Inspiring Change

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                  The President Post                                                 T H E              S P I R I T                        O F             I N D O N E S I A
     Published by President University /// Display until May 12, 2010 /// N0. 11                                                                                                                                                      

      The Homecoming of Barack Obama
Not surprisingly, many Indonesians consider
Obama as ‘one of us’. In fact, the school in
the Menteng area of Central Jakarta where
he spent four years of his childhood now
features a bronze statue of him.

By Lukman Hakim

                                                                                                                                                                                                                                                        In June, US
                    hen US Pres-            at Obama’s former school have                                                                                                                                                                               President Barack
                    ident Barack
                    Obama steps
                                            prepared a warm welcome for
                                            him by putting together a tradi-
                                                                                                                                                                                                                                                        Obama will pay
                    out of Air              tional gamelan orchestra, which                                                                                                                                                                             a short visit
                    Force One at            will greet him as he arrives at the                                                                                                                                                                         to Indonesia,
                    Halim Per-              premises for a quick tour.
danakusuma airfield some time                  The school’s principal recently                                                                                                                                                                          the world’s
in June, he cannot help but no-             told TIME magazine that the US                                                                                                                                                                              third largest
tice that the country he last saw
in 1971 has become a totally dif-
                                            leader “provides a huge motiva-
                                            tion to our students, as it means
                                                                                                                                                                                                                                                        democracy and
ferent place today.                         that no matter what your back-                                                                                                                                                                              a member of the
   At the time Indonesia was un-            ground is, you can succeed if are                                                                                                                                                                           G20.
der authoritarian rule while its            a good person with a democrat-
economy was practically in ru-              ic spirit.”
ins.                                           Obama, who calls himself
   Today, the country is the                “America’s first Pacific presid-
world’s third largest democracy             ednt”, was supposed to visit Indo-
(after the US and India) with a             nesia from March 23-25 to sign
US$550 billion economy and is a             a comprehensive partnership cov-
member of an informal but dis-              ering political, economic and de-
tinguished group comprising 20              fence relations.
of the world’s wealthiest nations
(G20).                                         In June, as the new plan so far
    Furthermore, it is one of the           goes, he is expected to push for                                                                                                                                                    Photo:

only three countries – along with           closer ties with Indonesia, which
China and India – that last year            has the world’s biggest Muslim            the emerging market elite.               mining sectors to Citigroup Inc          tions expect the United States to      as it will be widely covered by          ident for International Affairs,
posted positive growth as oth-              population, in the fields of cli-            The US is Indonesia’s third-          and JP Morgan in the financial           announce new funding of around         American media.                          noted that the Comprehensive
ers struggled to keep themselves            mate change, energy, education            largest trade partner, but has           sector are said to be keen to ex-        US$20-40 million, which may                                                     Partnership will require signif-
aloft.                                      and health.                               dwindled in importance as a              pand in Southeast Asia’s biggest         be classified as fast-start cli-       COMPREHENSIVE PARTNERSHIP                icant efforts on the part of both
   Indonesia has come a long way               Obama’s personal connection            source of foreign direct invest-         economy.                                 mate funding that rich countries          The US president’s visit was sig-     Indonesia and the United States.
indeed since Obama first came to            to Indonesia is one of his best as-       ment reflecting concerns over en-           As almost 90% of Indonesians          promised to make available to de-      nificantly preceded by a confer-            Dr. Djalal suggested that In-
Jakarta with his parents in 1967,           sets, as he spent four years in Ja-       demic graft, red tape, poor infra-       are Muslims, practising a moder-         veloping countries in Copenha-         ence on the forthcoming “United          donesia must learn to focus on
and left four years later to live           karta as a child, as his mother’s         structure and inflexible labour          ate form of the faith, Obama is          gen last year.                         States–Indonesia Comprehensive           the bigger picture while the Unit-
with his grandparents in the US.            second husband was an Indone-             laws.                                    widely expected to build on his             That could be money direct-         Partnership” on March 2 by the           ed States must respect Indone-
   But then so has Obama, who               sian.                                        Trade volume has risen                Cairo speech highlighting Indo-          ed to forest preservation projects     United States-Indonesia Society          sia’s independence. He pointed
went on to study law at Harvard                This makes Obama an even               from US$12 billion in 2002 to            nesia’s combination of Islam, de-        operating under a UN-backed            (USINDO) in collaboration with           out that a strong comprehensive
University, entered politics to be-         more popular figure in Indone-            US$21.4 billion in 2008 but fell         mocracy and moderation.                  framework called reducing emis-        Universitas Indonesia, the Indo-         partnership between the two
come a senator and was last year            sia than he is in much of the rest        to US$18 billion in 2009 due to             The United States has some            sions from deforestation and deg-      nesian Council on World Affairs          countries will redefine the bilat-
elected as president of the world’s         of the world, with many Indone-           the global financial crisis.             environment-related projects in          radation (REDD).                       (ICWA), Modernisator, and the            eral relationship for decades to
most post powerful nation (as               sians regarding him as virtually a                                                 Indonesia and may see that rise             Funding for a Southeast Asian       Centre for Strategic and Interna-        come, and that for this reason it
well as a Nobel Prize laureate for          native son.                                 The Investment Coordinating            after Obama’s visit.                     “regional centre of excellence” on     tional Studies (Jakarta) (CSIS).         must be an opportunity-driven
Peace).                                        Both countries are keen to             Board (BKPM) lists the US as                Washington signed an agree-           climate change could also be an-          The conference was the third in       and profound relationship. “…
                                            work together to strengthen the           seventh in its ranking of foreign        ment last year to cut Indonesia’s        nounced.                               a series hosted by USINDO, two           it is time for us to deliver the vi-
   Not surprisingly, many Indo-             G-20, the Doha Round, the As-             direct investment realisation by         debt payments by about US$30                Many expect Obama to instill        held in Jakarta and one in Wash-         sion of President Yudhoyono and
nesians consider Obama as ‘one              sociation of South East Asian Na-         country in 2009 -- just US$171.5         million in exchange for saving           a cultural nuance on his short vis-    ington, DC, which were designed          President Obama for the com-
of us’. In fact, the school in the          tions (ASEAN)-US partnership,             million or 1.6% of the total FDI,        forests in Sumatra.                      it by visiting the Borobudur Tem-      to engage the public, private, and       prehensive partnership with cre-
Menteng area of Central Jakarta             and work on climate change and            behind Singapore, which tops the            The climate change part of the        ple, the world’s largest Buddhist      non-government sectors in both           ativity and determination, so that
where he spent four years of his            nuclear security.                         ranking with 40.1% total FDI.            comprehensive agreement is like-         place of worship, near Yogyakar-       countries on areas of mutual im-         the next ten, twenty, fifty years,
childhood now features a bronze                Both governments hope to                 US companies, ranging from             ly to focus on forests and sustain-      ta.                                    portance and global significance         the relationship will survive – be-
statue of him.                              boost trade and investment, seen          ExxonMobil Corp, Chevron                 able peatland management, but               The visit, no matter how short,     for the partnership.                     yond the presidencies, beyond
   Many also consider Obama’s               as crucial for Indonesia’s bid to         Corp, Freeport-McMoRan Cop-              there may be an announcement             will give a huge boost to Indone-         In his opening remarks at the         the departments – and redefine
visit to Indonesia in June as a             join Brazil, Russia, India and            per & Gold Inc and Newmont               on clean energy as well.                 sia’s bid to attract more foreign      third conference, Dr. Dino Patti         the partnership between Indone-
‘homecoming’ of sort. Students              China, also known as the BRICs,           Mining Corp in the energy and               Sources close to the negotia-         tourists, especially from the US,      Djalal, Special Staff of the Pres-       sia and the United States.”

                                                                                          Inspiring Change
       A leader must not                              leader often demands               Thanks to his policy, in a quar-      was not merely transfer of tech-         There will be resistance, partic-      management stratgy is: Towards
    become complacent                                 his/her followers to make       ter of century Japan was able to in-     nology; it is also a review of ex-       ularly from those who feel that        what end?. This is called vision of
                                                      changes. Not all chang-         dustrialize itself so that it caught     iting value system. He preserved         their power or income will be re-      change. A leader has the respon-
           because of the                             es run smoothly and/or          up with the US and European              and strengthened positive values         duced and lost. There will be sug-     sibility to formulate and share
       organization’s and                   produce the desired result. How-          nations in technological develop-        and culture, while at the same           gestions or remarks that could         his/her vision with all organiza-
                                            ever, a leader can learn from one         ment. Meiji acted as a reformative       time adopted modern values such          break the spirit such as: This         tion members. He/she has to be-
         individual’s past                  of the most successful changes in         leader. He was able to recognize         as punctuality and openness.             change has no clear direction, the     come a “merchant of hope” to all
  achievements. He/she                      history: the Meiji restoration in         deadlocks, to identify everything           In order to run a change pro-         new approach is confusing, this        followers. He/she has to commu-
                                            Japan. It has inspired so many            went wrong, and to find the root         gram successfully, as done by Mei-       change reduces performance, etc.       nicate his/her dreams, raise hope
has to be vigilant to any                   great reforms in the world.               of the problems.                         ji, firstly a leader must remember       An organization must find the          and spirit, and get the organiza-
 change and developing                         As an archipelago, until the              Next, he opened the Japanese          the laws of change and comply            right strategy to control such in-     tion out of the current situation.
  situations which could                    middle of the 19th century Ja-
                                            pan was still a conservative and
                                                                                      people’s heart and mind through
                                                                                      local leaders, or shoguns, all of
                                                                                                                               with them. Those laws are name-
                                                                                                                               ly: Law of Native, Law of Chaos,
                                                                                                                                                                        convenience. And Law of Eden
                                                                                                                                                                        means that any change program
                                                                                                                                                                                                               A leader must have the ability
                                                                                                                                                                                                               to create and articulate a realis-
impact the organization                     isolated monarch. At that time,           whom were united to modern-              and Law of Eden. Law of Native           needs the support from a person        tic and credible vision which can
            in the future.                  the emperor practiced an isola-           ize the country. He convinced,           means that any change program            with high competence and com-          move his/her followers in achiev-
                                            tionist foreign policy with xeno-         asked, directed and effectively in-      has to involve all organization          mitment who can act as a posi-         ing the organization’s goals.
                                            phobic tendencies. Meiji, with            spired potential people to make          members. There will not be any           tive role model. Followers sure-          In managing a change, which
                       By A.B. Susanto      his progressive ideas, ended such         changes.                                 people outside the organization          ly want to know the benefits of a      is often challenging, a leader
                                            policy. He initiated a program               The most important factor in          which can force changes to hap-          change if it succeeds, despite its     must show his/her enthusiasm,
                                            to modernize his country by im-           Meiji’s successful change pro-           pen without the involvement of           risks and complexity.                  commitment, and spirit in order
                                            porting machines from the most            gram was the value system he em-         the organization members. Law                                                   to win the support from follow-
                                            advanced countries in the Indus-          bedded in his modernization pro-         of Chaos means that any change              In every change process, a          ers. A leader can give great impact
                                            trial Revolution era.                     grams. For Meiji, modernization          will always create inconvenience.        leader can divide his/her fol-         and energy to the organization
                                                                                                                                                                        lowers into three groups: propo-       and all of its members through           A.B. Susanto
                                                                                                                                                                        nents, opponents, and indiffer-        mastering change. Enthusiasm,
INTERVIEW                                   SPECIAL REPORT                            INVESTMENT                               INFRASTRUCTURE                           ents. Proponents are those who         commitment, and spirit play              struction that a leader should be
                                                                                                                                                                        support change; opponents op-          an important role and should be          aware of. Remember that our ex-
                                                                                                                                                                        pose it, while indifferent follow-     started from the change plan pro-        istence is not to relive the past and
                                                                                                                                                                        ers still do not have a clear stance   cess.                                    maintain what we have achieved,
                                                                                                                                                                        whether they support or oppose                                                  but to pave the way for a new or-
                                                                                                                                                                        change. These include followers           A leader must not become              ganization life in the future.
                                                                                                                                                                        who still don’t have enough in-        complacent because of the orga-             By understanding the law of
                                                                                                                                                                        formation or do not care about         nization’s and individual’s past         change, having a clear vision,
                                                                                                                                                                        what is happening in the organi-       achievements. He/she has to be           arousing enthusiasm, and avoid-
                                                                                                                                                                        zation. A leader has to try hard       vigilant to any change and de-           ing complacency, it would be
Fadel Muhammad: Indonesia                   Indonesia and China:                      Hatta: RI conducive for                  RI Needs More Investment                 so that as time goes by, oppo-         veloping situations which could          easier for a leader to manage a
set to become world’s largest               Unstoppable economic titans               investment                               in Infrastructure to Support             nents are weakened. There might        impact the organization in the           change program.
fish producer in 2015                       Two biggest countries in East Asia,       The situation at present is very         Economic Growth
As a country with the biggest marine        China and Indonesia, are growing          conducive and as such he is optimistic   Vice President Boediono believes that    be some of them who shift them-        future. Excessive pride will trig-
territory in the world, it is ironic that   in terms of economic size as well as      investment would increase.               infrastructure development is the        selves to the indifferent group be-    ger the organization’s potential         The writer is Dean of the
Indonesia is not the largest producer of    political importance in the region and                                             primary key to enhancing the growth of   fore finally support change.           weaknesses at the time when the          Faculty of Economics, President
marine and fishery products.                in the world.                                                                      all sub-sectors of the economy.             Change is a process. There-         organization is at its peak perfor-      University, and Managing
                                                                                                                                                                        fore, the most basic question that     mance. In an established condi-          Partner of THE JAKARTA
PAGE A3                                     PAGE A4                                   PAGE B3                                  PAGE C1                                  has to be answered in change           tion, there is also potential for de-    CONSULTING GROUP
 A2 April 12, 2010                                                                                                       The President Post                                                                                                          

Special Report
                                                                                                       INDONESIA AND CHINA:

                               Unstoppable Economic Titans
                                                                       Two biggest countries in East Asia, China and Indonesia, are growing in terms of economic size as
                                                                      well as political importance in the region and in the world. China took center stage for its role as the
                                                                       world’s engine of growth, while Indonesia’s importance is for its remarkable economic resilience.

                                                                                                                                            By Atmono Suryo

                o mark the 60th

                anniversary of dip-
                lomatic relations
                between China and
                Indonesia, Jakarta
                will be the host of
visiting Prime Minisiter Wen Jia-
bao in April. As Foreign Minister
Marty Natalegawa has stated bi-
lateral relations between Indone-                                                                                                                                                                                                                        Indonesia and China
sia and China has strengthened                                                                                                                                                                                                                         have been in constant
since the signing of the Strategic                                                                                                                                                                                                                     and close contact, not
Partnership Agreement in 2005.
   Two biggest countries in East                                                                                                                                         CHINA                                                                             only in the bilateral
Asia, China and Indonesia, are
growing in terms of econom-
                                                                                                                                                                                                                                                           area but also in the
ic size as well as political impor-                                                                                                                                                                                                                   multilateral or regional
tance in the region and in the                                                                                                                                                                                                                        forums. Both countries
world. China took center stage
for its role as the world’s engine                                                                                                                                                                                                                        are members of the
of growth, while Indonesia’s im-                                                                                                                                                                                                                             G20, form part of
portance is for its remarkable eco-
nomic resilience.
                                                                                                                                                                                                                                                             ASEAN plus Three
   In the political arena, China is                                                                                                                                                                                                                     (10 ASEAN countries
becoming more confident in the                                                                                                                                                                                                                          plus China, India and
international forums, engaging
itself in a lot of institutions, thus                                                                                                                                                                                                                       Japan) forum, East
becoming an important player in                                                                                                                                                                                                                           Asia Summit, APEC
the international decision-mak-                                                                                                                                                                                                                       and a number of other
ing process. Indonesia is from
the outset known as a champi-                                                                                                                                                                     INDONESIA                                                            forums.
on of developing countries. It is
now assuming a role as a peaceful
Muslim-majority country, aim-
ing at bridging the two worlds              China Prime Minisiter Wen Jiabao
apart, the Muslim world and the
western world.
   Indonesia and China have                 •	 Nevertheless, with a massive           •	 China, India and other East
been in constant and close con-                investment-led stimulus, the              Asian countries, including In-                                                                       ECONOMIC INDICATORS
tact, not only in the bilateral area           economy recovered to the lev-             donesia, are expected to be in
but also in the multilateral or re-            el of 6.7% in 2009. The Asian             the lead to achieve global re-                                                                   China’s Main Economic Indicators
gional forums. Both countries are              Development Bank (ADB) has                covery and growth.                                                                                       (percent change, unless otherwise indicated)
members of the G20, form part                  put China’s growth for 2010 at            The constant and massive                                                                                                      2006           2007        2008          2009         2010f         2011f
of ASEAN plus Three (10 ASE-                   8.9%, while the IMF 9%.                growth of the main sectors of
AN countries plus China, In-                •	 China is presently the larg-           the economy have stimulated                The real economy
dia and Japan) forum, East Asia                est trading nation in the world        the country to become a first–             Real GDP                                                                               11.6            12.9        9.6           8.7           9.5            8.7
Summit, APEC and a number of                   and the largest exporter with          rate and robust economic pow-
                                                                                                                                 Domestic demand 1/                                                                       9.7           10.7        9.4          13.8           9.7            8.6
other forums.                                  $1.20 trillion f.o.b 2009; the         erhouse.
                                               main trading partners are EU,             Indonesia is in a favorable posi-            Consumption 1/                                                                      8.4           10.1        8.8           9.7           9.6            9.1
CHINA’S ECONOMIC PROFILE                       US, Hong Kong and Japan.               tion to be close to the main eco-               Gross capital formation 1/                                                        11.1            11.4       10.2          18.3           9.7            8.2
   Data from various sources (the           •	 It is the second largest import-       nomic powerhouses of the glob-
                                                                                                                                 Contribution to GDP growth (pp)
World Bank and others) provide                 er of goods with $1.01 trillion        al economy, which include the
an economic profile of the Peo-                in 2009; the main import part-         United States, China, Japan and                 Domestic demand 1/                                                                  9.4           10.4        8.8          12.7           9.1            8.3
ple’s Republic of China as fol-                ners are Japan, EU, South Ko-          the European Union. At the                      Net exports 1/                                                                      2.2            2.6        0.8          -3.9           0.4            0.5
lows:                                          rea, Taiwan and USA. Its im-           same time Indonesia continues
                                                                                                                                 Contribution net exports (WB, pp) 2/                                                     3.8            3.4        1.8          -4.8           0.4            0.5
•	 In terms of population China                ports include petroleum &              to make special efforts to attain
   is a giant country (the largest in          related products and metalifer-        closer cooperation with the other          Exports (goods and services) 2/                                                        23.8            19.9        8.6         -10.6          14.7            9.4
   the world) with a population of             ous ores and scrap                     developing countries.                      Imports (goods and services) 2/                                                        15.9            14.1        5.1           3.9          16.4            9.2
   1.3 billion people in 2009.              •	 Its foreign reserves are the larg-
                                                                                                                                 Potential GDP growth                                                                   10.5            10.4       10.1          10.4           9.3            8.7
   Its GDP per capita is $3,742                est in the world, amounting to         INDONESIA–CHINA BILATERAL
   (nominal); $8.8 million PPP)                $2,399 billion                         RELATIONS                                  Output gap (pp)                                                                          0.0            2.5        2.1           0.4           0.6            0.6
•	 Its economy is the third largest         •	 According to GDP by sector,               Much is already known in In-
                                                                                                                                Source: The World Bank China Quarterly Update March 2
   in the world, after the United              industry is the largest sector         donesia through the media about
   States and Japan, with a nom-               (46.8%), services (42.6%), ag-         the spectacular development and
   inal GDP of US$4.91 trillion                riculture (10.6%)                      the significant growth trends of
   in 2009. It is the second with a         •	 In terms of domestic demand,           China in the area of economics               China has enormous capital                  in Madura.                                benefit for the two countries if      pore, China and India.
   GDP of $8.8 trillion on a PPP               China has been showing con-            and trade, but many are less fa-          and financial resources at its dis-               At the same time, Indonesia’s          China would strengthen and
   basis.                                      stant growth for consumption,          miliar with China’s financial as-         posal, and is much richer than                 business community is much                modernize Indonesia’s textile in-     TO INTENSIFY BILATERAL
•	 It is growing at an average of              from 8.4% in the year 2006 to          sets and as a potential investor in       the United States. But Indone-                 concerned with the strong com-            dustry.                               RELATIONS
   9.7% per annum since the                    9.7% at the end of 2009. This          Indonesia.                                sia is not aware of the easy access            petitive position of China’s ex-             China’s export goods includes         The visit of Prime Minister
   1970s. During the latest finan-             calls for the need of creating a          According to information from          in China to huge working capi-                 port products. Their products,            the following products: office        Wen Jiabao opens huge oppor-
   cial crisis, its economy had been           global economic balance be-            the Chinese Embassy there are at          tal and other financial sources,               cheap but of high quality, contin-        machines & data processing            tunities for Indonesia to intensi-
   weakened, showing a 6.1% lev-               tween the US economy’s defi-           present 700 Chinese companies             which could be used for the de-                ue to flood Indonesia’s local mar-        equipment, telecommunications         fy bilateral relations with one of
   el of growth in the first quarter           cit and the high savings of the        interested to set up factories and        velopment of infrastructure proj-              kets, especially in the area of tex-      equipment, electrical machinery,      the largest countries in the world,
   of the 2009.                                Chinese people.                        trading centers.                          ects such as the Suramadu bridge               tile products. It would be of great       apparel and clothing, miscella-       one that has immense financial
                                                                                                                                                                                                                         neous manufactures. In 2008,          and trade resources and a large
                                                                                                                                                                                                                         the total amount reached US$31        growing market.
                                                               NON-OIL & GAS IMPORT GROWTH BY ORIGIN COUNTRIES                                                                                                           trillion.                                To make the economic rela-
                                                                                                                                                                                                                            Indonesia’s export market          tions between Indonesia and
                                                                                                                                                                                                        (JUTA US$)       share to China grew from 6%           China more balanced, it would
                                                                                                        TREND         PERUB              PERAN          Jan-Des           Jan-Des          PERUB         PERAN           to 9%, while imports from Chi-        be of great mutual interest to ex-
 NO       NEGARA                     2004          2005          2006          2007        2008        (%) 04-08     (%) 08/07          (%) 2008         2008              2009           (%) 09/08     (%) 2009         na is now at the level of US$13       plore and implement the follow-
                                                                                                                                                                                                                         billion. Trade has been the focal     ing cooperation schemes:
   1      People of China Republic    3.358,3        4.551,3        5.502,0     7.957,3     14.947,9         42,55            87,85            15,15         14.947,9         13.491,4          -9,74          17,33     point of growth for several years,    •	 There is an urgent need to bol-
                                                                                                                                                                                                                         thanks to the opening up of both         ster Indonesian exports to Chi-
   2      Japan                       6.053,5        6.892,4        5.488,0     6.472,7     14.864,7         18,93           129,65            15,07         14.864,7           9.810,5        -34,00          12,60     markets. Minister of Trade Mari          na in order to close the increas-
                                                                                                                                                                                                                         Elka Pangestu describes China as         ing trade deficit for non-oil &
   3      Singapore                   2.527,4        2.936,9        3.733,4     3.908,3     11.095,6         38,33           183,90            11,25         11.095,6           9.236,6        -16,75          11,86
                                                                                                                                                                                                                         a “production source with a mar-         gas trade. Immediate measures
                                                                                                                                                                                                                         ket much bigger than any oth-            are needed to correct this situ-
                                                                                                                                                                                                                         er country in the world” (TPP,           ation.
   4      United States               3.148,3        3.810,6        3.968,2     4.711,8      7.731,5         22,25            64,09              7,84         7.731,5           7.037,6         -8,98           9,04
                                                                                                                                                                                                                         March 12, 2010).                      •	 Indonesia needs to acceler-
                                                                                                                                                                                                                                                                  ate the growth of its industri-
   5      Thailand                    2.363,9        3.082,0        2.962,3     4.194,8      6.269,9         25,35            49,47              6,36         6.269,9           4.570,8        -27,10           5,87        Imports of non-oil & gas from         al sector and promote exports
                                                                                                                                                                                                                         China has grown from about $5            in manufactures or semi-man-
 Source: Ministry of Trade
                                                                                                                                                                                                                         billion in 2005 to $13 billion in        ufactures
                                                                                                                                                                                                                         2009. China is the largest sup-       •	 Indonesia has natural resources
                                                                                                                                                                                                                         plier of Indonesia, followed by          to promote the development of
                                                       NON-OIL & GAS EXPORT GROWTH BY DESTINATION COUNTRIES                                                                                                              Japan, Singapore, the US and             value-added industries, which
                                                                                                                                                                                                        (JUTA US$)       Thailand. Manufacturing has              are resource-based
                                                                                                                                                                                                                         been China’s strongest point in       •	 China has the expertise and fi-
                                                                                                        TREND         PERUB              PERAN          Jan-Des           Jan-Des          PERUB         PERAN
 NO       COUNTRY                    2004          2005          2006          2007        2008        (%) 04-08     (%) 08/07          (%) 2008         2008              2009           (%) 09/08     (%) 2009         its trade relations with the inter-      nancial resources to develop
                                                                                                                                                                                                                         national world. Supported by big         infrastructure projects in In-
   1      Japan
                                      8.383,5        9.561,8       12.198,6    13.092,8     13.795,3         14,00             5,37            12,79         13.795,3         11.979,0         -13,17          12,29     investments and vast financial re-       donesia
                                                                                                                                                                                                                         sources, China has demonstrated          These are some of the areas
   2      United States
                                      8.272,1        9.507,9       10.682,5    11.311,3     12.531,1         10,57            10,78            11,61         12.531,1         10.470,1         -16,45          10,74     strong performance in the manu-       which could further intensify the
                                                                                                                                                                                                                         facturing sectors.                    economic relations between the
   3      Singapore
                                      5.390,7        7.068,6        7.824,2     8.990,4     10.104,6         16,15            12,39              9,37        10.104,6           7.947,6        -21,35           8,15        With regard to Indonesian ex-      two leading economies in Asia on
                                                                                                                                                                                                                         ports of non-oil & gas to China,      a sustainable basis. In particular
   4      People of China Republic
                                      3.437,4        3.959,8        5.466,6     6.664,1      7.787,2         24,06            16,85              7,22         7.787,2           8.920,1        14,55            9,15     Indonesia’s position in 2009 has      to develop a stronger win-win In-
                                                                                                                                                                                                                         been weak at only $8.9 billion.       donesia-China Relationship.
   5      Thailand
                                      2.115,2        2.865,4        3.326,5     4.885,0      7.060,9         34,24            44,54              6,54         7.060,9           7.351,4         4,11            7,54     Indonesia’s other main destina-
                                                                                                                                                                                                                         tion for its non-oil/gas products     The writer is a former ambassador
 Source: Ministry of Trade                                                                                                                                                                                               in 2009 are Japan, the US, Singa-     to the EU                                                                                      The President Post                                                                                                            April 12, 2010 A3

                                                                                                                                                                                                                                     Special Report

                            ASEAN-China Integration
                      Offers Myriad Business Opportunities
ACFTA has a combined GDP of US$ 6.6                                         trading.                                 He explains that ACFTA has          to mention cultural interactions       AN member countries against
trillion with 1.9 billion people constituting                                  In other words, Indonesia has      been implemented in stages and         that come through repeated visits      one another, the free trade ar-      Even though
a free market with a total trade volume of
                                                                            more tradable goods than the          products on member countries’          by Chinese merchant ships.             rangement now in place serves as     it is generally
                                                                            coverage of ACFTA list that will      negative investment lists will be                                             a catalyst to turn their diverging
US$ 4.3 trillion.                                                           generate huge export revenues.        liberated at a later stage.               ASEAN’s relations which Chi-        interests into a source of region-   acknowledged
                                                                               Surin, meanwhile, is of the           Economists believe that the         na received a bigger boost in 1991     al strength.                         that certain
By Jeannifer Filly Sumayku
                                                                            opinion that either as a group or
                                                                            as individual countries, ASEAN
                                                                                                                  implementation of ACFTA will
                                                                                                                  encourage Chinese investors to
                                                                                                                                                         following political developments
                                                                                                                                                         initiated by ASEAN leaders to
                                                                                                                                                                                                   The resulting economic inte-
                                                                                                                                                                                                gration will open up more oppor-
                                                                                                                                                                                                                                     industries will
                                                                            members will remain attractive        open new infrastructure and            embrace their giant neighbor for       tunities for trade, business, in-    come under tough
                                                                            as they can act as chains of sup-     transportation projects within         mutually beneficial relationship.      vestment, research, technological    pressure in the

                                                                            plies for China’s fast expanding      ASEAN.                                    As of 1991, thanks to warmer        development, as well as socio-cul-
               he free trade agree-   mine domestic manufacturing           economy.                                                                     diplomatic relations, China in-        tural interactions.                  transition period,
               ment ASEAN has         industries.                              “The landscape of trade be-           China recently launched a           tensified trade and investment            ASEAN is taking the benefit       the benefits from
               with China—pop-           Indonesian industry leaders re-    tween ASEAN and China has             US$10 billion infrastructure in-       interactions with Indonesia and        of continuous influx of Chinese
               ularly known as        cently submitted a proposal to        changed in the last decade due to     vestment fund to upgrade roads,        the rest of ASEAN also got the         tourists while treating China as     growing trade
               ACFTA—is the           postpone the implementation of        tariff cuts,” he said.                railways, airlines, and telecom-       benefit.                               its immediate market for various     between ASEAN
               world’s third larg-
est common market after the Eu-
                                      tariff reductions on 228 items in-
                                      cluding iron and steel, textiles,
                                                                               Statistics reveal that ASEAN’s
                                                                            trade with China grew by an av-
                                                                                                                  munication links with ASEAN.
                                                                                                                     China is also providing a
                                                                                                                                                            Political observers are now say-
                                                                                                                                                         ing that bilateral relations be-
                                                                                                                                                                                                gods and services. The Chinese
                                                                                                                                                                                                are also doing the same toward
                                                                                                                                                                                                                                     and China would
ropean Union and North Amer-          machinery, electronics, chemi-        erage of 26% per annum be-            US$15 billion in loan to promote       tween China and ASEAN’s in-            ASEAN member countries. In           mean that more
ica’s free market mechanism           cals and furniture. The Indone-       tween 2003 and 2008, mainly           regional integration and regional      dividual member countries have         fact, Chinese-made goods are ev-     employment
called NAFTA.                         sian Government has formed a          in electronics, fuel and fuel prod-   connectivity networks.                 improved markedly, paving the          erywhere in ASEAN countries.
   ACFTA has a combined GDP           team which also involves the pri-     ucts, plastics, rubber, and vegeta-      With China’s global invest-         way for greater flows of goods,                                             opportunities
of US$6.6 trillion with 1.9 billion   vate sector to examine these con-     ble oils.                             ment strategy now producing            services, expertise, and invest-          Economic cooperation has          will emerge,
people constituting a free mar-
ket with a total trade volume of
                                                                               Even though it is generally ac-
                                                                                                                  outstanding results and the fact
                                                                                                                  that in 2008 alone China’s di-
                                                                                                                                                         ment funds.                            grown rapidly, especially after
                                                                                                                                                                                                the signing of the Framework
                                                                                                                                                                                                                                     more people
US$4.3 trillion.                         Nevertheless, noted economist      knowledged that certain indus-        rect investment outflows were             In October 2003 the two sides       Agreement on Comprehensive           will become big
   Secretary General of ASEAN         Faisal Basri maintains that Indo-     tries will come under tough pres-     worth US$52.1 billion, there is        claimed success in opening a new       Economic Cooperation (CEC),          spenders and a
Dr Surin Pitsuwan believes that       nesia will benefit a lot—instead      sure in the transition period, the    hope that the Asian giant will in-     chapter of relations when they         which provides for the establish-
China’s economic growth and           of suffer losses—from the im-         benefits from growing trade be-       vest more in this new common           signed the Joint Declaration on        ment of an ASEAN-China Free          greater synergy
strong investment expansion “is       plementation of ACFTA because         tween ASEAN and China would           market.                                Strategic Partnership for Peace        Trade Area for Brunei Darus-         will bind the two
energizing the region and is pro-
viding ASEAN with an expand-
                                      locally-made goods competing
                                      against Chinese products are not
                                                                            mean that more employment op-
                                                                            portunities will emerge, more
                                                                                                                     Initially, member countries
                                                                                                                  would feel the pains of making
                                                                                                                                                         and Prosperity.
                                                                                                                                                            This was followed by the adop-
                                                                                                                                                                                                salam, Indonesia, Malaysia, the
                                                                                                                                                                                                Philippines, Singapore, Thailand
                                                                                                                                                                                                                                     regions together.
ing diversified market.”              that many.                            people will become big spenders       adjustments to a more competi-         tion of a five-year ASEAN-Chi-         and China to adopt in 2010; and
   Implementation of ACFTA               Indonesia has an advantage be-     and a greater synergy will bind       tive environment, business ana-        na Plan of Action in November          for Cambodia, Lao PDR, Myan-
also gives ASEAN a strong edge        cause in percentage terms only        the two regions together.             lysts say, but in the long run this    2004 which served as the road          mar and Viet Nam to join by
given the fact that participating     26% of its products are compet-          The ASEAN secretary gener-         new free market mechanism can          map for implementation of the          2015.                                an impressive 13.3% of glob-
countries have to live with low-      ing in AFTA compared to Malay-        al suggests that member govern-       only be fruitful.                      declaration.                              China is already ASEAN’s          al trade or half of the total trade
er tariffs, more open service op-     sia’s 88% and Thailand’s 91%.         ments may have to strengthen             “If history is to judge this FTA,      The move crowned ASEAN-             third largest trading partner and    of Asia in 2008. In addition, the
portunities and better potential         “So those who say that ACAF-       the capacity of domestic corpo-       it is the capacity to add greater      China top leaders’ maneuvers           is responsible for 11.3% of to-      two regions attracted a combined
for investment expansion, he the-     TA will harm Indonesia must be        rations, but do so in a way that      value to all parties’ economic de-     that served as the basis for further   tal ASEAN trade in 2008 worth        10% of global foreign direct in-
orizes.                               very ignorant,” Basri said.           would not discourage innova-          velopment that will weigh in its       strengthening of relations and se-     US$192.6 billion. According to       vestments in 2008.
   Dr Surin made the remarks in          Basri also theorizes that Indo-    tions and cost-reduction plans.       favor,” Surin says.                    curing of regional peace and sta-      statistics the combined GDP of          With all these developments
response to queries regarding the     nesia will remain competitive in         The free trade agreement              The historical links between        bility.                                ASEAN and China is worth of          taking place, one can only be op-
apprehension raised by Indone-        terms of realization of individu-     (FTA) also has a built-in mech-       Southeast Asia and China date             Political observers are saying      US$6.6 trillion with 1.9 billion     timistic about the region’s future
sia’s private sector players. They    al participating countries’ exports   anism for protecting domestic in-     back to ancient times when in-         that despite the fact that ASEAN       people and total trade of US$4.3     given the countless economic and
fear that the influx of cheaper       due to the huge potential that        dustries from damage and losses,      dividual countries of this region      and China compete with each            trillion.                            business opportunities the region
Chinese products would under-         has yet to be included in ACFTA       he notes.                             conducted trade with China, not        other economically, as do ASE-            Trade between the parties was     now offers.
 A4 April 12, 2010                                                                                          The President Post                                                                                           


Indonesia Set to Become World’s
Largest Fish Producer in 2015
  As a country with the biggest marine territory in the                    innovations. We will also extend     tuna, 7.9% for crabs, and 27.2%        On regional governments’s             such as seaweeds, catfish, milk       to educate, and they will be de-
world, it is ironic that Indonesia is not the largest producer             a network both with the regional     for other fish.                        income                                fish, grouper fish and crabs. In      ployed in the regions. I have also
of marine and fishery products.                                            governments and entrepreneurs          We continue to try to boost the         Pros and cos will always ex-       the future we will have 10 types      asked echelon one and two offi-
                                                                           on a national and international      percentage but overall, China re-      ist. But I have convinced region-     of fish that we will promote.         cials to visit the regions to get our
  The welfare of fishermen in some regions has even                        scale in order to accelerate pro-    mains the world’s biggest fish         al governments; now most of                                                 fish industry moving.
reached near poverty. To change this condition, a bold                     duction increase.                    producer.                              them have given their support. It     On his vision
move from the government is needed to improve the                                                                                                      is true that few others have still       I am very optimistic. China        On the ministry’s performance
welfare and productivity of fishermen and fishery                          Indonesia’s fishery production       On Indonesia’s ambition to             not agreed, but I have prepared       only needed five years to become         Not that it failed to do its max
entrepreneurs.                                                                In 2009, our fishery produc-      beat China as the biggest fish         a safety valve, which is to replace   the world’s biggest fish produc-      but maybe not yet because there
                                                                           tion reached 10.65 million tons      producer in the world                  regional income from the retribu-     er. They boosted their produc-        are still potentials that have not
                                                                           with fish farms (budidaya) con-         Yes, the target to boost produc-    tion with special fund allocation     tion aggressively since the 90s.      been tapped. The president as-
   From several sources, TPP has managed to gathered                       tributing 47.49% of the total pro-   tion is rather ambitious. That’s       (DAK) from the central govern-        Improvement in fish farming           signed me to maximize fish pro-
statements made by Maritime and Fisheries Minister                         duction and 52.52% from caught       why we need to work extra hard         ment.                                 technique successfully bolstered      duction with more advanced pat-
Fadel Muhammad, who said a new paradigm is needed                          fish (perikanan tangkap). Of the     and according to national pol-            The allocated DAK budget for       production by 40 times in 2004        tern.
to raise the awareness of fishermen, fishery entrepreneurs                 total production, 69.5% are ex-      icies. The most urgent agenda          maritime and fisheries for this       compared to 1978.                        In Gorontalo for example,
                                                                           ported to the United States, Eu-     in the maritime and fishery sec-       year is Rp1.7 trillion. If regional      42% of the growth in fish          when I was the governor I set up
and even regional governments on the importance of                         ropean Union and Japan, 11.8%        tor this year are debottlenecking,     governments agree to remove the       farming was contributed by sci-       Mina Bahari Taxi modeled after
productivity.                                                              to Southeast Asia, 10.6% to East     acceleration, and enhancement          retributions, I will replace them     ence on fisheries such as aqua-       Blue Bird and other taxies. So,
   “I vow Indonesia to become the world’s biggest marine                   Asia (excluding Japan), and the      with the issuance and implemen-        with a much higher DAK. Ret-          feeds, breeding, and disease con-     we have people to handle fish-
and fishery products producer by 2015,” he said.                           remaining 8.1% to the Middle         tation of policies aimed to create     ribution income from fisheries        trol. Indonesia can potentially       ing, ship, fish, manage the mon-
                                                                           East, Africa, and former Eastern     ease for businesses in the mari-       in Central Java is only Rp14 bil-     match China because our fish          ey, and etc. I will adopt the con-
                                                                           European countries.                  time and fishery sector.               lion, but DAK reaches Rp60 bil-       farm is much wider and we want        cept for all Indonesia.
                                                                              Fish consumption in Java re-                                             lion, which is much higher. This      to follow some of China’s ways in        The government will help fish-
The breakthroughs he is               the president, I have to come up     mains low. Fish consumption            I have also asked regional gov-      way, the farmers’ welfare will im-    developing its fishery sector.        ermen and entrepreneurs obtain
preparing                             with a clear program to achieve      in Banten is 20.56%, West Java       ernments to remove retributions.       prove and regional governments           I will change the budget in this   bank loans. The government has
   I will change the paradigm         that vision and mission.             16.65%, Jakarta 17.56%, Cen-         At first they didn’t agree, but they   will not get a smaller income.        sector and allocate as much as        already allocated Rp2 trillion in
that has long pervaded the mari-                                           tral Java 11.37%, and Yogyakar-      did after being briefed.                                                     possible on fish farming. We will     small business credit (KUR) for
time and fisheries sector. The cur-   On his programs                      ta 6.64%, which is lower than                                               On his strategies                     increase more fish farming than       micro businesses. The govern-
rent paradigm is supervision, but       I will adopt four main strate-     the national fish consumption of     On retributions as a burden to            We are planning to launch          captured fish production. From        ment will also control the pric-
from now on I will lead them to       gies.                                30.17 kilogram per capita.           fishermen                              “minapolitans” or fish produc-        now on, we will develop our own       es and keep them stable. Should
productivity. I want to boost pro-        Firstly, I will strengthen and                                           The fishermen are already im-       tion centers in many regions. For     seed varieties so that they become    there be any production excess
ductivity as a base to improve the    integrate the institution and hu-    Indonesia in relation to other       posed with retributions once they      instance, we build a catfish mi-      more affordable, for shrimp, cat      from fish farms, the government
maritime and fishery sector.          man resources. Secondly, sustain-    countries                            dock. They have to pay more ret-       napolitan in a certain region and     fish, silver catfish, nila fish and   will buy them so there is no need
   My dream, in line with the         able management of maritime             We are at number 5 to 11, de-     ributions when they bring their        tuna fish minapolitan in other        milk fish. That’s what we’ll do.      for fish farmers to worry.
maritime and fisheries ministry,      and fishery resources, and thirdly   pending on the product. In terms     fish products to their customers.      regions and so on. After that we
is that Indonesia can become the      to bolster productivity and com-     of seaweed, we are number one.       I have instructed for the remov-       will promote anti-illegal fishing     On government intervention            How the Indonesian people
world’s biggest marine and fish-      petitiveness with knowledge.         With tuna fish, we are not the       al of all retributions because pay-    and initiate marine-related busi-        Yes, it’s true that government     can help to realize the dream
ery producer by 2015.                   Fourthly, to widen both do-        number one exporter but the big-     ment of Rp1-2 million a month is       nesses.                               intervention is a needed. The gov-      Three things, we first need
   The mission is to bring pros-      mestic and international market      gest supplier to Japan. Our ex-      huge for fishermen. It turned out                                            ernment has to help the fishery       to consume more fish products.
perity to the marine and fishery      access.                              port accounted for 2.75% of the      that not only big fishermen that         Basically, we will deploy ev-       community in providing seeds,         Secondly, we have to look after
community. Why 2015? Because            The measures that we take are      world’s market share and is worth    had to pay the retributions but        erything to boost productivity.       financial management, market-         our sea and rivers for the sake of
in 2015 we hope to enter the          to implement the strategies and      US$2.69 billion in 2008.             also small fishermen. This must        However, we will not cultivate all    ing, and etc. Therefore, we will      everyone. Thirdly, let’s produce
group of countries with medium        make empowerment, introduce             In the world market, we con-      come to an end.                        types of fish, and will only select   provide education.                    more entrepreneurs in the fish-
income. And as an assistant to        entrepreneurship and technology      trol 43.1% for shrimps, 12.8% for                                           the most potential commodities           We have recruited 800 people       ery sector.                                                                                                    The President Post                                                                                                                                                      April 12, 2010 A5

The Economy
  S&P raises RI`s rating to BB
                                                                                         Mulyani: Economy to Grow 5.5% in Q1
                                                                                         The minister said investment had started to

                                                                                                                                                                                                                                                    Photo: The President Post/Nandi Nanti
                                                                                                                                                                     “In our early monitoring in the            The Finance Ministry had sub-
                                              International    rating    agency
                                                                                         recover early this year, recording a higher                              first quarter of this year the eco-        stantially increased the amount
                                           Standard and Poor`s (S&P) has                                                                                          nomic growth was still good and            of state expenditures, especial-
                                           raised Indonesia`s long-term foreign          figure than in the same period last year.                                there was no turmoil,” he said.            ly for the infrastructure sector, in
                                           currency rating to BB from BB- and                                                                                                                                the Revised 2010 State Budget.
                                           affirmed its long-term local currency                                                                                     “Economy to grow 5.5% in                   The increase in state expendi-

                                           rating at BB+.                                                                                                         first semester 2010”                       tures also raised the state bud-
                                              In a press statement issued last                      inance Minister Sri      although there is a tendency for        Indonesia`s economic growth             get deficit from 1.6% of GDP in
                                           week, S&P analyst for Indonesia                          Mulyani Indrawati        them to rise. So, the growth mo-     in the first semester of 2010 is es-       the original 2010 State Budget
Agost Benard said among the key factors pushing up the rating were improving                        predicts Indonesia`s     mentum in Q1 is very strong in       timated to reach 5.5%, driven by           to 2.1% of GDP in the Revised
government debt ratio and growing foreign currency reserves which reduce                            economy will grow        the Asian region including in our    the consumption sector, an econ-           2010 State Budget.
Indonesia`s vulnerability to shocks, coupled with cautious fiscal management             5.3 to 5.5% percent in the first    country,” she said.                  omist said.                                   The government had also
policies.                                                                                quarter of this year.                  The minister however said that       “I expect economic growth in            raised the state budget allocations
   “The rating upgrade reflects steadily improving debt metrics and growing                 “From January to the sec-        the government would not as yet      the first semester to reach 5.5%           for fuel, electricity and basic ma-
foreign currency reserves with continued cautious fiscal management,” Agost              ond week of March, the GDP          change its economic growth as-       and to be mainly driven by retail          terials subsidies to ensure price
Benard said.                                                                             is still above 5.0% or between      sumption of 5.5%.                    consumption,” Winang Budoyo,               stability.
   The two ratings` outlook is positive. Given the upgraded rating Indonesia             5.3 and 5.5%,” she said at the         “We still use the 5.5% assump-    an economist at CIMB Niaga                    Also raised was the state bud-                                                “Interest rates
is only two notches away from an investment grade and the positive outlook               submission of income tax re-        tion,” she said.                     Bank said here Wednesday.                  get allocation for fiscal subsidies                                              remain steady
suggests that Indonesia is most likely to see another rating upgrade in the next         ports by President Susilo Bam-         Chief of the Fiscal Policy of        Besides consumption, export-            to stimulate several important in-
one year.                                                                                bang Yudhoyono, Vice Presi-         the Ministry of Finance Anggito      oriented manufacturing indus-              dustries as called for in some of                                                although there
                                                                                         dent Boediono and a number          Abimanyu said there were sever-      tries would also be an economic            the government`s development                                                     is a tendency for
                                                                                         of state officials here recently.   al factors for optimism, including   growth driver in the first half of         programs.                                                                        them to rise. So, the
  Duty-free facilities for telecommunication                                                The minister said invest-
                                                                                         ment had started to recov-
                                                                                                                             the increase by 50% of exports,
                                                                                                                             improving global economic con-
                                                                                                                                                                  2010, he said,
                                                                                                                                                                     About economic growth for
                                                                                                                                                                                                                About the inflation rate in the
                                                                                                                                                                                                             first semester of 2010, Winang                                                   growth momentum
  industry                                                                               er early this year, recording a     ditions and the absence of in-       the whole year of 2010, Winang             said it would remain below 4%.                                                   in Q1 is very strong
                                                                                         higher figure than in the same      crease in Chinese goods imports.     said CIMB Niaga Bank estimat-                 “I think it will be within a 3.9-
                                                                                         period last year.                      “We are optimistic with that      ed it would be 5.8% or higher              4% range as the rice problem is to                                               in the Asian region
    The government is providing duty-                                                       “Exports are also positive       estimate,” he said.                  than the government`s projection           be resolved soon with the arrival                                                including in our
free facilities for the importation                                                      in February and March while            Anggito said that the govern-     of 5.5%.                                   of the harvest season.” he said.                                                 country.”
of goods and materials to produce                                                        consumption has remained            ment had not yet carried out            The expected higher growth in              For the whole year of 2010,
telecommunication appliances this                                                        constant,” she said.                excessive spending in the first      the second semester of the year            according CIMB Niaga Bank`s
year, the Finance Ministry announced                                                        Mulyani said there was also      quarter of this year, as no sec-     would mainly be fueled by the in-          forecast, the inflation rate would                                               Sri Mulyani Indrawati
last month.                                                                              a good possibility the GDP          tor needed large spending and        frastructure sector, which would           reach 6.3% or higher than the                                                    Finance Minister
    To improve the competitive edge                                                      would grow above 5.5%.              no negative indication in the real   usually surge during the Septem-           government projection of 5.7%,
of the domestic telecommunication                                                           “Interest rates remain steady    sector development.                  ber-December period, he said.              Winang said.
industry the government had set the
budget ceiling of Rp 38,771,000,000 to
bear the import duties.
    To      obtain     the      facilities.
telecommunication companies should
file applications to the director general
of customs and excise, along with the                                                    Over One-Third of RI Exports                                                                                           BI: RI Economy Set
                                                                                         to China Use FTA Facility                                                                                              to Grow Until 2011
import plans approved by the director
general of transportation and telematic
instrument industries.

  Excise receipts reach Rp12.75 trillion
                                                                                        The value of the                     ports in 2009 using the facility        With its huge population                      Bank Indonesia (BI) pre-                                                 quarter this year are predicted to
                                                                                        exports in 2009 using                reached 223.2 million tons worth     reaching up to 1.5 billion Chi-               dicts Indonesia`s economy will                                              give a bigger surplus than initial-
                             Indonesia`s excise receipts in the year ending on                                               US$425.5 million.                    na has to think hard to meet its              grow 5.5 to 6.0% in 2010 and                                                ly projected.
                         March 10 reached Rp12.75 trillion, accounting for              the facility reached                    In terms of SKA, textiles and     food needs, and in view of that               continue to grow 6.0 to 6.5%                                                   He said foreign investors` con-
                         22.26% of the target set in the 2010 state budget.             223.2 million tons                   textile products are the ones that   the chance for Indonesia to enter             in 2011.                                                                    fidence on the country`s econom-
                             The target of excise receipts for 2010 is Rp57.29                                               have used the facility most (1,916   that country`s market will be big-               BI Deputy Governor Har-                                                  ic prospects continued to be bet-
                         trillion, the Directorate General of Customs and Excise        worth US$425.5                       SKAs) reaching 40.9 million tons     ger following the implementation              tadi A Sarwono said here re-                                                ter as reflected by the surplus in
                         said in its online report.                                     million.                             in volume and US$57.6 million        of ACFTA.                                     cently the country`s econom-                                                capital and financial transactions
                             Import duty receipts reached Rp3.15 trillion or                                                 in value.                               The increasing population and              ic prospects would be better                                                which still remained high.

                         18.98% of the target of Rp16.57 trillion, the report said.                                             Rubber and rubber products        economy in that country will also             than initially forecast.                                                       Based on developments the
                             Export duty receipts stood at Rp407.43 billion or                     hirty percent of In-      fell second (1,202 SKAs) reach-      increase demand for motor vehi-                  “While domestic demand                                                   surplus in the Indonesian Bal-
Thomas Sugijata          5.34% of the target of Rp7.63 trillion.                                   donesian exports to       ing 147.4 million tons worth         cles and so Chinese demand for                remains strong, growth will                                                 ance of Payment (NPI) for 2010
                             “The excise receipts are relatively high although                     China are carried         US$225 million.                      rubber from Indonesia will also               be driven particularly by ex-                                               is predicted to be higher than ini-
                         overall, customs and excise receipts are still low because                out using a tariff re-       CPO, rubber top commodities       be bigger, he said.                           ternal factors in line with                                                 tially projected.
we are at the start of the year,” Director General of Customs and Excise Thomas          duction facility provided in        to meet ACFTA                           “We hope we can export not in              global economic recovery as                                                    “One notch left for Indonesia
Sugijata said.                                                                           the Asean-China Free Trade             Crude palm oil and rubber are     the form of raw materials but fin-            seen from increasing exports                                                to achieve an investment grade
                                                                                         Agreement, Deputy Trade             commodities Indonesia could          ished products, namely tires. So              since the fourth quarter last                                               that would give more confidence
                                                                                         Minister Mahendra Siregar           rely on to deal with the Asean-      the downstream industries need                year,” he said.                                                             to foreign investors to increase
  US lowers anti-dumping duty on RI plastic bags                                         said.
                                                                                            Based on the trade ministry`s
                                                                                                                             China Free Trade Agreement, an
                                                                                                                             Agriculture Ministry official said
                                                                                                                                                                  to be boosted,” he said                          He said signs of global eco-
                                                                                                                                                                                                                nomic recovery were clearly
                                                                                                                                                                                                                                                                                            their investment in Indonesia,”
                                                                                                                                                                                                                                                                                            he said responding to improved
                                                                                         records, in 2009 Indonesia is-      here on Friday.                                                                    seen in various economic in-                                                ratings for Indonesia by Fitch to
                                                                                         sued 16,606 Form E certifi-            “Indonesia is a leading pro-                   A lot of exports of fat and      dicators in advanced coun-                                                  BB+ from BB earlier.
                                                                                                                                                                               animal oil or vegetable oil
   The United States has                                                                 cates of origin (SKA) for ex-       ducer of raw materials. Plan-                      which is 90% crude palm         tries (US and Japan) or in Asia                                                Besides improving export per-
lowered the rate of its                                                                  ports to China. The value of        tation products and rice are                       oil also used SKA Form E.       (China and India).                                                          formance private consumption
provisionalanti-dumping                                                                  the exports in the year reached     actually our strength,” the Agri-                                                     In the US recovery was re-                                               also showed an improvement,
duty on Indonesia`s                                                                      US$2.6 billion.                     culture Ministry`s secretary gen-                                                  flected in increasing con-                                                  confirmed by various indica-
polyethylene           retail                                                               “The more products includ-       eral, Hasanuddin Ibrahim, said                                                     sumption responded to by in-                                                tors such as imports of consum-
carrier bags to 9.18%                                                                    ed in the ACFTA list (for tariff    at Agrinex International Expo                                                      creasing production, while in                                               er goods, car and motorbike sales
from 67.18% previously.                                                                  reduction) in 2010, the more        2010.                                                                              Japan it was shown by posi-                                                 and retail sales.
   “The final rate of                                                                    SKA Form E certificates will           However, it is a pity that rice                                                 tive growth in the last quarter                                                In the future, household con-
anti-dumping duty will                                                                   be produced, reaching more          exports are still small to only a                                                  of 2009, and in China and In-                                               sumption is predicted to keep in-
be decided on April 14                                                                   than 30%,” he said.                 few countries and of certain                                                       dia the indications are reflect-                                            creasing in line with higher in-
and we will later lodge                                                                     Indonesia`s biggest exports      varieties, he said.                                                                ed by high economic growth.                                                 come as a result of improvement
the second complaint,”                                                                   to China that used SKA Form            So, the prospective                                                                The recovery will impact                                                 in exports and consumers` confi-
Director      of      Trade                                                              E are fuel products/mineral         ones will be crude palm                                                            positively on their partner                                                 dence.
Safeguard at the Trade Ministry Ernawati said here on Friday.                            oils reaching 480 with a to-        oil and rubber in addi-                                                            countries, including Indone-                                                   The rise in the consumer price
   “Last week the International Trade Commission (ITC) which determined                  tal volume of 12.9 billion tons     tion to fishery products                                                           sia, he said.                                                               index early this year was prov-
losses as a result of dumping allegation asked for clarification. We told them that      worth US$1.01 billion.              like tuna, he said.                                                                   Indonesia`s non-oil/non-gas                                              en to be mere temporary espe-
the products exported to the US were hand-made while the US alleged that they               A lot of exports of fat and         “Rice will only go to the                                                       exports in the fourth quar-                                                 cially because of the rising price
came from mass production,” she said.                                                    animal oil or vegetable oil         southern part of China and                                                         ter of 2009 were recorded up                                                of rice and beliefs that no price
   The US-anti dumping authorities have accused 13 Indonesian polyethylene               which is 90% crude palm oil         it is not much while Japan                                                         17% and continued to in-                                                    hikes will happen in the next few
retail carrier bag makers of dumping practices based on the results of                   also used SKA Form E.               only consumes certain rice                                                         crease in January this year.                                                months due to the arrival of har-
investigation conducted since April 20, 2009.                                               The value of the ex-             varieties,” he said.                                                                  Transactions in the first                                                vest seasons in various regions.

               “Power Rate Hike not to
                  Affect Inflation”
   Finance Minister Sri Mulyani                                                       flation rate.
Indrawati has given the assurance                                                        “If the power rate is raised
that a 15% rise in the basic pow-                                                     in July and the hike is to affect
er rate effective July would have                                                     all classes of subscribers, it will
no impact on the 2010 inflation                                                       contribute about 0.36% to the
rate.                                                                                 inflation,” he said
   “This year`s inflation (has al-                                                       Joining the choris is Bank
ready included an increase in the                                                     Indonesia, which said the plan
basic power rate). We will dis-                                                       to raise basic power rates will
cuss the planned power rate hike                                                      only have a small impact on
with the House of Representa-                                                         the country`s inflation rate.
tives,” she said after a coordina-              Armida S. Alisjahbana
                                                                                         “The impact will not be sig-
tion meeting at the Coordinating                National Development                  nificant,” acting Bank Indo-
Ministry for Economic Affairs                   Planning Minister/Head of             nesia Governor Darmin Na-
here last week.                                 the National Development              sution said here on Friday.
   In the draft of the revised 2010             Planning Agency                          The central bank said ear-
state budget, the government has                                                      lier the relatively manage-
raised the assumed inflation rate                                                     able inflation rate in the Jan-
to 5.7% from 5% previously.                                                           uary-February 2010 period
   National Development Plan-                    “The fiannce minister has al-        was also reflected by core in-
ning Minister/Head of the Na-                 ready included it (in the draft of      flation which fell year-on-year
tional Development Planning                   the revised 2010 state budget),”        to 3.88% in February from
Agency (Bappenas) Armida S.                   Armida said.                            4.43% in January.
Alisjahbana said the projected                   Head of the Central Statis-             Overall, the inflation rate                                                                                                                                                                            Photo: The President Post/Nandi Nanti

5.7% inflation rate had already               tics Agency (BPS) Rusman Heri-          would remain manageable at                On the Rise: The Indonesian Stock Composite Index (IHSG) continues to rise along with the index of regional bourses. It is expected
taken into account additional in-             awan said earlier the power rate        the specified range of 5 plus             to hit the all-time mark of 2900 in April.
flation from the planned power                hike, if realized, would contrib-       and minus 1% in 2010 and
rate hike.                                    ute 0.36 percent to the 2010 in-        2011, he said.
 A6 April 12, 2010                                                                                                          The President Post                                                                                                           

The Economy

                            2010–2011: Critical Recovery Stage
                                                                               The years 2010-11 will be the recovery period unless it takes longer for the
                                                                               world to recover. The forecast so far is that recovery will be a subdued but
                                                                                                                                            By Atmono Suryo

GLOBAL PROSPECTS                         the Indonesian economy is also                                                                                                                                                     2010-2011 will be a highly criti-      relatively flat trend. The growth
                fter having gone         highly influenced by develop-                                      PROJECTION OF GLOBAL ECONOMIC GROWTH                                                                            cal recovery stage.                    of the economy will also be driv-
                through the most         ments in the global economy.                                                                                                                                                                                              en by external factors through in-
                devastating     crisis   This also applies to other devel-                                                                                                                                                  INDONESIA 2010-2012                    creased exports and investment.
                since the Great De-      oping and emerging countries.                                                                                                                                                         The Indonesian economy has             While the rate of consumption
                pression in the 30’s,    Indonesia cannot afford to as-                                     �����������������������                                                    ����������������                     shown high resilience through-         has been moving up, the real sec-
                the world of today is    sume a conservative inward-look-                                                                                                                                                   out the global recession of 2008.      tors and the productive segments
expected to go through another           ing position. It will be required                    ���                                                                       ���                                                 Three countries, China, India          of the economy are still lagging
critical stage: the stage of recov-      to adjust its stance and policies                                                                                              ���                                                 and Indonesia, were able to sus-       far behind, in particular the im-
ery. Conservative forecasts pre-         to fast changing global develop-                     ���                                                                       ���                                                 tain positive growth in the sea        portant industrial sector as well as
dict that it will take up at least       ments.                                                                                                                         ���                                                 of world contractions and nega-        agriculture, which are not mov-
two years to achieve the pre-cri-          During 2005-2007 the devel-                                                                                                                                                      tive growth. Within one year In-       ing fast enough, much less the

sis level of global growth and de-       opments of the global economy                        ���                                                                       ���                                                 donesia showed that it is back on      mining industry outside coal.
velopments.                              was in many ways to the advan-                                                                                                   �                                                 track.                                    Yet, the real sectors are the
                                                                                                                                                                               ����     ����      ����        ����
   The years 2010-11 will be the         tage of the Indonesian econo-                          �
                                                                                                     ����       ����        ����        ����                            ���                                                    Presently the Indonesian econ-      ones which should open up em-
recovery period unless it takes          my. That was the beginning of                        ����                                                                      ����                                                omy is projected to grow at 5.5%       ployment opportunities, reduce
longer for the world to recover.         the country’s economic growth.                                                                                                 ����                                                in 2010, 6.0-6.3% in 2011 and          poverty, expand the production
The forecast so far is that recov-       At that time global economic                         ����                                                                      ����                                                6.4 -6.9% in 2012 with the pro-        of goods and improve the real
ery will be a subdued but critical.      growth increased from 4.5% in                                      �����                                                                     �����                                 vision that the global economy         income of the people. In simple
As economists of the World Bank          2005 to 5.2% in 2007. Because                                      ����������������                                                          ���������������������                 recovers and international pub-        terms, the real sectors have been
predict, private capital flows are       of the global crisis it went down                                  ���������������������������������                                         ��������������������                  lic confidence and expectations        “stuck in the mud”.
unlikely to recover to the pres-         in 2008 to 3% and to minus                                                                                                                                                         improve. Some positive forecasts          It will take strenuous nation-
crisis levels for some time as world     growth of –0.8% in 2009. This                                        Source: Global Economic Prospect (Jan 2010) and World Economic Outlook (Jan 2010)
                                                                                                                                                                                                                            predict that the Indonesian na-        al efforts to take the real sectors
industrial production has yet to         had an adverse impact on the In-                                                                                                                                                   tional goal to achieve 7% growth       out of the muddy ditch. To that
recover to pre-crisis levels.            donesian economy.                                                                                                                                                                  in 2014 will not be an illusion        end, it is important to note that a
                                                                                                                                                                                                                            and that it is within reach.           special team chaired by Dr Kun-
INTERDEPENDENCE                          2010-2011 RECOvERy                  The forecast for emerging and developing economies is quite remarkable. In                                                                        At the macro-economic lev-          toro Mangkusubroto, head of the
   The world recognizes that in             At one time there was the fear    Asia, China and India are on the lead followed by Indonesia and Vietnam.                                                                      el the Indonesian economy will         President’s unit for Development
this interdependent world no             that as the world economy was                                                                                                                                                      continue to be doing remarkably        Monitoring and Oversight, has
one country or economic entity           so weak, it may have to under-                                                                                                                                                     well during the recovery period        the crucial task to unravel and
can exist or act on its own, not         go through another dip (the so-                                                                                                                                                    of 2010-2011. Bank Indonesia is        unlock the myriad of econom-
even the US, China, the Euro-            called W-type and not the V-type       As can be seen from the World                   be recovering during the 2010-                        countries, including Indonesia.       confident that the banking in-         ic barriers and obstacles which
pean Union, Russia or Japan. We          scenario).                          Bank and IMF’s projections, the                    11, warnings continue to be aired                     That is one of the key issues that    dustry will improve significant-       obstruct the country’s develop-
are now in the midst of a global-           That is now out of the ques-     road ahead for 2010-2011 shows                     that some risks remain, especially                    needs to be overcome.                 ly and is presently in a stable con-   ment.
ized world with a different setting      tion, as the forecasts for 2010-    an upward trend. The forecast for                  as global demand remains weak                            Although global prospects are      dition. Some positive points have         Meanwhile, the country has
than years before.                       2011 are now more promising. It     emerging and developing econo-                     while protectionism and inflation                     more promising, the global econ-      been reached such as high level of     to race against time in this high-
   The G20, which includes Indo-         can now be assured that the glob-   mies is quite remarkable. In Asia,                 are rising. In this highly compet-                    omy will remain at a critical stage   CAR (17%), the comfortably safe        ly competitive world in order to
nesia, would be the best grouping        al economy is now back on track,    China and India are on the lead                    itive global economy, coupled                         in this recovery period. It remains   level of NPL (below 5%), interna-      strengthen its position in the
to deal with uncertain and cru-          a conducive development for the     followed by Indonesia and Viet-                    with low world demand, the risk                       crucial as it will determine in       tional reserves of US$ 66 billion      global economy and also to im-
cial problems of recovery. One of        world community, including In-      nam.                                               of rising protectionism will still                    which direction the global econ-      (as of the end of December) and        prove its ranking in the top ten
the key issues relates to the ques-      donesia, which can envision good       With regard to world trade it is                prevail—trade wars can happen                         omy will move. It will also deter-    low inflation (2.8% CPI).              emerging countries with Brazil,
tion of Stimulus Programs, the           prospects in the coming years. It   predicted that the volume will in-                 everywhere.                                           mine how the financial structure         Increased economic growth in        Russia, India, China, South Afri-
world financial system, the global       is subject, however, to internal    crease by 4.3% to 5.8% in 2010                        In addition, the problem of un-                    will develop, including the fate      Indonesia will still be mainly sup-    ca, Turkey and South Korea.
imbalances and the well-being of         developments, in particular po-     and further to 6.2 –6.3% in                        employment is expected to con-                        of the weakening US dollar, and       ported by the consumption fac-
the developing countries.                litical and bureaucratic develop-   2011.                                              tinue, not only in the advanced                       how the imbalances in the global      tor. Private/household consump-        The writer is former ambassador
   With world interdependence,           ments.                                 While the global economy will                   countries but also in developing                      economy can be altered. Hence,        tion, however, seems to show a         to the EU.                                                                                        The President Post                                                                                                                    April 12, 2010 A7

                                                                                                                                                                                                                                               The Economy

                                                                                    THE INDONESIAN ECONOMY:

        Current Developments and National Goals
                                                           An important development to note is that, notwithstanding the non-conducive political and security
                                                                 upheavals, the economy and financial markets continue to go on, almost undisturbed.
                                                                                                                               By Atmono Suryo

CURRENT DEVELOPMENTS                  GROWTH TARGETS                       from the private sector and 25%          TABLE 1: THE GROWTH TARGETS 2010 - 2014
              fter many years of         At a panel discussion, orga-      from household spending. It will
              going through a pe-     nized by the Indonesian Council      be recognized that the flow of do-                                                  2010 (%)               2011 (%)                 2012 (%)                2013 (%)                2014 (%)
              riod called “mud-       on World Affairs (ICWA), Finan-      mestic investment has its limita-
                                                                                                                     GDP                                        5.5 – 5.6              6.0 – 6.3                6.4 – 6.9                 6.7 – 7.4            7.0 – 7.7
              dling through”, the     cial Club and EU, the follow-        tions. Foreign investment will be
              Indonesian econ-        ing data (Table 1) were present-     needed to a very large degree.            Investment                                 7.2 – 7.3             7.9 – 10.9               8.4 – 11.5             10.2 – 12.0             11.7 – 12.7
              omy has moved to        ed by the speakers, Vice Minister       As BKPM has pointed out,
the fast track during the last few    of Development Planning Lukita       thus far Indonesia has attracted          Exports                                    6.4 – 6.5             9.7 – 10.9                11.4 - 12             12.3 – 13.4             13.5 – 15.6
years. Together with China and        Dinarssyah Tuwo and Dr Umar          only 0.17% of world total FDI
India, Indonesia is now rated         Juoro.                               (foreign direct investment). It           Imports                                    9.2 – 9.3             12.7 – 15.2              14.3 – 15.9             15 – 16.5               16 – 17.4
among the fastest growth coun-           The growth targets of around      should be able to attract 0.75%
                                                                                                                     Government Expenditure                    10.8 – 10.9            10.9 – 11.2              12.9 – 13.2            10.2 – 13.5              8.1 – 9.8
tries in the world.                   6% in 2011 and around 6.4%           of the world total (2008: US$
   Its macro-economic pro-            -6.9% in 2012 are considered         1,7 trillion, 2009: US$1,2 trillion       Consumption                                5.2 – 5.3              5.2 – 5.3                5.3 – 5.4                 5.3 – 5.4            5.3 – 5.4
file has improved considerably        by the two speakers to be within     and 2011: projected US$1,8 tril-
and the economic fundamentals         reach. They can be achieved with     lion).
have become increasingly solid.       some ease.                              According to official data, the                                                                                       TABLE 2: ECONOMIC STABILITy
The finance and banking indus-           To reach the target of around     target of US$10,5 billion for 2010       donesian exports.                     the term namely 2014 are as fol-                                                                Projection 2014
try, which some years ago were        7% - 7.7% for the years 2013-        is being set. The seven provinces          The import sector is produc-        lows:
in complete disarray, are now in      2014 will not be an easy task.       of importance for FDI are Riau,          ing large amount of uncertainties     •	 Strengthening Indonesian re-            Monetary Sector
good shape.                           Economic growth will require         South Sumatra, West Java, East           such as the ASEAN-China FTA              forms                                    Inflation rate, Consumer Price Index (%)                3.5 - 5.5
                                      the developments of infrastruc-      Java, East Kalimantan, West              that took effect as of January        •	 Building the competitiveness
   Economic growth is under-          ture and easier access to credits    Nusa Tenggara and Papua.                 2010. It will boost imports from         of the economy, increasing the           Nominal Exchange Rate (Rp/US$)                       9,250 - 9,850
pinned by private and public ex-      with lower interest rates.              It is of crucial importance for       China while Indonesia seems ill-         quality of human resources,              Interest Rate (BI Rate - 3 Month) (%)                   5.5 - 6.5
penditure (consumption) and              There is also the need to re-     Indonesia’s economic growth              prepared to cope with the in-            enhancing innovation capaci-
lately also by increased trade and    solve the bureaucratic prob-         that the county boosts the inflow        creasing number of free-trade            ty, while strengthening doestic         State Budget
investment. Inflationary pres-        lems and improve the business        of Foreign Direct Investment to          agreements.                              economy                                  Surplus/Deficit of State Budget to GDP (%)                -1.2
sures are going up, but remain        and investment climate. Today,       complement domestic invest-                                                                                                Tax Revenue to GDP (%)                                    14.2
under control.                        the main driving force for high-     ment.                                    NATIONAL GOALS                        ECONOMIC STABILITy (2014)
   The important real sectors,        er growth should come from the          Dr Lukita emphasized that the           As explained by Vice Minister          The goals to be achieved in              Government Debt Stock to GDP (%)                           24
however, have been lagging far        private sector.                      role of the manufacturing indus-         of National Development Plan-         2014 in the monetary sector and
behind. They are the weak spots                                            try at present is quite low, grow-       ning Lukita Dinarsyah Tuwo,           the State Budget are stated in the        TABLE 3: WELFARE PROJECTION
of the economy affecting the wel-     INVESTMENT                           ing at a low rate of 1.6% in 2009.       the direction of the Indonesian       above graph (Table 2). One of the
fare of the people, particularly in      Investment is a powerful tool     There is the urgent need to boost        economy is reflected in the coun-     key elements to sustain econom-                                                                 Projection 2014
the area of unemployment and          to achieve higher growth. As ex-     the industry to become the back-         try’s National Development Plans      ic stability concerns the deficit of       People Welfare
poverty.                              plained by Gita Wirjawan, chair-     bone of Indonesia’s economic de-         (RPJPN) of 2005-2025.                 the State Budget, which must be
                                                                                                                                                                                                      Employment rate (%)                                     5.0 - 6.0
   An important development to        man of BKPM (Investment Co-          velopment.                                 This 20 years plan is divided       kept low. The revised 2010 bud-
note is that, notwithstanding the     ordinating Board), to achieve                                                 into 4 stages. At present we are at   get has widened the budget defi-            Poverty Rate (%)                                       8.0 - 10.0
non-conducive political and se-       the goal for economic growth of      TRADE                                    the Second Medium-Term De-            cit to 2.1% from the original 1.6%          GDP per capita (US$)                                     3,811
curity upheavals, the economy         7% the government has set the           In the area of trade, the export      velopment plan (RPJM) 2 cover-        of GDP to accelerate growth.
and financial markets continue        target of Rp. 2,000 trillion per     sector has improved after suf-           ing the period 2010-2014.                Of particular importance to the
to go on, almost undisturbed.         year in investment. The govern-      fering a drop. It is expected that                                             people concerns the Welfare Pro-         be reduced at a faster rate because       tant to note that another goal
   It shows that the Indonesian       ment’s share will be only around     there is little possibility that world   SECOND MEDIUM-TERM                    jection that is to be achieved dur-      of its socio-political implications.      is to achieve GDP per capita at
economy has gained strength and       15% and the financial institu-       demand will increase significant-        DEvELOpMENT pLAN/RpJM 2               ing the currentMedium Term:              With regard to the poverty rate,          US$3,811 (Table 3).
can survive even in an unfriendly     tions 7%.                            ly. The market in East Asia, in-         (2010-2014)                           WELfARE pROJECTION (2014)                the government’s goal is to reduce
socio-political environment.             The rest, or around 55%, of the   cluding China and India, should           The goals to be achieved in the         The current unemployment              the number of poor people to 16           The writer is a former ambassador
                                      investment needs should come         offer better opportunities for In-       medium term and at the end of         rate is around 7-8%, which must          million in 2014. It is also impor-        to the European Union.
 A8 April 12, 2010                                                                                                   The President Post                                                                                              

          Pre-University Scholarships Up, Post-Grad Students                                                                                                                                                                                                 “
                and Researchers Need Better Funding
The fund is primarily meant to support pre-university students with                                                      every million population.               ROLE MODELS                            nie says it’s time the government
exceptional abilities. It is part of this year’s total educational budget                                                   This simply means the Indo-             Perhaps Indonesia can learn         raised assistance for PhD candi-
                                                                                                                         nesian government needs to pro-         Cuba’s experience in developing        dates in every field because Indo-
of Rp221.47 trillion that has been approved in the revised state                                                         vide bigger funds to support PhD        human resources, analysts say.         nesia has a great number of tal-       Educators are now
budget.                                                                                                                  candidates and researchers. As it       UNESCO predicted in 2005               ented students of this level who       saying that the good
                                                                                                                         is today, sources of scholarships       that by 2015 Cuba will have            need financial support.                policies introduced by
                                                                                                                         for this level of study are very lim-   emerged as an exceptional coun-           Likewise, the government must
                                                                                                                         ited; more so for researchers who       try in terms of educational devel-     increase the allocation for re-        the SBY government
By Alci Tamesa                                                                                                           wish to conduct long-term re-
                                                                                                                         search activities.
                                                                                                                                                                 opment, similar to Canada, Fin-
                                                                                                                                                                 land, and Korea.
                                                                                                                                                                                                        search funding because research
                                                                                                                                                                                                        is the source of industrial inno-
                                                                                                                                                                                                                                               need to be put in a

                                                                                                                            In terms of “university partic-         In the UNESCO report, Cuba          vation and creativity which could      broader framework
               he      government              The fund is primarily meant to      tion minister had actually reject-    ipation,” a term used by the gov-       was singled out as a high per-         lead to strengthening of the econ-     that transcends
               has increased bud-           support pre-university students        ed the proposal for releasing the     ernment to describe involvement         forming country in terms of ed-        omy.
               get allocation for           with exceptional abilities. It is      fund.                                 in university studies, Indonesia is     ucational policy and a role mod-          The LIPI chairman says that         political interest
               scholarships to well         part of this year’s total education-      Investigations are going on to     also lagging behind other coun-         el to follow in terms of the quality   the focus must be on to areas—         so that national
               over Rp4 trillion,
               in a move that con-
                                            al budget of Rp221.47 trillion
                                            that has been approved in the re-
                                                                                   clarify the issue and concerns are
                                                                                   now rising from every direction
                                                                                                                         tries.                                  of its educational system.
                                                                                                                                                                    The developing country with
                                                                                                                                                                                                        one is universities that have post-
                                                                                                                                                                                                        graduate programs; the other is
                                                                                                                                                                                                                                               leadership succession
firms President Susilo Bambang              vised state budget.                    for closer monitoring of the min-        At present there are only about      11 million people spends 11 per-       the government sector.                 will not bring
Yudhoyono’s commitment to cre-                 The allocation for education is     istry’s spending.                     4.5 million students on more            cent of its GDP on education;             Such institutions as LIPI,          mercurial changes in
ating a better educated society.            about 20 percent of the govern-                                              than 2,600 university, college,         providing free education from el-      Agency for Assessment and Ap-
   The largest portion of this              ment’s total budget this year and      PHD SCHOLARSHIPS                      and academy campuses across In-         ementary school to college levels      plication of Technology (BPPT),        the nation’s education
fund, amounting to Rp257.3                  given the huge amount involved,           As the government increas-         donesia, meaning that some uni-         and now one in every 15 Cubans         Ministry of Health, and Minis-         system.
billion, will be for aiding some            critics were saying in early March     es scholarship funds for pre-uni-     versities have very small numbers       holds a university degree.             try of Agriculture need more ex-
932,000 talented but financial-             that a more stringent set of mea-      versity recipients, educators are     of students and may have to be             It now has 96.9 percent liter-      perts so there must be efforts to
ly weak junior high school stu-             sures should be in place to ensure     now calling for bigger allocation     merged with stronger ones.              acy rate, its student-teacher ratio    increase the number of PhDs in
dents.                                      efficiency and prevent manipula-       for researchers and post-graduate        But the number of primary            is 13.5 in primary schools and 15      those institutions.                    conduct research on natural re-
   A further allocation of Rp216            tion.                                  students. The reason is simple:       school students is six times big-       for higher levels. Compare this to        Indonesia needs more experts        sources due to lack of fund, ex-
billion will be for supporting 2.4             But only a week after the an-       Indonesia needs more high-lev-        ger. According to Vice Minis-           the average 40 in American and         in the field of food production,       pertise, and networking.
million elementary school stu-              nouncement on budget increase          el innovators and experts to drive    ter of Education Prof. Fasli Jalal,     Indonesian schools.                    health, sciences, climate change,         But the biggest problem in the
dents; while about 300,000 se-              was made, Jakarta newspapers           many sectors of the economy.          there are 29 million such students                                             infrastructure, energy especial-       sector of education is, as always,
nior high school students will              published stories about at least          According to 2009 data from        now at school, not to mention an           The People’s Republic of Chi-       ly electricity, and mining, Prof.      policy consistency. Indonesia
receive scholarships from an allo-          Rp1.2 trillion in educational          the Ministry of National Educa-       estimated 4.5 million new babies        na is another role model in terms      Umar says.                             does not have a system to ensure
cation of Rp92.6 billion.                   spending having either been em-        tion, Indonesia has almost 7,400      born every year that will system-       of educational pragmatism. Its                                                consistency of education poli-
   This plan of action will be re-          bezzled or inappropriately used.       PhDs from a total population          atically increase the size of pre-      education policy is directed to-          Similar to this, Prof. Kusma-       cies. Every time there is a change
alized by the Ministry of Nation-              Government Audit Agency             of 238 million. So the ratio is       university segment of the popu-         ward supporting the economy in         yanto Kadiman, the immedi-             in national leadership, education
al Education as of this year, says          (BPK) discovered recently that         1:32,162 or 31 PhD in every one       lation.                                 every angle. Even foreign com-         ate past minister for research and     policies also change. This has
Prof. Dr. Muhammad Nuh—                     for 2009 alone, utilization of at      million population.                      Consequently, it will be very        panies such as Starbucks are re-       technology, says that universities     been the case for decades.
the education minister.                     least Rp1.2 trillion was catego-          In comparison, the United          difficult to correct the graduate-      quired to provide scholarships to      must rewrite their curricula to           Educators are now saying that
   Compared to scholarship al-              rized as “problematic.”                States has 2,002,000 PhDs or          to-population ratio because more        local students in return for their     match “natural realities” around       the good policies introduced by
location in 2009 state budget,                 This allocation was actually        6,500 in every million popula-        students will shift to vocational       operations in rural areas. In this     them, meaning that every uni-          the SBY government need to
there is now a significant increase         meant for assisting 21 universities    tion. Japan’s PhD ratio is 4,800 in   schools in order to quickly get a       way China has been able to con-        versity must become the center         be put in a broader framework
of Rp1.2 trillion, an indication            but surprisingly, the fund was re-     every million population, mean-       job. In such a situation, Indonesia     trol a huge portion of Asian man-      of excellence for maximum de-          that transcends political interest
that the government is becom-               leased without approval from the       ing it has 609,600 PhDs. France       will produce more pre-universi-         ufacturing market.                     velopment of all the natural re-       so that national leadership suc-
ing more serious now in assisting           education minister. In fact, as ex-    has 268,700 PhDs or 4,700 in ev-      ty skilled workers rather than ex-         Reacting to this, Chairman of       sources in its surrounding. This       cession will not bring mercuri-
students from economically weak             plained to Jakarta journalists by      ery million population and India      perts with university education.        Indonesia’s Institute of Sciences      is what is tragically lacking in In-   al changes in the nation’s educa-
segments of society.                        legislator Rizal Djalil, the educa-    has 1,697,000 PhDs or 13,000 in                                               (LIPI) Prof. Umar Anggara Je-          donesia. Most universities do not      tion system.

      A Golf Tournament Marking
        the 45th Anniversary of
                    Around 136 participants took part in the event, which
                    held at the beautiful 18-hole Borobudur International
                              Golf and Country Club, Magelang
                                                  By Gunawan Wibisono

           NNES, which stands               Cooperatives and Small Medium          and Magelang. Most golfers in
           for Universitas Negeri           Size Businesses.                       Central Java surely knowthere are
           Semarang (State Uni-                High ranking officials of the       two golf courses in Semarang.
           versity of Semarang),            Central Java’s Department of Ed-
trains teachers of different disci-         ucation also took part, name-             An intriguing question wor-
plines.                                     ly Mr. Kunto Nugroho, Mr. Jas-         thy of being raised: Why did
   It was formerly called IKIP              man, Mr Nur Hadi Amiyanto              UNNES decide to hold its an-
(Teachers Training Institute),              and Mr Kartono MPd.                    niversary golf tournament in
with its campus in the Central                 The regional CEO of BRI             Borobudur International Golf in
Java capital city of Semarang.              (Bank Rakyat Indonesia) of Cen-        Magelang?
   In March this year UNNES                 tral Java and his 15 branch man-          Mr Hadi Rahardja, one of the
celebrated its 45th anniversary             agers together with the region-        founders of the Jababeka Indus-
by holding various activities, one          al CEO of BNI and 10 of his            trial Estate, has always insisted
of which was a golf tournament              branch managers also joined the        that a golf course has to maintain
held at the beautiful 18-hole               pack.                                  its three main components in su-
Borobudur International Golf                                                       perb condition, namely, good
and Country Club in the center                 Golfers of various professions      quality of the course, good food,
of Magelang, which is famous for            from different places also com-        and excellent services rendered by
its magnificent scenery and cool            peted in the event. All of them        its employees.
climate.                                    attended and enjoyed the lunch            And he will do whatever it
                                            and prize giving party, and stayed     takes to make sure that in every
   The tournament took place on             until the entire event was over.       golf course he manages, those
March 20th, 2010, with tee off                 Expats and lady golfers made        three components are in place.
time at 07:00 am.                           the event even merrier.                   In his speech before prizes
   Around 136 participants took                It was reported that all tickets    were handed over to the winner-
part in the event, among them               were sold out a week before the        sw, Mr.Sudiono said he was im-
Mr Sudiono Sastroatmojo, the                date of the event, leaving quite a     pressed by the cooperation, cor-
Rector of Unnes, Mr Bedjo Su-               few numbers of eager golfers with      diality and sincere hospitality he
janto, the Rector of Universitas            no chance to participate in it.        always gets every time he comes
Negeri Jakarta, Mr Mardianto,                  It is worth mentioning that         to the Borobudur International
the former Minister of Home Af-             there were three golf tournaments      Golf and Country Club.
fairs, and Mr Subiakto Cakraw-              on March the 20th in Central
erdaya, the former Minister of              Java, held in Cilacap, Semarang        Thank you, Mr Sudiono!

Borobudur International Golf and Country Club
Business                                                                                                                                                                                                            The President Post

                                                                                                                                                                                                         Display until May 12, 2010 /// N0. 11
                                                                                                                                                                                                              Published by President University
  RI coal fired power plants secure credits
                                                                                            Bukit Asam Posts Rp2.7 t Profit,
                          Japan Bank for International Cooperation (JBIC) and
                      a number of foreign financers have pledged a loan of
                      US$1.81 billion for two coal-fired power plants in Java.
                                                                                            as State Mining Firms Eye Freeport
                          The foreign financers agreed to loan US$1.21 billion
                      for the third unit of Paiton power plant in East Java and
                      US$595 million for the 660-megawatts Cirebon power
                      plant in West Java.                                                   The rise in net profit raised earning per share to                                 over, but of course after studying          ister Mustafa Abubakar said he        as such the purchase is unlikely to
                          JBIC, which is the lead arranger, will provide US$729
                                                                                            Rp1,184 from Rp741.                                                                the company`s financial report,”            will encourage the state mining       take place this year.
                      million for Paiton and other banks such as Bank of Tokyo                                                                                                 Sukrisno said.                              company to buy 9.36% of Free-            “This year we are focusing on

                      Mitsubishi, Mizuho Corporate Bank Ltd, and Sumitomo                                                                                                         “Freeport`s financial account            port shares.                          the construction of a chemical
Mitsui Banking Corp will provide the rest.                                                          ublicly-listed    coal              The cost of goods sold was             may not be good, but if it is fa-                                                 grade alumina plant Takhyan,
                                                                                                    mining firm PT                   meanwhile recorded at Rp4.014             vorable to us, we may just do                 In the meantime, Alwinsyah          and a power plant in Pomala,
                                                                                                    Tambang Batuba-                  trillion, a 11.34% increase com-          it,” PT Aneka Tambang Tbk                   Lubis said he was still expecting     South Sulawesi,” he said.
  RI insurance industry reports strong growth                                                       ra Bukit Asam Tbk                pared to 2008 when the figure             (Antam) president director Al-              directions from the government           He said that funding of the
                                                                                            (PTBA) posted a net profit of            was Rp3.686 trillion.                     winsyah Lubis meanwhile said                in the acquisition of 9.36% of the    two projects is expected to be se-
                                                                                            Rp2.727 trillion last year, up              The rise in net profit raised          on the sidelines of a meeting be-           shares of PT Freeport Indonesia.      cured this year from the Japan
   The insurance industry posted Rp89.4 trillion (US$97. billion) in gross premium          59.75& from a year earlier.              earning per share to Rp1,184              tween the State Minister for State            “If the government supports         Bank for International Coopera-
income in 2009, an increase of 20.8% from the previous year.                                  Income rose 23.98% to                  from Rp741.                               Enterprises and the Public Policy           the state mining company to join      tion (JBIC).
   Life insurance companies accounted for the largest proportion of the total               Rp8.947 trillion and gross                  President Director of PTBA             Committee themed Setting the                Freeport, we would be very hap-          Another state mining compa-
premium income with a contribution of Rp62.2 trillion up from Rp50.4 trillion               profit jumped 37.19% to                  Sukrisno said he was considering          Political Economy and State En-             py,” Alwinsyah said.                  ny who has also been nominated
in the previous year.                                                                       Rp4.843 trillion, according to           a purchase 9.36% of the shares of         terprises` Prospects, in Jakarta re-          But he added that a compre-         by the government to join Free-
   Julian Noor, the vice President of PT Asuransi Bumiputeramuda 1967                       the company`s financial state-           PT Freeport Indonesia.                    cently.                                     hensive study would be neces-         port is tin company PT Timah
(Bumida), attributed the improved performance of the industry to fairly strong              ment published on Monday.                   “If possible we will even take it         Earlier, State Enterprises Min-          sary before joining Freeport, and     Tbk.
economic growth in 2009 despite the impact of the global financial crisis.

  Indocement ups production by 1.5 m tons
                                                                                                                                                                                                                              PT Dirgantara Indonesia Poised
                                                                                                                                                                                                                              to Build Amphibious Planes
                               Publicly-listed cement maker PT Indocement
                            Tunggal Prakarsa Tbk looks set to raise its annual
                            production by 1.5 million tons as of May when its
                            two new cement plants start production.
                               Indocement corporate secretary Dani Handayani                                                                                                                                                     State aircraft industry PT      minister, needs to bridge the re-
                            said on Monday the construction of the two new                                                                                                                                                    Dirgantara Indonesia (PT DI)       gional administration heads to
                            cement mills cost an estimated US$35 million.                                                                                                                                                     has the capacity to build am-      open transportation routes by us-
                               She said the company was also planning to build                                                                                                                                                phibious planes, member of         ing amphibious planes,” he said.
                            another cement mill in Citeureup, West Java, with                                                                                                                                                 Commission I of the House of          But the company`s minus fi-
                            a production capacity of 1.5 million tons. The new                                                                                                                                                Representatives Al Muzamm-         nancial balance sheet is posing a
                            cement mill is expected to start production in 2012.                                                                                                                                              il Yusuf said Thursday.            serious obstacle to PT Dirgantara
                               Indocement has set itself the target of producing                                                                                                                                                 He said that amphibious         Indonesia in building airplanes
20.1 million tons of cement this year compared to 18.6 million tons last year.                                                                                                                                                planes may provide a solu-         and undertaking strategic proj-
  Indonesia`s cement consumption grew 0.9% to 38.4 million tons last year                                                                                                                                                     tion to Indonesia as an archi-     ects in the aviation sector.
while its cement mills had a combined production capacity of 46.2 million tons.                                                                                                                                               pelago because such aircraft          Technology and development
                                                                                                                                                                                                                              can land in many places with-      director of PT Dirgantara Indo-
                                                                                                                                                                                                                              out depending on land infra-       nesia Andi Alisyahbana said in
  UOB Indonesia`s profit up 19% in 2009                                                                                                                                                                                       structure.
                                                                                                                                                                                                                                 He even suggested the Pres-
                                                                                                                                                                                                                                                                 Bandung that PT DI will build
                                                                                                                                                                                                                                                                 amphibious planes in cooper-
                                                                                                                                                                                                                              ident to develop PT DI by          ation with the German plane
                                                                                                                                                                                                                              building amphibious planes.        builder Dornier Seawings.
   Publicly-listed PT Bank                                                                                                                                                              Photo:
                                                                                                                                                                                                                                 “Actually the President,           “PT DI is currently preparing
UOB Buana Indonesia said on                                                                 Three airline companies in Indonesia are currently operating 24 A319/320 planes.                                                  through the defense minister,      the production and customer af-
Sunday it posted a net profit                                                                                                                                                                                                 the research and technology        ter sales support. And the am-
                                                                                                                                                                                                                              minister, the minister of state    phibious planes will be marketed

                                                                                            GMF Meets Requirements
of Rp389 billion last year, up
19.3% over 2008.                                                                                                                                                                                                              enterprises, and the home          in 2012,” he said.
   “The         growth     was
contributed by growing net

                                                                                            of A320 Maintenance
interest income which rose 19% to Rp975 billion in 2009 from Rp817 billion
in 2008,” UOB Indonesia President Director Iwan Satawidinata said in a press
   The bank`s loan-to-deposit ratio (LDR) was recorded at 81.7% last year, while
                                                                                                                                                                                                                              BTN Net Profit up 14%
the amount of third party funds rose 2% to Rp9.307 trillion last year due to an
increase in the number of time deposits.                                                                                                                                                                                         PT Bank Tabungan Neg-           Rp58.5 trillion in assets, up
   The bank noted time deposits rose 4% or Rp325 billion to Rp8,130 billion last            The conclusion was made on the basis of the audit by two                                                                          ara (BTN) made a net profit        30.06% from 2008`s assets of
year on competitive interest rates.
                                                                                            EASA auditors Bruno Faucher and Emmanuel Heugas                                                                                   of Rp490 billion in 2009, up       Rp44.9 trillion.
   Last year the bank managed to keep its net interest margin (NIM) at 4.2%.                                                                                                                                                  from Rp430 billion in 2008.           Its total credits in 2009 reached
Return on equity (ROE) climbed to 16.6% in 2009 from 1.6% a year earlier, while                                                                                                                                                  Its president director, Iqbal   Rp40.7 trillion or grew 27.19%

the ratio of cost to income fell to 64.5% in 2009 from 71.3% in the previous                                                                                                                                                  Latanro, said in a press con-      from Rp32 trillion recorded in
year.                                                                                                aruda Indonesia`s               from March 2 to 7, 2010.                  creasing a rating of A320 is an                ference here last week the         2008.
                                                                                                     subsidiary PT GMF                  “According to the result of the        important asset in business devel-             jump in net profit was driv-          “The achievement is made due
                                                                                                     AeroAsia meets the              audit, our company meets all the          opment, especially in aiming at                en by a rise in income reach-      to expansion of corporate cred-
                                                                                                     requirements and                EASA conditions for the mainte-           the A320 maintenance market.                   ing Rp5.73 trillion or 25.65%,     its that reached Rp16 trillion in
  Gajah Tunggal earns net profit of US$98 m                                                 procedures of the mainte-                nance of A320 planes. The five-              The number of A320 aircraft                 from Rp4.56 trillion achieved      2009,” he said.
  in 2009                                                                                   nance of A320 aircraft ac-               day audit covers all aspects of           on the domestic and internation-               in 2008.                              Iqbal predicted this year the
                                                                                            cording to the civil aviation            maintenance like personnel, fa-           al market continued to increase                   “Ninety percent of our in-      bank could grow around 27%,
                                                                                            authority standards of the Eu-           cilities, training, equipment and         in line with the increasing num-               come came from interest rev-       which is bigger than the project
  Tire maker PT Gajah Tunggal reported a net profit of Rp905.33 billion (US$98.4            ropean Aviation Safety Agen-             procedures,” he said.                     ber of operators of this type of               enue,” he said.                    growth of the industry of 18 to
million) in 2009, against a net loss of Rp624.79 billion in the previous year.              cy (EASA).                                  He said that one of the EASA           plane.                                            He also said that the bank`s    20%.
                                                     Gajah Tunggal president                   The conclusion was made               findings is related to person-               The number of A319/A320                     financial ratio could be main-        He said the bank`s non-per-
                                                      Christopher Chan Siew                 on the basis of the audit by             nel quality for Non Destructive           planes in Southeast Asia had                   tained well by the manage-         forming loans until the end of
                                                        attributed the improved             two EASA auditors Bruno                  Testing-NDT. Under the EASA               reached 181 units.                             ment despite unconducive           2009 could be maintained at
                                                          financial performance of          Faucher and Emmanuel Heu-                requirements, NDT person-                    In the last five years, the num-            macro-economic conditions          2.7% (NPL Net).
                                                            his company to foreign          gas, Fuad Abdullah said in his           nel need to be qualified accord-          ber of A320 and B737-NG air-                   in 2009 as shown by tight li-         The bank`s capital adequacy
                                                            exchange gain with net          capacity as VP Quality Assur-            ing to the European Standard              craft in Indonesia had been in-                quidity that required banks to     ratio until the end of 2009 mean-
                                                             sales falling slightly by      ance & Safety of PT GMF                  4179:2000 (EN 4179), or nation-           creasing in line with the increase             adjust their lending rates.        while reached 20.7% with a net
                                                             0.25%.                         AeroAsia in Jakarta Monday.              al standard.                              in the number of operators of                     In 2009 BTN booked              interest margin at 4.7%, he said.
                                                                Last year, the                 He told ANTARA here                      But as Indonesia still has no          these planes. Many airline com-
                                                             company           posted       that the European civil avi-             such standards, EASA suggest-             panies have replaced their planes
                                                             Rp486.89 billion in            ation authority agreed to a              ed Indonesia to apply for a Euro-         with these aircraft.
                                                            foreign exchange gain           change in rating of the main-            pean qualification or from other             Three airline companies in In-
                                                           as against a loss of             tenance of A320 aircraft fol-            countries.                                donesia are currently operating
                                                         Rp786.36 billion in 2008.          lowing an audit at the GMF                  Richard Budihadianto said in-          24 A319/320 planes.

GarudaFood Sees Rp5 t Sales in 2010
The target was                                 “We are upbeat on achiev-                 plan once again. The company                donesia’s capital market condi-           different kinds of products, in-
set based on the                            ing sales growth to Rp5 trillion             had initially planned to hold the           tion was not conducive for IPO            cluding 20 flagship products.
                                            this year from Rp4.1 trillion in             IPO in 2009 but delayed it on               last year and that Indonesia was             It has 11 factories in Java, Su-
company’s increasing                        2009,” Sudamek said during a                 uncertain economic conditions.              also holding a general election           matra, Lombok and Sulawesi.
business growth trend                       media gathering last month.                  The plan will be put on hold un-            that could have resulted in eco-
                                               He also based the optimism on             til 2012. According to Sudamek,             nomic growth contraction.
in the past 20 years                        the government’s 6% econom-                  the company will first prepare                 GarudaFood will continue to            GarudaFood launched
and on Indonesia’s                          ic growth target this year. In its           the plan well before proceeding             focus on the domestic market by
                                                                                                                                                                               its business in 1990
                                            latest forecast IMF sees the world           with it.                                    selling 20 flagship products and
improving macro                             economy growing sharply from                    “It is the management’s deci-            at the same time expand to in-            with Garuda peanut
economic condition.                         minus 1.1% last year to 3.1%.                sion which has received the share-          ternational markets and tap new
                                                                                                                                                                               product. In 1994,
                                                                                         holder approval that we delay the           businesses.
                                                                                                                                                                               the company started

                                               Data from the Association of              IPO. It is most realistic to hold it           “Indonesia’s prospect is still
          arudaFood bids to                 Indonesian Food and Beverage                 in 2012,” he explained.                     good, while China’s and India’s           the tapioca business
          boost its sales by 22%            Producers (GAPMMI) shows                        He further elaborated that the           potentials are also promising
          this year to Rp5 trillion         that the food and beverage indus-            IPO is aimed to support its ambi-           for the next few years,” said Su-         in Pati, Central Java,
          from Rp4.1 trillion last          try grew 6% in 2009, down from               tion to become the number 2 big-            damek.                                    and initiated its
year. The food and beverage pro-            8% in the previous year.                     gest F&B company in Indonesia                  GarudaFood launched its busi-
ducer also aims to achieve sales               “GarudaFood enjoyed up to                 by 2015, especially amid the ro-            ness in 1990 with Garuda pea-             distribution network
of up to Rp20 trillion in the next          16% growth during that peri-                 bust food and beverage business.            nut product. In 1994, the com-            in Indonesia, the key
five years.                                 od or above GAPMMI aver-                        The company recorded Rp4.1               pany started the tapioca business
   GarudaFood CEO Sudamek                   age,” said GarudaFood Presi-                 trillion in sales last year and hopes       in Pati, Central Java, and initiat-       to the company’s                                                                      Photo: The President Post/Nandi Nanti

AWS said the target was set based           dent Commissioner Dorodjatun                 to boost the figure to Rp5 trillion         ed its distribution network in In-        success in the                                   Load Work: Workers at Sunda Kelapa Harbor, Jakarta,
on the company’s increasing busi-
ness growth trend in the past 20
                                            Kuntjoro Jakti.
                                               Meanwhile, GarudaFood Pu-
                                                                                         in 2010.                                    donesia, the key to the company’s
                                                                                                                                     success in the food and beverage
                                                                                                                                                                               food and beverage                                haul cement bags into a boat destined for Sulawesi. The
years and on Indonesia’s improv-            tra-Putri has decided to postpone              GarudaFood Managing Di-                   business in the country.                  business in the                                  national demand for cement continues to rise in line with
                                                                                                                                                                                                                                the country’s strong economic development.
ing macro economic condition.               its initial public offering (IPO)            rector Hartono Atmadja said In-                GarudaFood produces 100                country.
 B2 April 12, 2010                                                                                                      The President Post                                                                                                 

Taxing Times – Transitions,
Tax Treaties and Uncertainty
The purpose of this article is to briefly consider                                 Some initial observations re-              regulations has also to be con-
just one of the many recent developments, which                                 garding the regulations affecting             sidered. Indonesia’s income tax
                                                                                the use of tax treaties are as fol-           rates are trending downwards,
are causing some stress and uncertainty to the                                  lows:                                         but by no means are they yet
business community at large.                                                    •	 Indonesia issued two regula-               fully competitive, Regulations
                                                                                   tions (61 and 62) on 5th No-               61 and 62 threaten, for exam-
                                                                                   vember 2009, which impose                  ple, to impose a highly un-
By Philip J. Shah                                                                  additional requirements effec-             competitive rate of 20 percent
                                                                                   tive 1st January 2010 for those            tax on the gross interest cost

                                                                                   wishing to utilize Indonesia’s             (or 25% of net - the domestic
         here are many signif-        the reform of customs, were con-             network. The purpose of the                law rate, absent the benefit of a
         icant recent develop-        sidered foundation stones of In-             regulations is to prevent the              treaty) on many major Indone-
         ments in the field of        donesia’s economic deregulation              abuse of tax treaties. These re-           sian investors, which use SPVs.                                                                                            Photo: The President Post/Nandi Nanti
         taxation. Initial experi-    program, and intended to im-                 quirements focus on residen-
ence with one of these, the new       prove legal certainty and busi-              cy and beneficial ownership of              These economic consider-                       Strong Dollar: The exchange rate of the US dollar against the euro and other major currencies
“anti treaty shopping” tax reg-       ness competitiveness. A related              the foreign income recipient.            ations are a matter for Indonesia’s               has risen as uncertainty over EU aid to Greece prevails.
ulations, suggests that Indone-       element of Indonesia’s deregula-             They are complex in that they            policy makers, not just the Indo-
sia should proceed cautiously in      tion plan was the rapid expansion            are to be interpreted within the         nesian tax authorities whose first
order to minimize the potential       of its tax treaty network (now 58            context of International as well         priority is tax collection. Do the
damage which hasty implemen-          treaties and growing).                       as Indonesian Law. They have             country’s economic policy mak-
tation could cause to its invest-
ment competitiveness.
   As background, Indonesia’s tax
                                         The past decade has seen ma-
                                      jor initiatives and developments
                                                                                   generated considerable reaction
                                                                                   and uncertainty.
                                                                                •	 One source of disappointment
                                                                                                                            ers wish to execute such tax pol-
                                                                                                                            icies which could adversely affect
                                                                                                                            its competitiveness?
                                                                                                                                                                            BHIT to Acquire Oil, Gas Bloc
reforms of 1984, together with        aimed at reforming the envi-
                                      ronment and expanding the tax
                                      base. Some of these areas are as
                                                                                   is that the issuance of these very
                                                                                   significant regulations was not
                                                                                   preceded by a period of social-
                                                                                                                               Indonesia is at a critical point
                                                                                                                            in its economic development, as
                                                                                                                            are its efforts to increase its com-
                                                                                                                                                                            in South Sumatra
                                      follows:                                     ization with the public at large.        petitiveness in a highly competi-
 In order to give a clear             •	 The modernization of the tax              The regulations are not only             tive world. Recent developments                    Bhakti Investama (BHIT)          management team and profes-          reserve (reserve that have taken
    and certain message                  administration and significant            complex, but are still evidently         referred to above are perceived as              signed a binding agreement          sionals to operate the bloc.         into account all risk parameters)
                                         reform of the tax law aimed               uncertain in a number of im-             being contrary to such efforts and              with a local partner to jointly        He added that the oil and gas     of 50 MMBO (million barrels of
      to prospective and                 at improving the good gover-              portant respects. Some chang-            contradictory to the messages of                acquire an oil and gas bloc in      bloc is located in the southern      oil), a rare sizable reserve in Indo-
  current investors and                  nance of the tax administra-              es have already made to these            other Government agencies, such                 South Sumatra.                      end of the proven, prolific South    nesia,” he elaborated.
   to resolve competing                  tion and strengthening the
                                         rights of taxpayers,
                                                                                   regulations by the Tax Author-
                                                                                   ity and significant matters are
                                                                                                                            as the BKPM, seeking to pro-
                                                                                                                            mote and attract investment to
                                                                                                                                                                               BHIT Head of Investor Re-
                                                                                                                                                                            lations & Corporate Secretary
                                                                                                                                                                                                                Sumatra basin, in South Suma-
                                                                                                                                                                                                                tra.                                    Earlier, BHIT announced that
          policy issues, it           •	 A greater emphasis on the taxa-           in the process of ongoing de-            Indonesia through tax holidays,                 Robert Satrya said the compa-          Over the years the South Su-      it was going to hold a rights is-
      would be helpful if                tion of individuals, and                  bate and discussion. These               and other tax incentives.                       ny has completed a joint study      matra basin has accumulated          sue through non privilege rights
                                      •	 Recent regulatory responses to            matters include clarification of                                                         and submitted it to the oil and     production of more than 3 bil-       mechanism. The new shares will
   Indonesia postponed                   the use of tax havens, abusive            the concept of special purpose              In order to give a clear and cer-            gas regulator BP MIGAS.             lion barrels of oil. To the north    account for 10% of the compa-
 the implementation or                   tax schemes, transfer pricing,            vehicles (SPVs), and confirma-           tain message to prospective and                    The cooperation is await-        and west of the bloc under con-      ny’s total shares.
   enforcement of these                  and money laundering, etc.                tion of which types of income            current investors and to resolve                ing approval from BP MIGAS          sideration, several producing oil       The Indonesia Stock Exchange
                                                                                   are subject to the new eligibili-        competing policy issues, it would               which is expected to issue its      and gas blocks were encountered      temporarily suspended BHIT
 regulations until there                 These and other developments              ty criteria.                             be helpful if Indonesia postponed               decision in the middle of this      and are still in production by ma-   share trading (10/3/2010) after
     has been a full and              reflect a complex and multi facet-
                                      ed series of long term transitions
                                                                                •	 If care is not taken, immedi-
                                                                                   ate implementation or enforce-
                                                                                                                            the implementation or enforce-
                                                                                                                            ment of these regulations until
                                                                                                                                                                               “Under the binding agree-
                                                                                                                                                                                                                jor oil corporations.
                                                                                                                                                                                                                   “The block is predicted to have
                                                                                                                                                                                                                                                     the cumulative share price in-
                                                                                                                                                                                                                                                     creased significantly by 225.58%
   effective socialization            which Indonesia is engaged in.               ment of these new require-               there has been a full and effective             ment, Bhakti Investama will         a moderate risk exploration op-      from Rp485 to Rp700 during 9
  within the private and              This environment creates consid-             ments could be at the expense            socialization within the private                have a majority participating       portunity but with high poten-       March 2010 trading.
                                      erable stress and uncertainty. The           of “due process” and respect             and public sector, including the                interest and will be the opera-     tial to provide high returns. If        Speculations that Bhakti was
public sector, including              purpose of this article is to brief-         for the terms of internation-            involvement of Indonesia’s eco-                 tor responsible for exploration     the bloc is awarded, there will      planning to acquire insurance
      the involvement of              ly consider just one of the many             al law (e.g. the Vienna Con-             nomic policy makers.                            and development funding,”           be a significant favorable im-       and coal mining companies sent
  Indonesia’s economic                recent developments, which are
                                      causing some stress and uncer-
                                                                                   vention on the Law of Trea-
                                                                                   ties) and possibly Indonesian            The writer is Chairman Tax
                                                                                                                                                                            Robert told the Indonesia
                                                                                                                                                                            Stock Exchange last week,
                                                                                                                                                                                                                pact to the financial performance
                                                                                                                                                                                                                of Bhakti Investama as current
                                                                                                                                                                                                                                                     its share price to the roof.
                                                                                                                                                                                                                                                        BHIT’s share price was trad-
           policy makers.             tainty to the business communi-              law also.                                Committee at International                      adding that Bhakti Investama        study has indicated that the bloc    ed at only Rp215 on 16 Febru-
                                      ty at large.                              •	 The economic impact of these             Business Chambers (IBC)                         has employed a highly capable       is most likely to have a risk case   ary 2010.

                                               Garuda Books Rp1 trillion in Profit in 2009
          lag carrier Garuda In-      seeking for 15% overall growth                                                                                  schedul-           US$95 million, Floating Rates          government wishes to retain its      which will be partly used to re-
          donesia Airlines fetched    this year, starting from net profit,                                                                            ing, debt          Notes (FRN) worth US$75 mil-           position as the controlling stake-   structure the company.
          Rp1 trillion in net prof-   revenue, and load factor.                                                                                       to equi-           lion and Rp108 billion, and oth-       holder in the airline company           Mustafa also said that the
          it in 2009, up from only       The company has allocated                                                                                    ty swap            er debts amounting to US$105           with up to 60% shares and thus       ministry is planning to retain
Rp669 billion in the previous         capital expenditure of US$100                                                                                   and re-            million.                               Garuda may only sell 40% of its      Emirsyah Satar’s position as Gar-
year.                                 million this year, sourced inter-                                                                               purchase              Eddy added Garuda aims to           shares to the public through ini-    uda Indonesia president director
   Garuda Indonesia President         nally.                                                                                                          through            reduce the amount of debts to          tial public offering.                because the company is prepar-
Director Emirsyah Satar in a             The funds will be used to buy                                                                                tender             about US$400 million by the               “The government will con-         ing an IPO.
press conference (17/3/2010) at-      24 new aircraft, comprising 23                                                                                  mecha-             end of 2010.                           trol 60%. We agreed to keep 60,”        “Garuda is focusing on prep-
tributed the achievement to vari-     B737-800s and one unit of A330-                                                                                 nism.                 He claimed that Garuda has          Mustafa said.                        arations to go public. We have
ous commercial measures and as-       200.                                                                                                              “The             secured debt restructuring ap-            He said the government will       a mechanism to temporarily ex-
pects, operational, financial, and       “We will take delivery of two                                                                                a mou nt           proval from most of its creditors.     prioritize selling Garuda shares     tend the terms of Garuda direc-
better efficiency.                    new aircraft each month,” he ex-                                                                                of debt               “Except for ECA because it is       to domestic investors and provide    tors,” he said at the discussion on
   However, Garuda’s revenue          plained.                                                                                                        has much           still in the process of documen-       as small as possible room for for-   the establishment of state planta-
dropped to Rp16.7 trillion from          Emirsyah added that Garuda                                                                                   declined,          tation negotiation (dalam pros-        eign ownership.                      tion holding company in Jakarta
Rp18 trillion the year before.        is also planning to continue its                                                                                f r o m            es negosiasi dokumentasi) and we          “We haven’t decided yet. We       last week.
   Emirsyah said avtur price de-      refurbishment program on B747-            Garuda Indonesia President Director                                   US$868             hope to finalize it very soon,” he     wish to give as much as possible        He added that the extension
cline of 40% in 2009 had affect-      400 and A330-300 units and                Emirsyah Satar                                                        m i l l ion        said, adding that Garuda is com-       to domestic investors as in the      mechanism can be applied to
ed ticket prices, which eventually    open 12 new routes to Bengkulu,                                                                                 in 2006            mitted to make at least US$45          case of BTN, where 80 is bought      companies with special condition
also affected revenue.                Tanjung Pandan, Ambon, Palu,              year and will talk to its creditors         to US$527 million in January                 million payment to ECA and             by domestic (investors) and 20 by    or to those that have not held a fit
   “Although we gained 3% pas-        Ternate, Amsterdam via Dubai              regarding the plan.                         2010,” he elaborated.                        that the figure is still being nego-   foreigners,” he said.                and proper test for new directors.
senger increase, the avtur price      and more.                                   Garuda Finance Director Eddy                Eddy said the debts come from              tiated.                                                                        Emirsyah was appointed as
drop of 40% on average had eat-          Garuda is also planning to             Porwanto said in restructuring its          European Credit Agency (ECA)                    On Garuda’s plan to go pub-           Garuda plans to hold an IPO        president director on 17 March
en our revenue,” he said.             restructure all its debts which           debts, the company is faced with            which amounts to US$241.2                    lic, State Minister of State Enter-    in June this year to raise fresh     2005 and is supposed to end his
   The state airline company is       amount to US$527.8 million this           several options, which include re-          million, commercial lender                   prises Mustafa Abubakar said the       funds of US$300-400 million          term at the end of March 2010.

                                      Dress Up, Trade Up
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                                      your packaging.                           are valued in terms of fit, colour and         The time is now to achieve opti-
                                          Smarter dressing connotes better      overall style and appropriateness with      mum professional styling. Schedule
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                                      that business deal or not. Dressing up    take note of your lifestyle choices,
                                      is two parts trading up.                  environmental requirements, nature
                                          That being said, putting on a tra-    of business and so on and then cuts
                                      ditional two-piece like the average       them into a literal and figurative pow-
                                      Joe does not guarantee authority or       er suit. Balancing quirks with effortless
                                      success. Dressing up means dressing       classics, you can work with him or her
                                      right, so shun the pundits of arbitrary   to create an index of looks and styles
                                      garbs and approach your wardrobe          that speak for you and of you.
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                                      tion you extend to your finances – go     either with wallet-friendly consultants                                                                                                 The President Post                                                                                                                                                                                          April 12, 2010 B3

                                                                                                                                                                                                                                                  Dutch Investors Interested
Hatta: RI Conducive for Investment                                                                                                                                                                                                                in Hydro-Power Project
                                                                                                                                                                                                                                                  in Babel
The situation at present is very conducive and as

                                                                                                                         Photo: The President Post/Nandi Nanti
                                                                                                                                                                 in management and the one-stop        issue supporting monetary polic-              A number of Dutch inves-                                                 cial to the local people compared
such he is optimistic investment would increase.                                                                                                                 service facility.                     es so that investment could be             tors have expressed interest in                                             to other types of power plants.
                                                                                                                                                                                                       more generated.                            building hydro-power plants                                                    “Now that Babel has been de-
                                                                                                                                                                 RI economy facing investment             Based on a survey, in terms of          (PLTA) in Bangka Belitung                                                   clared an area facing a power cri-

                                                                                                                                                                 challenges                            foreign direct investment, Indo-           (Babel) province to meet the                                                sis, the local administration is
          hief Economic Minister          “Investment is increasing and                                                                                             Meanwhile, economist of Cit-       nesia is the 15th most attractive          power needs of the people in                                                facing a challenge to raise power
          Hatta Rajasa said Indo-      so is the interest of foreign inves-                                                                                      igroup Johanna Chua said “the         nation for would-be investors.             remote and isolated islands.                                                supplies,” he said.
          nesia is still considered    tors. The head of the Capital In-                                                                                         most important challenge In-             “The cost of workers, availabil-           “The interest of the Dutch                                                  He said the regional admin-
          conducive for invest-        vestment Coordinating Board                                                                                               donesia in trying to improve its      ity of resources and regulation is-        investors provides an oppor-                                                istration needs to invite inves-
ment by foreign investors.             (BKPM) is also optimistic that                                                                                            economy and generate its eco-         sues are factors that put Indone-          tunity for the government to                                                tors to build hydro-power plants
   “Foreign investors still regard     that investment would increase,”                                                                                          nomic growth is how to increase       sia in the 15th position,” Johanna         meet the needs of the people                                                (PLTA), coal-fired power plants
Indonesia as a conducive place         he said.                                                                                                                  investment.                           said.                                      living in remote and isolated                                               (PLTU) and nuclear power plants
for investment in portfolio, real         He noted there are still invest-                                                                                          Chua, in a seminar on the 10th        However, she expressed opti-            small islands for electricity,”                                             (PLTN).
sector as well as manufacturing.       ment projects that have not yet                                                                                           Annual City Indonesia Econom-         mism that Indonesia`s economy              chairman of the Babel legis-                                                   “At the moment, Babel needs
Our exports are also increasing,”      been put in the BKPM list of re-                                                                                          ic and Political Outlook 2010         would improve in 2010 and be-              lative Council (DPRD) Ismi-                                                 180 megawatts (MW), and may-
he said after a coordination meet-     alized projects.                                                                                                          last week, added that investment      come better than that in 2009.             yardi said in Pangkalpinang                                                 be even more, because the num-
ing on an upcoming Asean Sum-             “Based on realization, those in     Chief Economic Minister                                                            growth in 2009 was too low so            “One thing that needs to be             Thursday.                                                                   ber of those on the waiting list
mit in Hanoi here recently.            the BKPM list do not represent         Hatta Rajasa                                                                       that its contribution to national     watched is the upward trend of                He made the statement in                                                 have yet to be taken into consid-
   He said the situation at pres-      all investments yet. Investments                                                                                          economy was also too small.           inflation which would happen               view of the declaration of Ba-                                              eration, including hotels and oth-
ent is very conducive and as such      in the oil and gas sector have not     year.                                                                                 “Investment growth in 2009         in line with improving economic            bel, along with 12 other prov-                                              er buildings,” he said.
he is optimistic investment would      yet been included,” he said.              “We can say that in 2010 in-                                                    was very low, only about three        conditions. Also, the government           inces in the country, as an area                                               While the building of PLTU
increase.                                 BKPM Chief Gita Wirjawan            vestment will grow 10 to 15%,                                                      percent. It should be improved in     should manage well bonds which             facing a power crisis.                                                      Air Anyir with a capacity of 2x30
   He added that efforts had to be     said BKPM has targeted invest-         from Rp135 trillion last year,” he                                                 2010,” the economist said.            are in the hands of foreign inves-            “Some of the Dutch inves-                                                MW would be completed this
made to increase investment by         ment growth of 15% in 2010 to          said.                                                                                 She said the government need-      tors, particularly when advanced           tors have even already con-                                                 year, the province would still
more than 10%, particularly for-       reach Rp160 trillion, up from             Gita believed it would be                                                       ed to pay attention to the invest-    nations adopt an exit policy strat-        ducted a survey in the prov-                                                need other sources.
eign investment.                       Rp135 trillion in the previous         achieved through improvements                                                      ment activities in the country and    egy,” she said.                            ince to study the prospects of                                                 So far, he said, the government
                                                                                                                                                                                                                                                  PLTA including its impacts,”                                                cannot do much, because matters
                                                                                                                                                                                                                                                  he said.                                                                    relating to electricity was entirely
                                                                                                                                                                                                                                                     He said that the building of                                             the business of state power com-
                                                                                                                                                                                                                                                  a PLTA would be more benefi-                                                pany PT PLN.

In Need of Industrial Clusters                                                                                                                                                                                                                    Australian Firms to
The government is cooperating with Japan to                                   veloped into integrated industry
                                                                              clusters for agro-based industries.
                                                                                                                                                                 domestic industries with easier
                                                                                                                                                                 access to local resources would
                                                                                                                                                                                                       pressed concern that in this in-
                                                                                                                                                                                                       creasingly competitive envi-
                                                                                                                                                                                                                                                  Invest US$1 billion
develop three agro-based industrial clusters.                                    Hidayat explained that the de-                                                  help them improve their perfor-       ronment, national industrial
                                                                              velopment of industrial clusters is                                                mances.                               restructuring will be vital to

                                                                                                                                                                                                                                                                                      Photo: The President Post/Nandi Nanti
                                                                              aimed at strengthening the coun-                                                      According to him, the chem-        boost competitiveness in key sec-             Five large Australian com-
By Eka Putri                                                                  try’s industrial structure which                                                   ical industry, including petro-       tors and ensure business survival.         panies will increase their in-
                                                                              would integrate upstream and                                                       chemical industry offers a great         The 10 prime industries                 vestment up to US$1 billion

                                                                              downstream industries.                                                             business potential given the wide     are: textile and footwear; elec-           to expand their business in In-
           he government is set to     ic potential,” Krishnamurti said.         To that end, the government                                                     supply and demand gap.                tronic and parts thereof; automo-          donesia, Investment Coordi-
           push for the develop-          Clusters are groups of inter-re-    was encouraging national busi-                                                        Meanwhile, Kadin had called        tive and parts thereof; shipping;          nating Board (BKPM) chief
           ment of industry clus-      lated industries that drive wealth     nesspeople to take optimum ad-                                                     for appropriate policies at the na-   infrastructure development, such           Gita Wirjawan said.
           ters to attract invest-     creation in a region, primari-         vantage of local resources to meet                                                 tional level to promote increased     as power plants, toll roads, tele-            “The five large Australian
ments and to spur the economic         ly through export of goods and         their industries’ demand for raw                                                   investment and better manage-         communication, construction,               firms, in my rough calcula-
growth.                                services. The use of clusters as a     materials.                                                                         ment in industries.                   cement, steel and ceramic; cap-            tion, will increase their invest-
   The government is cooperating       descriptive tool for regional eco-        “To support the effort the gov-                                                    Kadin also recommended re-         ital goods and machineries; up-            ment up to US$1 billion to
with Japan to develop three agro-      nomic relationships provides a         ernment has drawn up a number                                                      orienting government policy           stream petrochemical, including            expand their business in In-
based industrial clusters, namely      richer, more meaningful repre-         of policies, including a regulation                                                away from promoting the export        fertilizer; fisheries; agriculture,        donesia,” Wirjawan on board
Semangke Kuala Tanjung indus-          sentation of local industry driv-      on enhancing the use of domestic                                                   of raw materials toward directing     poultry, forestry and plantation,          the presidential plane that
trial area in South Sumatra, Du-       ers and regional dynamics than         products,” the minister was quot-                                                  raw materials to supplying do-        including food and beverage; and           flew President Susilo Bam-
mai area in Riau and Maloi area        do traditional methods.                ed as saying by Vivanews.                                                          mestic production.                    cultural and traditional based in-         bang Yudhoyono from Syd-
in Kalimantan.                            Building industry clusters is          Hidayat hoped that the gov-                                                        Kadin Head of Industry and         dustries, such as traditional med-         ney to Papua New Guinea on
   Deputy Minister of Agricul-         also an effective strategy to over-    ernment’s policy which provides                                                    Technology, Rahmat Gobel, ex-         icine, handicrafts, and batik.             Thursday.
ture Bayu Krishnamurti said Ja-        come limited development bud-                                                                                                                                                                                 He said that the five Austra-                                              “The five large
pan is a prominent trading part-       get. In 2003, the Asian Develop-                                                                                                                                                                           lian companies, namely Coca                                                   Australian firms, in
ner for Indonesia’s agricultural       ment Bank found Indonesia as                                                                                                                                                                               Cola Amatil, Commonwealth                                                     my rough calculation,
products and the government            the country with the poorest in-                                                                                                                                                                           Bank, Thiess, Ramsay Health
will therefore offer six economic      frastructure of the 12 countries                                                                                                                                                                           and AIBC, would make the                                                      will increase their
corridors to Japanese investors.       it studied, lagging behind Sin-                                                                                                                                                                            investment this year.                                                         investment up to US$1
   “Agriculture will be affected by    gapore, India and even Vietnam.                                                                                                                                                                               Previously, the chief execu-                                               billion to expand their
the economic corridors because         The government had blamed the                                                                                                                                                                              tive officers of the five com-                                                business in Indonesia.”
three out of six corridors pro-        lack of funding as the reason for                                                                                                                                                                          panies met with the President
posed will highly support the de-      the poor infrastructure.                                                                                                                                                                                   before a business forum was                                                   Gita Wirjawan
                                                                                                                                                                                                                                                                                                                                Investment Coordinating
velopment of the agriculture sec-         During a visit to Cilegon, Ban-                                                                                                                                                                         held in Sydney last week.                                                     Board (BKPM) Chief
tor,” Krishnamurti said in Jakarta     ten, Industry Minister MS Hi-                                                                                                                                                                                 The business forum was
recently.                              dayat said that the government                                                                                                                                                                             attended by 140 Australian
   He added that the industry          has designated three areas in the                                                                                                                                                                          businessmen from various
clusters in Sumatra are expect-        provinces of Banten, East Java                                                                                                                                                                             business sectors, including
ed to provide additional values to     and East Kalimantan to develop                                                                                                                                                                             former Australian prime min-                                                60 million annually, he said.
the local prime commodities.           clusters of petrochemical indus-                                                                                                                                                                           ister Paul Keating.                                                            Mining and construction
   Semangke Kuala Tanjung in           tries. Banten would be developed                                                                                                                                                                              Wirjawan said that even                                                  company Thiess, which already
the southern area of North Su-         into a cluster of olefin industries,                                                                                                                                                                       though the value of their in-                                               has a stake in the mining sector,
matra will collaborate with state      East Java a cluster of aromatic in-                                                                                                                                                                        vestment was not big, the in-                                               would take part in the Trans-Ja-
plantation company PTPN III,           dustries and East Kalimantan a                                                                                                                                                                             tention of the five companies                                               va toll road project, Wirjawan,
while, in Dumai, Riau the indus-       cluster of gas-based industries.                                                                                                                                                                           to expand their investment in                                               the head of the investment agen-
try cluster will be developed at its      “In the future the development                                                                                                                                                                          Indonesia would serve as an                                                 cy (BKPM) said.
industrial site.                       of petrochemical industries will                                                                                                                                                                           encouragement for other Aus-                                                   Thiess’ local unit, PT Thiess
   “The concept will resemble the      be directed towards creating clus-                                                                                                                                                                         tralian businessmen to do the                                               Contractors Indonesia, was
Delhi-Mumbai economic corri-           ters of industries to improve their                                                                                                                                                                        same here.                                                                  awarded a 35-year concession to
dor in which the infrastructure        competitive edge,” he said.                                                                                                                                                                                   Coca Cola Amatil, for ex-                                                build and operate two sections of
is built in an integrated way with        The government had earli-                                                                                                                                                                               ample, will build 10 new fac-                                               the Trans-Java toll road that will
the electricity and transportation     er also chosen Kalimantan, Su-         Aerial view of Dumai Industrial Clusters                                                                                                                            tories in Indonesia to increase                                             link the western and eastern parts
being linked to the local econom-      matra, Java and Papua to be de-                                                                                                                                                                            its production which reaches                                                of Java.
B4 April 12, 2010                                                                                      The President Post                                                                                                 

The Changing Face of Reward
A New Focus in Challenging Times

                                              Nugroho Irawan                                     Benny Zahrial                                           Ed Krancher
                                              Director                                           Senior Consultant                                       Managing Consultant
                                              Hay Group Jakarta                                  Hay Group Jakarta                                       Hay Group Jakarta

                                                                    engaged employees is imperative.       rewards to the performance met-         practice crept into reward pro-          5. Make a thorough assessment           future (Figure 3).

                             THE NEW BUSINESS IMPERATIVE:
                             DO MORE WITH LESS                      Our research has shown that or-        rics that drive profit and revenue      cesses during the boom years and            of risk. Risk is inherent in re-
         Current times                      n a fundamen-           ganizations in the top quartile on     growth.                                 the economic challenging times              ward programs – not least the        About Hay Group
       are challenging                      tal level, the crisis   engagement demonstrate revenue                                                 have forced many organizations              danger of encouraging risky             Hay Group is a global consult-
                                            has functioned as       growth 2.5 times more than that           Differentiating and reward-          to think more sharply about who             behavior through variable pay        ing firm that works with lead-
   and organizations                        a change acceler-       of organizations in the bottom         ing ‘mission critical’ roles:           and what they are paying for.               which has been sharply high-         ers to turn strategies into reality.
                seek for a                  ator of already in-     quartile. And those that score         companies are channeling the               Keeping the following princi-            lighted by the financial crisis –    We develop talent, organise peo-
                                            going macroeco-         highly for both engagement and         limited rewards available in a far      ples in mind will help line man-            and should be frequently and         ple to be more effective, and mo-
   competitive edge          nomic developments. Even in            nurturing and enabling work en-        more focused way to those em-           agers and human resources pro-              thoroughly assessed, with the        tivate them to perform at their
        in the industry.     countries or industries that do        vironment have revenue growth          ployees most vital to the future of     fessionals responsible for rewards          compensation committee play-         best. With 86 offices in 47 coun-
                             not experience a recession, it is      4.5 times higher. More then be-        the company: the top performers,        to ensure that their reward pro-            ing an increased role as such.       tries, we work with over 7,000 cli-
              Refocusing     felt that changes are taking place     fore leaders begin to aim for an       high potentials, and those with         grams effectively support busi-          6. Balance global and local re-         ents across the world. Our clients
             on the right    and the sped of change has in-         engaged and enabled workforce          scarce skills. They are also taking     ness strategy.                              quirements. With centraliza-         are from the public and private
    business strategy        creased. Organizations need to
                             adopt to these changes, protect
                                                                    that will produce their best possi-
                                                                    ble performance for the organiza-
                                                                                                           a total reward approach to en-
                                                                                                           gaging that key talent by offering
                                                                                                                                                   1. Create a performance culture.
                                                                                                                                                      Use your reward programs to
                                                                                                                                                                                               tion of reward strategy on the
                                                                                                                                                                                               increase, the challenge for mul-
                                                                                                                                                                                                                                    sector, across every major indus-
                                                                                                                                                                                                                                    try, and represent diverse business
       with integrated       their position, innovate, find op-     tion. This relentless focus on per-    clear career paths, (global) mo-           help you move from an ‘en-               tinational companies is to en-       challenges. Our focus is on mak-
          objectives on      portunities, grow and expand in-       formance is a recurring feature of     bility and targeted development            titlement’ to a ‘performance’            sure they hit the right balance      ing change happen and helping
                             ternationally to spread the risks of   the study, as organizations seek       programs as well as higher mone-           culture. Consider whether the            between global consistency           organisations realise their poten-
    leadership, talent       operating in one market.               to reverse some of the sloppy per-     tary rewards.                              measures that underpin vari-             and local autonomy. A close as-      tial. Visit
         management,            Cost containment is a major is-     formance management practices                                                     able pay are optimal for driv-           sessment of the effectiveness of
          engagement,        sue for many organizations, in
                             all regions and sectors. Most have
                                                                    that have crept in over the boom
                                                                    years. The first step in this pro-
                                                                                                              Increasing variable pay: com-
                                                                                                           panies are increasingly awarding
                                                                                                                                                      ing performance. Look at how
                                                                                                                                                      to differentiate reward for high
                                                                                                                                                                                               reward programs at both glob-
                                                                                                                                                                                               al and local level is essential to
            reward, cost     already cut employment costs as        cess for many organizations is en-     a greater share of total rewards           performers so that it acts to en-        a successful strategy.                  About the research
             control and     much as they can through redun-        suring that they understand what       to variable pay to increase focus          gage not just your ‘stars’, but all   7. Reward effectiveness. Reward
                             dancies, restructuring, pay freez-     performance looks like.                on critical goals, and to reduce           your people.                             programs need to deliver a clear           Hay Group conducted the
                return on    es and restrictions to internal in-                                           the vulnerability of companies to       2. Think in terms of total re-              return on investment. Clarify           changing face of reward re-
   investment is key         vestments. The focus is now on            Many organizations are taking       high fixed reward costs. Howev-            wards. Our research has con-             what you expect your reward             search in order to better un-
   to drive improved         centralization and rationalization     a broader view of performance          er, they are also re-examining the         sistently shown that intangible          programs to deliver – wheth-            derstand the factors driving
                             of business and management pro-        that includes the impact on so-        measures they use to assess per-           benefits such as career develop-         er it be engagement, retention,         changes in reward strategy,
   performance. Hay          cesses to have a more responsive       cial, environmental and brand is-      formance, to reduce the risk of            ment opportunities play a vital          performance on critical success         design and implementation,
        Group’s recent       and leaner organization that con-      sues. As a result there is increased   disproportionate or undeserved             role in employee engagement.             factors, or some other measure.         and how organizations are re-
                             centrates on those activities that     sensitivity to the need to balance     bonuses and to reflect a broad-            This is one of the many rea-             Make sure you have the means            sponding to those changes to
      global research        bring the greatest returns, while      short and long-term performance,       er understanding of performance            sons that organizations should           of measuring progress, such as          engage their people and meet
        focuses on the       at the same time putting their         and financial and non-financial        that includes social responsibili-         not lose sight of total reward –         employee satisfaction surveys.          the challenges of the new busi-
                             operations on a more sustain-          measures of performance.               ty and brand. The assessment of            the total benefits employees re-      8. Nurture              innovation.        ness environment.
       key factors that      able course for the future. Diffi-        Some organizations – such as        risks inherent in bonus schemes is         ceive from working for a com-            The survey highlights the ten-             The survey was conducted
          influence the      cult choices are being made; the       those in the public sector or some     also becoming more frequent.               pany.                                    sion between the need to re-            in October and November
     changing reward         money that is available has to be
                             earned through performance and
                                                                    family-based companies which
                                                                    tend to value loyalty and ‘fit’           Centralization: reward poli-
                                                                                                                                                   3. Consider all costs. While many
                                                                                                                                                      organizations closely focused
                                                                                                                                                                                               duce risk and meet compliance
                                                                                                                                                                                               requirements and the desire
                                                                                                                                                                                                                                       2009 via face-to face inter-
                                                                                                                                                                                                                                       views with CEO’s, senior and
    and engagement           allocated to those areas (and peo-     above performance – have not           cies and programs are increasing-          on reward costs during the re-           to develop new reward poli-             line managers, HR Directors
               strategies.   ple) most critical to business suc-    previously operated within a per-      ly being centralized. This is being        cession, this was sometimes at           cies and programs that better           and HR specialists from over
                             cess. Return on investment has         formance-focused culture. But          driven by a desire for consistency         the expense of a wider contex-           support the needs of the busi-          230 companies in 29 countries.
         Organizations       become an important metric for         the pressures of a tightened mar-      of focus on key objectives, and to         tual consideration of cost. It is        ness. Reward managers need to           Half of these companies were
      are now looking        all functions and one that needs       ket means that also these organi-      reduce costs and risk. Companies           too easy in the current climate          manage the gap between need-            based in Europe, a quarter in
       more closely to       to be better used and tracked.
                             This is also true for getting a re-
                                                                    zations are looking to introduce
                                                                    more of a performance focus.
                                                                                                           are striving to find an ideal bal-
                                                                                                           ance between global consistency
                                                                                                                                                      to overlook the total cost of re-
                                                                                                                                                      ward – benefits and allowances
                                                                                                                                                                                               ed innovative reward solutions
                                                                                                                                                                                               and increased regulation.
                                                                                                                                                                                                                                       Asia, a sixth in North America
                                                                                                                                                                                                                                       and others evenly distributed
   their total reward        turn on HR investment. While              Organizations are also invest-      and local flexibility, to best man-        can account for as much as 40                                                    across South America, Africa
    and engagement           the focus remains on the bottom        ing in ensuring that their perfor-     age the impact of local markets,           per cent of reward costs.                For many, the recession has             and Pacific. The participant
                             line, from now on increased ef-        mance management systems and           culture, taxes and regulations.         4. Build in flexibility. Bonus-          been an opportunity to retrench            group is a mix of mid sized to
   programs in order         ficiency will be a core driver of      processes work to drive the per-                                                  es not only focus attention on        and reassess. Organizations now            large companies, three quar-
   to make sure that         profit growth.                         formance they define. In some             Market        benchmarking:             key goals, they also provide a        seize the chance to clarify their re-      ters were multinational and
          it delivers the                                           cases this means introducing           the study showed a surprising-             cost buffer in downturns. In-         ward strategy and seal any cracks          the participant group had a
                                Performance is the fundamen-        more efficient systems and pro-        ly strong focus on benchmark-              creasing the proportion of to-        in the foundations, improving              spread across all industries.
   performance that          tal focus of most organizations        cesses, and centralizing or au-        ing, given the relatively quiet tal-       tal pay delivered through bo-         and strengthening their reward                Indonesia participated with
      is badly needed        with a dominant theme: ‘doing          tomating performance man-              ent markets. This is driven by a           nuses provides employers with         and performance management                 13 organizations in the re-
                             more with less’. There is a very       agement. But most recognize            desire to ensure that top talent           greater flexibility in their cost     systems. Organizations are focus-          search.
      to stay ahead of       strong focus on the alignment of       that those systems and process-        is paid competitively against the          structures, and helps to protect      ing now more prominently on a
     the competition.        team and individual performance        es will only work if they have the     market, and that organizations             jobs.                                 reward ‘to do’ list for the (near)
     Indonesia based         to corporate goals. To accomplish      right culture and management           are not paying too much in oth-
                             this organizations focus on build-     skills to support it. A good per-      er areas.
    companies seem           ing leadership strengths and skills    formance management system                                                     FIGURE 1: BALANCING THE CHALLENGES
      to follow closely      to lead the organization through
                             turbulent times and balance the
                                                                    is not a substitute for manage-
                                                                    ment. The focus for many, as a
                                                                                                           Reward is on the board agenda
                                                                                                              Reward is no longer the prov-
       the reward and        short and long-term consider-          result, was on building manage-        ince of compensation and bene-
                                                                                                                                                                ����������������                                                    �����������������
 engagement trends           ations in alignment with the ob-       ment skills around performance         fits experts. Representing any-
                             jectives of the organization.          management, and on ensur-              where up to 70 per cent of a
     that are found in          Recognizing that excessive fo-      ing the transparency of the per-       company’s total costs, reward is
 the global research.        cus on short term gains was at         formance management process.           now more then ever a top man-
                             the root cause of the financial cri-                                          agement issue, with the CEO                     �����������������������                                                   ���������������
                             sis, and that stability of the mar-    THE IMPACT ON REWARD AND               and the board getting closely in-
                             ket cannot be assumed, risk            REWARD TRENDS                          volved and asking:
                             management is on everyone’s               As discussed in previous para-      •	 What performance are we get-
                             mind now. With increased reg-          graphs it seems that across all sec-      ting in return for what we pay?      fIGURE 2: WHAT IS ON TOp Of MIND fOR RESpONDENTS
                             ulation and public scrutiny, es-       tors and regions, organizations are    •	 What is the effectiveness of all
                             pecially around reward, ful-           struggling to re-build profitabili-       the costs allocated to reward?
                             ly understanding the relation          ty following the recession or rap-     •	 What is the return on invest-         Business challenges                                      Pay/performance relationship
                                                                                                                                                     Cost management                                           Review metrics
                             between business risks and re-         id changes in the industry. With          ment?                                  Risk and regulation                                       Better link between pay and performance
                             ward is taking more time of the        revenue growth hard to come by,                                                  Competition                                               Differentiating reward
                             board and senior management.           they are focusing on cost con-            Alongside this, the role of the
                                                                    tainment and performance im-           compensation committee is un-
                             THE TALENT MANAGEMENT                  provement as the paths to prof-        dergoing radical changes, with a         Response to challenges                                   Engagement changes
                             CHALLENGE                              it growth. This requires them to       much greater remit to oversee all         Cost management                                          Intangible/total reward focus
                                                                                                                                                     Leadership development                                   Line manager skills
                                In the current tough market, a      balance four, often conflicting,       reward programs and understand            Organizational redesign                                  Improve communications/transparency
                             talented, engaged and motivated        challenges: cost containment,          their impact on costs and risk.
                             workforce is critical to success. In   performance improvement, tal-          This is in part being driven by
                             the cost cutting phase many or-        ent engagement and risk man-           the growing impact of regulation         Talent strategy focus                                    Reward and engagement
                             ganizations already focused on         agement (Figure 1).                    and taxation. The concern is that          Internal development                                    Employee surveys
                             stripping out poor performers.            In particular, the tension be-      this is deviating scarce manage-           Recruit/retain key talent                               Reward communications
                             Organizations of all sizes in al-      tween cost containment and tal-        ment time to ensure compliance             High potential programs                                 Line manager focus
                             most every sector cited that now       ent engagement was a very strong       and a maximum of tax effective-
                             the recruitment, deployment,           theme to come out of the re-           ness, rather than formulating the        Drivers of reward                                        Reward management changes
                             and retention of key talent, along     search. Organizations are very         best reward strategies to drive            External benchmarks                                     Senior and line manager involvement
                             with the development of good           concerned about retention and          sustainable performance.                   Performance management                                  Increase reward communication
                             internal candidates and succes-        motivation, particularly for top          Developing and delivering re-           Cost management                                         Centralization of management
                             sion planning, is the dominant         performers, high potentials and        ward programs that are cost ef-
                             strategy. A word of caution has        those with scarce skills. Howev-       fective, drive performance im-
                             to be offered about an over-reli-      er, the option of paying more for      provement, build talent and             FIGURE 3: THE REWARD ‘TO DO LIST’ FOR ORGANIZATIONS
                             ance on high performers to de-         retention or performance is often      avoid undue risks: these are the
                             liver business results. The major-     no longer available and compa-         challenges ahead. Getting reward         The reward ‘to do’ list
                             ity of people fall into neither the    nies are focusing more on intangi-     right is mission critical for all or-
                             poor performer nor the star cat-       ble rewards (such as motivational      ganizations.                              1     Review reward strategy to ensure that it supports business strategy.
                             egory, but are good, competent,        leadership, challenging work and
                             average performers. It is shifting     career development) to boost en-       Top of mind                               2     Reassess performance criteria so reward is linked more closely to goals that clearly reflect
                             performance in this middle cate-       gagement.                                 Throughout the responses to                  the vision and strategy of the organization.
                             gory that will really make a dif-                                             our research, common threads
                                                                                                                                                     3     Review the balance of variable and fixed pay to ensure it is right for the company culture
                             ference in the success of the orga-    Trends in reward                       emerged as to what was top of                   and for business needs.
                             nization. Organizations should            The research found some clear       mind for respondents. Summa-
                             also keep this large group moti-       themes in how companies are us-        rized below are the top three             4     Use reward differentiation (where appropriate) to focus limited resources on those most
                             vated, engaged and adequately          ing reward to tackle these chal-       themes for each topic covered                   successful to the business: high performers, high potentials and those with skills that are in
                             rewarded for the positive contri-      lenges.                                (Figure 2).                                     short supply.
                             bution they make.
                                In a challenging global and na-        Making pay for performance          THE KEYS TO EFFECTIVE REWARD              5     Closely assess and measure the return on investment from reward programs and strategy.
                             tional economy where organiza-         a reality: the study shows a much        In many ways, these challeng-
                             tions are running lean, tapping        greater focus on creating a culture    ing economic times have been a            6     Communicate the true value of your reward package, and how it supports the goals of your
                             into the discretionary effort of       of performance through aligning        wake-up call for reward. Sloppy                 business.                                                                                         The President Post                                                                                                             April 12, 2010 B5

                                                          Resistance to Change
In this hyper dynamic world it is so true that                                 pens both at the individual as           pened when many a compa-
humans have a natural resistance to change and                                 well as the organization level.          ny have downsized in a change                                                                   RISK
                                                                                                                        program – in fact in the last
are comfortable with the given and status quo.                                    Amarjit Chopra, author of             2 decades or so, Change has                                               High                                         Low
                                                                               ‘The Many facets of Leadership’          come to be associated directly
                                                                               puts it very interestingly: “There       with downsizing.
By Dr. Karan Singh MBA, DBA                                                    are conscious and unconscious         •	 Concern about high Costs.
                                                                               forces at work in all human sys-      •	 Fear of Personal failure – in not
                                                                               tems, from the individual to the         being able to cope up with new

                                                                               largest corporation, which func-         systems or methods of opera-                                       Dual Resistance                              Habit Resistance
                 ow an old cliché,        Emotionally, people also feel        tion to maintain homeostasis –           tion.
                 that the only con-    connected to old folk tales, tra-       keeping things as they are. When      •	 Loss of Status and Power – in
                 stant, is change.     ditions and past practices. Our         we think and perceive the world          the case of organizational re-
                    And in this        availability heuristics, or the rules   within a closed system, we are           structuring.

                 hyper dynamic         of thumb that we use for every-         doing ‘inside-the-box thinking.’      •	 Threat to Values and Ideals –
                 world it is so true   day decisions, are formed by our        Standing inside the box, there           in being able to make adjust-
that humans have a natural re-         individual experiences and in-          is no real possibility for funda-        ments to a new culture.
sistance to change and are com-        fluences through social practice        mental change. There might            •	 Resentment of Interference
fortable with the given and sta-       and culture. And all future deci-       be change, but inside-the-box            and loss of Control.

tus quo.                               sions are determined by the tem-        change is really only more of the                                                                            Risk Resistance                              No Resistance
   As an experiment, clasp your        plates we have formed based on          same.”                                   Henry and Canella, in ‘The
hands in front of you in a locked      the past; and it is always difficult       Of course there is more to re-     Many facets of Leadership’, clas-
position, with thumbs folded on        to change what we believe is al-        sistance to change in addition to     sify Change Resistance into three
one another. Now exchange the          ready good.                             inside-the-box-thinking and in-       broad forms:
position of your thumbs. How              As much as people loathe to          deed many of the following could      1. Blind Resistance. Those who
does it feel? Odd?                     admit, their inertia to change is       also be contributing to that state:      simply and naturally resist
   The same with folding your          also subconsciously driven by           •	 Belief that Change is unnec-          Change.
arms. Now change the position          their fear of lack of competence           essary. Especially if there are    2. Ideological Resistance. Dis-         ample of GE (General Electric)       Lighting Division). In addition,          Greenberg and Baron go on
of you arms. Feels strange, right?     to change. Who would not want              no visible problems and things        agreement through different          which has gone through a series      changes were highly disruptive to      to add that fortunately such re-
   It is well known that peo-          to be the pilot of a new and suc-          have been successful. And more        Values & Beliefs.                    of Changes. “Throughout this         GE’s “social architecture”; friend-    sistance to Change can be over-
ple have an inertia against or re-     cessful venture? But to go for             so if top management has been      3. Political Resistance. Those          process, several of the barriers     ship groups were broken up and         come through Organizational
sistance towards change. In the        a new venture and then expose              advertising that success.             who believe that there will be a     just identified have been encoun-    scattered throughout the com-          Developmental Techniques that
field of psychology, many reasons      one’s own incompetence is more          •	 Lack of Trust possibly emanat-        loss in terms of Position, Status,   tered. For example, managers         pany. In all, GE has been a liv-       implement Change in a man-
have been put forward for this re-     embarrassing than remaining sta-           ing from a feeling that there         Power, Resources at hand.            had mastered a set of bureaucrat-    ing example of the many differ-        ner that is acceptable to employ-
sistance to change. One of the         tus quo. To follow someone who             may be a hidden agenda, es-                                                ic traditions that kept their hab-   ent barriers to Change – all rolled    ees and which enhances the effec-
more important considerations is       takes the lead to a change also            pecially if top leaders are not       Greenberg & Baron, authors           its strong and their inertia mov-    up into a single company.”             tiveness of the organization.
when the risk of change is greater     means a down gradation to the              fully open about all aspects       of ‘Behaviour in Organizations’,        ing straight ahead. The prospect
than the risk of status quo. This      status of follower, so would natu-         concerned with the Change          classify resistance to Change in        of doing things differently was
is because current practices are       rally want to stay as an opponent          program.                           terms of:                               scary for those who were strong-
tried and tested while new prac-       to the change rather than be a fol-     •	 Belief that Change is not fea-        Individual barriers – Eco-           ly entrenched in doing things the       Dr. Karan Singh MBA, DBA, Organization Development
tices require one to venture into      lower of the change.                       sible. When making a Change        nomic Insecurity; Fear of The           “GE Way.” In particular, the            Consultant, is presently Management Development Director at
new territories that have no exist-       It is also emotionally unap-            that is radically different, or    Unknown; Threats to Social Re-          company’s interest in globaliza-        President University, and Managing Consultant of PT King &
ing models to follow. Even if one      pealing to forsake something               if any earlier program has not     lationships; habit; Failure to rec-     tion triggered many fears of the        Singh Consulting. In his seventeenth year in Indonesia, Dr. Singh
is not concerned about the prob-       that has a higher chance of suc-           been fully successful.             ognize the need for Change, and         unknown.                                has wide experience, across a range of multinational companies,
ability of success, criticisms of      cess for something that has a low-      •	 Economic threats. In case peo-        Organizational Barriers –               Resistance to Change also was        in areas like corporate training, market entry strategy, integrated
current practices are likely to be     er chance of succeeding as it re-          ple perceive that they would       Structural Inertia; Work group          strong because it threatened to         marketing (external and internal marketing), communications,
more muted than those for new          quires venturing into uncharted            suffer a personal loss in terms    Inertia; Threats to existing bal-       strip power from those units that       and human performance improvement.
practices, as the former have prec-    territory.                                 of job security, or income loss    ance of Power; Previously unsuc-        traditionally had possessed most
edents to fall back on.                   This resistance to change hap-          – which has historically hap-      cessful efforts; and offer an ex-       of it (e.g., the Power Systems and
 B6 April 12, 2010                                                          The President Post


Mahakarya Borobudur
Mahakarya Borobudur tells the story behind the
building of the Borobudur temple, which began
during the reign of King Samaratungga and was
completed during the era of King Gunadharma.

   Taman Wisata Candi Borobu-
dur, Prambanan & Ratu Boko
will hold their annual event
called Mahakarya Borobudur
at Panggung Terbuka Aksobya,
Borobudur Temple, Magelang,
Central Java.
   Mahakarya Borobudur tells
the story behind the building of
the Borobudur temple, which be-
gan during the reign of King Sa-
maratungga and was completed
during the era of King Gunad-
   Accompanied by the tradition-
al gamelan music and the moco
pat (a reflective Javanese song),
this spectacular and dramatic
dance will run for two hours.
   There will be four perfor-
mances this year, namely on May
22nd, June 26th, July 24th, and           attractions on hand, and to
September 11.                          make Borobudur, Pramban-
   The Mahakarya Borobudur             an and the Ratu Boko Palace as
dance performance is the result        a world-class cultural tourist at-
of a collaboration between artists     traction.
from the Surakarta Indonesian             There are four classes of tick-
Arts High School (STSI), the lo-       ets:
cal community and historians           •	 Platinum (Rp 800,000, in-
led by the Taman Wisata Candi             cludes dinner, round trip pick-
Borobudur, Prambanan & Ratu               up services hotel–Borobudur
Boko.                                     Temple, photo session with
   The dance performance de-              the dancers, a souvenir and a
picts the spirit of cooperation be-       complimentary Borobudur en-
tween various elements of soci-           trance ticket)
ety in the past and their loyalty to   •	 Gold (Rp 700,000, includes
serve the values of a noble life.         dinner, round trip pick-up ser-
   The Mahakarya Borobudur                vice hotel–Borobudur Temple)
show aims to complement oth-           •	 Festival (Rp 300,000)
er tourist                             •	 Student (Rp 50,000)                                                                                         The President Post                                                                                                                April 12, 2010 B7

Senate Report Links Diabetes                                                                                                                                                                       STUDY

                                                                                                                                                                                                   Healthy Adults Need
Drug Avandia to Heart Attacks                                                                                                                                                                      Less Sleep as They Age
The Senate report was developed over the past two years by committee
investigators who reviewed more than 250,000 pages of documents provided                                                                                                                           Older adults, aged 66-83, slept about
by GlaxoSmithKline, the FDA and several research institutes.                                                                                                                                       20 minutes less than middle-aged
                                                                                                                                                                                                   adults (40-55 years), who slept 23

                                                                                                                                                                                                   minutes less than young adults aged
            he diabetes drug Avan-                                                                                                                              lationship to myocardial isch-
            dia is linked with tens                                                                                                                             emia is inconclusive.              20-30, the study said.
            of thousands of heart
            attacks, and drugmak-                                                                                                                                  Avandia has been under
            er GlaxoSmithKline                                                                                                                                  scrutiny for years. The New

            knew of the risks for                                                                                                                               England Journal of Medicine                  ealthy older adults need       quick kip during the day.
years but worked to keep them                                                                                                                                   called the drug’s safety into                less sleep than their             The study was conducted at
from the public, according to a                                                                                                                                 question in 2007. The Jour-                  younger       counterparts     the Clinical Research Centre of the
Senate committee report released                                                                                                                                nal of the American Medical                  and, even with less sleep      University of Surrey in England and
Saturday.                                                                                                                                                       Association also questioned        under their nightcaps, are less          involved 110 healthy adults with-
   The 334-page report by the                                                                                                                                   whether Avandia was safe in        likely to feel tired during the day, a   out sleep disorders or complaints.
Senate Finance Committee also                                                                                                                                   2007.                              study published Monday showed.           Forty-four of the participants were
criticized the Food and Drug Ad-                                                                                                                                   “Among patients with im-            The time spent actually sleep-       young, 35 middle-aged and 31
ministration, saying that the fed-                                                                                                                              paired glucose tolerance or        ing out of eight hours in bed            older adults.They slept normally
eral agency that regulates food,                                                                                                                                type 2 diabetes, rosiglitazone     declined progressively and sig-          one night, the baseline night, then
tobacco and medications over-                                                                                                                                   use for at least 12 months is      nificantly with age, the study pub-      had two nigths where their sleep
looked or overrode safety con-                                                                                                                                  associated with a significant-     lished in SLEEP, the official journal    was interrupted, followed by one
cerns found by its staff.                                                                                                                                       ly increased risk of myocardi-     of the American Academy of Sleep         recovery night.
   “Americans have a right to                                                                                                                                   al infarction and heart failure,   Medicine and the Sleep Research
know there are serious health                                                                                                                                   without a significantly in-        Society, said.                              During the baseline night,
risks associated with Avandia and                                                                                                                               creased risk of cardiovascular                                              younger adults spent an average
GlaxoSmithKline had a responsi-                                                                                                                                 mortality,” the AMA journal           Older adults, aged 66-83, slept       of 433.5 minutes asleep com-
bility to tell them,” said U.S. Sen-                                                                                                                            wrote, adding that the “find-      about 20 minutes less than mid-          pared to around 410 minutes for
ator Max Baucus, a Democrat                                                                                                                                     ings have potential regulatory     dle-aged adults (40-55 years), who       middle aged adults and 390 for
and committee chairman.                                                                                                                                         and clinical implications.”        slept 23 minutes less than young         older adults.
                                                                                                                                                                                                   adults aged 20-30, the study said.          On the same night, the younger
   The bipartisan report also was                                                                                               Photo:      In 2007, an FDA panel rec-         The older adults woke up sig-         adults had 118.4 minutes of deep
signed by Sen. Chuck Grassley,                                                                                                                                  ommended by a vote of 22-1         nificantly more often and spent          sleep, compared to 85.3 minutes
the top-ranking Republican on             The Senate report was devel-         egies to minimize or misrep-            GlaxoSmithKline        counters          that Avandia should remain         more time awake after initial sleep      for middle-aged adults and 84.2
the committee.                         oped over the past two years by         resent findings that Avandia          that the Senate report relies on           on the market despite an anal-     onset than younger adults.               minutes for older adults.
   GlaxoSmithKline rejected any        committee investigators who re-         may increase cardiovascular           outdated information.                      ysis showing links to increased       Deep, or slow-wave sleep,                But when asked to lie in a com-
assertions Saturday that the drug      viewed more than 250,000 pages          risk and sought ways to down-           “In essence, the report is a             risk of heart attack. The vote     thought to be the most restorative       fortable position on a bed dur-
is not safe.                           of documents provided by Glaxo-         play findings that a competing        compilation of information and             was not binding, but a sugges-     phase of sleep, decreased with           ing the day and try to fall asleep,
   “We disagree with the con-          SmithKline, the FDA and several         drug might reduce cardiovas-          events that took place years ago,”         tion to FDA regulators.            age, the study said.                     young adults nodded off in an
clusions in the report,” compa-        research institutes.                    cular risk,” the report says.         spokeswoman Pekarek said.                     The panel also voted 20-3 at       But although older adults slept       average of 8.7 minutes, compared
ny spokeswoman Nancy Pekar-                                                                                            “There’s no new data there.”             the same meeting in support        less deeply and less overall, and        with nearly 12 minutes for middle-
ek told CNN.                              According to the Senate re-            As an example, committee            (CNN)                                      of data that showed Avandia        their sleep was less continuous          aged adults and just over 14 min-
   “The FDA had reviewed the           port:                                   investigators say they found            The FDA has evaluated at the             increased the risk of cardiac      than their younger counterparts`,        utes for older adults. (ANTARA
data and concluded that the drug       •	 FDA scientists estimated in          that GlaxoSmithKline experts          drug, Pekarek said, and updat-             ischemia in patients with the      they also showed less need for a         News/AFP)
should be on the market.”                 July 2007 that Avandia was           verified an outside study show-       ed product labeling in 2007 to             most common type of diabe-
   Seven clinical trials on the drug      associated with approximately        ing the cardiac problem, but          say information on Avandia’s re-           tes.
prove that it is not linked to heart      83,000 heart attacks since the       the company publicly attacked
attacks, Pekarek said.                    drug came to market.                 the findings as incorrect.
   “None of that data shows a sta-           “Had GSK considered Avan-
tistically significant correlation        dia’s potential increased car-     •	 Two FDA safety officials
between Avandia and myocardi-             diovascular risk more seriously       sounded a clear alarm in Oc-
al ischemia or myocardial infarc-         when the issue was first raised       tober 2008 writing, “There is
tion [heart attack],” she said.           in 1999 ... some of these heart       strong evidence that rosiglita-
   Ischemia is a condition in             attacks may have been avoid-          zone [Avandia] confers an in-
which blood flow and oxygen               ed,” the report states.               creased risk of [heart attacks]
are blocked from going to certain                                               and heart failure compared
parts of the body.                     •	 GlaxoSmithKline undertook             to pioglitazone [rival drug on
   FDA Commissioner Margaret              attempts to undermine infor-          market].” They concluded and
Hamburg said she is waiting for           mation critical of Avandia.           trials comparing the two would
the recommendations of an advi-              “GSK executives attempt-           be “unethical and exploitive.”
sory committee that will hear re-         ed to intimidate independent          Yet, the trial is still under way,
ports on the drug this summer.            physicians, focused on strat-         the senators say.

Medicine and ‘Luck’ on
Multiple Heart Attack
Survivors’ Side
        f ifth heart attack, such as   heart catheterization, according      slow it down if necessary.
        the one suffered recently      to his office.                           In 2008, he underwent a pro-
        by former Vice President         In a cardiac catheterization,       cedure to restore his heart to a
        Dick Cheney, is not rare       a thin, flexible tube is thread-      normal rhythm after doctors
because of advances in modern          ed into the heart, usually from       found that he was experiencing
medicine, cardiologists say.           the groin or the arm, to examine      a recurrence of the condition,
   “It’s something we see often        blood pressure within the heart       known as atrial fibrillation.
enough that we’re not surprised        and how much oxygen is in the
about it,” said Dr. Cam Patterson,     blood.                                   Recently, former President
chief of cardiology at the Univer-                                           Clinton was also hospitalized
sity of North Carolina School of          Cheney has a long history of       briefly because of a heart prob-
Medicine, who is not involved in       heart problems. He suffered his       lem. Clinton received two stents
Cheney’s care.                         first heart attack in 1978, when      to restore blood flow to a coro-
   “But it’s also an indication that   he was 37. He had his second          nary artery after doctors discov-
somebody has some luck on their        heart attack in 1984 and a third      ered blockage.
side.”                                 in 1988 and underwent a qua-             The two have heart disease.
   More patients are surviving         druple bypass surgery to unblock      This condition is the leading
multiple heart attacks because of      his arteries. Shortly after Cheney    cause of death in the United
procedures and drugs, Patterson        was elected vice president in No-     States; more than 630,000 peo-
said.                                  vember 2000, he had a fourth          ple die each year from it, ac-
   “We have patients who are tak-      heart attack and received a stent     cording to the Centers for Dis-
en to the [cardiac catheteriza-        to open an artery.                    ease Control and Prevention.
tion labs] to have blocked arteries                                             Having the kind of medical
opened up,” he said.                      In some cases, even patients       care that Clinton and Cheney
   “We have stents to keep blocked     who follow instructions do not        receive increases the chances of
arteries opened and high-poten-        respond to therapies and drugs,       the patient’s survival.
cy drugs like statins that protect     and they continue to get heart at-       “There is very strong data
against risk factors that make         tacks, said Dr. Randall Starling,     that shows both access to care
heart disease progress rapidly.”       vice chairman of the department       and socioeconomic status has
                                       of cardiovascular medicine at the     marked impact on outcomes
   Although these options help         Cleveland Clinic, who also is not     with people with heart disease,”
heart disease patients, they may       involved in Cheney’s care.            said Patterson, director of the
not prevent another heart attack.         “I’d like to believe that if pa-   UNC McAllister Heart Insti-
Patients who’ve suffered a heart       tients take their meds, exercise,     tute.
attack usually have more block-        they’re on a great diet, they re-
ages in other vessels that weren’t     duce their risk,” he said.               And even after several heart
problematic earlier. But over             “But unfortunately, there are      attacks, someone like Cheney
time, the blockage builds and          patients who have progressive         can continue to live an active
could cause future heart attacks,      disease even by following all their   life.
doctors said.                          doctor’s orders. That’s where some       “If his heart function remains
   Cheney, 69, went to the George      of the genetics get into things.”     strong, he’s got good medical
Washington University Hospi-              In 2001, doctors implanted a       care and is taking care of risk
tal after experiencing chest pains     monitoring device to keep track       factors, he can be in very good
and underwent a stress test and a      of Cheney’s heart rhythm and          shape,” Patterson said. (CNN)
 B8 April 12, 2010                                                                                                         The President Post                                                                                              

Finding Cruise Deals
in a Recovering Economy
Consider expenses for the whole trip -- including
airfare and hotel costs -- before assuming you can’t
afford a more luxurious cruise line

           he jaw-dropping cruise         tractive as it was in 2009, Allen
           deals of 2009 have all         said the number of wave season
           but dried up. This year        bookings has been impressive.
           travelers will have to            “This is the biggest wave sea-
           work harder to find a          son I’ve seen in years,” said Al-
           way to save on floating        len, who owns Cruises by Linda
escapes.                                  in Harrison, Arkansas.                                     Photo:

   “Last year the deals fell out of          She’s had more last-minute
the sky and hit you on the head,”         bookings this year than she’s seen
said Carolyn Spencer Brown, ed-           in her 15 years as a travel special-
itor-in-chief of cruising Web site        ist.
Cruise Critic.                               “I think that people have fi-
   “This year you’re going to             nally decided that the recession           narrow down your cruise style             you want a larger cabin and more       SOfT MARKETS, SOfT SHIpS                cruise line’s older ships translate    sailing somewhere for $499, see if
have to look for them. They’re            is over, and they’re willing to part       and then shop that way. Who has           amenities, she said.                      A glut of ships means lower          into savings for passengers.           one of them is offering gratuities
there, there are deals out there,         with their money and crack open            a week of vacation that they want                                                prices. Cruise Critic counted 37                                               as well. See if there are extras, you
but they’re just not as plentiful as      their credit cards,” Allen said.           to blow in the wrong way?”                FLEXIBILITY                            ships with itineraries in the west-     LOOK AT THE WHOLE PACKAGE              want to take advantage of that if
they were.”                                  “It is still early in the selling cy-                                                Opting for a shoulder season        ern Mediterranean in June, and             Consider expenses for the whole     you can,” Brown said.
   Wave season, the beginning of          cle for 2010, but our order book           GOOD-DEAL GUIDELINE                       sailing, when crowds are thin-         the competition is reflected in         trip -- including airfare and hotel
the year when cruise lines tradi-         is stronger and prices are higher             A double-occupancy, inside             ner but the destination’s weath-       attractive prices on those cruises      costs -- before assuming you can’t     CRUISE MYTHS
tionally roll out value-added pro-        than at the same time last year,”          cabin shouldn’t set you back more         er is still nice, can save travelers   this year, Brown said.                  afford a more luxurious cruise           Two common cruising miscon-
motions, is looking pretty flat in        said Royal Caribbean Chief Fi-             than about $200 a day.                    not only on cruise prices but also        “The Mexican Riviera is an-          line, Allen said. Sometimes a trip     ceptions: The ships are cramped
terms of deals. Travelers seem to         nancial Officer Brian J. Rice in a            “The new formula for a deal,           on airfare and hotels in port cit-     other place where we’re seeing          on a more expensive ship will ac-      and you’ll end up socializing with
be shopping for cruises all year          recent earnings announcement.              for the most part -- for a mass           ies, Allen said.                       historically low prices, and it’s got   tually be cheaper in the long run.     people you don’t like. Not true,
round, taking the edge off the                                                       market ship, a big ship -- is if             Booking a certain level of cab-     10 ships,” Brown said.                                                         Brown said.
frenzy for promotions in Janu-            WORD OF WARNING                            you’re paying more than $100 a            in but forgoing a room assign-            “Now that doesn’t sound like a       LOOK FOR EXTRAS                          “Most of the cruise lines have
ary, February and March, Brown               Don’t lose sight of the value of        day, per person, you’re paying too        ment is another way to save, Al-       lot, but remember, there basical-          Comparison cruise shopping          gotten out of the practice of forc-
said.                                     your vacation, Brown cautions.             much for just about anyplace, in-         len said. Cruise lines are willing     ly are three ports that everybody       means looking for added value in       ing you to sit down to dinner with
   Cruise agent Linda Allen said          Saving money on something that             cluding Alaska, which has always          to trade lower prices for the abil-    goes to.”                               the form of on-board credits, up-      people you don’t know, which I
she’s spending more time this             isn’t a good fit for you is ultimate-      been a little bit higher priced, and      ity to shift passengers to meet in-       Choose an older ship if you’re       grades or complimentary ameni-         think is the most barbaric custom
year finding the best deals for her       ly a waste.                                even in Europe,” Brown said.              ventory demands.                       not looking for the splashiest new      ties.                                  ever created.”
clients. While pricing isn’t as at-          “You’ve really got to kind of              Expect the price to go up if                                                  features. Fewer amenities on a             “If you see two ships that are      CNN

         A New Flagship Model of BMW Attracting
         Indonesian Public
          Jeannifer Filly Sumayku

                                                                                                                                                                                                                          “The new BMW 7 Series is a
                                                                                                                                                                                                      statement. Its strong yet elegant look, combined
                                                                                                                                                                                with superior driving experience, comfort and roominess of the rear
                                                                                                                                                                              area, as well as best-in-class entertainment system, makes this flagship
                                                                                                                                                                            model the choice of leaders and dignitaries in Indonesia and abroad,” said

             T BMW Indonesia              said Ramesh Divyanathan, Pres-             its effortless surge of power,            gine vehicles automatically con-                         Ramesh Divyanathan, President Director of BMW Indonesia.
             has unveiled its new         ident Director of BMW Indone-              unique acoustic and vibration-            sume more fuel and produce
             12-cylinder BMW              sia.                                       damping qualities, and a level            higher carbon emissions than
             760Li, the pinnacle of          The BMW 760Li features                  of efficiency never seen before in        other models.
             the fifth generation of      a masterpiece in modern en-                this performance class, test-driv-          “Customer responses to our           and 5-year BMW Service Inclu-           ates.                                     The establishment of this sub-
             the BMW 7 Series.            gine technology, the all-alumini-          ers say.                                  new BMW 7 Series last year were        sive package for peace of mind.            The success of the BMW              sidiary in April 2001 reflects the
   The new model was launched             um 12-cylinder power unit with                The innovations developed              extremely positive, and we have           The BMW Group is the world’s         Group has always been built on         BMW Group’s confidence in the
recently at BMW Studio, Plaza             BMW TwinPower Turbo tech-                  based on BMW EfficientDy-                 delivered 50 units in total,” Di-      leading premium car manufac-            long-term thinking and responsi-       long-term future of Indonesia
Indonesia, Central Jakarta.               nology, High Precision Injec-              namics enable this unprecedent-           vyanathan said during a press          turer since 2005 with its BMW,          ble actions.                           and its commitment to maintain-
   The car’s superior powertrain          tion and double-VANOS infinite             ed luxury saloon to accelerate            briefing.                              MINI and Rolls-Royce brands.               The company has therefore es-       ing and extending BMW’s lead-
technology, generous space and            camshaft adjustment, delivering            from a standstill to 100 km per                                                     As a global company, the             tablished ecological and social        ing position in the premium mar-
unique features all round create          a maximum output of 544 hp                 hour in just 4.6 seconds on aver-            The new BMW 760Li fea-              BMW Group operates 24 pro-              sustainability measures through-       ket segment.
an incomparable travelling expe-          from engine capacity of 6.0 liters         age fuel consumption of 13.0 li-          tures a full range of unique in-       duction facilities in 13 countries      out the value chain, comprehen-           PT. BMW Indonesia’s activi-
rience both in the driver and rear        and a peak torque of 750 New-              ters per 100 km with CO2 emis-            novations such as BMW Night            and has a global sales network in       sive product responsibility and a      ties cover the wholesale of BMW
seats, confirming BMW’s lead-             ton-meters from just 1,750 rpm.            sion of 303 grams per km.                 Vision, BMW Head-up Display,           more than 140 countries.                clear commitment to conserving         cars, provision of spare parts and
ing position in the global market            The third BMW model intro-                 BMW Efficient Dynam-                   Lane Departure Warning, Side              The BMW Group achieved a             resources as an integral part of its   accessories, as well as the overall
of luxury performance cars.               duced in Indonesia in 2010, the            ics technology reduces fuel con-          and Rear View Camera and In-           global sales volume of approxi-         strategy.                              planning of sales, marketing, af-
   “The new BMW 7 Series is a             BMW 760Li features a brand-                sumption and carbon emissions             teractive Owner’s Manual Book.         mately 1.29 million automobiles            As a result of its efforts, the     ter-sales, and related activities in
statement. Its strong yet elegant         new eight speed transmission,              while simultaneously enhanc-                 All BMW 7 Series vehicles pur-      and over 87,000 motorcycles for         BMW Group has been ranked              Indonesia.
look, combined with superior              an ideal match for the power and           ing the superior performance and          chased at authorized BMW deal-         the 2009 financial year.                industry leader in the Dow Jones          Its dealership network covers
driving experience, comfort and           performance of the 12-cylinder             driving pleasure typical of BMW           ers have passed the highest qual-         The pre-tax profit for 2009          Sustainability Indexes for the last    11 new car dealers and one used-
roominess of the rear area, as well       engine.                                    cars.                                     ity test, including for road and       was euro 413 million; revenues          five years.                            car dealer spread out in various
as best-in-class entertainment               The new transmission also en-              The efficiency level achieved          traffic conditions as well as hu-      totalled euro 50.68 billion. As of         PT. BMW Indonesia is a whol-        cities in Indonesia.
system, makes this flagship mod-          hances the efficiency of the car to        by BMW 760Li through BMW                  midity and fuel quality.               31 December 2009, the compa-            ly-owned subsidiary of Munich-            Selected models of the 3 and 5
el the choice of leaders and dig-         an even higher standard.                   EfficientDynamics technology                 All BMWs purchased at the           ny employed a global workforce          based Bayerische Motoren Werke         Series sedans are also assembled
nitaries in Indonesia and abroad,”           The engine stands out through           refutes assumptions that big en-          dealers have a 2-year warranty         of approximately 96,000 associ-         (BMW) AG in Germany.                   in Indonesia by a local partner.

                                                                    PUBLISHED BY

   The President Post
                                                                    Yayasan President University

                                                                    CEO & EDITOR IN CHIEF                  EDITORIAL & ADVERTISING/
                                                                    Ali Basyah Suryo                       CIRCULATION DEPARTMENTS
                                                                                                           Eka Galliano
OFFICE                                                              CONTRIBUTORS
Menara Batavia 25th Fl. Jl. K.H. Mas Mansyur Kav. 126               Atmono Suryo                           LAYOUT & DESIGN
Jakarta 10220, Indonesia                                            Cyrillus Harinowo Hadiwerdoyo          Mohamad Akmal
Phone      : (021) 572 7337                                         Taufik Darusman
Fax        : (021) 572 7338                                         Thomas W. Shreve                       SALES & MARKETING
Email      :                               Jeannifer Filly Sumayku                Mariah Bella Alla
Web        :                               Eka Putri                              Zulia Khairunisa
    The President Post

    Infrastructure                                                                                                                                                         Display until May 12, 2010 /// N0. 11
                                                                                                                                                                                Published by President University

                                                                   RI Needs More Investment
Water! And Waste, of Course!                                       in Infrastructure to Support
Within the scope of this small
ministerial level office, chaired by the
experienced and highly competent Dr
                                                                   Economic Growth
Kuntoro Mangkusubroto with a hand-
picked team of some of Indonesia’s                                 The government                                                                                                                                                      lysts say there are endless oppor-
brightest, lie targets for water,                                  needs bigger                                                                                                                                                        tunities for investing in Indone-
waste, pollution and actions                                                                                                                                                                                                           sia’s infrastructure development.
towards achieving                                                  participation by the                                                                                                                                                   Legislator Bambang Soeroso
the Millennium                                                     private sector and                                                                                                                                                  says a good infrastructure policy
                                                                                                                                                                                                                                       must be supported by the govern-
Development Goals.                                                 a more substantial                                                                                                                                                  ment’s strong political will that
                                                                   intermediation by the                                                                                                                                               ensures substantial allocation
pAGE C2                                                            banking industry.                                                                                                                                                   from the state budget. Ideally five
                                                                                                                                                                                                                                       percent of GDP should go for in-
                                                                                                                                                                                                                                       frastructure projects, he says.
                                                                                                                                                                                                                                          Agoes Widjanarko, a high
                                                                   By Alci Tamesa                                                                                                                                                      ranking official from the Min-
                                                                                                                                                                                                                                       istry of Public Works, says that

                                                                                                                                                                                                                                       since Indonesia gives little at-
                                                                                   he government                                                                                                                                       tention to infrastructure devel-
                                                                                   has in recent                                                                                                                                       opment, it is far behind other
                                                                                   years increased                                                                                                                                     countries including Singapore,
                                                                                   substantially the                                                                                                                                   Malaysia and India.
                                                                                   state budget al-                                                                                                                                       For instance, he says, the allo-
INFRASTRUCTURE                                                                     location for in-                                                                                                                                    cation for the Ministrhy of Pub-

Jababeka, from Industrial
                                                                   frastructure        development                                                                                                                                     lic Works is only three percent of
                                                                   hoping that a better and more                                                                                                                                       state budget; whereas India allo-
                                                                   comprehensive provision of                                                                                                                                          cates up to 10 percent of its bud-
Zone to Independent City                                           facilities would accelerate eco-
                                                                   nomic growth and provide
                                                                                                                                                                                                                                       get for public infrastructure proj-
                                                                   new employment opportuni-                                                                                                                                              Indonesia has now allocated
                                                                   ties for the population.                                                                                                                                            20 percent of its budget for edu-
                                                                                                       Vice President Boediono believes that infrastructure development is the primary key
                                                                      In 2006 for instance, the al-    to enhancing the growth of all sub-sectors of the economy.                                                                      cation; so the allocation for infra-
                                                                   location for infrastructure was                                                                                                                                     structure projects should also be
                           Looking back at where he started        Rp34.32 trillion, but in 2007                                                                                                                                       raised to at least 10 percent, he
                                 off, president director of PT     it was increased to 38.31 tril-        The infrastructure policy pack-         structure Indonesia needs to pro-          tion facilities. At least $22.5 bil-      proposes.
                                 Kawasan Industri Jababeka         lion.                               age comprises three major areas            vide if it wishes to become a more         lion is needed to establish these            But legislator Effendi Choirie
                                                                      A year later, the government     as follows:                                attractive investment and tourist          facilities.                               from National Awakening Par-
                               (KIJA) Tbk, SD Darmono, says        increased the spending for in-      1. Improvement of the invest-              testinations in the years ahead.              Another area needing more in-          ty says the government needs to
                                      that much progress has       frastructure by almost 62 per-         ment climate through stream-               According to chief research-            vestment is the telecommunica-            relax many of the regulations in
                                      been made but there is       cent, assigning up to Rp61.92          lining of regulations and bu-           er of BNI Securities, Norico               tion sector especially for cellular       order to raise Indonesia’s invest-
                                       still a long way to go in   trillion for building roads,           reaucratic procedures. This is          Gaman, Indonesia needs at least            phones. Indonesia is already one          ment charm and attract more in-
                                        turning this hub into a    bridges, harbors, as well as ir-       important because many in-              US$10 billion for downstream               of the world’s fastest growing na-        ternational investors especially
                                                                   rigation and industrial facili-        ternational investors have com-         industries alone for this year giv-        tions in terms of absorption of           for building better quality indus-
                                            cosmopolitan area.     ties.                                  plained about arduous bureau-           en the fact that new opportuni-            cellular phones.                          trial infrastructures.
                                                                      In 2009 the government              cracy, illegal levies, etc.             ties are emerging as a result of re-          In 2002 only 19.4 million peo-
                                                      PAGE C4      raised infrastructure spend-        2. Upgrade the quality of infra-           gional economic integration in             ple used cellphones. In 2008 the             Whatever the argument, since
                                                                   ing to well above Rp70 tril-           structure of strategic projects         Asia.                                      number had soared to 172.78               infrastructure investment is usu-
                                                                   lion and this year around              such as oil and gas, telecom-              The BNI Securities research-            million and this year it must have        ally a long term venture, a coun-
                                                                   Rp100 trillion is needed to            munications, etc. The govern-           er says that by increasing invest-         exceeded 180 million. In terms            try needs political stability to fa-
                                                                   build and fix infrastructures          ment is determined to extend            ment in infrastructure, Indonesia          of cellphone density, Indonesia is        cilitate such investment. Together
                                                                   in many sub-sectors of the na-         full support to private sector          will see the benefit of its up-            known to have ranked 6th after            with legal supremacy and poli-
                                                                   tion’s economy. This does not          investors that need better facil-       stream industries becoming a lot           China, India, Russia, USA, and            cy consistency, political stability
                                                                   include infrastructure for real        ities for their expansion plans.        more sustainable, innovative, and          Brazil.                                   has often been cited as the prima-
                                                                   sector business expansion by        3. The government will help lo-            competitive.                                  Given the fact that industries         ry ingredient for attracting huge
INFRASTRUCTURE                                                     primary actors of industry.            cal businesspersons in need of             The country needs to imple-             will need greater capacity of tele-       foreign capital.

Bonded Zones Need Better
                                                                                                          financing assistance especial-          ment a bottom-up infrastructure            phone and Internet broadband                 So, while Indonesian democra-
                                                                      Vice President Boediono             ly for infrastructure projects.         strategy in that downstream in-            connectivity, investment in this          cy is good for encouraging great-
                                                                   believes that infrastructure           One may easily assume that              dustries will sustain upstream             sub-sector will remain attractive         er political participation and free-
Infrastructure                                                     development is the primary
                                                                   key to enhancing the growth
                                                                                                          the government may act as a
                                                                                                          bridge between such investors
                                                                                                                                                  industries including in the min-
                                                                                                                                                  ing industry. In the long run this
                                                                                                                                                                                             to international investors in the
                                                                                                                                                                                             years ahead.
                                                                                                                                                                                                                                       dom of expression, it should not
                                                                                                                                                                                                                                       prevent progress in business and
                                                                   of all sub-sectors of the econ-        and state-owned banks which             would spur national econom-                   Economists have suggest-               economic areas. In other words,
                                                                   omy. He says the government            are politically recognized as           ic growth as new opportunities             ed that for Indonesia to become           political maneuvers must not re-
                                                                   will therefore give high prior-        “agents of development.”                open up for more people to grab.           a more advanced economy, one              duce Indonesia’s investment
                                       The figure actually         ity to infrastructure develop-                                                    The amount of $10 billion the           prerequisite is that it must have         charm.
                                represents 60 percent of           ment in line with its strategy         The government’s priorities in          researcher proposes is the min-            a competitive edge in terms of               But in recent months, Indone-
                                                                   to raise Indonesia’s competi-       terms of infrastructure develop-           imum Indonesia needs to spend              provision of infrastructure. This         sia’s policy making stage has been
                                 their annual production           tiveness and boost domestic         ment include development of fa-            for this year alone. More invest-          would attract industrial reloca-          jolted by political parties’ internal
                                    worth as each of the           industries.                         cilities for land, sea, and air trans-     ment will be needed in the years           tions and expansions.                     bickering and maneuvers to over-
                                                                      But he also emphasizes that      portation, toll roads, electricity         ahead as local industries struggle            But this is a domain that needs        throw one another. In the pro-
                                6,321 industries in those          the government needs bigger         plants, oil and gas industry, tele-        to raise competitiveness amidst            not only managerial decision but          cess international business actors
                                     locations bagged an           participation by the private        communication, clean water, irri-          implementation of China-ASE-               more importantly political deci-          have taken the wait-and-see atti-
                                                                   sector and a more substantial       gation, and public housing proj-           AN Free Trade Area (CAFTA).                sion by national leaders. For in-         tude and are only spending mon-
                               average production value            intermediation by the bank-         ects.                                         As of today, according to Gad-          stance, in 2009 when Indonesia’s          ey on short-term portfolio invest-
                                  of $12.5 million a year.         ing industry.                          Private sector actors will take         jah Mada University’s economist            Gross Domestic Product (GDP)              ments.
                                                                      The government has in fact       much of the responsibility while           Tony A. Prasetiantono Indonesia            stood at Rp5,000 trillion, ideal-            For this reason analysts say po-
                                                                   issued a set of policies to boost   developing such modern facilities          needs to build 38 more toll roads,         ly its allocation for infrastructure      litical parties need to “think out
                                                    PAGE C6        infrastructure development          as office blocks and apartments,           five new airports, four big har-           projects should at least be Rp250         of the box” and plan a long-term
                                                                   hoping that higher economic         shopping malls, sport facilities           bors, six natural gas complexes,           trillion.                                 economic strategy together, oth-
                                                                   growth would lead to creation       like gold courses, etc which are           12 electricity negating plants, one           The fact is, in that year Indo-        erwise selfish pursuits of their
                                                                   of more employment oppor-           needed by the international busi-          railway, one telecommunication             nesia spent only about Rp72 tril-         short-term interests would block
                                                                   tunities and substantial reduc-     ness community.                            industry center, and 24 clean wa-          lion, leaving the huge gap open           the course of progress already laid
                                                                   tion of poverty.                       Those are the kinds of infra-           ter dams, not to mention irriga-           through 2010. This is why ana-            down by the private sector.
 C2 April 12, 2010                                                                                                     The President Post                                                                                                          

                                                 Water! And Waste, of Course!
While Indonesia is well-blessed with fresh water                                                                                                                                                                    secure groundwater at more ac-
in most places, it is not used efficiently in areas of                                                                                                                                                              ceptable depths as well as largely
                                                                                                                                                                                                                    eliminate erosion. Further the ad-
dense population, as exists on Java and around the                                                                                                                                                                  ditional greening provided in this
main city centres elsewhere in the country.                                                                                                                                                                         manner can lead to a very signif-
                                                                                                                                                                                                                    icant increase in agricultural land
                                                                                                                                                                                                                    use and local economic produc-
Dr Scott Younger OBE
                                                                                                                                                                                                                       Solid waste from human ac-

                                                                                                                                                                                                                    tivities has provided a blot on
                 he subject of wa-      ery to the citizens and reducing                                                                                                                                            the landscape in many locations.
                 ter has featured       dependence on abstraction from                                                                                                                                              There is much to do in this area,
                 extensively in the     groundwater sources. The latter                                                                                                                                             whether just in proper structural
                 world’s press in re-   has reached critical proportions                                                                                                                                            containment or with the addition
                 cent times. An ex-     in several locations and the con-                                                                                                                                           of providing gas for small power
                 cellent coverage of    sequent significant subsidence of                                                                                                                                           offtake. Some local governments
most applications of this most          the city has exacerbated wet sea-                                                                                                                                           are also taking serious steps to            Within the scope
precious of fluids has been pre-
sented in the current issue of Na-
                                        son flooding problems. One solu-
                                        tion applied elsewhere, where the
                                                                                                                                                                                                                    separate organic from inorgan-
                                                                                                                                                                                                                    ic wastes, with the former being
                                                                                                                                                                                                                                                                of this small
tional Geographic. As I stated in       supply of water is not critical but                                                                                                                                         processed for compost. These are            ministerial
a recent issue of Globe Asia, wa-       the demand exceeds supply, is to                                                                                                                                            early days, of course, and much             level office,
ter and how we conserve and use         recycle water that has been used.                                                                                                                                           remains to be done either direct-
it sensibly is arguably the most se-    For instance, citizens expect to                                                                                                                                            ly through positive local gov-              chaired by the
rious issue of the century. One         drink water from the tap in UK.                                                                                                                                             ernment action and/or through               experienced and
week without water and we are
                                        I remember most vividly, as part
                                        of a publicity campaign, a dem-
                                                                                                                                                                                                                    progressive NGOs and good
                                                                                                                                                                                                                    company CSR programmes. But
                                                                                                                                                                                                                                                                highly competent
    While Indonesia is well-blessed     onstration by the Chief Execu-                                                                                                                                              the message seems to be getting             Dr Kuntoro
with fresh water in most places,        tive of Thames Water more than                                                                                                                                              out to the population; solutions            Mangkusubroto
it is not used efficiently in areas     a decade ago drinking a glass of                                                                                                                Photo:   will not be successful unless local
of dense population, as exists on       tap water in London and em-             The government has appointed an office chaired by Dr. Kuntoro Mangkusubroto with the mission to monitor and oversee development     communities play a major role in            with a hand-picked
Java and around the main city           phasising its purity, despite its al-   and deal with difficult inter-ministerial departmental issues while securing improved cooperation between ministries.               implementation.                             team of some
centres elsewhere in the country.       ready having passed through sev-                                                                                                                                               It is interesting that this gov-         of Indonesia’s
Further, there are many other re-       en stomachs on the way! The                                                                                                                                                 ernment has appointed an office
moter areas around the country          Thames valley could not meet its        ter supply problems, put in a              stream flow to provide a sur-               tion exceeding the rate of replen-           with the mission to monitor and             brightest, lie
where collecting water to survive       water supply obligations unless a       well-constructed sanitation sys-           face source. The cost of putting            ishment. An exacerbating factor              oversee development and deal                targets for water,
is still the most important daily       fully integrated water recycling        tem, with significant extra capac-         in a small water treatment plant            has been upstream deforesta-                 with difficult inter-ministerial de-
activity. Expanding the provision       scheme were in place, despite the       ity for expansion. Unfortunately           is relatively speaking not high             tion, which has led to devastating           partmental issues while securing            waste, pollution
of water supply is a key feature of     relatively wet climate familiar to      succeeding administrations did             and, where these are not already            rates of run off, with consequent            improved cooperation between                and actions
the Millennium Development              Britons.                                not see fit to make further con-           in place, this should be a priori-          downstream flooding, damage                  ministries. This is essential for
Goals to which Indonesia be-               Jakarta is also one of the most      nections as the city expanded, al-         ty for local government. I must             to infrastructure and long term              achieving government produc-                towards achieving
came a signatory at the begin-          backward cities in the world in         though the matter is finally re-           add that, having been around a              damage to the stability of relat-            tivity targets, but sadly lacking           the Millennium
ning of the century. The chal-
lenge for water involved ensuring
                                        terms of dealing with dirty water
                                        and all forms of waste. It always
                                                                                ceiving some attention.
                                                                                   In the rural areas of Indone-
                                                                                                                           few local governments recently, I
                                                                                                                           am being encouraged that many
                                                                                                                                                                       ing surface and ground water re-
                                                                                                                                                                       gimes. While much of the cur-
                                                                                                                                                                                                                    in the past. Within the scope of
                                                                                                                                                                                                                    this small ministerial level office,
that more than 75% of the popu-         seems to be tomorrow’s prob-            sia, the problems vary accord-             of the new batch of local govern-           rent attention on climate change             chaired by the experienced and              Goals.
lation would have access to clean       lem. A consequence of this is se-       ing to location, topography, ge-           ment leaders – not all – now do             REDD schemes concerns carbon                 highly competent Dr Kuntoro
water by 2015, i e 5 years from         rious pollution, unnecessary ex-        ology and rainfall. In some cases          have an understanding of their              issues, maintaining of the stabili-          Mangkusubroto with a hand-
now. Partly because of the length       posure to unpleasant diseases and       tapping into the groundwater is            obligations to the communi-                 ty of water basins is arguably even          picked team of some of Indone-
of time taken to recover from the       a very significant negative im-         quite acceptable, since recharge           ties of their jurisdictions. Some           more important.                              sia’s brightest, lie targets for wa-
1997/8 Asian economic crisis, it is     pact on the health of the popu-         can cope adequately with ab-               now seem to understand what is                 There is also a number of dry             ter, waste, pollution and actions
certain that the target will not be     lation, plus the loss in productiv-     straction. However, there is not           meant by the Millennium Devel-              areas of Indonesia, especially in            towards achieving the Millenni-
achieved, although it will be es-       ity which can be measured in the        always adequate care taken to en-          opment Goals and have the sev-              the east, where it is often hot and          um Development Goals. It will
sential to pursue it even though        billions of dollars. It is long over-   sure that the water withdrawn              eral targets of these, which also           dry for long spells and the soils            be fascinating to see what prog-
it will take a number of years lon-     due that the city of Jakarta really     has sometimes not been acci-               include health, environment and             on their own are not adequate                ress this government can achieve
ger. A few messages and keys to         starts to tackle water and waste as     dently contaminated, sometimes             gender issues, very much part of            for holding water. Water has of-             in the coming years to improve
action come to mind.                    a major priority, with solutions in     from pollutants from fertilizers or        their missions.                             ten to be piped from remote                  Indonesia’s environment on the
                                        a holistic manner. Surely the time      careless defecation, both of which                                                     sources. However, interesting                back of a fundamentally rich and
  Expanding the coverage of sur-        for talking is over, and action ini-    could be avoided with relatively              However, I must also draw at-            and successful efforts elsewhere             well-endowed landscape.
face water supply in the huge con-      tiated!                                 simple practical solutions along           tention to the fact that an alarm-          have shown that planting trees
urbation of greater Jakarta has                                                 with transfer of knowledge.                ing number of river basins, in to-          with deep tap roots in conjunc-              The writer is Chairman Glendale
proved elusive in terms of mak-           In the late 1980s, the city of           In other places, there is ad-           tal or part, are showing signs of           tion with a stabilising fast rooting         Partners and PT Nusantara
ing headway towards wider deliv-        Bandung, which also faces wa-           equate all year round river or             distress with demand abstrac-               grass, such as vetiver, can help to          Infrastructure Tbk

The Importance of Building Highways in Java
The need for transportation infrastructure                                      an action needs the endorsement            provided to private companies,
is indeed a very urgent. If the Government                                      of the House, but the fact that we         including financial aids for land-
                                                                                have such a financial capacity is          clearing so that the investment                                                                                                   With the
is too slow in taking action, it will hamper                                    very encouraging indeed.                   cost becomes feasible for them.                                                                                                   development of toll
developments.                                                                      Nowadays, a parallel effort is          Again and again, the Govern-
                                                                                                                                                                                                                                                             roads along the way,
                                                                                taking place in the form of the            ment has the financial capacity
                                                                                new toll development between               to resolve such problems. After                                                                                                   the old northern-
                                                                                Semarang and Solo. From the                all, this project will benefit soci-
By Cyrillus Harvinowo Hadiwerdoyo                                               other end, the development of              ety and the Government as well.                                                                                                   shore highway serves
                                                                                the toll road from Surabaya to                                                                                                                                               traffic relatively well

                                                                                Mojokerto is also currently un-                Are there any other alternatives
          recently passed by            ed, is still not enough compared        derway. This highway will later            to all these development proj-                                                                                                    except during long
          the        Semarang–Ku-       with the rapid rise of traffic.         link up with Solo by way of the            ects?                                                                                                                             holidays.
          dus Highway, which is         Therefore, some kind of acceler-        current highway from the other                 There has been recently an
          part of the Java North-       ation is needed to cope with ever-      end that is now being developed.           interesting development in the
          ern Shore Highway, in         rising challenges.                      In the meantime, other segments            state-owned railway company
          the province of Cen-             The segment between Ku-              in Central Java, from Pejagan to           PT Kereta Api Indonesia. At the
tral Java. The two-lane highway         dus and Tuban and eventually to         Semarang, are also in the ear-             helm of the company is Mr. Igna-
has been recently expanded and          Surabaya is also being expanded.        ly development stage. Similarly,           tius Jonan, a former Citibanker.
now has four lanes. The travel          If that part of the highway can be      the toll road from Cikampek and            He brought with him a vision to
time between Semarang to Ku-            completed, there is a good chance       Palimanan. Once the Trans Java             build an alternative for highway
dus used to be two hours; it can        that travel time between Surabaya       Toll Road is completed, the trav-          transportation by developing a
now be covered within an hour.          and Jakarta, two major commer-          el time on that highway can be             reliable railway system. As he sees
This is certainly a new develop-        cial hubs, can be reduced signifi-      reduced significantly. Fuel con-           it, the railway company will move
ment for many people who trav-          cantly. Such a reduction in travel      sumption (and emission) and in-            in trains some of the cargoes now
el this tract regularly. What is        time easily cuts down the dura-         ventory in transit can be reduced          carried by trucks in containers.
also important is the travel time       tion of goods in transit. There-        so that the overall working cap-           From just 300 containers a week
for long-distance travel between        fore, working capital tied up in        ital can be saved. It is expected          last year, the railway company
Surabaya and Jakarta has been           traffic will eventually be saved        that the completion of the new             has now increased the number to
reduced by at least one hour. The       as it raises the competitiveness of     toll road will pave the way for            1000 containers per week, with a
time saved can increase the effi-       the industry.                           the new developments along this            plan to raise it to 5000 containers
ciency of transportation using the                                              highway for commercial, indus-             in five years’ time.
highway.                                   The development of the North-        trial and residential activities.              This is certainly a tall order, but
   The improvement of the Se-           ern-Shore Highway can be fur-                                                      Mr. Jonan is not unfamiliar with
marang–Kudus Highway is part            ther improved by reducing jun-            What are the challenges sur-             such challenges. In the very near
of a more comprehensive im-             tures by way of tunnels. If that        rounding this project?                     future, the company will build a
provement of the highway con-           can be developed, the North-              This toll-way project is being           dry port at the Jababeka Indus-                                                                            Photo:
necting the eastern and western         ern Shore Highway can also be           developed by various private op-           trial Park. Locomotives are now
parts of Java. The tract between        turned into a Non–Toll Express-         erators. Therefore, their financial        being imported from the Unit-
Serang in West Java, Jakarta and        way fully supported by the Cen-         capacity needs to be addressed.            ed States in large numbers so that          ble in making rail tracks available          of traffic can be increased tre-         at least start non-multiple track
Kudus has been expanded to four         tral Government. Is the develop-        However, even after financial              such progress can be realized very          while the railway company owns               mendously.                               projects and fill the gaps after-
lanes, sometimes even more, so          ment of such a highway feasible         capacity has been assured, the             soon. Freight cars are also being           rolling stock and the stations.                 Since we are racing against           wards.
that traffic now moves well dur-        within the current state budget?        difficulty in clearing lands re-           ordered to carry hundreds of con-           Therefore, the Government is                 time, such developments need to             The need for transportation
ing weekdays. With the develop-            The answer is a strong affirma-      mains a major obstacle in devel-           tainers. Therefore, we can be sure          able to complement the vision by             be accelerated. Again, the Gov-          infrastructure is indeed a very
ment of toll roads along the way,       tive. The Government has the fi-        oping toll-ways. In some places            that the vision will be realized in         aggressively building rail tracks.           ernment has the financial capac-         urgent. If the Government is
the old northern-shore highway          nancial capacity to develop such        local government officials assist          the foreseeable future.                     Currently, there are limited dou-            ity to expedite the process. With        too slow in taking action, it will
serves traffic relatively well except   an expressway within current and        to secure lands, but on many oc-                                                       ble tracks in the Northern-Shore             Rp. 5 trillion from the state bud-       hamper developments. I strongly
during long holidays. The hard          future budgets as its cash position     casions they become part of the              What can the Government do                Lines. If the lines between Jakar-           get, for instance, the Govern-           believe the Government has the
work by the Department of Pub-          is strong, allowing rapid disburse-     problem, not the solution. There-          to support the development?                 ta and Surabaya can be developed             ment should invest rapidly in de-        wisdom in playing a more proac-
lic Works, while highly appreciat-      ment at any time. Of course, such       fore, strong support needs to be             The Government is responsi-               into double tracks, the frequency            veloping double- track projects or       tive role.

                                                                         Supported by                                               Hosted by

                                                                                                                                                                                              D Sp
                                                                                                                                                                                               el ac
                                                                                                                                                                                                Bo e P L i
                                                                                                                                                                                                 eg e

                                                                                                                                                                                                   ok as mi
                                                                                                                                                                                                   at is

                                                                                                                                                                                                     Yo s T ted
                                                                                                                                                                                                       ur od !
                                                                          United Nations                                    The Government of
                                                                              ESCAP                                       The Republic of Indonesia

                14th - 17th April 2010, Jakarta International Expo, Jakarta - Indonesia

                                                                        Join The Market Leaders!
                                   ● Unprecedented Level of Speakers Delivering Groundbreaking Insights.
         ● Unparalleled Opportunities to Network and Build Relationships with Indonesian and Asia-Pacific Senior Government Officials.
            ● The Only Event Where Indonesian and Asia-Pacific Government Infrastructure Projects will be Discussed and Exhibited.
                      ● Global Speaker Faculty Includes Over 80 Senior Government Officials and Global Business Leaders.

                                                                                       Headline Speakers include :
                                                                                    H.E. Susilo Bambang Yudhoyono*
                                                                                       President, Republic of Indonesia

                                                                                                 H. E. Boediono*
                                                                                          Vice President, Republic of Indonesia

                                             H. E. Hatta Rajasa                               H. E. Sri Mulyani Indrawati                               H. E. Armida S. Alisjahbana
                               Minister, Coordinating Minister for Economic Affairs,           Minister, Ministry of Finance,                    State Minister, National Development Planning /
                                              Republic of Indonesia                                Republic of Indonesia                         Chairperson of Bappenas, Republic of Indonesia

         H. E. Darwin Saleh               H. E. Freddy Numberi              H. E. Djoko Kirmanto                  H. E. Tifatul Sembiring                   H. E. Gita Wirjawan                         Mr. Dahlan Iskan
Minister of Energy and Mineral Resources, Minister of Transportation,       Minister of Public Works,      Minister of Communication and Information     Chairman, National Investment            President Director of Perusahaan
           Republic of Indonesia            Republic of Indonesia             Republic of Indonesia             Technology, Republic of Indonesia    Coordinating Board, Republic of Indonesia         Listrik Negara (PLN)

           H.E. Noeleen Heyzer                          H. E. Kamal Nath                    Mr. Madhu Koneru                    Mr. Fred P. Hochberg                Mr. John Krenicki                  Mr. John Davies
     Executive Secretary of UNESCAP and              Minister of Road Transport &           Executive Vice Chairman             Chairman & President of              President and CEO                   Vice President
       Under Secretary of United Nations              Highways, Republic of India            MEC Holdings, UAE                  Ex-Im Bank, United States           General Electric Energy             Intel Corporation

                                                                                        Confirmed Participants include :
ADB-AsianDevelopmentBank●AdhiKarya●ArevaT&D ● AngkasaPuraI● BangunGrahaSejahteraMulia ● BloombergTV ● BoralPipe ● BPMigas● BSDCity ● BritishChambersof Commerce ● ChinaGezhouba ● ComitéMaritimeInternational ●
Choice Plus Energy ● Coordinating Ministry for Economic Affairs, RI ● Copper Cable Company ● Detede / Linnhoff Technologies ● Digital Divide Institute ● Ecolutia Services ● Embassy of Canada ● ESRI ● Euroasiatic Jaya
● Elo Digital Office Indonesia ● EuroCham ● Export-Import Bank U.S. ● France Pavilion ● General Electric ● Gunung Garuda Steel ● Grundfos Indonesia ● Hitachi Asia Ltd ● Holcim Indonesia ● India Pavilion ● INKA
● Indika Energy ● Indonesia Investment Coordinating Board Intel Corporation ● Jasa Cita ● Jasa Marga ● Jayaco Alderon Persada ● Jembo Cable ● JGC Corporation ● Kaltimex Energy ● KMI Wire & Cable ● Korea Rural Community
Corp (KRC) ● Leighton Contractors Indonesia ● Leader Universal Holding Bhd. ● Lovells LLP ● Maersk ● Malaysia Pavilion ● MEC Holdings ● Ministry of Communication and Information, RI ● Ministry of Finance, RI ●
Ministry of Public Works, RI ● Ministry of State-Owned Enterprises, RI ● Ministry of Transport, RI ● Mitsubishi Corporation ● Mitubishi Heavy Industries ● Mitsui & Co ● Mott MacDonald ● National Development Planning / National
Development Planning Agency, RI ● Navigat Energy ● GE Jenbacher ● Netherlands Pavilion ● Nokia Siemens Networks ● Pemda DKI Jakarta ● Pelabuhan Indonesia III ● Prov. Kal-Tim ● Perusahaan Listrik Negara
● Philippine Pavilion ● Pemerintah Prov. Gorontalo ● Pemerintah Prov. Sulawesi Utara ● Refindo Inti Selaras Indonesia ● PIARC World Road Association ● Russia Pavilion ● Sampoerna Education Foundation ●
Sarana Multi Infrastruktur      ● Segway Indonesia Siemens ● SK Engineering & Construction ● Sinarmonas Industries ● South Korea Pavilion ●                              Sumitomo ● Sumberdaya Sewatama ● Telekomunikasi
Indonesia ● Total E & P Indonesie ● Turkey Pavilion ● Thailand Pavilion ● Trakindo Utama ● Voksel Electric ● World Bank ● Zinkpower Austrindo ● Zug Industry Indonesia..... and many more!

                                                               Infrastructure Asia 2010 Seminars :
                                Franco - Indonesian Energy Seminar | Information Technology and Telecommunications Solutions
                                                                                                                                                                                                                *To Be Confirmed

                                        To Exhibit, Sponsor or Attend as Conference Delegate contact Infrastructure Asia 2010:
                              T (021) 576 4240 | F (021) 576 4239 | email: |

  In Association With                     Title Sponsor
 C4 April 12, 2010                                                                                                   The President Post                                                                                           

O                                        Jababeka: From Industrial Zone to Independent City
               ne of the fastest                                                                                                                                                                                                            fact that metropolitan Jakarta is
               growing industri-                                                                                                                                                                                                            being expanded eastward, an ear-
               al zones in Indo-                                                                                                                                                                                                            ly property investment in Jababe-
               nesia is Jababeka,                                                                                                                                                                                                           ka may be a worthwhile endeavor
               which is situated                                                                                                                                                                                                            as is early purchase of office and
               in Bekasi regency,                       Looking back at where he started off, president director of PT Kawasan Industri Jababeka (KIJA) Tbk, SD                                                                             industrial space in anticipation of
on the eastern outskirt of Jakar-                     Darmono, says that much progress has been made but there is still a long way to go in turning this hub into a                                                                         rising land and building prices.
ta. What was in 1989 known as                                                                                                                                                                                                                  As the company struggles to
a “remote suburb” no one wished                                                                   cosmopolitan area.                                                                                                                        promote Jababeka City’s new
to visit has grown into an inde-                                                                                                                                                                                                            image, it has in fact obtained li-
pendent city for the international                                                                                                                                                                                                          cense from the regional govern-
community, housing thousands                                                                                                          By Alci Tamesa                                                                                        ment in Central Sulawesi to de-
of offices and houses not to men-                                                                                                                                                                                                           velop yet another industrial city
tion shopping malls, schools and                                                                                                                                                                                                            on a 1,520-hectare land.
a university.                            He seems to have based his                                                                                                                                 oping this hub in 1989 under a             The granting of license for this
   Looking back at where he           statement on his own experience                                                                                                                               consortium of 21 businessper-           new project suggests that per-
started off, president director of    clearing land for the project that                                                                                                                            sons who developed a neglected          haps Jababeka must continue to
PT Kawasan Industri Jababe-           is now very much in demand                                                                                                                                    500 hectare area into what is now       be an industrial city developer
ka (KIJA) Tbk, SD Darmono,            among international investors.                                                                                                                                one of Indonesia’s promising all-       while promoting the image of its
says that much progress has been         Usually land clearance is a seri-                                                                                                                          in-one cities.                          Cikarang hub as an independent
made but there is still a long way    ous obstacle to real sector invest-                                                                                                                              From then on the hub has been        city for the international commu-
to go in turning this hub into a      ment, more so to foreign com-                                                                                                                                 expanded to 5,600 hectares in-          nity.
cosmopolitan area.                    panies. Therefore Darmono’s                                                                                                                                   habited by some of the world’s             The main activity of this com-
   One reason certainly is a lack     statement indicates he is a good                                                                                                                              top industries such as Unilever,        pany, as it has always been for the
of infrastructure that meets in-      source to turn to for advice when                                                                                                                             United Tractors, Samsung Elec-          past 20 years, is to develop indus-
ternational standards. He says        you run aground in clearing land                                                                                                                              tronics, ICI, Mattel, Nissan,           trial estates which offer attractive
that Indonesia’s industrial centers   for infrastructure projects.                                                                                                                                  KAO and many more.                      industrial sites, standards facto-
need better facilities to compete        Meanwhile, Jababeka Manag-                                                                                                                                    There are 1,570 companies op-        ry buildings, supporting industry
in the global market.                 er Sony Kukuh has explained to                                                                                                                                erating in the area that also has       buildings, as well as customized
   Darmono believes that the          reporters that on December 6,                                                                                                                                 24,300 houses complete with             buildings.
Cikarang bonded zone in what          2006the leaders of seven bond-                                                                                                                                schools, shopping and recreation-
is now better known as Jababeka       ed zones had signed a memoran-                                                                                                                                al centers, office blocks etc. The         This publicly listed group of
Independent City is an example        dum of understanding (MoU)                                                                                                                                    total population of this industrial     companies also provides infra-
of a potential area in need of bet-   with the central and local govern-                                                                                                                            city is well over one million peo-      structure and estate manage-
ter attention.                        ments as well as PT Jasa Marga in                                                                                                                             ple.                                    ment, operating clean water and
   “The support for infrastruc-       order to develop infrastructure at                                                                                                                               In Jababeka there is also the        waste treatment plants, man-
ture has not been sufficient,”        the Cikarang industrial hub.                                                                                                                                  President University, Movie Land        aging fire brigades, maintain-
Darmono says in a subtle tone for        One of the issues the central                                                                                                                              for television and film produc-         ing roads, parks and public street
what could otherwise have been        government has agreed to do is                                                                                                                                tion, and medical City a special        lights.
an appeal on the government to        to build the Cimanggis-Cibitung                                                                                                                               zone for superb healthcare servic-         Industrial tenants on JICA
improve the facilities therein.       section of the toll road as well as                                                                                                                           es. One of the public figures be-       projects are from Australia, Bel-
   “The roads are quite okay but      an access road to Tanjung Priok                                                                                                                               hind this prestigious university is     gium, Canada, People’s Repub-
not enough…” Darmono says,            harbor.                                                                                                                                                       Prof. Dr. Juwono Sudarsono, the         lic if China, Denmark, Finland,
recognizing, however, that the                                                                                                                                                                      immediate past minister of de-          France, Germany, Greece, Hong
government has done its best in          Meanwhile, Jasa Marga is re-        President Director of PT Kawasan Industri Jababeka (KIJA) Tbk, SD Darmono                                              fense and a noted expert on in-         Kong, Italy, Japan, Korea, Malay-
increasing infrastructure capacity    quired to increase the capacity of                                                                                                                            ternational relations. It is also an    sia, Netherlands, Norway, Philip-
in Cikarang.                          Jakarta-Cikampek toll road and                                                                                                                                international university where          pines, Singapore, Spain, Switzer-
                                      move Pondok Gede toll gate to          opment and installation of wa-               Cikarang, a golf course operator;     time ago.                           entrepreneurial spirit is easily felt   land, Taiwan, United Kingdom,
   Darmono seems to have the          Cikarang. The reason for this is       ter treatment plants, waste water            PT Saranapratama Pengemban-              Jababeka is moving fast from     on campus.                              and United States of America.
opinion that the government is        that in 15 years time the traffic in   treatment, telephone, electricity,           gan Kota, a real estate infrastruc-   being an industrial production         The existence of the universi-          Apart from Jababeka, the com-
over-cautious and is therefore        West and East Bekasi, Cikarang         sports, and recreational facilities.         ture company, and PT Metropark        center into an “independent city”   ty has given added ballast to Ja-       pany’s projects are situated in Ci-
afraid of making important deci-      and Cibitung will be very heavy           Jababeka’s subsidiaries include           Condominium Indah, a residen-         which carries the connotation of    babeka’s image as a new indepen-        legon in Banten province, Ma-
sions that would otherwise have       and this could impair produc-          PT Grahabuana Cikarang, a                    tial condominium operator.            it being a comfortable living en-   dent city. What is needed today         gelang, and Jakarta Central
solved the issue of land clearance    tion speed at Cikarang industri-       real estate company; PT Indo-                   Its President Director SD          vironment complete with all the     is perhaps to develop more roads        Business District (CBD). In Tan-
which is an obstacle to further de-   al hub.                                cargomas Persada, an industri-               Darmono is a talented business        household, office, recreational,    leading to this new city in order       jung Lesung on the westernmost
velopment of the industrial hub.         Jababeka is engaged in the de-      al estate developer; PT Jababe-              thinker and actor who believes        as well as business and industri-   to erase its impression of being a      tip of Java Island, the compa-
   “Land clearance would not          velopment and sale of industrial       ka Infrastruktur, a real estate and          in the philosophy of “think big,      al needs.                           mere industrial location.               ny runs a luxury resort to satis-
be a big issue if the government      estates and related facilities and     industrial estate management                 move fast, and start small.” He          The term Jababeka itself            Jababeka also has a lot of of-       fy the need of the international
has the courage to discuss amica-     services. These include residen-       company; PT Gerbang Teknolo-                 elaborates on this philosophy in      was originally made up of two       fice space suitable for industri-       businesspersons and Indonesians
bly with local residents and land     tial estates, apartments, office       gi Cikarang, an industrial es-               a book with the same title which      words—Jawa Barat (West Java)        al companies that need spacious         from middle and upper-class seg-
owners, Darmono points out.           buildings, shopping malls, devel-      tate developer; PT Padang Golf               was launched in Jakarta some          and Bekasi. They started devel-     production areas. And given the         ments.
 C6 April 12, 2010                                                                                               The President Post                                                                           


         Bonded Zones Need Better Infrastructure
         as Exports Rise to US$47.4 Billion a Year
The figure actually represents 60 percent of their annual production
worth as each of the 6,321 industries in those locations bagged an
average production value of $12.5 million a year.
By Alci Tamesa

         ndonesia’s 88 industri-                                              ume of export-import activities
         al production centers,                                               has exceeded by far the handling
         also known as bonded                                                 capacity of local harbors so new
         zones, generated a to-                                               harbors must be built to satisfy
         tal of US$47.4 billion                                               the rising need.
         worth of exports last                                                   Sabang is one of Indonesia’s
year, an indication that local-                                               strategic sports being developed
ly made products are gaining a                                                to accommodate sea traffic and
stronger foothold in internation-                                             other purposes. But it does not
al market.                                                                    have empty land to be turned
   The figure actually repre-                                                 into a good harbor site and only
sents 60 percent of their annu-                                               0.7 percent of its land may be
al production worth as each of                                                used for the purpose, according
the 6,321 industries in those lo-                                             to a Bappenas official.
cations bagged an average pro-                                                   Geographically Sabang is situ-
duction value of $12.5 million a                                              ated on the island of Weh which
year.                                                                         is part of NAD province. The
   According to data compiled                                                 government needs a total of Rp11
by the Association of Indonesian                                              trillion worth of investment to
Industrial Centers (HKI), those          M.S. Hidayat                         turn Sabang into an international
companies employ 1.5 million             Industry Minister                    trading and investment hub.
workers who are working to en-
sure sustainability of these pro-                                             JAMBI PREPARES TO LURE
duction centers.                                                              INVESTORS
                                       a comprehensive and integrat-             Meanwhile, by the end of this
   Industry Minister MS Hidayat        ed urban planning policy that          year, the province of Jambi will
has said that the 60 percent ex-       would prevent floods during the        have completed works on Jambi
port portion is good enough, giv-      rainy season.                          Industri Agro Industrial (JIAP)
en that the government does not            Responding to this, West Java      project in East Tanjung Jabung
only focus on exports but also on      Governor Ahmad Heryawan says           regency.                                                                                                                                      Photo: The President Post?Nandi Nanti
satisfying domestic demand for         his administration has declared           Contractors are rushing against     Sliding Down: The 500-hectare Pulogadung Industrial Complex, once a prime attraction to industrialists, now suffers from a bad
industrial products.                   2010 as the “year of infrastruc-       time to complete works on a 487        reputation due to poor roads and lax security.
   Due to the rising demand,           ture” and consequently they will       hectare plot of land including
Minister Hidayat indicates, the        work harder to empower indus-          300 hectares provided by the re-
government will put special em-        trial locations with better infra-     gional government, according to
phasis on rejuvenating infra-          structures.                            Saut Hilser Sihite, chief of the lo-
structure in bonded zones while           For instance, for this year, the    cal branch of Investment Coor-
weighing possibilities for install-    provincial government has ear-         dinating Board.
ing new facilities in collaboration    marked over one trillion rupi-            He says that the project is sup-
with the private sector.               ah for renovating and building         ported by the Minister of Indus-
   “The government is commit-          new facilities around the region.      try, Minister of Agriculture, Min-
ted to encourage development of        In 2009 the regional government        ister of Trade, Bappenas, Export
infrastructure such as roads, toll     provided only Rp500 billion for        Financing Agency (LPEI) and lo-
roads, harbors, airports, electrici-   the purpose.                           cal plantation companies.
ty generating plants, telecommu-          West Java contributes 57 per-          At least three corporations have
nications, etc,” Hidayat says.         cent of national industrial out-       started to participate in the devel-
   Nevertheless, he acknowledg-        put including the contributions        opment plan. They are PT Bak-
es that over the past five years in-   made by 240 textile companies          rie Rekie Bio Energy, PT Green-
frastructure development has not       there. The province also absorbs       land Agroteal industries, and PT
been conducted optimally. For          44 percent of the nation’s indus-      Wahana Mandiri Indonesia. An
instance, it land clearance has al-    trial workforce.                       organic fertilizer company is also
ways become a stumbling block                                                 stepping in.
to many toll road projects.            PULOGADUNG INDUSTRIAL                     They produce crumb rubber
                                       COMPLEX                                and derivatives of crude pal oil
   This is a big irony for the coun-      The main issue in Indonesia’s       such as oleochemical, cooking
try which 35 years ago became          business development is actu-          oils, etc. LPEI has also included
one of Asia’s pioneers in toll road    ally a lack of professional man-       Bank of China in the financing
development when it built the          agement and leadership. This is        plan for this project.
Jagorawi toll road. He recalls the     particularly true when we look            The local government is hop-
days when Lee Myung Bak—               at Pulogadung Industrial Com-          ing to attract more international
now South Korea’s president—           plex. What used to be Indonesia’s      investors to develop the area into
was the chief engineer for the Jag-    main attraction for industrial re-     a high-class trading and invest-
orawi project.                         locations is now a somewhat ne-        ment gateway to boost the Indo-
   Talking about it, Hidayat says,     glected area.                          nesian economy.
there is a big irony here because         For many years since its estab-
since 35 years ago “we have not        lishment in 1973, the 500 hectare      FORESTRY BONDED ZONE
been able to develop more than         Pulogadung Industrial Complex             In a related development, in-
600 kilometers of good toll roads      attracted many industrialists but      vestors from South Korea have
whereas Malaysia has had 5,000         bad condition of the roads that        called on the Indonesian govern-
kilometers of toll roads and the       lead to it is to blame for a decline   ment to build a special bonded
People’s Republic of China now         in investor’s interest. Another dis-   zone for development of forestry
has 85,000 kilometers of toll          couraging factor is security sys-      products.
roads.                                 tem that seems to be too relaxed,         Kim Hoon, the director for
   He therefore describes as very      business observers say.                agriculture and forestry affairs
positive the issuance of Gov-             If not for seasonal floods that     of the Korea-Indonesia chamber
ernment Ordinance Number               frequent inundate the area, Pu-        (Korindo) says that his govern-
24/2009 on development of in-          logadung would have been a             ment is willing to help build the
dustrial locations and adds that       choice. Since 2002 when floods         forestry bonded zone if requested
hopefully Indonesia will hence-        devastated roads and other facil-      by the Indonesian side.
forth have industrial centers in all   ities, no concrete action has been        This would solve many of the
its provinces to attract investment    taken to restore its condition. In     problems often encountered in
and bolster economic growth.           fact it was the tenants that took      the forestry industry, he says, add-
   Hidayat has repeatedly called       the initiative to repair roads lead-   ing that Korean business leaders
for upgrading of infrastructure in     ing to the site.                       sent a proposal on this to the In-
industrial locations arguing that         Not surprisingly, Irwansyah,        donesian government.
this determines to a great extent      a noted urban development ob-             Kim explains that this idea
the quality and competitiveness        server from the University of In-      first emerged in a meeting be-
of Indonesian products in the          donesia (UI) says that abandon-        tween Korean businesspersons
global market.                         ing hard-earned achievements is        and Indonesia’s minister of for-
   He has even called on region-       a habit in Indonesian society.m        estry Zulkifli Hasan. The meet-
al (provincial and regency-level)      Indonesians are often very good        ing was also attended by South
governments to review their in-        starters but not good maintain-        Korea’s ambassador to Indonesia.
frastructure development plans         ers nor finishers as well. Similar        Korean investors have of-
and if need be ask for additional      situations occur in other indus-       ten complained about land con-
funds from the state budget be-        trial centers and some authority       flicts with local residents as well
cause the priority now is on in-       should handle this, he proposes.       as about different approaches be-
creasing Indonesia’s competitive-         “Otherwise, foreign investors       tween central and regional gov-
ness in the global market.             would rethink their plans and          ernments with regard to city
   “The government pays special        may relocate their businesses to       planning issues.
attention to development of in-        other countries.”                         Business analysts say that de-
dustrial clusters which are fund-                                             velopment of a forestry bonded
ed by the state budget because         SABANG NEEDS MORE HARBORS              zone would help foreign investors
such a policy is meant to enhance         One of the industrial locations     run business without the head-
industrial growth,” he theorizes.      being developed today is Sabang        ache of having to deal with ardu-
                                       on the northernmost tip of Suma-       ous bureaucracy.
WEST JAVA                              tra island. The area being devel-         Kim believes that once a for-
   The minister particularly sin-      oped along with Nangroe Aceh           estry bonded zone is established,
gled out West Java as the prov-        Darussalam (NAD) needs more            Indonesia will be able to produce
ince that needs special attention      harbors to facilitate increased        bio-energy in a large scale because
because it hosts most of the coun-     traffic of merchant ships.             Korea has all that is needed to do
try’s industrial centers.                 A recent study by National          mass production and at the same
   West Java needs more toll roads     Development Planning Agency            time reduce pressure on industri-
and industrial facilities as well as   (Bappenas) reveals that the vol-       al consumption of fossil fuel.                                                                                                         The President Post                                                                                                                      April 12, 2010 C7

Pictorial Event
Breakfast Dialogue
with Dr Kuntoro Mangkusubroto
at The Financial Club Jakarta
The Financial Club Jakarta organized the monthly
Breakfast Dialogue series on Tuesday, 30 March 2010
by inviting Dr Kuntoro Mangkusubroto as its speaker.
Dr Kuntoro presents his speech entitled “Unlocking
Indonesia’s Economic Barriers”

Present at the breakfast prominent businessmen and
professionals, among others, Giueseppe Nicolosi (Enest &
Young), Alwin Syah Loebis (Aneka Tambang), Richard Bale
(Embassy of Canada), Scott Younger (Glendale Partners),
Tony Wenas (International Nickel), Shanti Poesposoetjipto
(Samudra Group), Karen Mills (Karimsyah Law Firm),
Atmono Suryo (Ambassador), Subarto Zaini (Persona
Global), and Mark Wong (Lippo Group).

           IABC Cocktail Reception
           at The Mandarin Oriental Hotel
                                                                                                                                                         From left to right Mr. Rod Morehouse – Austrade; Mr. Nyamdorj
                                                                                                                                                         Chuluunbaatar – Consulate of Mongolia; Mr. David Macdonald – Magnum

           IABC Cocktail Reception
           was held on 25th
           March, 2010 at The
           Mandarin Oriental
           Hotel attended by 211

                                                                                                                                                                                                                                         From left to right Mr. Paul Martin – Asutrade & Mr. Nam
                                                                                                                                                                                                                                         Lee Seng – Singapore Airlines

                                                                         From left to right Mr. Sabam Siagian – IABC; H.E. Bill Farmer AO – Australian   From left to right Mr. Noke Kiroyan – IABC; Mr. Moetaryanto – IABC; Mr. John
                                                                         Ambassador; Mr. S. Wiryono & Mr. Hamzah Thayeb – Department of                  Russell – John Russell Golf; Mr. Sabam Siagian – IABC & H.E. Bill Farmer AO –
                                                                         Foreign Affairs                                                                 Australian Ambassador

The Family Business Network                                                                                                                                                  An Interview with Rosihan Anwar
Pacific Asia (FBNPA) Seminar
                                                                                                                                                                             The President Post conducted an
The Family Business Network                                                                                                                                                  interview with senior journalist
Pacific Asia (FBNPA) conduct                                                                                                                                                 Rosihan Anwar at his residence at
a seminar at the Financial                                                                                                                                                   Jalan Surabaya, Jakarta.
Club Jakarta on March 30,
2010. Shanti L. Posposoetjipto,                                                                                                                                              In the interview, he mentioned
member of the board of                                                                                                                                                       about the freedom of press and the
FBNPA officiate the opening                                                                                                                                                  journalist association which still are
of the seminar, while Dr. Greg                                                                                                                                               unable to guarantee their journalists’
Li, Head of Enterprise Risk                                                                                                                                                  welfare
Governance & Management
AON Asia Pacific, lead the
                                                          Dr. Gregg Li                                       Dr. Martha Tilaar

From left to right: Ali Basyah Suryo, Shinta W. Kamdani, Shanti Poesposoetjipto      From left to right: May Tjokrosetio & Nicole Tjokrosetio