World Report 9th December 2011
INDONESIA
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INDONESIA
SUSILO BAMBANG YUDHOYONO, President of Indonesia
‘We have a clear opportunity
to introduce green growth as a
global paradigm’
Former US vice-president Al Gore has praised Indonesia’s vision, courage
and leadership on climate change issues and says it has the potential to become
“a superpower of geothermal electricity”
wo-thirds of Indonesia’s population sian Government bears a huge responsibil- “We have a clear opportunity to reshape longer than other nations in the region to
T reside on the island of Java, the coun-
try’s economic and political centre.
Jakarta, the capital city, overflows
with people and traffic and, with more than
nine million people living there, is among
ity. Deforestation and changing land use not
only damage the country’s unique biodiver-
sity, they also contribute to climate change;
Indonesia has been the world’s third largest
producer of greenhouse gases.
our economic systems and to introduce green
growth as a global paradigm,” says the
President. His green economic programme
is part of a sustainable development plan
summed up as “pro-growth, pro-job, pro-
get back on track. But it proved resilient to
the 2008-09 global financial crisis, suffer-
ing no more than a temporary economic
setback thanks largely to its sizeable domes-
tic market. The economy grew by 6 per cent
the 10 largest cities in the world. Indonesia’s President Susilo Bambang poor and pro-environment”. in 2010 and is expected to expand similar-
Yet Indonesia has more biological diver- Yudhoyono argues that it is possible to Indonesia made the transition to democ- ly this year.
sity than anywhere on earth and teems with achieve the country’s Millennium Develop- racy after more than three decades of dic- “I am convinced that President Yudhoy-
a bewildering variety of wildlife and plants. ment Goals and improve the lives of Indone- tatorship under President Suharto came to ono has contributed a lot to the development
Home to the world’s third largest tropical sians – 50 per cent of whom are aged 30 or an end in 1998. It has had a directly elect- of the country,” says Cabinet Secretary Dipo
rainforest, after Brazil and the Congo, it con- under – while at the same time protecting ed president – Mr Yudhoyono, currently in Alam. “Looking forward, we have created
tains 10 per cent of global forest cover. the country’s tropical forests. Indeed, Indone- his second five-year term – since 2004. our 2025 Master Plan with a projected
As the custodian of a resource of such na- sia aims to be one of the world’s top 10 The country was badly affected by the $300 billion (£183 billion) investment. We
tional and global importance, the Indone- economies in coming decades. 1997-98 Asian financial crisis and took want to accelerate and enlarge our econom-
2 World Report
INDONESIA
‘Our 2025 Master Plan, ‘Indonesia is certain to ‘Our energy demand grows ‘The 7/26 growth strategy
with a projected £183bn become a world economic between 9 and 10 per cent is 7 per cent economic
investment, is very power. It is just a matter of per year. There is no other growth from 2012 and 26
pragmatic, accountable time. All signs indicate we way; we have to use other per cent fewer greenhouse
and achievable’ are on the right track’ types of energy’ gas emissions by 2020’
DIPO ALAM SURYO SULISTO GUSTI MUHAMMAD HATTA KUNTORO MANGKUSUBROTO
Cabinet Secretary of the Chairman of the Indonesian Chamber of Minister of Research and Technology in Head of the President’s Delivery Unit for
Republic of Indonesia Industry and Commerce (KADIN) the Republic of Indonesia Development Monitoring and Oversight
ic activities, while not forgetting the poor 2012 and 26 per cent reduction of green- (KADIN), says there is no reason why In- He acknowledges that the challenges are
and the environment. I am very optimistic house gas emissions by 2020,” says Dr Kun- donesia cannot be self-sufficient in energy. daunting and adds: “We need to speed up
for my country and firmly believe we can toro Mangkusubroto, head of the President’s “Indonesia is so rich in resources and ener- projects such as new power plants, toll roads
achieve the targets. This is not a mantra. Delivery Unit for Development Monitoring gy, so we should develop renewable energies. and ports.”
The 2025 Master Plan is very pragmatic, and Oversight. “The two-year suspension Here we are exporting millions of tonnes of Chris Wren, executive director at the
accountable and achievable.” creates the pause that allows us to start coal and feeding power plants all over the British Chamber of Commerce in Indone-
With its abundant natural resources, with a clean sheet and develop a new land- world, yet we do not have enough electric- sia, reports that interest from British investors
Indonesia’s main exports are oil and gas, use system that maximises the economic ity back home. That is unacceptable.” has skyrocketed. “Last year as a whole, we
plywood, textiles, rubber and palm oil. benefits from our natural resources and re- He believes Indonesia is certain to become received the highest number of enquiries
But the Government is promoting diver- duces Indonesia’s greenhouse gases in line a world economic power. “It is just a mat- from the UK since we started records,” he
sification away from commodities and low- with our international commitment.” ter of time. All the signs indicate that we says. “We are going to see a lot more ac-
cost production towards high value-added The Government is also committed to re- are on the right track with 6 per cent eco- tivity with our major energy companies in
products, through greater industrialisa- forestation, targeting the planting of one bil- nomic growth. I believe that we can do much relation to cleaner fuels, biofuels, renewables
tion and the development of a knowledge- lion trees a year. “Deforestation is signifi- better than that.” and so on.”
based economy. cantly contributing to Indonesia’s green-
Indonesia is already Southeast Asia’s house gas emissions,” says former Environ-
largest economy, with its gross domestic ment Minister Gusti Muhammmad Hatta
product exceeding $1 trillion after taking (now Minister of Research and Technology).
into account purchasing price parity. The “We have decided that 14 per cent of our
country’s debt-to-GDP ratio emissions-reduc-
is currently its lowest ever, SMI a tion goal will be
at 26 per cent. catalyst for achieved by saving
“We have a balanced the forests.”
budget, owing to prudent infrastructure Meanwhile, the
fiscal policy,” the President development Ministry of Ener-
told the World Economic in Indonesia gy and Mineral Re-
Forum on East Asia recent- sources has a new
www.ptsmi.co.id.
ly. “Our trade volume and Directorate Gen-
foreign reserves are at a eral for Renewable
record high. Foreign invest- Energy that is
ment is rising sharply.” spearheading a
Creation of a green econ- campaign for effi-
omy will require implemen- ciency in energy
tation of sustainable agricul- use.
ture; sustainable forestry management; en- Indonesia has around 40 per cent of the
ergy efficiency and renewable energy us- world’s geothermal resources, the great ma-
age; clean technology support; waste man- jority of which is yet to be exploited.Presi-
agement; and efficient and low carbon trans- dent Yudhoyono has said that for every
portation management. Key components 1,000 MW of electricity, at least 48 per cent
will be innovation, education and improved should come from geothermal energy and
national infrastructure. 12 per cent from hydroelectric energy. The
In May, in line with the commitment he Government provides around 1 billion ru-
made in Copenhagen, President Yudhoyono piahs (around £73,000) to companies that
signed a moratorium on logging that will would like to invest in geothermal energy.
last for an initial two years, following a $1 “As we increase the use of renewable sub-
billion deal with Norway under a UN-based stances, we want the use of oil to decline
anti-logging campaign. Any new licensing year by year,” says Mr Hatta. “Our energy
for land use and land conversion in Indone- demand currently grows between 9 per cent
sia’s primary or undisturbed forest and peat and 10 per cent per year. There is no other
land areas has been suspended, effectively way; we have to use other types of energy.
protecting 64 million hectares of the coun- We call it the Energy Mix Programme. In-
try’s 120 million hectares of forest. donesia has various sources of energy, such
“We will immediately start implement- as coal, oil, geothermal or wind.”
ing the Government’s 7/26 growth strate- Suryo B. Sulisto, chairman of the In-
gy, with 7 per cent economic growth from donesian Chamber of Industry and Commerce
World Report 3
INDONESIA
Finance ‘Indonesian banking
says. “We learned a lot of hard lessons from
the 1997/98 Asian financial crisis; we can
safely say that we are prepared for the next methods are still very
crisis. Furthermore, during the 2008/09
global financial crisis, we realised that there
traditional. Most banks in
is a positive side to having modest exports. the Western world play
Surging foreign investment and banking Our strong local consumption has helped the
country weather the downturn.”
with derivative products
with high risks and high
perfomance reflect increasing confidence Singapore is Indonesia’s largest investor,
with the UK in second place. While recent yields; we don’t have
investment in the mining sector can be at-
ccording to Indonesia’s Investment ing from stable to positive in February. tributed to strong commodity prices, a re- those practices here’
A Coordinating Board (BKPM), for-
eign direct investment (FDI) rose
by 21 per cent in the second quar-
ter of 2011 year on year. The 43.1 trillion
rupiah (£3.15 billion) increase between April
Recently-appointed Minister of Trade Gi-
ta Wirjawan is a former Chairman of BKPM,
who feels Indonesia, with its political and
macroeconomic stability, deserves better
recognition from international agencies. “We
cent report from DBS Group Research says
that the increase in FDI in Indonesia since
the global recovery took hold in 2009 has
been broad based, spread across industries
ranging from mining and manufacturing to
External “push” factors favouring in-
creased FDI in Indonesia include the expan-
sion in the global business cycle and China’s
waning competitiveness owing to higher wage
and June followed a £2.82 billion increase are talking about a country with proven fis- services sectors such as wholesale and retail costs. Meanwhile internal “pull” factors in-
in the first quarter of the year, putting the cal sustainability. This is a country with a trade, transport and communication. clude Indonesia’s strong growth, low labour
country on course to achieving its target of 26 per cent debt-to-GDP ratio (on decline) costs and improving economic stability. The
a record FDI level of 156 trillion rupiah and an ability to manage inflationary pres- size and youthfulness of its population also
(£11.4 billion) this year. sures in an effective and efficient way.” gives the country a solid competitive edge,
Bank Indonesia, the nation’s central bank, A recent investment report from the Unit- providing investors with a huge domestic con-
more conservatively predicts that FDI will ed Nations Conference on Trade and Devel- sumer market and an abundant supply of af-
surge by 42 per cent this year, passing the opment (UNCTAD) depicts Indonesia as the fordable labour; wages in Indonesia are among
£8.6 billion mark. Portfolio investment, ninth best destination for investment, and the the lowest in Asia, averaging around one-third
which remains dominant, is expected to fall, country has risen from 54th to 44th in the of those in China.
but the rise in FDI indicates a clear shift to- Global Competitiveness Index (GCI). Parikesit Soeprapto, Deputy Minister of
wards long-term investment. The internation- Ronald Tauviek A. Kasim, president direc- State-Owned Enterprises for Services, has
al credit rating agency Fitch Ratings said re- tor of Indonesia’s leading credit ratings praised the involvement of state banks in the
cently that Indonesia has a “more than 50 agency PT Pemeringkat Efek Indonesia development of the Indonesian economy. Guid-
per cent chance” of achieving an investment- (Pefindo), an affiliate of Standard and Poor’s, ed by Government policies, they provide loans
grade credit rating before the end of next identifies certain criteria as being among
year, which would put it in the same league the main challenges that Indonesia faces in
as India and Brazil. Fitch, which currently attracting more FDI. “Having transparen-
rates Indonesia BB+, one step below invest- cy, good corporate governance and good ac-
ment grade, raised the outlook on the rat- counting standards is not an option,” he
GATOT SUWONDO
President Director of BNI
Indonesia’s top securities house
Investment banking, like many other busi- and asset management services through its
nesses, has experienced a hard time since the wholly owned subsidiary PT Mandiri Manaje-
global recession erupted, but one bank that is men Investasi.
facing adversity head on with innovative fi- Mandiri Sekuritas was established on July
nancing solutions from the capital markets is 31, 2000, as part of the consolidation of the
PT Mandiri Sekuritas. Bank Mandiri group of companies. It was
A member of the Indonesia Stock Ex- significantly recapitalised in 2002 and
change, Mandiri Sekuritas is a one-stop in- 2003,and subsequently transformed itself
vestment banking service provider and offers from a marginal player in the Indonesian
a full range of integrated investment banking capital markets into a full-service investment
and securities brokerage services. Its services bank.
also include Sharia-compliant financing and “Mandiri Sekuritas essentially consists of
corporate finance advisories for a wide range three securities houses owned by Bank
of corporate actions, from mergers and ac- Mandiri. These have merged into one –
quisitions to financial restructuring and debt Mandiri Sekuritas,” says president director
refinancing. Harry M Supoyo. “We hired professionals
In addition, the bank provides investment from outside the firm; we can say that 85 to
4 World Report
weighted assets – stood at 17.2 per cent at
‘Our banking industry is the end of June this year, higher than the re-
full of potential and there quired minimum 8 per cent ratio set by the
central bank.
are immense opportunities BNI’s profits surged 41 per cent in the first
still untapped. Penetration half of 2011. Net income at the bank rose to
is about 26 per cent... Rp 2.73 trillion (£200 million) from Janu-
ary to June, up from Rp 1.93 trillion (£141
This speaks volumes about million) over the same period last year. Total
the abundance of outstanding loans at BNI also increased to
Rp 152.9 trillion (£11.2 billion) for the first
opportunities here’ six months of 2011, up 21 per cent on last
year’s first-half figure of Rp 126.2 trillion
at favourable interest rates to spur develop- (£9.2 billion) in the same period last year.
ment and change. The Deputy Minister is “When I became CEO (in 2008) I focused
highly confident about the future for Indone- on strengthening the foundations of the bank.
sia’s publicly owned banking and financial in- Then in 2010, once the bank was back on
stitutions. “We have bigger assets than those track, we returned to our original mission (as
of private banks and in general we have bet- the circulation and central bank),” says Mr
ter ratios,” says Mr Parikesit, who also points Suwondo. “For instance, one of Indonesia’s
out that the numerous burdensome regula- main priorities is to fix the infrastructure –
tions state-run banks have to comply with are transportation, telecommunication and en-
currently being addressed to help their growth. ergy being the main focus. BNI has commit-
Confidence in the Indonesian economy and ted about $43 billion (£26.2 billion) for in-
finance sector is far from the sole domain of frastructure projects.”
the Government. A recent World Bank and Indonesian banks are constantly looking
IMF assessment of Indonesia’s financial sys- for ways to increase the number of bank users.
tem concluded that it is generally healthy. In “In terms of market share, I prefer to grow
the private sector, aspirations for the coun- steadily and moderately,” says Mr Suwon-
try’s banking industry are high. “I am very do. “I consider myself a moderate CEO, nei-
optimistic about Indonesia’s economic fu- ther aggressive nor conservative. On the oth-
ture,” says Gatot Suwondo, president direc- er hand, we are very focused to grow in the
tor of Bank Negara Indonesia (BNI). segments we want to serve. I believe that this
BNI was established in 1946 and was the kind of strategy will give BNI sustainable and
first bank formed and owned by the Indone- long-term growth.”
sian Government. Its legal status was up- Consumer loans are giving an extra boost
graded in 1992 to that of a state-owned lim- to the bank’s performance this year. BNI is
ited corporation under the name of PT Bank targeting the mortgage market, particular-
Negara Indonesia (Persero) and it now em- ly first-time buyers as rising numbers of In-
ploys more than 19,000 people. “Even though donesia’s young population look to set up
the financial and banking industry was mild- home. BNI sees a lot of potential in the sec-
ly shaken during 2007 and 2008, as you can tor, especially with continued improvements
see today Indonesia’s banks are solid and in incomes and standards of living. Home bor-
highly liquid,” says Mr Suwondo. “Indone- rowing, at Rp 14.79 trillion (£1.08 billion),
sia’s banking industry is strong mainly be- accounted for 54 per cent of total consumer
cause we have been able to overcome and learn loans in the first six months of 2011. Mort-
the lessons from the Asian crisis of 1998. gage loan growth for the second half of this
“Also, Indonesian banking methods are year is expected to be at the same pace as in
still very traditional. Most banks in the West- the first half, at 49 per cent.
ern world play with derivative products with “Our banking industry is full of potential
high risks and high yields; we don’t have those and there are immense opportunities still un-
types of practices here in Indonesia.” tapped,” Mr Suwondo adds. “Indonesia’s
The nation’s fourth-largest bank by assets, penetration is about 26 per cent while in Sin-
BNI’s capital adequacy ratio (CAR) – the stan- gapore it almost constitutes 100 per cent. This
dard measure of the core or permanent cap- speaks volumes about the abundance of op-
ital a bank holds as a percentage of its risk- portunities you can find in Indonesia.”
90 per cent of the company right now is not
our original team. But the beauty of this is
that we merged old and new teams well. Hu-
man capital plays a very important role for
us. Not only did we bring in professionalism,
we now grow together as a family.”
In 2003, shareholders injected IDR
638.50 billion (£46.6 million) of capital,
which currently makes Mandiri Sekuritas the
biggest securities house in Indonesia in terms
of equity capital. “Our key mission is to de-
velop the Indonesian capital markets and be-
come the biggest player in every segment of
the markets,” says Mr Supoyo.
In the business where an aptitude for value
creation distinguishes the best from the rest,
Mandiri Sekuritas shines bright as the capital
markets’ dynamic powerhouse with its top-of-
the-range services in capital raising and pro- HARRY M SUPOYO
ject financing. President Director of Mandiri Sekuritas
World Report 5
INDONESIA
SUWHONO, President Director of Pegadaian
‘We are the leaders in the
microfinancing industry’
hile the worldwide banking system endures profit grew by about 38 per cent at that time, with about
W a tough period and struggles to recover
from the recessionary storm, there are var-
ious success stories that outline how many
financial institutions are working flat-out to overcome
these challenging times.
21 million customers by December 2010. We have
around 4,920 outlets throughout the country, present
in all places, from village to city.
Did the recent global financial crisis affect your business?
Perum Pegadaian, established in 1901, is the lead- No, it did not affect our business. Our customers are,
ing Indonesian pawnbroker and an alternative financial for the most part, in the mid to lower classes; this is a
service provider. The state-owned company carries the very cash-run society.
motto “Mengatasi Masaiah Tanpa Masaiah” (to over- Furthermore, we have issued many bonds – this year
come problems without problems) and now employs alone 2 trillion were covered. Pegadaian is testing the
18,300 people. market in this respect.
Since its inception, Pegadaian has striven to assist
the Government’s programme to improve people’s How sustainable is your business?
welfare by providing the best financial solutions There is a lot of potential in Indonesia. We got involved
through the distribution of loans to micro and small- in microfinancing and now we contribute to the im-
scale businesses. Suwhono, the president director of provement of local businesses.
Pegadaian, here discusses the present and future plans We are interested in helping anyone who wants to use
of the company. our wide network and financial programmes to grow their
business. Do you have any examples of success to share?
What are some of the milestones of Pegadaian? There are many success stories here. A lot of students
Perum Pegadaian is one of the oldest state-owned com- Is an initial public offering (IPO) possible? owe much of their education to the support of their par-
panies in Indonesia. It is now 110 years old, having been This year we changed our regulation. We will very soon ents using Pegadaian’s services.
established on April 1, 1901. We are the leaders with- become PT and after that the next step will be TBK, We are also engaged in corporate social responsibility
in the microfinancing industry in Indonesia. meaning listed. We are just in the process of closing the for example; we are participating in the one million trees
Within the last five years, from 2006 to 2011, Pe- books. The company is really ready for an IPO. It de- programme, planting trees in collaboration with the Min-
gadaian grew an average of 35 per cent per year. Its pends on Parliament now. istry of Forestry, from which we get the seeds.
6 World Report
INDONESIA
Infrastructure
The nuts and bolts of accelerating socioeconomic development with new infrastructure
ell-developed infrastructure is Progress is under way. With the help of oration between Jasa Marga and Wijaya
‘We need to build
W one of the key factors behind
any country achieving high and
sustainable economic growth,
as well as being able to compete on a na-
tional and international scale. Indonesia is
PT Pembangunan Perumahan (Persero)
,
Tbk, known widely as PP both the compa-
ny and the country are making massive in-
roads into the development and sustenance
of Indonesia’s infrastructure.
roads and ports in a
quick and efficient
manner. If we can
Karya at Mojokerto in East Java. “How-
ever there is a joint venture between PP and
Jasa Marga to create a new city there,” adds
Mr Musyanif. “We will be developing 1,500
hectares for homes and shops, designed by
no exception to this rule. “The need for in-
frastructure all over Indonesia is immense.
State-owned PP was established in 1953
and has since become a major player in the
quickly set up the the well-known architects Townland.”
The Minister of Public Works, Djoko Kir-
The sheer physicality of the country is a national construction industry. Its main area right infrastructure, manto, also reinforces the need for up-to-
challenge,” says Prof Dr Armida S. Alis- of business is contractor services, including people will subscribe date infrastructure. “In order to acceler-
jahbana, Minister for National Develop- high-rise buildings and civil work, such as ate and expand our economic develop-
ment Planning and chairman of the irrigation, harbours, airports, roads, to Indonesian ment we must improve our infrastruc-
National Development Planning bridges, dams and hydropower instal- investment a ture,” he says. “We need sufficient elec-
Agency (Bappenas). “The lack of lations. tricity, roads, water supply, airports and
new infrastructure investment Besides the construction field, PP al- lot better’ seaports. At the Ministry of Public Works
against the country’s continuous so takes on the role as developer, es- GITA WIRJAWAN we are developing roads, as well as raw
growth has made the backlog more pecially in managing, renting and sell- Minister of Trade and drinking water.”
evident than ever. But we feel we are ing high-rise buildings. PP has plans to As a huge archipelago, inter-island con-
now in a good position to take on expand by investing in – as well as con- nectivity is vital. “We have completed a
this challenge.” structing – various infrastructure and Indonesia is huge, bridge connecting Java and Madura. Now
Trade Minister energy projects. The former pres- we are planning an 18-mile bridge to con-
Gita Wirjawan, ident director of PP Mr with some 17,000 nect Sumatra and Java,” says Mr Kirman-
former Chairman Musyanif provides some in- islands and over 50 per to. “PP initially noticed investment oppor-
of the Indonesia sight into the ongoing infra- tunities in the energy and port sectors. It
Investment Co- structural plans for Indone- cent of its 245 million has joined with Pelindo II as operators, and
ordinating sia: “When the Land Law people are under 29 total investment was approximately 22 tril-
Board (BKPM), is completed, PP will be lion rupiahs (£1.58 billion) in six years.
says: “The eas- called on by the President years old. It is also the There are currently very few ports, so we
iest way of con- for a meeting to build the third largest wish to build more.”
vincing an in- Trans-Java Highway. Last year the UK was the second-largest
vestor to go to Since going public in Feb- democracy in the investor in Indonesia, after Singapore. Oth-
any country is ruary 2010, PP has de- world er overseas countries are also getting involved,
by virtue of the cided on a growth strat- with Japan contributing to the archipelago’s
existing infra- egy as an investor as well economic corridor and China contributing
structure. We need as contractor. that once the Trans-Java Highway is com- towards roads and power. “We do not dif-
to build roads and “We started as in- pleted it will show the world how Indonesia ferentiate between investment countries,
ports in a quick and vestors, especially in is moving forward with its large-scale de- whether they are European or Asian, because
efficient manner. The the infrastructure sec- velopment plans. we need our projects done,” says Mr Kir-
success of this depends tor, to support the Gov- “For example, since President Soeharto’s manto. “Any country in the world can come
greatly on certain insti- ernment’s infrastruc- regime in the 1980s until now there were and bid on our projects.”
tutional reforms, which ture development pro- only 370 miles of toll roads built. After the PT Sarana Multi Infrastruktur (Persero),
we are aiming to get off gramme. We have been new regulations have been implemented, or PT SMI, forges relationships with pri-
the ground this year – the awarded two power plant there shall be 150 miles within two years. vate investors and multinational institutions
first of which is the Land projects in Cilegon as an That is proof of the ongoing improvement to create public-private partnerships that
Law. If we can quickly set up EPC (engineer, procure, in infrastructure,” he says. boost the country’s infrastructure. “We act
the right infrastructure, peo- construct) contractor and The company is collaborating with In- as a facilitator between the project owner
ple will subscribe to Indone- also – as an investment donesian toll-road operator Jasa Marga on and the investor. We can be a window for
sian investment a lot better. company – awarded the the Serpong-Cinere toll-road project. “We an infrastructure project. As a catalyst, we
It has been pretty good so PLTG 60MW power plant also plan to take over one by Thiess Indone- would like to make things easier for the in-
far, but I think we can do project at Talang Duku, sia, and a second one at Aloha, Tanjung Per- vestor,” says CEO Emma Sri Martini, who
more. The sky is the limit in Palembang, in South ak, Surabaya,” says Mr Musyanif. highlights energy and transportation (for
terms of where we can be in Sumatra.” Another toll road under construction as regional or domestic connectivity) as the
three to four years’ time.” Mr Musyanif believes part of the Trans-Java Highway is a collab- main sectors ripe for investment.
Building for a better future
Developing the basic infrastructure of Indonesia. Acting as a catalyst and
Indonesia is no easy task, but PT Sarana facilitator in the acceleration of
Multi Infrastruktur (Persero) (PT SMI) infrastructure development in Indonesia, PT
makes this its main goal. “I would like PT SMI has established strong partnerships with
SMI to be seen as an organisation that the private sectors and multilateral and
facilitates the acceleration of infrastructure bilateral institutions in order to increase the
growth in the country,” says Emma Sri capacity of infrastructure funding.
Martini, CEO of PT SMI. “However, those looking to participate in the
Since 2009, PT SMI has provided some area of infrastructure can utilise PT SMI as
financing for infrastructure projects in a window for investing,” says Ms Martini.
World Report 7
INDONESIA
Social Security
From employment and retirement to housing and
health, social security is widening its scope
he Indonesian social security rent these apartments and only have to
T programme is constantly being
overhauled to make the existing
system work better for the ben-
eficiaries and to extend social securi-
ty coverage to more workers, both in
pay 120,000 rupiah (about £8.75) per
month and can walk to work.”
According to Dr Armida S. Alisjahbana,
the Minister for National Development
Planning and chairman of the National De-
‘We have direct
programmes
targeting the poor,
particularly in
the formal and informal sector. velopment Planning Agency: “Right now,
The current social security system is run we have direct programmes targeting the terms of
by PT Jamsostek (Persero), which was poor, particularly in terms of health, ed- health, education
founded in 1977 and is based in Jakarta. ucation, food, and so on. We offer health
It provides protection across four main ar- care assistance for those who cannot af- and food’
eas, which include the Employment Acci- ford medical treatment. For education, HOTBONAR SINAGA,
dent Insurance Programme (JKK), Death we offer scholarships to children of peo- President Director of
Benefit (JK), Old Age Security (JHT) and ple from lower income households,” says PT Jamsostek
Health Care (JPK) for the entire workforce Dr Alisjahbana. “And with regard to food,
and their families. we offer rice subsidies for the poor.”
Hotbonar Sinaga, the president direc- During his tenure, Mr Sinaga also set
tor of PT Jamsostek, took the helm in Feb- about creating Jamsostek Investment Com-
ruary 2007 and has taken a proactive ap- pany (JIC), a subsidiary of Jamsostek.
proach. “Firstly we had to improve bene- “One of the main purposes of the cre-
fits for the workers and members by im- ation of JIC is to participate in equity
proving the service quality of the organi- investment in projects, for example in
sation,” explains Mr Sinaga. “Also with infrastructure or agriculture. JIC will
respect to our financial benefit programme, only invest in equity; it will not be able
we worked on increasing returns for our to give loans for those projects,” says
members on profits and funds known as Mr Sinaga. “Once this company grows,
‘old-age benefits’. JIC will be ready for an initial public
“Furthermore, we provide our mem- offering; selling shares to the public will
bers with additional benefits, such as be our exit strategy. We also want to in-
housing, and we build cheap apartments vite other investors and shareholders
very close to the industrial complexes from the Middle East in addition to In-
that are aimed at our members who donesians to participate in the develop-
work in those areas. Our members can ment of JIC.”
PROJECT TEAM: Director Asia: Vincent Rifici, Country Director: Leandro Cabanillas, Project Director: Corinna Hoyer,
Project Analysts: Ugo Bagration and Celine Louis, Project Assistant: Rita Adnani
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