events. Permana said the province this year would host other international events among others, worlds Islamic states parliamentary meeting late of January and other international meetings and therefore investment opportunity in the province was still promising. He added that his party would even have a cooperation with South Africa especially in the field

vincial Investment Promotion Board (BPPMD) Agus Gustiar said here on Tuesday. The investment mostly went to the manufacturing sector. Like in the past years, investment in 2011 was still concentrated in industrial enclaves such as Bekasi, Bandung, Karawang, Bogor and Cirebon, he said.

www.bloomberg.com

ank Indonesia has estimated that foreign investment (PMA) in 2012 would continue to increase due to the improved investment climate in Indonesia which was marked by the increase in Indonesia`s rating to investment grade. “We estimate it may reach $19.119.2 billion, higher than last year`s $18.7 billion,” Deputy Governor of Bank Indonesia Halim Alamsyah said in Jakarta Thursday. In the meantime foreign investment in portfolio like shares and bonds may decline from $5.8 billion to $3.7 billion, in relation to the worsening economic condition in Europe and risk factor relating to Indonesia`s condition which has not reached the AAA category. “While already reaching an investment grade, foreign portfolio investors would not dare to come to Indonesia,” Halim said.

Darmin Nasution Bank Indonesia Governor

The growth of the world economy would be lower than consumption in the advanced countries, which would be stagnant, and unemployment would be high.

Bank Indonesia Governor Darmin Nasution said that the growth of the world economy would be lower than consumption in the advanced countries, which would be stagnant, and unemployment would be high. This will effect the exports of developing countries, while the global financial market is still in a confusion with the continued crisis in Europe causing liquidity in the financial market to continue to remain tight with increasing risks. In addition, the global financial market is also facing possible rating declines in a number of countries in Europe triggering negative sentiments. With regard to prices, global inflation pressures have been declining along with declining international commodity prices. Under such developments, in anticipation of the effects on the weaken-

ing global economy amidst the declining inflation, global monetary policy responses had been accommodating. Domestically, Darmin believed Indonesia`s economy growth in 2011 had been quite firm in line with the well maintained macroeconomic stability and financial system. Economic growth in the fourth quarter of 2011 may reach 6.5%, with the support of the still strong household consumption and investment with exports still being maintained although rather sluggish. In the entire 2011, economic growth may still reach 6.5%, higher than the previous year`s 6.1%. Production wise, the sectors which may function as the main boosters of economic growth are industry, transportation, communications, trade, hotels and restaurants.

Foreign Investment in Batam up $105 million of economy in order to reach the target of investment in the fields of mining, agriculture, electricity, industry, and clean water. In a bid to facilitate the investors to invest in South Sumatra, Permana said the human resources quality in the province would be improved especially in information technology. He said investment in the province in 2011 reached Rp11.5 trillion from the original target of Rp9 trillion because the province at the time hosted the Southeast Asian Games.

Foreign investments amounting to $105 million had been made by 91 companies in 2011, according to the Batam Enterprise Agency (BP Batam). “The manufacturing sector is still the largest contrib-

utor, attracting $34 million in 35 foreign companies. In 2010, this sector was also the largest contributor,” Director of One Stop Integrated Services and Public Relations of BP Batam, Dwi Djoko Wiwoho, said here on Thursday. The other sector was shipping

with $17.8 million in 23 companies, property development $30 million in four companies, and trade and services $22 million in 29 companies. The figure was an increase in 2010 by $72.5 million in 58 foreign investments. In 2012, BP

Batam has targeted 110 foreign investments and tried to achieve it with a budget from Finance Ministry. “We will promote investment in countries in the Asian region to achieve the target in a year,” he said.

Breakfast Dialogue

Property Outlook 2012

Investment in W. Java Reaches Rp48t in 2011 The amount of domestic and foreign investment in West Java in the past one year reached Rp48.75 trillion with 767 projects, an investment official said. “The realization of investment in West Java rose. Until the third week of December it reached Rp48.75 trillion or 23% higher than the target of Rp39.47 trillion,” Head of the West Java Pro-

Foreign Investment in 2012 Predicted at $19.2 billion

“Bekasi district ranks first as investment destination with Rp13.2 trillion, or nearly 27.09% of the overall investment inflows to the province in 2011,” he said. Trailing behind in second place was Bandung with Rp9.5 trillion, followed by Cirebon Rp7 trillion, Karawang Rp5.3 trillion and Depok Rp4 trillion.

Indonesia needs to take into account several factors to bolster the domestic property market such as investment in infrastructure sector, effective education system, property right system, enforceable law, peaceful ousting of corrupt administrations in several provinces to create an accountable government, more stable political condition, financial system and market.

T

he President Post and Financial Club held a Breakfast Dialogue on 25 January 2012 and invited prominent business and property development consultant Ferdinand Boedi Poerwoko as the speaker. In his presentation on Property Outlook of 2012, Boedi said Asia’s track record during the crisis and recovery had been impressive. He projected that growth will decelerate but will continue to remain strong. “Although it is moderating with emerging capacity constraints and weaker external demand, domestic demand is expected to continue to support growth,” Boedi said. He said that the rise of ASEAN 5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam) has become the world’s focus due to high domestic demand. He explained that investment growth in China has decelerated, property prices were suffering from inflation and credit growth had softened from a recent record level. Meanwhile, private consumption is expected to drive the activity in India as policymakers will curb the inflation. Japan’s confidence has picked up and activities have continued to rebound after the Tsunami. Growth in Australia and New Zealand had slowed down due to natural disasters last year but recovery has now gained traction, supported by strong trade and positive spillovers from the region. He added that Indonesia needs to take into account several factors to bolster the domestic property market such as investment in infrastructure sector, effective education system, property right system, enforceable law, peaceful ousting of corrupt administrations in several provinces to create an

The President Post/Nandi Nanti

Ferdinand Boedi Poerwoko accountable government, more stable political condition, financial system and market. Summing up his presentation on 2012 Jakarta Property Market outlook Boedi said there will be 336,300sqm of new office building supplies due to expected strong demand and increasing gross rentals. He added that 18,140 new condominium units will be available in Greater Jakarta area and 5,400 condominiums for lease sub sector will be completed. Jakarta’s retail market will also have an additional supply of 336,800 units

and occupancy rate of approximately 79.5 %. Ferdinand Boedi Poerwoko is founder of Property Investor Club. He has been executive at property companies and associations. He has received several accolades, namely Top Executive Indonesia 1992, 50 Highest Ranking Executive by Warta Ekonomi in 1993, Best Executive Award – Asean Program Consultancy – 1997, Executive Dunia Profesi – YPKP 1997, and Who’s Who in Asean.

INDUSTRIAL ESTATE Location

Absorption Rate

Rp./Sq.m. (Average)

Jakarta

86.5%

2,500,000

Tangerang

66.8%

1,010,000

Bekasi

80.7%

1,099,850

Krawang - Purwakarta

80.0%

714,688

Serang

64.1%

687,500

Bogor

72.2%

1,000,000

Average

77.6%

1,099,000

Source: Cushman and Wakefield Q4 2011


B4 January 12, 2012

The President Post

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Pictorial Events

IABC Event The President Post/Nandi Nanti

T

he Department of management FEB-UGM and Indonesia Australia Business Council (IABC) cooperates in a Comprehensive Economic Partnership Agreement in business in Indonesia. Present at the forum were Susilo Nugroho (Head of Management Department FEB – UGM), Micky Hehuwat, Leith Dody, Goerge Iwan Marantika, and Julianne Merriman. The event was followed by dinner at Grand Hyatt Hotel, Yogyakarta. The event was attended by prominent figures, among others Peter Craven, Leith Dody, Nurcholis, Lie Sang Ta, Yudiotomo Imardjoko and Brendan Jinks.

The President Post/Nandi Nanti

Breakfast Dialogue BREAKFAST DIALOGUE at the Financial Club Jakarta presented Ferdinand Boedi Poerwoko, a Business and Property Development Consultant as speaker in a dialogue themed “Property Outlook 2012”.


The President Post

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January 12, 2012 B5

Pictorial Events The President Post/Nandi Nanti

Morning Talkshow The Industrial Post in collaboration with APINDO held a seminar themed “Building Better Communication Between Companies and Workers’. The talk show invited APINDO Secretary General Suryadi Sasmita and APINDO Sector Executive Aditya Warman as speakers and Alibasyah Suryo as the moderator.

The President Post/Heros

CEO BUSINESS FORUM on Food & Beverage Industry CEO BUSINESS FORUM of Food & Beverage Industry was held at at the President lounge, Menara Batavia, Jakarta and carried the theme “Business Outlook & The Breakway as Indonesian Leading Industry in 2012”. GAPMMI Chairman Adhi Siswaja Lukman and FITS Consulting Group Senior Advisor Zavar Momin attended the event as speakers. The President Post/Nandi Nanti

Indonesian Masters

Left to right: Hans Leo (Linc Group), Darrel Lin (IMPL), Irfan Hamid (Asian Tour), H.M Syafei Asnap (PGPI), Suryopratomo (Metro TV), George Chandra (Royal Jakarta Golf Club).

Garuda Indonesia International Islamic Expo

@america First Anniversary

Digital Video Conference

Garuda Indonesia held Garuda Indonesia International Islamic Expo (GAIIIE) 2012, on 20-22 January 2012 at Jakarta Convention Center. The appointment of Indonesia as host to the INTERNATIONAL ISLAMIC EXPO 2012 signifies its importance as the world’s most populous Muslim country.

@america celebrated its first anniversary with music performance and talk show. @america, located at Pacific Place mall in South Jakarta, provides visitors with high-technology facilities to explore, experience, and express their interest on the United States. Visitors can find cutting-edge technology, interactive games, and live events designed for all genders and ages.

Senior adviser to US Secretary of State Hillary Clinton for the Field of Innovation, Alec Ross held a dialogue with entrepreneurs, bloggers, and students in Indonesia regarding parents’ responsibility to assist their children and on the use of social media to achieve its objectives related to foreign policies.

The President Post/Heros

The President Post/Heros

The President Post/Heros

People Power: Online Media for Offline Change


The President Post

B6 January 12, 2012

www.thepresidentpost.com

Manufacturing Sound Development Strategies Can Lead to Huge Job Creation Figure 1. Average annual Manufacturing output growth Percent

I

As stated by R. Tryout of Pennsylvania University in one of his articles, “the manufacturing sector is often the darling of policy makers in developing countries”. As he rightly stated, “It is viewed as the leading edge of modernization and skilled job creation and a fundamental source of various positive spillovers”. In my view such an observation makes real sense.

Policy Isssues and considerations

• In the absence of the manufacturing sector, developing countries sees themselves as a member of LDCs (Least Developed Countries). In this era of globalization developing countries have their ambition to leave that stage of development and embark on the road to modernization. • They recognize that in this era of globalization competition in the manufacturing sector can be very tough, as is happening in the current global recession. But manufacturing remains the leading edge of modernization. • In addition, it can be a fundamental source of positive spillovers. Such spillovers can happen in the area of human resources development, the development of technology and communication. • With their increasing population developing, countries have to race against time to create jobs. In addition to the development of services, manufacturing is needed to create employment opportunities, especially in countries with dense population facing unemployment problems. • This is the case, for example, with the island of Java, Indonesia, with its huge population. Because of the non-availability of land, it becomes practically impossible for Java to continue to depend too much on its highly developed agriculture for their living. • Growth in the area of agriculture is now limited to about 2.5%, much lower than the country’s growth of 6% or more. There is the urgency to achieve

5

5

0

0

-5

-5

Manufacturing exports have shifted towards resource-based products (share of Indonesia’s non-oil exports, percent) 100% Raw materials

90% 80%

Agri resource-based manufacturing

70% Resource-based manufacturing

60%

Other resource-based manufacturing

50%

Lainnya

Transport equip. machinery

Note: FBT is food, beverages and tobacco. Cement & minerals include only non-metal minerals

Iron & basic steel

Cement & minerals

Chemicals, rubber

Paper & printing

Wood & products

TCF

40%

Source: BPS and World Bank staff calculations

higher economic growth and to create sizeable employment opportunities. The development of a competitive manufacturing sector has become a real must. • Another policy issue concerns the problem of general welfare. Developing countries are all aiming to achieve better conditions of life. There is the urge in developing countries to be supplied with goods which can help to provide them with better living conditions. • With the explosive increase of the middle class in Indonesia, that means among others the increasing supply of mobile phones (hp), motor cycles, computers and modern household articles. It is most fascinating to observe the Maspion group producing a great variety of manufactures while actively promoting the use of local products.

MANUFACTURING SECTOR

It may be hard to believe that the World Bank, in its Indonesia Economic Quarterly of December 2011, states that Indonesia was one of East Asia’s emerging “dragons” with a manufacturing sector growing as fast as in Korea, Malaysia and Thailand” . That was at the mid-1980’s to the mid-1990’s when a number of large factories sprung up in various parts of the country. The pace of development of manufacturing (mostly state enterprises – BUMN) was then similar to the other “dragons”, reaching the incredible growth of 12-14%. Declining trend: However, since 1998, when the Asian financial crisis hit the country, Indonesia’s manufacturing sector has been following a lower growth path compared to the pre-crisis level (Figure 1). During the 1995-2010 a large number of manufacturing products declined. Output growth of FBT (Food, beverages and tobacco), chemicals and rubber went down immensely, as well as wood and wood products and cement and minerals, in particular TCF products (Textiles, clothing and footwear), which provide employment to a very large sector of the community. The main reason is that they were losing out in com-

Food, Beverage & Tobacco

2.73%

Leather goods & Footwear

1.74%

Timber and Forest Products

-3,5%

Paper & Printing Products

1.64%

Fertiliser, Chemical and Rubber Products

4.67%

Cement & Non Metal Minerals

2.16% 2.56%

Automotive & Heavy Machinery

10.53%

Source: Ministry of Trade

Figure 4. Manufacturing continues to attract the largest share of FDI inflows into Indonesia (% Share of total net FDI inflows by sector) 2004

2005

2006

2007

2008

2009

2010

Average

Agriculture, Hunting, and Forestry

6.7

0.0

4.6

4.1

2.1

-1.1

2.1

2.7

Fishing

0.0

0.1

0.1

0.3

-0.3

0.2

0.4

0.1

Mining & Quarrying

5.9

14.7

6.5

27.5

38.7

26.7

13.5

19.1

39.3

63.1

34.4

34.8

24.9

32.3

36.2

37.9

0.0

1.9

0.0

-0.9

-0.6

1.1

1.6

0.4

-0.8

1.6

1.7

2.8

0.3

0.1

-0.4

0.8

Wholesale & Retail

-10.1

0.7

7.6

3.1

12.4

1.5

19.4

4.9

Hotel & Restaurant

0.0

0.0

0.1

-0.1

0.2

0.0

0.0

0.0

Transport, Storage & Communication

10.7

4.6

12.1

8.6

1.4

36.9

18.7

13.3

Financial Intermediation

20.5

9.4

20.9

19.3

20.7

3.1

3.2

13.9

Real Estate & Business Activity

-0.8

0.2

-0.3

-0.1

-2.2

-0.5

0.2

-0.5

Others

28.6

3.6

12.2

0.5

2.3

-0.3

5.1

7.4

Source: Bank Indonesia & World Bank

20

10

Basic Metal Products

Construction

2001-10

10

Indonesia Manufacturing Real Annual Growth by Sector 2010

Electricity, Gas and Water

Percent

15

Figure 3. Indonesia Manufacturing

Manufacturing

Figure 2. Resource-based Manufacturing Exports

15

Total

the growth of manufacturing. This is happening even in countries which have plenty of natural resources and commodities such as Indonesia, Brazil, Mexico and South Africa. To depend solely on commodities would not be sufficient. Hence, the application of “value-added policies” becomes of great importance.

1993-96

20

FBT

Manufacturing sector should be developed to By Atmono Suryo the optimum in the years COUNTRIES ahead. Manufacturing DEVELOPING n this era of globalization represents 21% of and modernization, deGDP with some 14 veloping countries are of the view that there is the million employed in need to adjust developthe sector. And the policies accordingdomestic economy with a ly. Therement is now the need to have population of some 240 a closer link between development million people provides strategies and the growth of manan enormous burgeoning ufacturing. Development stratemarket. gies should give higher priority to

machinery, electronics, processed manufacturing

30% Non-resource-based manufacturing

20%

Textiles, footwear, clothing

10% 0% 1980

Low-tech manufacturing 1985

1990

1995

2000

2005

2010

Source: BPS and World Bank staff calculations

petition with imported goods, especially from China. This is the risk to be in the manufacturing business, and Indonesia has to cope with that. The decline of TFC, electronics and processed manufactures, had its adverse impact on the social conditions of a large section of the Indonesian community. There was then the fear that the process of de-industrialization was taking place. It shows how important it is to achieve higher competitive edge in the area of manufacturing. Resources-based exports: It is important to note that in terms of exports and percentages manufacturing, exports have shifted towards resource-based products such as agro resource-based

manufacturing and other resources-based manufacturing (Figure 2). This proves that resourcesbased manufacturing can have an important place in the composition of Indonesian exports. This is an important point to be remembered, when designing our development strategy. The application of “added-value policies” becomes urgent for Indonesia. We need to restructure our economy towards industrialization and to make the best use of our natural resources.

POSSIBLE UPSWING

After the big downturn, manufacturing activities have recently shown some strong recovery.

World Bank economists are even optimistic that manufacturing in Indonesia will grow by 7%, a most welcome assessment. The following data gives us an idea where manufacturing growth stand during 2010 (Figure 3). The largest growth happened in the automotive, heavy machinery, fertilizers, chemicals and rubber secrtors, followed by food, beverage and tobacco. Then comes the area of basic metal products. In the area of investment manufacturing has since 2004 attracted the largest share of FDI inflows, achieving the average of 37.9%, followed by mining and quarrying which show an irregular trend with a high figure in 2008 and a sharp decline in 2010.

While recognizing the risks and complexities involved, I strongly feel that the manufacturing sector should be developed to the optimum in the years ahead. Manufacturing represents 21% of GDP with some 14 million employed in the sector. And the domestic economy with a population of some 240 million people provides an enormous burgeoning market. This should be one of the prime goals in our development policies, which should be pursued with vigor by the business community and the government—to transform Indonesia into a modern emerging country. The writer is former ambassador to the EU


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January 12, 2012 B7

Technology

China Has Its Own GPS Now www.china-defense-mashup.com

China is now one step closer to become the top economic and military superpower in the world: their Beidou geo-positioning system is now fully armed and operational.

I

t is designed to provide an alternative to the U.S. Global Positioning System and, according to defense experts, could help the Chinese military identify, track and strike U.S. ships in the region in the event of armed conflict. China began building an experimental precursor to Beidou in 2000 with the goal of creating its own global system—called Compass—with 35 satellites, by 2020. The only other operational global system apart from GPS is Russia’s Glonass, although the European Union’s Galileo system is set to be completed by 2020.

Why is this important?

Accurately knowing where you are on planet Earth is one of the most powerful technologies any country can have. Beidou cuts China’s dependency of the American GPS system completely. It means that they would be able to launch any attack and move their forces around the world without any US interference. Right now, the United States can deactivate their Global Positioning System so nobody can use it in certain areas. That includes enemy armies. After Beidou, however, this will be impossible. This year, China has passed several milestones in developing military technology that could be used in these areas: It conducted the first test flight of a stealth fighter prototype in January and began sea trials of its first aircraft carrier in August. China also confirmed for the first time that it was developing an anti-ship ballistic missile that the Pentagon says may already be basically operational and eventually capable of hitting a moving aircraft carrier up to 1,700 miles,

Beidou cuts China’s dependency of the American GPS system completely. It means that they would be able to launch any attack and move their forces around the world without any US interference.

or 2,700 kilometers, from China’s shores.

How accurate is Beidou?

Beidou - which translates as the Plough, or Big Dipper - promises to offer civilian users positioning information correct to the nearest 10m, measure speeds within 0.2m per second, and provide clock synchronisation signals accurate to 0.02 millionths of a second. The Chinese military will be able to obtain more accurate data. A 2004 study by Geoffrey Forden, a researcher at the Massachusetts Institute of Technology, US, suggested that Beidou could be used to target cruise missiles against Taiwan if a war broke out over the territory. Having its own system would protect China against the risk that the US could turn GPS off. A 2011 report for the website defensepolicy.org suggested the network could also be used to guide drones to destroy foreign naval forces were China to come under attack. However, Beidou’s developers also stress day-to-day benefits for the public. They told China Daily that the system could create a 400 billion yuan ($63.2bn, £40.4bn) market in related applications for the automotive, telecommunications, fishing and other industries by 2020. The US military and other agencies use augmentation systems that provide higher accuracy. GPS.gov claims that “these enable real-time positioning to within a few centimeters, and post-mission measurements at the millimeter level.” Right now, the Air Force and Lockheed Martin are working on GPS III. It will greatly increase

tary, their economic system will have a big boost thanks to Beidou. According to the head of the project talking to China Daily, it “will create a market as big as 400 billion yuan ($61.54 billion) by the end of 2020.” The Chinese government is investing $25 billion on it.

Is it compatible with GPS?

Beidou Navigation Satellite System accuracy while giving a stronger signal, harder to jam and capable of penetrating areas in which the current GPS doesn’t work. Beidou, like GPS, will provide free civilian services—for both Chinese and foreign users—that can be used in conjunction with commercially developed applications to help navigate private cars, monitor commercial trucks and ships and assist during natural disasters. It has the added advantage of supporting SMS messages.

The system is designed partly to give Chinese companies a larger share of the satellite-navigation-system market in China, which is currently dominated by GPS and which the state-run Xinhua news agency said was valued at 50 billion yuan ($7.9 billion) by May 2011, compared with four billion yuan in 2003. It also gives China a significant tactical advantage over neighbors with which it has territorial disputes, including India, which is developing its own regional satel-

lite navigation system but doesn’t expect to complete it for several years.

What does it cover?

Right now they have ten geopositioning satellites in orbit covering China. By 2012 they will have 16 to cover most of Asia and, by 2020, they will cover the entire world with 35 satellites. That means that their navy, airplanes and land troops would know where they are in any part of the world without depending on the American GPS.

Nokia Lumia Released in Indonesia Supporting the launching of Nokia Lumia, Micrososft and Nokia held “The Amazing Nokia Lumia Developer Days at Bandung which was attended by over 800 developers.

Nokia Indonesia through the Nokia Developer has supported more than 10,000 local application developers who produce more than 3,000 local applications on the Nokia Store and can be downloaded by Nokia users worldwide.

N

okia Indonesia will release the first smartphone based on Windows Phone operating system, the Lumia 800 and Lumia 710, in Jakarta on February 17. Starting on February 6 to 16, consumers can order the pre-order online through www.nokia.co.id/ lumia. Nokia Lumia 800 IS designed to attract attention. It is supported by the outside appearance of bright colors (blue, magenta and black) and best performance for social networking and internet access

with just one touch. It features a 3.7 inch AMOLED ClearBlack display with a subtle blend in mobile phone design, and is equipped with 1.4 GHz processors and 16GB of internal memory and graphics processor—Nokia Lumia 800 is a perfect mix between design and technology. Meanwhile, Nokia Lumia 710 was designed with stunning simplicity; it can be personalized with a back cover that can be replaced. It is available in two colors, black and

white, with a choice of back cover: black, white, blue, fuschia and yellow. Nokia Lumia 710 was created for ease of access to social networking and sharing of images, as well as for best browsing experience using IE9. Supporting the launching of Nokia Lumia, Micrososft and Nokia held “The Amazing Nokia Lumia Developer Days at Bandung which was attended by over 800 developers. In the event, Nokia Indonesia and Microsoft provided technical education about the development

How can they use Beidou?

China will be able to move their civilian transport ships and airplanes all over the world without being dependent on any other country. Their military would also use this system to direct their ships, combat airplanes, drones and land forces in battle. They would also be able to use Beidou to target any kind of weapons with great accuracy, including cruise missiles.

Who benefits from this?

Apart from the Chinese mili-

According to Beidou, their system will be compatible with the American GPS, the Russian Glonass—which is also fully operative—and the European Galileo. Beyond GPS, Russia operates the Glonass network. It recently launched a series of satellites to cover gaps in its system and reported earlier this month that it once again covered 100% of the Earth’s surface. The EU is also developing its own system - Galileo. The first of its operational satellites entered orbit in October. The European Space Agency said the network should be completed in 2019. Meanwhile, American defence developer Lockheed Martin is working to upgrade the US’s system to GPS III. The firm has begun constructing a prototype next-generation satellite in a facility near Denver. The US Air Force said the new system would have more power, making it harder for enemies to jam it, and allowing the signals to penetrate deeper into built up cities and dense foliage. The Congressional Budget Office has estimated that the project will cost $25bn by 2025.

www.techindustriya.co m

This time, Nokia continued its efforts and commitment to keep supporting Windows Phone application development ecosystem in Indonesia along with Microsoft Indonesia.” Narenda Wicaksono Developer Outreach Manager Nokia South East Asia

of applications based on Windows Phone, as well as effective ways to market their products. Nokia is working closely with Microsoft to support application development in Windows Phone platform to carry out a series of events to the ecosystem of Windows Phone application development

through workshops for universities, community and individual application developers of various levels. These activities demonstrate the commitment and support of Nokia for local application developer ecosystem. “Application of ecosystem in Indonesia is very attractive, active and has a great business opportunity for both application developers and stakeholders from different industries. So far Nokia Indonesia through the Nokia Developer has supported more than 10,000 local application developers who produce more than 3,000 local applications on the Nokia Store and can be downloaded by Nokia users worldwide. This time, Nokia continued its efforts and commitment to keep supporting Windows Phone application development ecosystem in Indonesia along with Microsoft Indonesia,” said Narenda Wicaksono, Developer Outreach Manager, Nokia South East Asia. “In a bid to foster the ecosystem of developers and to trigger the creativity of Indonesian developer to make the best applications on

the Windows Phone platform with Nokia, it will be the main program Microsoft Indonesia,” said Risman Adnan, Director Developer & Platform Group, Microsoft Indonesia. “The success of the platform is not only measured by the number of applications made, but the quality of applications and the economic contribution of ecosystem to be developed. Together with Nokia, we will continue to pump our platform ecosystem contribution to the creative economy in Indonesia”. Besides “The Amazing Nokia Lumia Developer Days”, Nokia and Microsoft also held a road show to seven universities, namely University of Indonesia, Bina Nusantara University, University of Parahyangan, University of Gajah Mada, STMIK Akakom Yogyakarta, Petra Christian University, and STIKOM Bali. This road show will be organized by Nokia and Microsoft from February to April 2012.


The President Post

B8 January 12, 2012

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Executive Highlights Economics Coordinating Minister Hatta Radjasa said the government was committed to implementing its fuel rationing program by 1 April ECONOMICS COORDINATING MINISTER HATTA RADJASA SAID THE GOVERNMENT WAS COMMITTED TO IMPLEMENTING ITS FUEL RATIONING PROGRAM BY 1 APRIL. This comes despite concerns among some analysts about its feasibility and its impact on social stability. Hatta said the program was in accordance with the 2012 budget law mandating the government control expenditures for fuel subsidies. Under the program, all privately owned vehicles will be prohibited from buying subsidized fuel. Rationing will initially be implemented in the Greater Jakarta area, and be expanded gradually across Java and Bali over the course of the year. Rationing in the outer islands will be implemented by 2014. Hatta said logistic preparations were fully underway. Pertamina will have more than 2,700 petrol stations out of its 3,000 stations in Java and Bali upgraded to dispense non-subsidized fuel by April. Over the medium-term, Hatta said the government would also be promoting the use of compressed gas to support its subsidy reduction program. Deputy finance minister Anny Ratnawati, meanwhile, has expressed confidence the fuel rationing program would not have a long-term impact on inflation or growth. The government is currently forecasting inflation of 5.3% and economic growth of 6.7% for 2012, compared to 3.8% inflation and projected 6.5% growth in 2011.

The rupiah was trading near sevenweek lows of around Rp9,150-9,200 to the dollar as of 11 January THE RUPIAH WAS TRADING NEAR SEVEN-WEEK LOWS OF AROUND RP9,150-9,200 TO THE DOLLAR AS OF 11 JANUARY. Yields on Indonesia’s benchmark 10-year bond, however, remained near record lows of around 6.24%, suggesting no major capital flow reversals. The rupiah weakness reflects the view of many investors that BI will continue its monetary easing in the first half of 2012 amid a moderate inflation outlook and concerns that Europe’s financial problems could hurt economic growth domestically. It also reflects dollar strength across the board as the U.S. economic recovery picks up steam. Many analysts expect continued weakness in the rupiah over the short and medium-term.

given its still huge poten- (boe). The block produced an av- ship three million tons of LNG to The government has sector tial and the government’s policy erage of 62,000 boe per day in the Nusantara’s floating storage and revised regulations on of giving priority to domestic com- first nine months of 2011. The regasification unit (fsru) in Jakarin developing the country’s controlling interest in the ONWJ ta Bay. The deal marks Indonetax incentives to help panies oil and gas resources. is held by state-owned Pertam- sia’s first domestic LNG transporina, with a 53.2% stake. Other tation contract. It is also Mitsui boost investment in stakeholders in the block include OSK’s first offshore business in downstream, valueRisco Energy and Talisman En- Indonesia. The transportation ergy. The venture is slated to in- contract is scheduled to start latadded manufacturing vest US$50-70 million this year to er this January. Mitsui OSK and Local firm Energi industries drill five new exploration wells in Trada Maritime will use its carriMega Persada has the block to boost production. er LNG Aquarius, a 126,000 m3 THE GOVERNMENT HAS REMoss-type vessel built in 1977, acquired a 36.7% VISED REGULATIONS ON TAX to transport the LNG. The bulk INCENTIVES TO HELP BOOST stake in the ONWJ of the LNG will be obtained from INVESTMENT IN DOWNthe Bontang LNG facility in East STREAM, VALUE-ADDED MAN- block from China’s Kalimantan. Nusantara Gas is a Japan’s Mitsui UFACTURING INDUSTRIES. The CNOOC in a US$212 60:40 joint venture between state new rules, effective this year, have oil and gas firm Pertamina and OSK Lines and expanded the number of indus- million deal state gas distributor PGN. The local shipper Trada tries eligible for tax allowances to venture will sell most of the gas 129 business sectors from 38 secfrom its fsru to state power utiliMaritime were tors previously. Investments in LOCAL FIRM ENERGI MEGA ty PLN under a sales agreement downstream industries in sectors PERSADA HAS ACQUIRED A awarded a 10-year, signed in 2010. ranging from plantations, mining, 36.7% STAKE IN THE OFFreal estate, electronics and phar- SHORE NORTHWEST JAVA US$200 million macy to food are now eligible for (ONWJ) BLOCK FROM CHINA’S LNG transportation the tax incentives. These incen- CNOOC IN A US$US$212 MILtives include reducing taxable in- LION DEAL. Energi Mega presi- contract by Nusantara A consortium led by come to 30% of total investment dent director Imam Agustino said Regas carried over six years, accelerat- the acquisition would provide the private equity firm ing depreciation and amortiza- firm with a stable cash flow, adtion, an income tax of 10% or low- ditional reserves and prospects JAPAN’S MITSUI OSK LINES Saratoga Capital has er for dividends paid to offshore for additional oil and gas output AND LOCAL SHIPPER TRADA acquired a 51% stake taxpayers, and carrying forward from the block in the future. The MARITIME WERE AWARDED A losses for up to 10 years. Indra ONWJ block, located in the Java 10-YEAR, US$200 MILLION LNG in power utility firm Darmawan, the national invest- Sea offshore Cirebon, West Java, TRANSPORTATION CONTRACT ment board’s (BKPM) director for has net proven reserves of 22.3 BY NUSANTARA REGAS. The Medco Power in a investment regulations, said the million barrels of oil equivalent contract calls for the venture to US$112 million deal new rules would help the agency achieve its target of Rp284 trillion in direct investments this year, up from an estimated Rp240 trillion in 2011. He said the tax incentives also underscored the government’s commitment to developing the country’s underinvested downstream, manufacturing industries.

Selected Instant Indicators GDP GROWTH (&) By Quarter 175 6.3

The government raised US$1.75 billion from its 30-year, U.S. dollar denominated bond issue THE GOVERNMENT RAISED US$1.75 BILLION FROM ITS 30YEAR, U.S. DOLLAR DENOMINATED BOND ISSUE. The deal was Indonesia’s first since Fitch raised the country’s sovereign credit rating to investment grade or BBB- from BB+ last month. The bonds were priced to yield 5.375%, the lowest ever for 30year Indonesian debt. HSBC, J.P. Morgan Chase and Standard Chartered managed the deal, which was oversubscribed 2x. U.S. investors purchased 51% of the issue, followed by investors from Asia at 37% and European investors at 12%. Around 73% of the buyers were investment managers, followed by banks at 20%, insurance and pension funds at 4% and private banking clients at 3%. The bonds were rated BBBby Fitch, Ba1 with a stable outlook by Moody’s and BB+ with a positive outlook by Standard & Poor’s. The latest issue forms part of the country’s US$15 billion global medium-term notes (MTN) program. The government is also looking to sell global sukuk and yen-denominated samurai bonds later this year, with most of the financing activity to be carried out in the first two quarters of the year.

5.5

6.7 6.7 6.1

6.0

6.1

5.9

6.9 6.2 6.3 6.2

6.1 5.4 5.6

5.3

6.56.56.5

165

5.8

4.6 4.2 4.2

4.5

10 2011 *Q4 2000 = 100

108

104.5

105

103.8

102

99 Dec-10

J-11

Feb

M

Apr

May

J

Jul

2010

A

Sep

O

Nov

Dec-11

INDONESIA SIGNED THE ASEAN-AUSTRALIA-NEW ZEALAND FREE TRADE AGREEMENT (FTA) EARLIER THIS WEEK. Indonesia is the last country to formally join the FTA, which covers goods, services, investment and intellectual property, after negotiations were concluded in 2008. Gusmardi Bustami, the trade ministry’s director general for international trade, said the FTA would be effective immediately. He said the government would eliminate 90% of 10,000 tariffs listed in the normal track covering a range of imports including live animals, fruit, vegetables, meat, fish, milk, cheese, eggs, pharmaceuticals and wood and paper products. Other tariffs will be gradually removed by 2020. Australian trade minister Craig Emerson said the agreement was a milestone for bilateral relations and would give a huge boost to regional trade given Indonesia’s fast-growing economy and projected position as a top-10 global economic power house by 2030.

INDIKA ENERGY IS LOOKING TO RAISE UP TO US$100 MILLION WITH AN 18% SHARE SALE OF ITS CONTRACT MINING SUB-

Local firm Sugih Energy has acquired a 49% stake in the Lemang oil and gas block in Jambi in a US$230 million deal LOCAL FIRM SUGIH ENERGY HAS ACQUIRED A 49% STAKE IN THE LEMANG OIL AND GAS BLOCK IN JAMBI IN A US$230 MILLION DEAL. The acquisition was made through the purchase of Eastwin Global Investment, a Singapore-based firm that invests in Indonesia’s energy sector. The Lemang block is scheduled to start production in Q4 of this year with initial output of around 2,500 barrels of oil equivalent (boe) per day. The block is projected to produce 20,000 boe per day for three years at peak production. The remaining 51% stake in the Lemang block is held by an affiliate of the Ramba Energy Group, which is controlled by the Soeryadjaja family. With Sugih Energy also affiliated with Ramba Energy, the latest deal gives the Soeryadjaja clan full control over Lemang. Sugih Energy director Bagoes Hermanto said the acquisition was a strategic move by the group to expand its presence in Indonesia’s energy

Indika Energy is looking to raise up to US$100 million with an 18% share sale of its contract mining subsidiary Petrosea

2011

18,000

Indonesia signed the Asean-Australia-New Zealand Free Trade Agreement (FTA) earlier this week

A CONSORTIUM LED BY PRIVATE EQUITY FIRM SARATOGA CAPITAL HAS ACQUIRED A 51% STAKE IN POWER UTILITY FIRM MEDCO POWER IN A US$112 MILLION DEAL. Medco Power is an affiliate of energy firm Medco Energi Internasional. Medco Energi president director Lukman Mahfoedz said the deal would provide the group with a strategic partner to support Medco Power’s growth. Medco Power currently operates gas-powered power plants in Batam and South Sumatra with a total capacity of 250 MW. It holds the concession for the US$1.2 billion, 330 MW Sarulla geothermal power project in North Sumatra, and is also working on several projects with state power utility PLN. Medco Power is looking to boost its generation capacity to 1,000 MW by 2015. The latest deal with Saratoga will help Medco Power secure the funding it needs to support its US$600 million capital expenditure plan over the next three years. The Saratoga consortium includes the International Finance Corporation (IFC), the investment arm of the World Bank.

Nov-10 Dec

J-11

Feb

M

Apr

May

J

Jul

2010

A

Sep

Oct Nov-11

2011

113

4,250

108

4,000

103 98 93

$98.7

$96

3,750 3,500

M$3,814 $91.3 M$3,175

88

3,250 3,000

83

2,750

78

2,500

73

2,250

68 Dec-10 2010

J-11

Feb

M

Apr

May

J

Jul

A 2011

Sep

O

Nov Dec-11

SIDIARY PETROSEA. Macquarie and UBS is managing the divestment, which is slated for later this month after a short road show to meet with potential investors. Petrosea reported US$185 million in revenues for the first nine months of 2011, up 36% y-o-y. Net profits for the period, meanwhile, increased by 12% y-o-y to US$33 million. Around 87% of Petrosea’s revenues come from miningrelated businesses. This includes a 50% stake in the Santan Batubara coal mining concession in Kalimantan which currently produces around two million tons of coal per year. Petrosea also provides engineering, construction and cargo handling services for the mining and oil and gas industries. The divestment would reduce Indika’s share in Petrosea to 80.5%.

Geo Dipa Energi has awarded a consortium led by Japan’s Marubeni the EPC contract for its 55 MW Patuha geothermal project GEO DIPA ENERGI HAS AWARDED A CONSORTIUM LED BY JAPAN’S MARUBENI THE ENGINEERING, PROCUREMENT AND CONSTRUCTION (EPC) CONTRACT FOR ITS 55 MW PATUHA GEOTHERMAL PROJECT. The deal is worth an estimated US$85 million. The consortium, which comprises Marubeni and local engineering firm Maklamat Cakera Canggih, will act as the main contractor and will oversee management of the project under a full turnkey contract. The venture will use Japan’s Toshiba to supply the project’s main equipment, including the steam turbine and generator and key auxiliary equipment. The Patuha facility, located near Bandung, West Java, is scheduled to start commercial operations in 2014. Geo Dipa Energi is a stateowned company focused on developing the country’s geothermal resources. The firm has a power purchase agreement with state power utility PLN to sell the electricity produced from Patuha over a 30-year period.

GE was awarded a contract by Krakatau Steel to support expansion of their Krakatau Daya Listrik power plant GE GAS TURBINE TECHNOLOGY WAS AWARDED A CONTRACT BY KRAKATAU STEEL TO SUPPORT EXPANSION OF THEIR KRAKATAU DAYA LISTRIK POWER PLANT IN CILE-

GON, BANTEN. Financial terms were not disclosed. Under the deal, GE will supply two 6B gas turbines to be shipped to the project site by next month. GE Power & Water senior executive Steven Rahm said the contract highlighted the proven performance and reliable technology of the firm’s products. The gas turbines will initially operate in simple cycle producing 80 MW by August later this year, using natural gas supplied by state gas distributor PGN. The turbines will enter combinedcycle operation by 2013 and ultimately boost Krakatau Daya Listrik’s generation capacity by 120 MW. The GE technology will also enhance plant efficiency by nearly 15%. The deal includes a 16-year contractual service agreement to cover the supply of parts, repairs and field services for maintenance outages of the gas turbines and generators.

The KPK 2011 integrity survey of state institutions showed the BKPM topping its list THE ANTI-CORRUPTION COMMISSION’S (KPK) 2011 INTEGRITY SURVEY OF STATE INSTITUTIONS SHOWED THE INVESTMENT COORDINATING BOARD BKPM TOPPING ITS LIST. The BKPM scored a 7.60 on a scale of 0-10, with a higher score implying better overall governance. The health ministry came in second in the survey at 7.52, followed by state insurance firm Jamsostek at 7.52, the industry ministry at 7.51, state-owned Tanjung Priok port operator PT Pelindo II at 7.50, the transportation ministry at 7.47, the ministry of maritime affairs and fisheries at 7.45, the communications and information technology ministry at 7.43 and the national education ministry at 7.41. The survey average was 6.31. The KPK questioned more than 15,000 respondents from 89 central and local government agencies and stateowned enterprises. Factors assessed included corruption experiences, corruption perceptions, working environments, administration systems, the behavior of individuals and corruption prevention efforts in the respective government agencies.

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


SECTION

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International

Display until February 12, 2012 /// N0. 31 www.thepresidentpost.com

C

“Taiwan and Indonesia to Enhance Economic Relations” Statistics show that Indonesia’s trade volume with Taiwan from January to November 2011 reached $11.2 billion, an increase of 17,61%. Indonesia’s exports value to Taiwan reached $6.78 billion, up by 24,77%.

Indonesia can’t just sit and wait for people to come. This is a global society, you need to compete with other countries.

T

By Jeannifer Filly Sumayku

Andrew L. Hsia TETO representative

aiwan and Indonesia established formal ties in 1971 when both countries agreed to open representative offices in Taipei and Jakarta. In 1989, the Taiwan Chinese Chamber of Commerce changed its name into Taipei Economic and Trade Office (TETO) to enhance ties between both countries in several areas. Though Taiwan does not have diplomatic relations with Indonesia, Andrew L. Hsia, the current TETO representative, states that the economic, cultural, and social relations between two countries are getting better. Statistics show that Indonesia’s trade volume with Taiwan from January to November 2011 reached $11.2 billion, an increase of 17,61%. Indonesia’s exports value to Taiwan reached $6.78 billion, up by 24,77%. Over the same period, Indonesia’s and Taiwan’s trade relations produced a surplus of $2.29 billion for Indonesia, while Taiwan’s investment in Indonesia as of September 2011 hit $14.52 billion, covering 1,409 projects. Below are excerpts of an interview with TETO representative Andrew L. Hsia: What is TETO and how does it serve Taiwan-Indonesia relations? TTETO is Taipei Economic and Trade Office. Basically, we don’t have diplomatic relations with Indonesia. So, in countries where we do not have such relations, we set up Taipei economic and cultural (or trade) office instead of formal embassies to take care of Taiwan’s interests. We issue visas, handle our economic, trade, cultural, social, labor relations with Indonesia, and also protect our

tries in the world that have been marginalized, unable to join any free trade blocks - the other one is North Korea. But two years ago we signed a free trade agreement with China. We are now negotiating with Singapore and are in preliminary talks with New Zealand. We are certainly interested with ASEAN since we are neighbors.

Andrew L. Hsia, the current TETO representative, states that though Taiwan does not have diplomatic relations with Indonesia, the economic, cultural, and social relations between two countries are getting better.

people who live in Indonesia. How is the current TaiwanIndonesia relationship? Taiwan and Indonesia have a long history of cooperation. At this moment, I can say the relations are getting better and better. Currently, we have 175,000 Indonesian migrant workers in Taiwan. The number has increased by 30,000 over the past two years. We like working with Indonesians, and we treat them like family members. Meanwhile, Indonesian workers enjoy the minimum wages in Taiwan, and they also covered with national health insurance. In terms of education, we have more than 3,000 Indonesian students in Taiwan, and we expect the number to increase over the next few years because we are now promoting education in Taiwan, which offers good quality

but cheaper education than when they study in Singapore, Malaysia or Australia. Trade and investment are also becoming more and more substantial. We are now Indonesia’s number nine investor. Taiwan has technology, small-medium enterprises. What we are short of is labor and a big market. Meanwhile, Indonesia has a big market, natural resources to offer. So, I see every reason for us to become good partners in the future. How do you see Indonesia’s political situation? Is it conducive enough for investors? The problem between Taiwan and Indonesia is a lack of understanding. Only a few Taiwanese realize that Indonesia is a democratic country. You elect directly your regent, members of city council and president. They didn’t know that you have a free society, the people, and the press enjoy the

freedom of association, expression, religion, and more. They also didn’t know that you are politically and socially stable. The image that most Taiwanese people have about Indonesia is negative: the tsunamis, volcanoes, demonstrations, but that’s not true. Indonesia has performed quite well over the past two years. So, I think Indonesia is a good place for investment. Of course, improvements are still needed on infrastructure. You need to let people know what you have, your natural resources, skilled workers, huge market, climate, which are better than some other countries, especially for agriculture and aquaculture. Every year Taiwan gets hit by typhoons. I have checked with people who have invested in fish farming here for twenty years and they said there hasn’t been any here. So you need to promote this.

Indonesia can’t just sit and wait for people to come. This is a global society, you need to compete with other countries. What kind of cooperation will be further developed this year? This year we see more migrant workers and students heading to Taiwan. We see more investment shifting from places like China and Vietnam to Indonesia, because in China the cost is higher and there are strikes in Vietnam. People are looking for places where they can predict returns from their investments. Indonesia has been our target, and we, the government, are encouraging people to do that. What do you think about free trade zones? ASEAN + Taiwan, perhaps? We certainly hope so. But the problem we have now is political. Taiwan is one of the two coun-

What do you think about Indonesia’s human resources? What do we need to improve to compete in the global market? We like Indonesians and that is why; the number of Indonesian workers in Taiwan has increased by so many. In Taiwan we don’t set a quota for each country, we let the market decide. We believe the Indonesian people are very optimistic, they love to smile, have good personality, and they get along well with other workers. How many Taiwanese live in Indonesia? Roughly, about 10,000 people. We don’t have the exact number, but I sense the number is increasing. How do you see Taiwan-Indonesia relationship in the future? We should become good neighbors, good friends, and good partners. The relations have been very good, it is getting better, and could be so much better if we work harder in terms of exchange of information. If we can remove unnecessary political obstacles, there should be no reason why Taiwan cannot become your number two trading partner. I think there is no limit, if we work harder, we can achieve a lot.

ECFA to Have Huge Impacts on Cross-Strait Relations C

hina’s mainland is implementing the second phase of tariff reduction on goods and services as listed in the early harvest program of the cross-Strait Economic Cooperation Framework Agreement (ECFA) this year. The second phase of tariff reduction, which has taken effect since January 1, 2012, is the biggest portion of the gradual tariff reduction which includes most products from Taiwan. Yang Yi, the spokesman for the State Council’s Taiwan Affairs Office (SCTAO), said tariffs on more than 94% of the goods and services listed in the ECFA will be reduced to zero, including metallurgy, medical care, and auto parts as well as instruments and meters, without specifying what types of instruments and meters. The tariff rates on 30 other items, which current rates are over 15%, will be reduced to five percent, he added. “Relevant departments in the mainland have made full preparations to ensure the smooth implementation of

duty reductions,” Yang said. “We have adjusted the import and export tariff and updated the work system.” Yang also expressed China’s determination to enhance crossStrait cooperation on environment protection and sandstorm management. According to the SCTAO, exports worth $3.45 billion from Taiwan to the mainland enjoyed a tariff reduction of $102 million in the first 11 months in 2011, the spokesman said. Cross-Strait relations refer to Mainland China (People’s Republic of China) and Taiwan (Republic of China) complex relationship which is rooted in the Chinese civil war of 1946–1949. However, since the realization of ECFA, both countries have sustained rapid economic growth. Taiwan’s exports to China have shot up since the signing of ECFA. Taiwanese firms have already invested hundreds of billions of US dollars in China to build a totally competitive industrial presence. There are already more than 600 direct flights per week between Taiwan and China. Taiwan will be a logistical hub for flights to every province in China in the future.

es in terms of its trade with China. The ICT industry’s business models are undergoing a period of intense change on a global basis, with globalization already an irresistible trend.

CROSS-STRAIT TRADE RELATIONS Unit: US$b 160 140 120 100 80 60 40 20 0

2006

2007

2008

2009

2010

Total

115.86

130.29

132.49

109.33

152.3

2011* 156.6

Export

89.19

100.44

95.38

83.7

114.7

114.72

Import

26.67

29.84

32.91

25.63

37.5

41.94 *) Jan - Nov

Source: Ministry of Finance, ROC, Mar 2011

Multinational firms can harness the power of Taiwan’s technology industries, as well as Taiwan’s logistic systems to share in the rapidly growing China market. Taiwan has invested more than $100 billion in China, with annual exports to China worth in excess of $100 billion. Statistics show that 40% of all Taiwan’s exports are destined for China. Taiwan will enjoy even greater op-

portunities to share in the rapidly growing Chinese market following the signing of ECFA. Taiwan included a total of 539 items from Taiwan in its “early harvest list” for the first phase of ECFA. These products will benefit from preferential tax rates and tariffs, and are also areas which foreign funds should give particular consideration to when investing in Taiwan.

Whichever way you look at the Asia Pacific industry, Taiwan’s track record of success has proven time and time again that Taiwan is the best choice.

Although the China market is in many ways very attractive, it is also the world’s most difficult market to penetrate. As China’s rural population remains vast, and individual provincial governments continue to provide support to certain designated industries, there are many hidden obstacles to moving into the China market. Taiwan has concrete cultural, linguistic and political advantag-

As the industry has become increasingly concentrated in Asia, component demand will also be stronger in the region; for European and North American companies, this means that establishing comprehensive systems to service companies in the Asian region is a necessity. Outsourcing is another important trend. The Japanese TV giants Sony and Toshiba already outsource upwards of 70% of production, with the recent earthquake only likely to accelerate this manufacturing exodus. The production of notebook computer products from major global firms such as Dell, HP and Lenovo, as well as Apple’s iPad, have all been contracted out to firms in the Asia Pacific region, principally in Taiwan. It is widely accepted that we are on the verge of an “Asia Pacific century”. More and more commercial opportunities will come from emerging markets rath-

er than from Europe, North America and Japan. From an Asian perspective, companies from Western nations should employ more persons of Asia Pacific origin, in order to help them truly understand the region’s industries and markets. Taiwanese people understand China better than anyone, so much so that the Koreans have dubbed those Taiwanese who best understand China the “Chaiwanese”. It goes without saying that the governments of Asia Pacific countries are all extremely proactive about developing cutting-edge technology industries, and Taiwan’s past experiences have also been driven by more than a little political strategy. This sort of strategic thinking is extremely important for firms around the world that wish to compete in the Asia Pacific market. Whichever way you look at the Asia Pacific industry, Taiwan’s track record of success has proven time and time again that Taiwan is the best choice.


The President Post

C2 January 12, 2012

www.thepresidentpost.com

International Ambassador Moriarty Hails

RI-Australia Close Ties Currently 400 Australian companies operate in Indonesia in various fields ranging from mining, agriculture to education. Australian businessmen have also invested more than A$4.7 billion in Indonesia in 2009.

A

n agreement to hold negotiations towards Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) signed in November 2010 by President Susilo Bambang Yudhoyono and Prime Minister Julia Gillard provides a perfect opportunity and a vehicle to enhance bilateral investment, economic and trade relations, said Australian Ambassador to Indonesia Greg Moriarty. In his speech before members of the Indonesia Australia Business Council (IABC) and guests to celebrate Australia Day (Jan 26) in Jakarta, Ambassador Moriarty said, “We plan to work with Indonesia and support Indonesia to ensure that we achieve the best results for both countries.” He added that it was very important to consult with all sectors. “We really need to consult with the business community and organizations representing the business community.” Currently 400 Australian companies operate in Indonesia in various fields ranging from mining, agriculture to education. Australian businessmen have also invested more than A$4.7 billion in Indonesia in 2009. At the luncheon, Ambassador Moriarty also presented medals of Honor Officer of the Order of Australia (AO) to Moetaryanto Poerwoaminoto, Founder and Advisor of IABC, for his service in the Australian business sector, particularly through IABC. Moetaryanto, who is also known as MP, is a senior Indone-

sian businessman and has been a member of IABC since he helped the association’s founding in 1989. As a highly respected businessman, Moetaryanto has been promoting trade and business between Australia and Indonesia for 40 years and has helped many Australian businesses in understanding the business environment in Indonesia. From 1992 to 1996 Moetaryanto was the President of IABC and thereafter acts as Advisor. He is responsible for the development of IABC as an influential organization that promotes trade and investment between Australia and Indonesia. IABC is a large and respected institution, which is considered by many to be the legacy of Moetaryanto. IABC is one of the most dynamic business entities in Indonesia, promoting bilateral business cooperation between Australia and Indonesia, and works closely with its partner organizations in Australia, the Australia Indonesia Business Council (AIBC).

We plan to work with Indonesia and support Indonesia to ensure that we achieve the best results for both countries.” Greg Moriarty Australian Ambassador to Indonesia

SD. Darmono, President of Jababeka, is the current President of IABC. The IABC is governed by an Executive Board elected by the members every two years. The Executive Board is supported by a National Secretariat, which is run by a professional team headed by an Executive Director. Currently there are IABC branches in Central Java (Semarang) and East Java (Surabaya). The Bali branch is in the process of re-establishment. www.kkp.go.id

BRIDGE Brings AustraliaIndonesia Relations Closer Australian Ambassador to Indonesia, Greg Moriarty, hosted a reception for 14 Australian teachers participating in a program that supports schools to build ties with Indonesian schools online, BRIDGE. BRIDGE - Building Relations through Intercultural Dialogue and Growing Engagement - enables thousands of Australian and Indonesian students and teachers to improve language abilities and gain new teaching and learning skills through connecting face-toface online with technology such as Skype.

er’s cultures,” said Ambassador Moriarty. The event also marked the signing of an agreement between the Asia Education Foundation and the provincial office of the Ministry of National Education in Yogyakarta, ensuring more Indonesian schools participate in BRIDGE. “I’m very pleased eight new schools will participate in BRIDGE this year, bringing the total number of Indonesian schools in the program to 73 across nine provinces,” said Ambassador Moriarty.

“I am very pleased to see more and more Australian teachers visiting Indonesia. Programs like BRIDGE strengthen the peopleto-people links between our two countries and expand knowledge and understanding of each oth-

Three other agreements were also signed earlier in South Sumatra, Bali, and East Java provinces. New participating schools in 2012 are: SMAN 3 Yogyakarta, SMPN 1 Karangmojo, SDN 4

Wates, SDN Bantul Manunggal, SMAN 2 Sekayu, SMAN 1 Tabanan, SDN Kaliasin 1 and SMPN 1 Surabaya. While in Indonesia, Australian teachers have visited schools, universities, government agencies as well as museums and other cultural attractions in Jakarta, Bandung, Yogyakarta and Surabaya. In March 2012, 16 teachers from Indonesian schools will reciprocate with a trip to Australia. These teachers will receive training on how to use information and communication technology in teaching programs. Funded by the Australian Government and the Myer Foundation, BRIDGE is delivered by the Asia Education Foundation with support from the Australian Embassy in Jakarta.

BRIDGE - Building Relations through Intercultural Dialogue and Growing Engagement - enables thousands of Australian and Indonesian students and teachers to improve language abilities and gain new teaching and learning skills through connecting face-to-face online with technology such as Skype.

Australia to Extend Rp5t in Grants to Indonesia The Australian Government will pour in Rp5 trillion to Indonesia to help empower people in disadvantaged areas that have not got access to health care, clean water and humanity. Program Director of the Australian Agency for International Development (AusAid) Perarca Karetji in Kupang on Jan 26, said the aid is a grant, so its use should be accountable according to mutual agreement between the two countries (Australia and Indonesia). Karetji made the remarks at the

closing of “Temu Bintang Pengembanan Ekonomi Lokal”, which carried the theme “Initiatives, Actions and Contributions of Women Supporting the Local Economy and Independence Village” and held by Australian Community Development and Civil Society Strengthening Scheme (ACCESS). Australia, said Karetji, through AusAID in 2011 showed its support in the form of program and financial assistance to help the East Nusa Tenggara (NTT) administration to reduce poverty

and achieve prosperity level in rural communities.

determination and agenda to develop NTT.

“AusAID contributed a total budget of A$2 million to the government of NTT to help provide education and training for approximately 585 chaperones of community groups (PKM) who served in Desa Mandiri Anggur Merah (DeMAM) in order to assist the community in managing its economy to prosper,” he said. While ACCESS, he said, has empowered rural communities in six districts in NTT with several programs that synergy with the

Australia’s aid program focuses on the Asia Pacific region. The aid is even more important given two-thirds of the world’s poor— some 800 million people—live in the Asia Pacific, yet they receive less than one third of global aid. Australia also provides assistance to Africa, the Middle East, Latin America and the Caribbean. The aid to Africa has increased significantly in recent years and now represents around five per cent of the aid program.

Australia Supports Indonesia’s Focus on Achieving the Millennium Development Goals The Australian Government, through its aid program (AusAID), is strongly supporting Indonesia in achieving the MDGs by being Indonesia’s largest development partner. www.bumn.go.id

With three years until the world needs to meet the Millennium Development Goals (MDGs), the Indonesian Government, with Australia’s support, is focused on progress throughout the archipelago. The Australian Government, through its aid program (AusAID), is strongly supporting Indonesia in achieving the MDGs by being Indonesia’s largest development partner. As part of this commitment, AusAID is sponsoring the Indonesian Government’s MDG Awards, and participating in an exhibition showcasing MDG achievements at the Balai Kartini Convention Centre, on 31 January and 1 February. The MDG Awards will recognize individuals and organizations making a substantial contribution towards achieving the MDGs. These awards will also inspire further action to tackle poverty and other development challenges in Indonesia. “Indonesia is making substantial progress helping poor people improve their incomes and access food, ensuring children go to school, supporting wom-

Vice President Boediono (middle) attended Indonesia MDG Award at the Balai Kartini Convention Centre.

en and making childbirth safer, but there’s still a lot more work that needs to be done,” said the head of AusAID in Indonesia, Jacqui De Lacy. “By recognizing those making a difference, we will encourage more Indonesians to accelerate efforts on achieving the MDGs including improving maternal health, combating HIV/AIDS and ensuring environmental sustainability,” added Ms. De Lacy. The exhibition, which is open to the public, will promote the work of Indonesian Government de-

partments, international development partners, members from the private sector and local and international NGOs. The MDG Awards are hosted by the Office of the Special Envoy of the President for the MDGs and in cooperation with Metro TV. Australia is allocating an estimated A$558.1 million in 2011-12 for its development program in Indonesia. Australian aid programs have already created over 330,000 new school places for students trained over 5,000 health workers and connected nearly 350,000 people to water and sanitation networks.


The President Post

www.thepresidentpost.com

January 12, 2012 C3

National RI-German Ties Reach New Levels Germany will cooperate with Indonesia to make Batik become more global by delivering high technology and methods in producing them.

R

The President Post/Heros

elations between Indonesia and Germany recently reached new heights by way of arts and culture: batik and films. To promote batik in Germany, JERIN (The German-Indonesian Chamber of Industry and Commerce) and EKONID decided to hold an exhibition called “Indonesian Batik – A Living Heritage”. German Ambassador to Indonesia Norbert Baas said batik is an Indonesian living heritage which has good prospects and a bright future in the international fashion industry. “Batik production can be more significant than the fashion industry in Germany and Indonesia,” said Baas. He further said that Germany will cooperate with Indonesia to make Batik become more global by delivering high technology and methods in producing them. The exhibition conveys the rich history of batik which can be traced back 1,500 years ago, and informs about its traditional and almost forgotten production processes and provides insight into the meaningful symbols and motifs used. Current environmental challenges and modern designers demonstrating their love for traditional and contemporary batik show that batik is relevant for the future, he added. The exhibition aims to dignify batik as a most traditional art

style in a very specific way. In addition to historic background, symbols and production process of batik, the exhibition also keeps an eye on batik artists from Europe, especially from Germany. In the meantime, Deputy Managing Director of the German-Indonesian Chamber of Industry and Commerce (EKONID) Martin Krummeck said basically EKONID has already started clean batik production with the encour-

Yamashita is a housewife and mother of two, living in Saitama region, Tokyo, who became a volunteer after tsunami last year. She said when the quake hit three prefectures, Miyagi, Fukushima and Iwate, most Japanese were doing their daily activities but reacted immediately to save their lives. “That is the result of many years of simulation and experience of Japanese facing the disas-

ter,” she said. Japan is very concerned about disaster simulation and mitigation, Yamashita said, adding that only five hours after the quake, electricity was restored. Another story was about the Japanese attitude, shown in international broadcasts, which did not focus solely on their sufferings. Japanese television only broadcast rescue and restructuring efforts after the disaster, although they had been ordered to broadcast cheerful ads for two weeks. Yamashita said she expected Indonesia to follow Japan`s way to manage and survive disasters. “We share an experience on disasters. Indonesia and Japan are both vulnerable to disasters, hence I think Indonesia could do what Japan has done,” she said.

In the meantime, Junianto Herdiawan said Indonesian leaders should follow Japanese leaders who reacted immediately in saving victims of disasters. “They worked immediately and focused on how to rescue the victims and restructuring,” he said. According to him, a couple of hours after the tsunami hit Japan, Emperor Akihito delivered a speech to encourage his people and to give them spirit to rebuild a new life. “That was a very inspiring speech, without pity and sadness,” Herdiawan said.

Basically EKONID has already started clean batik production with the encouragement of Indonesian batik producers and artists by adopting environmentally-friendly processing methods. Martin Krummeck Deputy Managing Director of the German-Indonesian Chamber of Industry and Commerce (EKONID)

When the disaster struck, Herdiawan worked at the RI Embassy in Tokyo as an Indonesian economist of Bank of Indonesia. He joined efforts of rescuing Indonesians in Tokyo. He told a story about a Japanese grandmother who was not selfish nor kept food for herself although she was also

a victim. The grandmother gave her bread to Herdiawan happily and comforted him by saying, “You have to eat enough, you are far from your family, but have to stay with us here (in shelter).” Herdiawan said that the story was unlike many Indonesians whom he said are only concerned about themselves. “You can see it on television when a quake hit Yogyakarta in May 2006, many people scrambled for food, “ he said. Herdiawan also criticized Indonesian media for broadcasting the exaggerated sadness of the victims. He hoped through the book Indonesian people would learn the Japanese way in coping with disasters, All of the royalties of this book will be donated to the Japanese Red Cross and other social organizations.

agement of Indonesian batik producers and artists by adopting environmentally-friendly processing methods.

dy about the integration of a German-Turkish family, ”Die Fremde” (When We Leave), and the romantic story of “Lila Lila”.

The 1st German Cinema Festival

JERIN is an interactive project platform open for your involvement which ensures an added value and goes beyond individual activities. The project covers events ranging from culture to business, from science to education, from politics to the environment. JERIN would like to provide an interactive platform for GermanIndonesian companies and institutions to help increase their visibility in Indonesia. It also provides an opportunity to strengthen Germany’s image as an innovative and creative partner in Indonesia.

As a further testimony to closer RI-Germany ties, the first ever German Cinema festival was launched in Jakarta, Makassar, Surabaya, and Yogyakarta from 14-25 January 2012. The German Cinema Festival was presented as part of a series of events held by JERIN (Jerman dan Indonesia), to celebrate German–Indonesian partnership. The year of 2012 marks 60 years of diplomatic relations between the two countries.

Indonesian Batik “A Living Heritage”. An exhibition held by JERIN (The German-Indonesian Chamber of Industry and Commerce) and EKONID to promote batik in Germany.

Writers Launch Book on Japanese Tsunami Victims Two Indonesian writers, Hani Yamashita and Junanto Herdiawan, have launched the book “Japan After Shock”, depicitng the bravery of survivors of the tsunami that hit Japan on March 11, 2011. “This is not a book about quakes and their sadness, but on how the Japanese fought to rebuild their life after the disaster,” Yamashita said in Jakarta on Sunday, Antara reported.

www.jerin.or.id

In the presence of Oscar–winning director Florian Gallenberg, the historical epic “John Rabe” (2009) opened a varied program on 14 January at the Epicentrum XXI in Jakarta. Florian also won an Oscar for Best Short Film category via’Quiero Ser’, documenting the daily struggles of street children in Mexico City. Other highlights of the programs were “Alamanya”, a come-

From October 2011 until February 2012, a travelling exhibition focusing on climate protection, economic development in the private sector and good governance will be touring through nine Indonesian cities. For further information of the whole programs, please visit www.jerin.or.id

RI to Stop Exporting Workers in 2017

RI to Export Armored Vehicles to Malaysia

The Indonesian government is planning to stop sending informal sector workers such as domestic helpers to other countries beginning in 2017, a minister said. “In the plan drawn up based on the 2017 Domestic Workers Roadmap, we envisage `zero` domestic worker exports by the year 2017,” Manpower and Transmigration Minister Muhaimin Iskandar said here on Wednesday.

Head of the Indonesian Agency for Assessment and Application of Technology (BPPT) Marzan A Iskandar said his agency in cooperation with weapons maker PT Pindad was ready to export armored vehicles to Malaysia and Brunei Darussalam. “BPPT and PT Pindad are cooperating in the production of armored vehicles to be exported to Malaysia and Brunei Darussalam,” Marzan said here on Friday. He said that his side was also concentrating on modernizing the combat equipment of the Indonesian Army (TNI-AD) to replace its old equipment.

The minister acknowledged, however, that the implementation of the plan would face constraints as the government would have to provide alternative employment for domestic helpers in addition to the fact that the state could not forbid its citizens to seek jobs overseas. Yet, for the sake of Indonesian migrant workers` protection in the country where they were

placed, the roadmap required that any Indonesian worker in the informal sector should have clear position and should be recognized by the foreign country concerned. “So, there must be recognition of their work based on their position and profession. Placement countries must recognize them as workers with clear positions. They should be contract workers with certain rights regarding working hours, holidays, income based on minimal wage standards or social insurance like workers in the formal sector,” the minister said.

The BPPT chief said that his agency had now almost finished 150 armored vehicles to replace the TNI-AD`s old combat equipment. Not only armored vehicles, the BPPT was now also able to produce explosive materials that could replace imports, he said.

So, beginning in 2017, Indonesian migrant workers to be placed overseas should have clear positions such as cooks, housekeepers or caregivers. “Their positions must be clearly stated with clear wage standards,” the minister added.

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C4 January 12, 2012

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Tourism First Large Cruise Ship Berths at Benoa, Bali

ASEAN Tourism Forum 2012 was held at the Golden Kawanua Convention Center, Manado, North Sulawesi, Indonesia from 8th to 15th January 2012, Carrying the theme: ASEAN Tourism for Global Community of Nations. ATF brings together Tourism ministers from all 10 ASEAN countries and senior government officials, and has an important adjunct the annual ASEAN Travex, the BtoB forum bringing global tourism business to the entire ASEAN region.

Meanwhile, the harbor and dredging director of Bali`s Transportation Office, Kemal Heryandri, said Benoa harbor was ready to receive big ships from overseas. Kemal said coral reefs in the harbor

RI, Philippines Form Tourism Working Group The agreement to form the working group was reached at a bilateral meeting between Tourism and Creative Economy Minister Mari Elka Pangestu and her Philippine counterpart Ramon R Jimenez on the sidelines of ATF 2012.

T

he Indonesian and Philippine governments have formed a working group to draw up a memorandum of understanding (MoU) on bilateral tourism cooperation, the very first such agreement between the two, an Indonesian official said. I Gusti Putu Laksaguna, chairman of the Indonesian delegation at the ongoing ASEAN Tourism Forum 2012 (ATF 2012) in Manado, North Sulawesi, said on Thursday the MoU on tourism between Indonesia and the Philippines had never been made before. He said the agreement to form the working group was reached at a bilateral meeting between Tourism and Creative Economy Minister Mari Elka Pangestu and her Philippine counterpart Ramon R Jimenez on the sidelines of ATF 2012. “At the bilateral meeting, the Philippines agreed to come to

Bandung, West Java, in March 2012 for the first working group meeting to draw up the memorandum of understanding,” Gusti said. He said in bilateral relation with the Philippines in the field of tourism, Mari offered a connectivity between the two countries by cruise ships that could sail from Davao in the Philippines to Manado in Indonesia. Besides, direct flights from Manado to Davao would be reopened because there was a longstanding memorandum of understanding between North Sulawesi and Davao on the flight connection. Meanwhile, North Sulawesi Governor Sinyo Sarundajang said here on Wednesday that direct flights from Manado to Davao would be reopened on January 22, 2012 with Batavia Air serving the route.

Manila, Manado to step up tourism cooperation

Philippine Tourism Minister Ramon R. Jimenes JR has said Manado had a lot of promising tourism potentials and therefore his country wanted to step up cooperation with the North Sulawesi provincial capital in that sector. “I have seen that Manado has a lot of tourist potentials that can be used to improve the cooperation in this sector with the Philippines in the future,” Jinenes said here on Tuesday. He added that due to its geo-

graphic location, Manado is close to the Philippines with less than one-hour flight and that it was of great advantage for the development of the cooperation in tourism sector. According to Jimenes, it was very important for the Philippines to step up the cooperation with North Sulawesi, especially the city of Manado. “A number of cities in North Sulawesi were actually introduced to us and that we have a profound interest to cooperate with them but we have to start with the most advanced city in terms of economy and infrastructure namely Manado,” Jimenes said. Sangihe Talaud district is much closer to to the Philippines but Jimenes said they preferred to cooperate with Manado in the tourism sector because of its supporting infrastructure and facility. Meanwhile, Manado based Philippine Consul General Jose Burgos said that to make the Phil-

Mari offered a connectivity between the two countries by cruise ships that could sail from Davao in the Philippines to Manado in Indonesia.

10 Indonesian Hotels Win ASEAN Green Award The 10 hotels are Matahari Beach Resort & Spa (Bali), Discovery Kartika Plaza Hotel (Bali), Holiday Inn Resort (Batam), Angsana (Bintan), Melia Benoa (Bali), Losari Spa Retreat & Coffee Plantation (Magelang), The St Regis Bali Resort(Bali), Melia Bali Villa & Spa Resort, The Dharmawangsa Jakarta, Hotel Gran Melia Jakarta. Ten hotels operating in Indonesia have won ASEAN Green Hotel Recognition Award 2012 for applying environmentally friendly principles to their operations. Indonesian Minister of Tourism and Creative Economy Mari Pangestu presented the award to

representatives of the hotels here on Wednesday. The 10 hotels are Matahari Beach Resort & Spa (Bali), Discovery Kartika Plaza Hotel (Bali), Holiday Inn Resort (Batam), Angsana (Bintan), Melia Benoa (Bali), Losari Spa Retreat & Coffee Plantation (Magelang), The St Regis Bali Resort(Bali), Melia Bali Villa & Spa Resort, The Dharmawangsa Jakarta, Hotel Gran Melia Jakarta. Mari said the Green Award 2012 was the third of its kind since 2008. The first such award was given to ASEAN hotels in Thailand in 2008 and the second in Brunei Darussalam in 2010. Environmentally friendly principle is the main aspect to see if a hotel deserves to receive the award according to the document of ASEAN Green Hotel Standard agreed upon by 10 ASEAN member countries. The document covers a number of criteria and prerequisites as environmental policies which

lay a basis for the environmentally friendly operation of hotels, including the use of green products, cooperation with local people and organizations, and human resources development. Besides solid waste management, energy efficiency, water efficiency, air quality management (indoor and outdoor), noise pollution control, waste water treatment and management, toxic and chemical substance disposal management. Tight competition in the hotel industry has encouraged the adoption of the Green Hotel Standard. The award is designed to promote hotel operators’ environmental awareness amid the looming threat of global warming, increase the competitive edge of the hotel industry in attracting more guests and improving the quality of ASEAN hotels’ services to support ASEAN as a single tourism destination. The award was also given to a number of other ASEAN member countries which respectively nominated 10 hotels for the award.

ippine tourism ministry`s cooperation effort with North Sulawesi, they would fully support all programs initiated by North Sulawesi Governor Sinyo Sarudajang for the cooperation. “We are going to redevelop the cooperation between Davao and North Sulawesi by reopening the

Deputy Minister of Tourism and Creative Economy Sapta Nirwandar said a cruise ship named MV Legend of the Seas was the biggest yacht to berth in Benoa Harbor, Bali. “Previously, cruise ships of the same size as the Legend could not berth at any Indonesia port. They could only throw anchor some distance from the coast and transport passengers to the shore by small boats,” he said here Monday. Sapta Nirwandar also said the 264.3-meter-long Legend of the Seas was the biggest cruise ship to berth at an Indonesian port, in this case Benoa, Bali.

waters had been removed in 2011 to ensure the navigation safety of big ships, even of ships bigger than the MV Legend. Besides, Kemal added, the local government had also dredged the coastal waters up to a depth of 11 meters. “In 2012, the dredging will reach 12 meters to enable big cruise ships to berth easily and safely,” Kemal said. President Director of PT Indonesia Harbor (Pelindo) III, Djarwo Surjanto, had previously said Benoa would be the first port in Indonesia able to receive the Legend of the Seas. The cruise ship had 2,300 passengers and a 1,000strong crew on board when it arrived in Benoa. “The Legend`s visit will attract world attention because it is the first time for a big cruise ship to berth at an Indonesian port,” Djarwo said. www.wikimedia.org

commercial flights from Manado to Davao,” Burgos said. He said there has been an agreement between the Philippines and North Sulawesi in terms of economic and tourism cooperation and therefore it would be increased even more in other sectors.

MV Legend of the Seas


The President Post

www.thepresidentpost.com

January 12, 2012 C5

Travel Central Aceh to Become Prime Tourist Destination www.wikimedia.org

The district has a number of potential tourist attractions such as Lake Laut Tawar, Pantan Terong top, in addition to the local culture and history.

C

“The presence of Bayu Hill Hotel in Takengon is part of all parties` seriousness in Central Aceh to support the district to become one of tourist destination areas in Aceh province,” he said. He said Bayu Hill Hotel has three meeting rooms with the ca-

Describing the critical conditions of Lake Limboto, Ru-

In an effort to open the isolation of MED district and boost local tourism, the Ministry of Transportation is currently constructing a new airport on Moa island. Moa which is part of the Leti Islands in Maluku province is located close to Australia but it has nothing to do with the Moa island in the Banks Channel of the Torres Strait, Queensland; nor the extinct giant flightless birds native to New Zealand. John Rante, head of Maluku`s

Lake Laut Tawar, Central Aceh. Lake Limboto pacity of 500 and 100 people. “The presence of the hotel will support the tourist sector in Central Aceh,” Nasaruddin said, adding that the district has a number of potential tourist attractions such as Lake Laut Tawar, Pantan Terong top, in addition to the local culture and history.

With its various potentials to support tourism, Central Aceh district is ready to become a tourist destination mainstay in Aceh Province.”

Air Transportation Office, said in Ambon on Wednesday that the Transportation Ministry had allocated Rp25 billion from the 2011 State Budget for the first phase of the airport`s construction in Moa island in MBD district. “The first phase of the airport project on Moa island includes piling-up and compaction, scheduled to be completed in late December 2011,” John said. He noted the presence of the airport on Moa island which has been chosen as the site of Southwest Maluku district`s administrative center was expected to smooth air transportation to and from the region. “When completed, the airport will have a 1,400-meter-long runway,” John said. John admitted MED district already had an airport on Kisar island but it was too small to meet the local people`s need for air transportation. At present, Purpura airport on Kisar island is MED district`s only

air link with the outside world. Merpati Air maintains a regular four-times-a-week service between Purapura and Ambon and Kupang in East Nusatenggara. The only other way one can travel from Kisar island to Ambon and Kupang is by so-called pioneer boats that cover the distance in several days` time. Gaspersz said the expansion of Purpura airport`s runway was a strategic measure to step up air transportation service to Southwest Maluku district by operating bigger aircraft than the Cassa 212 planes being operated by Merpati Nusantara Airlines. But the already existing airport in Kisar was not enough to accommodate the ever increasing number of passengers from day to day. The new airport on Moa island was expected to be completed as soon as possible in order to enable the operation of another airline company such as Trigana Air which has planes with a capacity of 42 seats, besides the Cassa 212 planes of Merpati Airlines.

Ternate Cites Culture, History as Drwaing Cards Ternate city`s government has declared 2012 the year of the revival of the island`s tourism with its local culture and historical sites as the main attractions, Mayor Burhan Abdurahman said. Burhan said the city administration had already begun efforts to revive the local tourism such as opening the Kedaton Ternate Sultanate Museum, empowering the local vernacular center and sprucing up several colonial-era forts such Fort Oranye. Other efforts on the city government`s agenda were holding cultural festivals such as a

gaiya said the lake`s average depth was now only 2.5 meters and its total width had dwindled to 3,000 hectares. In 1932, the lake`s depth was an average of 30 meters but over the years the figure had continued to drop and was recorded at only 10 meters in 1961 while its surface at the time was still 4,250 hectares. The beautiful lake used to be a repository of the water of 23 rivers that flowed into it from northern, western and southern direction but now only one river was supplying it with water throughout the year, namely the Biyonga River. The Biyonga River itself only had water flow area of about 68 square km. “Lake Limboto`s degradation is also exacerbated by illegal logging and forest encroachment in the upstream area,” she said. www.panoramio.com

SW Maluku District New Airport Set to Boost Local Tourism Insufficient transportation facilities and electricity supply have become major problems in Southwest Maluku (MBD) district, which officially separated from West Southeast Maluku (MTB) district in 2008. The islands that make up MBD district used to be the remotest and the least accessible with almost no facilities for visitors, but now the central government is making efforts to gradually improve the district`s infrastructure.

The central government has earmarked Rp93 billion in funds to revitalize Lake Limboto, the biggest lake in Gorontalo province and a major tourism attraction, which is now in environmentally critical conditions, a regional environmental affairs official said. The funds to be disbursed in 2012 would be used among other things to dredge the sediment on the lake`s bottom, creation of green belts around the lake and relocating the people who had encroached on the lake`s protected area and built settlements there, Rugaiya Biki, head of environmental affairs at Gorontalo`s Environmnent, Research and Technology Agency, said here Tuesday.

entral Aceh district in Aceh province is ready to become a tourist destination in the province, district head Nasaruddin said in Takengon on Friday. “With its various potentials to support tourism, Central Aceh district is ready to become a tourist destination mainstay in Aceh Province,” Nasaruddin said. When dedicating the operation of Bayu Hill Hotel in Takengon on Thursday, he said the government of Aceh province had confirmed Tanah Gayo Highlands and the cities of Sabang and Banda Aceh as tourist destination areas in the province. To support Central Aceh district as one of tourist destination area in the province, the Central Aceh district head said a number of supporting facilities and infrastructures had been prepared and one of them was the presence of Bayu Hill Hotel in Takengon.

Gorontalo’s Lake Limboto Gets Rp93b Makeover

Kora Kora (traditional boat) festival, Ela-ela and Legu Gam festivals in cooperation with the Ternate sultanate. The local government would also promote Ternate`s tourism potentials through the internet or campaigns in a number of wellknown tourist destinations in Indonesia like Bali and other places. Burhan said the city government was resolved to make tourism one of the region`s main sources of income , and was optimistic that with the construction of a number of star-rated hotels

in and the opening of several airline routes to and from Ternate, its goal could be gradually achieved. The local government was also preparing the city for the holding of the Sail Morotai festival in Morotai Island in the middle of 2012 by upgrading all infrastructure facilities in the region. “People from outside North Maluku intending to participate in the Sail Morotai festival are most likely to transit in Ternate, especially those who travel by airplane. Therefore, the local government will capitalize on this momentum to develop Ternate`s tourism,” he said.


The President Post

C6 January 12, 2012

www.thepresidentpost.com

Living Anti-smoking Efforts

Working Odd Hours May Have Impact on Family Life

Often Fall Short

Researchers discovered that having a father who worked an irregular schedule was strongly linked with a child being overweight or obese, even after controlling for such issues as household income and various lifestyle factors.

Seven out of 10 smokers say they’d like to quit, and many may already be struggling to stick to their resolution to make 2012 a smoke-free year. If quitting were easy, after all, chances are good that nearly 20% of adults wouldn’t still be smokers, a figure that hasn’t budged much in several years.

S

moking is such a familiar health hazard that some experts say it doesn’t get the attention it deserves; the focus is often on other lifestyle-related conditions, especially obesity. But smoking is still the No. 1 cause of preventable death in this country. Nearly half a million people die prematurely because of smoking-related illnesses, including lung cancer, heart disease and chronic obstructive pulmonary disease, according to the Centers for Disease Control and Prevention. Most smokers need some sort of assistance to quit, whether it’s counseling, support groups or medication to help reduce nicotine cravings. But getting that help can be difficult. Scrambling to address budget problems, states this year will spend less than 2% of their tobacco-tax and tobacco-settlement billions on programs to help people quit smoking or prevent them from starting in the first place, according to a recent report by a coalition of public health organiza-

tions. In the last four years, state spending on tobacco prevention and cessation has declined by 36%, to $457 million. Tobacco-related healthcare spending adds up to nearly $100 billion annually, according to the CDC. “It’s a travesty,” says Danny McGoldrick, vice president for research at the Campaign for Tobacco-Free Kids. “These programs more than pay for themselves.” While public funding falters, a growing number of companies offer smoking-cessation programs to their workers. Last year, twothirds of businesses with 200 or more workers offered such programs, while 31% of smaller firms did so, according to the Kaiser Family Foundation’s annual survey of employer-sponsored health benefits. At the same time that they offer a helping hand to quit, more companies are also penalizing employees who don’t kick the habit by hitting them with higher health insurance premiums. At large companies with more than 20,000 employees, 24% vary premiums based on wheth-

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er someone smokes, as do 12% of those with 500 or more workers, according to the 2011 survey of employer-sponsored health plans by human resources consultant Mercer. Public health advocates generally agree that this punitive approach isn’t ideal. “The issue isn’t smokers; it’s smoking,” says McGoldrick. Charging people higher premiums may just make smokers drop their coverage, he says. But employers argue that charging smokers more is only fair. “The cost of medical care for smokers is considerably higher,” says Helen Darling, chief executive of the National Business

Group on Health, an employer group. “Employers are increasingly saying that if someone costs the pool more, they should pay more.” Darling points out that companies that go this route typically offer free smoking-cessation services and give employees plenty of notice before implementing the change. For Tommy Piver, 59, the combination of pricier cigarettes and looming health insurance penalties finally motivated the twopack-a-day smoker to give up the habit he’d started at age 13. Increased taxes had caused the price of a pack of cigarettes at the

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gas station near his home in Naples, Fla., to double within a year, to $5. Then he got a notice that his insurance carrier was going to triple the health insurance premium for smokers and reduce the amount it covered for all sorts of care from 90% to 70%. “Kicking and screaming,” Piver quit on Jan. 1, 2010. About a week later, he saw a television ad for an online stop-smoking program developed by Legacy, a nonprofit created under the settlement between the states and the tobacco industry. Piver joined the free EX program and hasn’t had a cigarette in two years. health@latimes.com

Working nonstandard hours can do a number on employees’ health, but a study suggests it may also impact obesity levels in their children. Australian researchers looked at how parents’ odd work timetables affected the weight of their children. Study participants included 434 9-year-olds, among whom 22.8% were overweight or obese. A nonstandard work schedule was defined as always or often working shift schedules, working after 6 p.m., or working overnight or on weekends. The authors

made the point that working odd hours is becoming increasingly common, especially in the service industry. In 75% of two-parent families both were employed, and in single-parent families almost 75% of parents were employed. In 32.5% of families mothers had irregular work schedules, in 39.4% of families fathers had nonstandard schedules and in 14.9% of two-parent families, both parents worked nonstandard schedules. Researchers discovered that having a father who worked an irregular schedule was strongly linked with a child being overweight or obese, even after controlling for such issues as household income and various lifestyle factors. A weaker association was seen between both parents having nonstandard schedules and the child being overweight or obese. No link was seen between the mothers’ work schedule and obesity. The authors said that a father’s odd work schedule could put additional time stresses on families, which may mean having to make concessions at mealtime. It could also put added pressure on mothers, who are still the main caretakers of their children. Los Angeles Times


The President Post

www.thepresidentpost.com

January 12, 2012 C7

Health History: China Behind Effective Malaria Drug www.curepharmaceutical.com

The Chinese drug artemisinin has been hailed as one of the greatest advances in fighting malaria, the scourge of the tropics, since the discovery of quinine centuries ago.

ticle by Chinese researchers. It won a prize, but the check, in British pounds, could not be cashed in China. Shortly thereafter, Dr. Arnold said, Walter Reed scientists found wormwood growing on the banks of the Potomac and extracted artemisinin. Nonetheless, the drug languished. The W.H.O. did not endorse it until 2000, and it was not widely available until 2006.

S

weet wormwood provides artemisinin, discovered decades ago in China. Artemisinin’s discovery is being talked about as a candidate for a Nobel Prize in Medicine. Millions of American taxpayer dollars are spent on it for Africa every year. But few people realize that in one of the paradoxes of history, the drug was discovered thanks to Mao Zedong, who was acting to help the North Vietnamese in their jungle war against the Americans. Or that it languished for 30 years thanks to China’s isolation and the indifference of Western donors, health agencies and drug companies. Now that story is coming out. But as happens so often in science, versions vary, and multiple contributors are fighting over the laurels. That became particularly clear in September, when one of the Lasker Awards — sometimes called the “American Nobels” — went to a single one of the hundreds of Chinese scientists once engaged in the development of the drug. Mao’s role was simple. In the 1960s, he got an appeal from North Vietnam: Its fighters were dying because local malaria had become resistant to all known drugs. He ordered his top scientists to help. But it wasn’t easy. The Cultural Revolution was reeling out of control, and intellectuals, including scientists, were being publicly humiliated, forced to labor on collective farms or even driven to suicide. However, because the order came from Mao himself and he put the army in charge, the project was sheltered. Over the next 14 years, 500 scientists from 60 military and civilian institutes flocked to it. Meanwhile, thousands of American soldiers in Vietnam were also getting malaria, and the Walter Reed Army Institute of Research began its own drug hunt. That effort ultimately produced mefloquine, later sold under the brand name Lariam. Powerful, mefloquine has seri-

Anopheles mosquitoe www.treeplantflowerid.com

ous drawbacks, including nightmares and paranoia. In 2003, dozens of American Marines in Liberia got malaria after refusing to take pills because of military scuttlebutt that several Special Forces soldiers who killed their wives after returning home from Afghanistan in 2002 had been driven insane by the drug. China’s effort formally began at a meeting on May 23, 1967, and was code-named Project 523, for the date. Researchers pursued two paths. One group screened 40,000 known chemicals. The second searched the traditional medicine literature and sent envoys into rural villages to ask herbal healers for their secret fever cures. One herb, qinghao, was mentioned on tomb carvings as far back as 168 B.C. and praised on medical scrolls through the centuries, up to the 1798 Book of Seasonal Fevers. Rural healers identified qinghao as what the West calls Artemisia annua, or sweet wormwood, a spiky-leafed weed with yellow flowers. In the 1950s, officials in parts of rural China had fought malaria outbreaks with qinghao tea, but investigating it scientifically was new. It also had at least nine rivals from traditional medicine with some anti-malarial effects, including a pepper. In the lab, qinghao extracts killed malaria parasites in mice. Researchers tried to find exact-

But few people realize that in one of the paradoxes of history, the drug was discovered thanks to Mao Zedong.

The American military stuck with mefloquine, despite its expense. As late as 2002, as Doctors Without Borders clamored for artemisinin, an adviser to the United States Agency for International Development dismissed it in an interview with The New York Times as “not ready for prime time” and defended chloroquine and other old, cheap drugs even though resistance to them was widespread. A Swiss company, Novartis, finally broke the logjam. It bought a new Chinese patent on a mix of artemether, an artemisinin derivative, and lumefantrine, another Chinese drug, and took out Western patents, planning to sell it under the name Riamet at high prices to tourists and militaries; in 2001, it agreed to sell it nearly at cost to the W.H.O. under the name Coartem.

ly which chemical worked, which plants had the most, whether it could cross the blood-brain barrier to fight cerebral malaria, and whether it worked in oral, intravenous and suppository forms. Outmoded equipment slowed research. But by the 1970s it was known that the lethal chemical, first called qinghaosu and now artemisinin, had a structure never seen before in nature: In chemical terms, it is a sesquiterpene lactone with a peroxide bridge. Trials in 2,000 patients showed that it killed parasites remarkably rapidly. A 2006 history of the project by Zhang Jianfang, its former deputy director, contains some gripping details: petty disputes between rivals, Cultural Revolution street fighting that forced one laboratory into a basement, project doctors’ living on brown rice and vegetables as they did clinical trials in remote villages in China’s tropical southern mountains, and other

Artemisia annua (sweet wormwood)

doctors’ hiking the Ho Chi Minh Trail with the Vietcong. Mao died in 1976; Project 523 was officially disbanded in 1981, though clinical work continued. In 1979, Dr. Keith Arnold, a malaria researcher in Hong Kong who had helped the Army develop mefloquine, wangled his way into China, hoping to test his drug there. He met Dr. Li Guoqiao, who

The reasons for that delay are disputed. China was in political disarray. Different labs in and outside China were working on derivatives. Patent law had vanished under communism, and China never took out Western patents, so there was no way a major drug company could get a monopoly and make big profits. Malaria was a disease of the poor, and today’s big donor funds did not exist. Aid agencies could not buy drugs that were not W.H.O.-approved. For years, Dr. Arnold said, he tried to get permission for his Chinese collaborators to do clinical trials in Thailand and Vietnam, but the W.H.O. stalled. (As a United Nations agency, it is rarely bold, but the 1990s were a decade of particularly low morale and constant infighting.) As nearly one million African children a year died, Dr. Arnold denounced its indecisiveness as “genocidal.”

was testing artemisinin variants. They decided to try head-to-head trials, and the Chinese mystery drug beat his, Dr. Arnold said. Soon, World Health Organization scientists asked for articles from China’s medical journals, the first of which had been published in 1977, in response to reports that a Yugoslav chemist was experimenting with wormwood. In 1982, The Lancet had an ar-

The money to buy the drug on a large scale became available with the creation of the Global Fund to Fight AIDS, Tuberculosis and Malaria in 2002 and the Bush administration’s introduction of the President’s Malaria Initiative in 2005. Now, about 150 million doses of several combinations are bought for poor countries each year. With that victory, surviving Project 523 scientists and some

outsiders began vying for credit. In 1996, a Hong Kong science foundation recognized 10 team leaders. In 2009, Zhou Yiqing got the European Patent Office’s “Inventors of the Year” award for Coartem. In September, the $250,000 Lasker Award for clinical medical research was given to Dr. Tu Youyou, former chief of the Institute of Chinese Materia Medica in Beijing. The Lasker committee named her “the discoverer of artemisinin.” Some Chinese and Western malariologists were outraged. Dr. Nicholas J. White, a prominent Oxford malaria researcher, said it was “not fair to credit this discovery to one individual”; he named others he considered equally deserving, including the clinical trial leader, Dr. Li, and a chemist, Li Ying. Dr. Arnold, whose work with Dr. Li was mentioned in the Lasker citation, agreed. Richard K. Haynes, a malaria researcher and historian at the University of Science and Technology in Hong Kong, called naming one inventor “a travesty.” The Lasker Foundation declined to comment, other than to note that Dr. Tu’s citation mentioned that Project 523 was a large collaborative effort. In an interview before the ceremony, Dr. Tu, 81, argued that she deserved it because her team had been the first to isolate qinghao’s active ingredient while other teams worked on the wrong plants. Also, after rereading a manuscript by Ge Hong, a fourth-century healer, prescribing qinghao steeped in cold water for fever, she realized that boiling, the typical extraction method, was destroying the active ingredient. She switched to ether, and qinghao became the first plant extract 100 percent effective at killing malaria in mice. And before human testing began, Dr. Tu said, she and two colleagues took it themselves to make sure it was not toxic. Before the West even heard of the drug, she said, she was one of the four anonymous authors of the initial 1977 paper, and in 1978, she was chosen to accept the Chinese government’s overall award to Project 523. However difficult winnowing the field would prove, the Nobel Prize committee would be forced to do it anyway. The Nobel rules specify no more than three winners. And no posthumous prizes, either — meaning Mao would be out of the question. NYT

Daily Aspirin Is Not for Everyone, Study Suggests Aspirin users were about 30 percent more likely to have a serious gastrointestinal bleeding event, a side effect of frequent aspirin use.

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early a third of middleaged Americans regularly take a baby aspirin in the hope of preventing a heart attack or a stroke or lowering their cancer risk. But new research shows that aspirin is not for everyone, and that in some patients this so-called wonder drug is doing more harm than good. “I stop a lot more aspirin than I start,” said Dr. Alison Bailey, director of the cardiac rehabilitation program at the Gill Heart Institute at the University of Kentucky. “People don’t even consider aspirin a medicine, or consider that you can have side effects from it. That’s the most challenging part of aspirin therapy.”

Research shows that among men who have had a heart attack, regular aspirin use can be lifesaving, lowering the risk of a second heart event by 20 to 30 percent. It also reduces the risk of a recurrence among women who have had a stroke caused by a blood clot.

Last week, researchers in London reported that they had analyzed nine randomized studies of aspirin use in the United States, Europe and Japan that included more than 100,000 participants. The study subjects had never had a heart attack or stroke; all regularly took aspirin or a placebo to determine whether aspirin benefits people who have no established heart disease. In the combined analysis, the researchers found that regular aspirin users were 10 percent less likely than the others to have any type of heart event, and 20 percent less likely to have a nonfatal heart attack. While that sounds like good news, the study showed that the risks of regular aspirin outweighed the benefits.

Aspirin users were about 30 percent more likely to have a serious gastrointestinal bleeding event, a side effect of frequent aspirin use. The overall risk of dying during the study was the same among the aspirin users and the others. And though some previous studies suggested that regu-

lar aspirin use could prevent cancer, the new analysis showed no such benefit. Over all, for every 162 people who took aspirin, the drug prevented one nonfatal heart attack, but caused about two serious bleeding episodes.

“We have been able to show quite convincingly that in people without a previous heart attack or stroke, regular use of aspirin may be more harmful than it is beneficial,” said Dr. Sreenivasa Seshasai of the Cardiovascular Sciences Research Center at St. George’s, University of London.

The findings are likely to add to the confusion about who should regularly take aspirin and who should not. Research shows that among men who have had a heart attack, regular aspirin use can be lifesaving, lowering the risk of a second heart event by 20 to 30 percent. It also reduces the risk of a recurrence among women who have had a stroke caused by a blood clot. Aspirin works by interfering with the blood’s clotting action. In blood vessels narrowed by heart disease, fatty deposits can burst, leading to the quick formation of a clot that blocks the flow of blood to the heart or brain. Regularly taking an aspirin helps prevent the clot from forming. Yet many current aspirin users have never had a heart attack or stroke, and take aspirin in the hope of preventing one. Among middle-aged aspirin users, the 2007 report found, 23 percent didn’t have established

heart disease. Among older aspirin users, 41 percent didn’t have a history of heart disease or stroke. But Dr. Seshasai said the new findings didn’t necessarily mean that healthy men and women should immediately stop taking aspirin. People with a strong family history of heart attack or stroke may benefit by continuing the regimen, and they should raise the question with their doctors. “The decision to treat such individuals with aspirin should be made on a caseby-case basis, taking into account the likely risk of heart attack or stroke in the future,” he said. “However, as the risk of major bleeding episodes increases proportionately with an increase in benefit, physicians and patients must make carefully considered choices regarding long-term aspirin treatment.” NYT


The President Post

C8 January 12, 2012

Photo Essay

GONG XI FAT CHAI TEXT AND PHOTOS BY NANDI NANTI

Lunar New Year is the most important celebration of the Chinese. Lunar New Year celebration starts on the first day of first month (Tionghoa language: 正月; pinyin: Zheng yue) of the Chinese calendar and ends with Cap Go Meh on the fifteenth (during the full moon). Lunar New Year’s Eve is known as Chúxī which means “New Year’s Eve”. Like in other parts of this world, the Chinese New Year in San Boen Bio Temple, in Tangerang, Banten, was festive. At 11 pm the temple was already crowded with visitors who wanted to participate in the height of the Chinese New Year celebrations at midnight. Those who celebrated the Lunar New Year had to complete various processions, such as burning candles, and visit a shrine to pray. The first altar to be visited is the god of sky altar, followed by the god of earth altar. On this altar, followers will burn money made of paper. Inside the Boen San Bio temple, one can find the embodiment of fortune god who would distribute red cards that are believed to bring blessings for business.

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