Indonesia optimistic its economy will grow 4.5 percent

Jakarta (ANTARA News) - Indonesia is optimistic its economy will grow 4.5 percent in 2009 in spite of the impact of the global financial crisis on several of its economic sectors.

Its finance minister Sri Mulyani Indrawati said after a limited cabinet meeting on economy on Monday "our projection remains between 4.0 and 4.5 percent until the end of this year. Indeed international institutes are projecting the country`s economy will only grow 3.0 to 3.4 percent."

She said the country`s economic growth in the first quarter could still reach above 4.0 percent and this was a good beginning to show that the country`s economy remained quite resilient against the negative impact of the global economic crisis.

She said she predicted the country`s economy grew between 4.3 and 4.8 percent in the first quarter on consumption that grew 5.5 percent.

She said household economic growth in the period was predicted to be between 4.3 and 5.0 percent or down from 6.4 percent in the fourth quarter of 2008.

"The consumption growth of between 4.3 and 5.0 percent is still quite high as several parties are predicting that the country`s economy will grow lower than expectations," she said.

The growth of government consumption in the first quarter this year is predicted at between 8.0 and 13.1 percent or higher than that of the same period last year.

The minister said the global financial crisis had affected investment as well as export and import performance as shown by first quarter figures.

Investment is predicted to grow 5.0 to 6.5 percent in the first quarter or lower than the average growth in 2008 that reached double-digit between 10 and 13 percent. "So there has been a correction of more than 50 percent," she said.

Exports in the period contracted between minus 6.0 and minus 9.0 percent or dropped sharply from 13.6 percent in the same period last year.

"In the fourth quarter of 2008 our exports grew almost 1.8 percent so contraction in the first period of 2009 is a declining trend resulting from global economic downturn," she said.

Imports also contracted in the first quarter of 2009 between minus 8.0 percent and minus 12 percent and because the drop was deeper than that of exports the country`s trade balance remained positive at US$607 million until the end of March.

Exports in the first quarter reached US$22.55 billion while imports US$18.578 billion, leaving a surplus of US$3.974 billion.

Kalla congratulates SBY as coalition hunt begins

The Jakarta Post, JAKARTA | Sat, 04/11/2009 9:59 AM

Delayed democracy: A Polling Station Working Committee (KPPS) member holds up a ballot in a repeat legislative election in Nusukan subdistrict, Surakarta, Central Java, on Friday. The authorities cancelled the elections in Nusukan after realizing the ballots were invalid because they were designated for other regions. (Antara/Andika Betha)

Politicians got back to wheeling and dealing with potential allies Friday as the all-important task of forming coalitions for the presidential election got underway.

Symbolic meetings were abound as major parties assessed their losses and gains from Thursday's elections.

Reeling from a disappointing result, Vice President and Golkar Party chairman Jusuf Kalla effectively conceded his party’s “defeat” by personally congratulating President Susilo Bambang Yudhoyono after Friday prayers on the Democratic Party’s sweep of the polls.

“I was quite surprised,” said Yudhoyono after receiving Kalla’s telephone call.

Always one to put his enthusiasm in check, the President quickly qualified the conversation as a “communication between friends”.

Nevertheless, in the strongest hint yet of a possible reprise of the SBY-JK duo, the President admitted the brief talk was a good start.

When pressed further on the vice presidency, Yudhoyono refused to be specific.

“There is Pak JK, and there are also other candidates,” he remarked, stressing that the focus was now on forming a coalition based on a written agreement.

“The presidential and vice presidential candidate will be an extension of the coalition,” said Yudhoyono.

Based on the results of quick counts, so far only the Democratic Party can single-handedly meet the prerequisite for nominating a presidential candidate, which requires 20 percent of seats in the House of Representatives or 25 percent of all valid votes cast.

Ahead of the election, Kalla had bowed to party pressure by declaring himself ready to run as president. Other suspected major contenders for the presidency are Megawati Soekarnoputri from the Indonesian Democratic Party of Struggle (PDI-P), along with retired generals Prabowo Subianto from Gerindra and Wiranto from Hanura.

As the party leading the polls so far, Yudhoyono was very specific about the “rules based” parameters of the coalition he would like to form.

He said such a contract should be made public so the people themselves can control the workings of government.

He said he was disappointed with the weaknesses of the present coalition and the behavior of certain politicians.

“How can a minister, who is a member of the coalition, attack a government policy?” the President said.

“In any other country he would be [kicked] out!”

Yudhoyono insisted that his party was open to any coalition as long as a mutual commitment, irrespective of ideology, was reached.

“We will especially be looking toward those who have proven they can work effectively together”.

Separately, the Prosperous Justice Party (PKS) refused to commit on the idea of a coalition, with deputy secretary-general Zulkieflimansyah saying the party leadership had not made a decision despite an internal lean toward Yudhoyono’s party.

“Our supporters are inclined toward a coalition with the Democratic Party rather than PDI-P or Golkar,” he said to Antara from Serang, West Java.

A meeting was also held between Megawati and Wiranto, though the latter said their discussion focused on their dissatisfaction with the elections, which he claimed were rife with violations.

Industrial activities pick up in Q1: Officials

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Fri, 04/10/2009 1:39 PM

Having been falling since the last quarter of 2008, the country's industries - mainly those aimed at the domestic market - have begun to show signs of perking up, indicated by an increase in electrical power consumed in the first quarter this year, compared to a quarter earlier, a ministry official says.

While industry as a whole experienced contraction in the final four months of last year, there were signs of more industrial activity in the following quarter, the first quarter of 2009, said director general of electricity and energy utilization at the Energy and Mineral Resources Ministry, J. Purwono, on Thursday.

"Electrical usage of industries began to increase in the first quarter of 2009 from the fourth quarter of 2008, when industrial activities were sluggish," Purwono said.

"Maybe industries have found new markets," he added.

His statements echoed remarks on Monday by Finance Minister Sri Mulyani Indrawati who said power consumption of industries rose 2.5 percent in the first quarter of 2009 compared to the previous quarter, indicating more activity.

It signaled, she said, that industries have continued producing goods amid the global economic downturn because of higher demand in the domestic market.

The Industry Ministry has said industries may expand between 3.6 percent and 4.6 percent this year. Indonesia's economy may expand as low as 3 percent this year, according to the central bank, as exports and investments slow down.

While the country will not reach economic growth comparable to last year's 6.1 percent, the impact of the global economic slowdown will be cushioned or countered if industries can maintain output, provided that domestic demand, Indonesia's main economic driver, remains robust.

Both Purwono and Mulyani however, warned that a pick up in electricity in the first quarter was not yet significant on its own.

Compared to the electrical usage level of industries in the first quarter of 2008, this year's first quarter use of power by industry was less than that of last year, said Rudiantara, vice president director of the state power company PT PLN, the sole electricity public utility.

"Electrical usage of industries was down double-digits in the first quarter of 2009 compared to the same period a year earlier," he said, without elaborating.

Diesel consumption of industries in the first quarter of 2009 was also lower than that in the same period last year, said Anang Rizkani Noor, spokesman for state oil and gas firm PT Pertamina.

"There has not been a significant rise in diesel consumption," he said.

However, in the first quarter, Indonesia's economy is predicted to have expanded by 4.6 percent, according to the Finance Ministry.

The Central Statistics Agency (BPS) will reveal the official first-quarter growth in May.

SBY's 'integrity' behind Democratic Party's win: Juwono

The Jakarta Post, Jakarta | Fri, 04/10/2009 8:37 AM

Defense Minister Juwono Sudarsono, who is not affiliated to any political party, attributes the Democratic Party's success in the legislative elections to President Susilo Bambang Yudhoyono's "character and integrity."

"The success of the Democratic Party in gaining more than 20 percent of the votes in the legislative elections is a measure of the voters' trust in character and integrity of SBY's personality," Juwono said Friday.

Quick counts by a number of research institutes, including the Indonesian Survey Institute, the Indonesian Survey Circles, LP3ES and the National Survey Institute show that Yudhoyono's Democratic Party gained about 20 percent of the total votes, almost three times of total votes it got in 2004.

Megawati Soekarnoputri's Democratic Party of Struggle (PDI-P) came second with about 15 percent of the votes and Jusuf Kalla's Golkar Party followed closely at the third place with about 14 percent.

Yudhoyono welcomed the quick counts, saying that survey institutes would not risk their integrity by issuing quick counts.

He said that he would start talking to other political parties to build possible coalitions at the House of Representatives for the July 8 presidential elections.

Indonesia Tops Graft List in Asia, Says Survey

The Jakarta Globe, April 8, 2009

Singapore. Indonesia is perceived as Asia’s most corrupt economy, an annual survey of foreign business executives showed on Wednesday.

According to the survey by the Political and Economic Risk Consultancy, or PERC, Singapore and Hong Kong remained the region’s least corrupt economies.

Despite the negative perception of Indonesia though, PERC noted “real headway in fighting the problem” under President Susilo Bambang Yudhoyono, who was seeking reelection in July.

“To be sure, the absolute scores show corruption in the public and private sectors is still very high,” PERC told AFP.

“But our latest survey shows that residents in Indonesia are more favorably impressed with the determined way the KPK [Corruption Eradication Commission] has been fighting corruption than any of the other countries graded poorly for corruption.”

The major question in Indonesia was whether the anticorruption efforts could be sustained.

The March results are based on more than 1,700 responses from 14 Asian economies plus Australia and the United States, which were included for comparison purposes, PERC said.

In a grading system with zero as the best possible score and 10 the worst, Indonesia got 8.32. A score greater than 7.0 indicates “serious” corruption problems.

Last year’s cellar-dweller, the Philippines, made a marked improvement, ranking sixth worst with a score of 7.0.

Thailand was seen as the second most corrupt country with a grade of 7.63, but PERC said foreign investors were more concerned about political stability.

“Very few expatriate executives find that corruption makes the country a less attractive place to live and do business,” it said.

Agence France-Presse

BI: Processing industry to grow only two percent

Jakarta (ANTARA News) - Indonesia`s processing industry is predicted to grow only two percent this year, down from 3.7 percent in 2008, according to Bank Indonesia`s economic report issued on Wednesday.

"The slowdown occurs because of decreased exports and domestic demand," it states.

BI predicts export-oriented industries would be the hardest hit, including textile and textile products, footwear, electronics, automotive, wood and wooden handicraft products.

Reduced domestic and external demand had forced many companies in the industrial sector to stop production. "They adopted the policy to avoid overstocking," it states.

It says expansion of the domestic economy will also be potentially hampered by tight liquidity and inflow of discounted imported goods.

The goods come from markets in advanced countries facing declining purchasing power.

It says imported goods that enter into Indonesia are not only half-made goods but also goods that are ready for consumption and also produced in the country.

BI also predicts the growth in the trade, restaurant and hotel sectors would also drop from 7.2 percent in 2008 to only 4.5 percent following weakening private consumption as a result of declining purchasing power.

The central bank predicts retail and wholesale trade that have dropped since the end of 2008 will further decline further in 2009.

Retail markets that will be affected heavily are the automotive, electronic and shoe markets.

Auto sales will drop, BI predicts, because people`s purchasing power declines while the price of cars soars to adjust with the exchange rate and because of tight liquidity, it says.

Indonesians vote for new parliament

The Jakarta Post, Robin McDowell, The Associated Press, Jakarta | Thu, 04/09/2009 7:46 AM

President Susilo Bambang Yudhoyono and First Lady Ani Yudhoyono show their thumbs marked by ink after they vote at a voting booth near their residence in Cikeas, Bogor, West Java, Thursday (4/9). Indonesians today vote in the parliamentary elections. (ANTARA Photo/Widodo S. Jusuf)

Legislative elections Thursday could determine if President Susilo Bambang Yudhoyono will have enough support to win a second five-year term needed to push through aggressive economic and institutional reforms.

Violence flared hours before the first polling stations opened in the easternmost province of Papua, the scene of a decades-long insurgency, killing at least six people, said local police chief Maj. Gen. Bagus Ekodanto.

But by midmorning, the situation appeared calm, with voters forming long lines to cast ballots.

The outcome of Thursday's election for a new 560-member legislature is being closely watched because it will determine who will qualify to run for president in July.

The party or coalition that wins a fifth of the seats - or 25 percent of the popular vote - can nominate a candidate for that race.

Yudhoyono's Democrat Party is expected to come out on top, but with more than 170 million people registered to vote and 38 parties to choose from, nothing is certain. Other front-runners are the Indonesian Democratic Party of Struggle headed by former President Megawati Sukarnoputri and the largest party, Golkar.

Indonesia, the world's most populous Muslim nation, emerged from 32 years of dictatorship under Gen. Suharto in 1998, leading to reforms that freed the media, struck down repressive laws and, in 200, allowed citizens to vote for president for the first time. It is often held up as a beacon of how Islam and democracy can go hand-in-hand.

If Yudhoyono's party wins 26 percent of the popular vote, as some opinion polls predict, he will not have to cobble together an alliance with others seen to be less willing to tackle corruption, overhaul the judiciary and streamline bureaucracy.

"At this moment it looks like he's going to make it," said Dede Oetomo, a political analyst from Airlangga University in the city of Surabaya.

Last time around, the Democrats won just 7 percent of the vote, forcing Yudhoono, eventually, to partner up with Golkar and a handful of Islamic parties that tried to push through laws governing everything from the way women dressed to the types of magazines that could be hawked on street corners.

Analysts say these elections could see the popularity of religious parties, which did well in 2004, waning. Most of the secular country's 210 million Muslims practice a moderate form of the faith.

"As long as these parties try to push through Islamic-based laws, they are going to keep losing support," said Syafiie Maarif, an Islamic scholar. "They need to come up with a broader, policy-based platform, like fighting poverty."

Campaigns across the board were largely personality driven and policies have been broad and ill-defined, focusing on issues like the effect the global slowdown has had on the economy or the need to root out pervasive corruption.

Unlike 2004, security is no longer a big issue, something many credit to Yudhoyono.

Indonesia was last hit by an al-Qaida-linked terrorist attack four years ago and, thanks to a 2005 peace deal, guns have largely fallen silent in formerly war-torn Aceh province, on the country's northwestern tip.

Aceh and Papua are the only places thathave been hit by pre-election violence, but it is not expected to spiral out of control.

Papuan police chief Maj. Gen. Bagus Ekodanto said more than 80 suspected rebels attacked a police post in the provincial capital, Jayapura, with machetes and spears at around 1 a.m. Thursday, leaving four dead in thelash that followed.

Elsewhere, he said, rebels who want Papua to break from Indonesia stabbed several motorcycle taxi drivers, burned an oil depot and property at a state university, leaving two others dead.

Voters, who had been told to boycott the vote, refused to be intimidated.

"I think everything should be solved in a peaceful way. That's why I'm out here today," said Leonard Tuilan.

In addition to a national parliament, elections were being held Thursday for a new provincial and local legislatures and councils.

The Indonesian Survey Institute poll showed the Democratic Party would win 26 percent of the popular vote; the Indonesian Democratic Party of Struggle 14 percent; and Golkar 13 percent. The four Islamic-based parties each came in at around 4 percent. The survey, based on interviews with 2,486 people, had a margin of error of 2.3 percent.

Associated Press Writers Zakki Hakim, Niniek Karmini and Ali Kotarumalos contributed to this report from Jakarta.

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Economy may grow by 4.6% in Q1, supported by elections

The Jakarta Post, JAKARTA | Wed, 04/08/2009 12:03 PM

Stimulating election: A worker in a small T-shirt production house in Jakarta arranges the products ready to hit the streets. Finance Minister Sri Mulyani Indrawati predicted Tuesday Indonesia has grown by 4.6 percent in the first quarter from a year earlier, as elections helped stimulate the economy. JP/P.J. Leo

The economy may have grown by 4.6 percent in the first quarter of the year from a year earlier, as the elections helped pushed up consumption, the finance minister says.

Consumption remains the largest contributor to Indonesia’s economy, making up about 70 percent of the GDP.

Finance Minister Sri Mulyani Indrawati told reporters Tuesday that a number factors in the first three months of the year had helped boost consumption, such as the campaign for the general elections, fuel price cuts, and salary increase for state employees.

“Almost all political parties spent massive amounts on consumption during their campaigns in various activities,” Mulyani said.

“Bank Indonesia predicts that household consumption grew by 4.1 percent, while we predict it grew by 4.6 percent.”

The growth in consumption.

Mulyani added, mitigated slumping export figures and slowing flows of investment amid the global credit crunch.

The Central Statistics Agency (BPS) has reported that non-oil and gas exports contracted 28.34 percent to $12.26 billion in the first two months of this year, from $17.11 billion in the corresponding period last year.

Total exports stood at $14.23 billion in that period this year, a 34.5 percent drop from the $21.73 billion recorded in the same period last year, BPS data shows, with the central bank also cutting its full-year growth forecast to between 3 and 4 percent, down from the initial 4 to 5 percent.

“The recent trend of decreasing imports will also have a significant effect on investment. We predict that investment growth will decrease to 4 percent from 12 percent in the first quarter,” Mulyani said.

Indonesia’s economic growth of 4.6 percent is slower than the 6.1 percent booked in the fourth quarter of last year, but is still fairly respectable as compared to many of its peers in the region amid the global downturn.

Mulyani said the first quarter growth was within the government’s expectations.

“We have told the House of Re-presentatives that economic growth this year will tend to go downward, between 4 and 4.5 percent. That means our first quarter prediction is still achievable,” she said.

Mulyani also said the fiscal sti-mulus, worth Rp 43 trillion, had also contributed in improving consumers’ spending power for consumption in the first quarter.

“The tax cuts and their impact in stimulating purchasing power are already effectively recorded within the economic system during the first quarter as well.”

It forms part of the government’s Rp 73.3 trillion in stimulus package designed to keep the country’s economic wheels oiled and eventually cushion the external economic impacts.

Going forward, Mulyani was upbeat the elections would again help stimulate the economy, in particular consumption.

“We should consider the fact that the election is far from over, as it will proceed to the presidential election in June, which will greatly affect consumption, not to mention the impact of lower fuel prices along with the increase of salaries for state employees,” she said.

The BPS will reveal the official realization of this year’s first quarter economic growth in May.

The Asian Development Bank (ADB) and World Bank forecast Indonesia’s economy to grow this year by 3.4 percent and 3.6 percent, respectively.

Indonesia needs to keep its economy expanding at a respectable rate to help prevent unemployment and keep poverty rates from rising. (hdt)

Indonesia Foreign Debt at US$ 10.1 Billion

Tuesday, 07 April, 2009 | 18:42 WIB

TEMPO Interactive, Jakarta: Indonesia foreign debt due to be paid in 2009 reached US$ 10,1 billion, a report from the central bank showed on Tuesday. The report also projected foreign loans in 2009 at US$ 9,1 bilion.

Bank Indonesia noted that US$ 7,1 billion of the total debt was the primary loan while US$ 3 billion was the loan interest, and the government to make the payment from the 2009 state budget.

In 2009 the government planned to acquire US$ 9,1 billion to finance spending, US$ 5,8 will came in form of programme and project loans, while US$ 3,3 billion will be acquired through auctions of government and islamic bonds.

Several countries and international institutions have reportedly pledged loans for precautionary measures for Indonesia totalled at US$ 6,5 billion. The pledge came from the World Bank at US$ 2 billion, Asian Development Bank and Australian Development Bank to make separate contribution of US$ 1 billion, the Japanese government to make US$ 1,5 billion loans, while International Development Bank and the French government to lend US$ 0,5 billion.

The private sector according to the central bank is due to settle US$ 17,4 billion foreign debts due to mature this year or about 63,3 percent of Indonesia's total short term debts.

EKO NOPIANSYAH

Samurai power

The Jakarta Post | Tue, 04/07/2009 7:01 PM

Finance Minister Sri Mulyani Indrawati (2nd right) exchanges agreement documents with Japan Bank for International Cooperation (JBIC) president Hiroshi Watanabe (2nd left) in Jakarta on Tuesday while accompanied by Japan’s ambassador to Indonesia Kojiro Shiojiri (left) and Director General for Debt Management Rahmat Waluyanto (right). Backed by a loan worth US$1.5 billion from JBIC, the government plans to issue sell five- and 10-year yen-denominated bonds or Samurai bonds this year.

US provides over $1b for RI airline upgrades

Ika Krismantari, THE JAKARTA POST, JAKARTA | Tue, 04/07/2009 11:01 AM

The United States Export-Import Bank approved more than US$1 billion in financing for Indonesian airlines to improve passenger fleets, generate business and create jobs in Indonesia and throughout the region.

In a press statement in Jakarta on Monday, the US Embassy said the financing was made possible after the ratification and implementation of the Cape Town Treaty, which allows Indonesian airlines to save millions of dollars in financing costs.

“This financing allows Indonesian-registered companies to gain very competitive rates and favorable credit similar to the most advanced countries in the world,” said US Ambassador Cameron R. Hume.

“This action by the US is a vote of confidence for the improvement of aviation regulation and the general business environment in Indonesia,” said Henry Bakti, the Indonesian Transportation Ministry’s director general for air transportation.

The financing will allow Lion Air to access $238 million to purchase new Boeing 737-900ER planes and provide preliminary authorization for another $841 million, for a total of 30 new passenger jets.

Last month, national flag carrier Garuda Indonesia announced the bank’s authorized joint financing of $346 million for increasing its’ fleet.

“We are delighted to offer Lion Air the reduced exposure fee available under this treaty, which reduces the legal risks associated with cross-border, asset-backed aircraft financing and leases,” said Robert Morin, Export-Import Bank vice president of transportation.

The loan facility is expected to boost not only aviation safety but also the country’s image, which has been marred by several air transportation accidents.

Since 2007, the European Commission has banned all Indonesian airliners from flying to EC territory in response to the country’s poor safety record. The government has since tried to improve the airline regulatory system and safety in the hope the EC will revoke the ban. EC representatives have promised to lift the ban, acknowledging the progress Indonesia has made. However, Indonesia will still need to comply with the remaining 10 of 60 flight safety requirements set out by the EC before the ban can be lifted.

At least six incidents of aircrafts skidding off the runaway occurred during the first quarter of this year.

While there were no fatalities, these accidents could signal the government’s sluggish effort to revise safety standards despite EC inspections to ensure the ban could be lifted.

BI rate cuts make no impact on growth in bank lending: Report

The Jakarta Post, JAKARTA | Mon, 04/06/2009 9:29 AM

Taking too long: Customers queue Saturday at an ATM in a mall in South Jakarta. Despite sharp cuts in Bank Indonesia’s key interest rate since December, growth in bank lending remains slow. With the BI rate at 7.5 percent, interest rates for bank lending remain high at 12 to 16 percent, discouraging companies and individual consumers alike from borrowing, thus doing little to get the wheels of the economy moving any faster. JP/P. J. Leo

Despite sharp cuts in the central bank’s key interest rates since December, growth in bank loans remains slow as the sector grapples with rising bad loans and — for small and medium lenders — tight liquidity.

Bank Indonesia has since December slashed its benchmark interest rate by 200 basis points, the latest cut being last Friday, to help bolster domestic demand and stimulate economic growth slowed by a drop in exports amid a global economic meltdown.

However, while the BI rate now stands at 7.5 percent, interest rates for bank lending remain fairly high at around 12 to 16 percent, discouraging companies and individual consumers alike from borrowing, thus doing little to get the wheels of the economy moving any faster.

Businesses also claim that banks have been applying stricter and tighter requirements in handing out loans.

Bank Mandiri, the country’s largest lender by assets, says such a trend may have a lot to do with the banking sector’s cautiousness in giving out loans amid a rising trend in nonperforming loans (NPLs), and also a lack of liquidity in small and medium banks.

“Smaller banks will keep their interest rates high because they are worried their clients will transfer their savings and deposits to larger banks, which would then hurt their liquidity even more,” Mandiri president director Agus Martowardoyo said Friday at a gathering.

“Banks also have to face other problems in lowering interest rates, such as the high cost of funding, capital, risk, management and competition.”

According to BI data, there was no significant amount of increase in loans from commercial banks since the first BI rate cut last December.

The report shows that bank loans for investment only increased by 1.3 percent to Rp 259.3 trillion in January from Rp 255.9 trillion from the previous month, while lending for consumption barely rose to Rp 367.2 trillion in January from Rp 367.1 trillion in December.

Lending for working capital even decreased to Rp 663.4 trillion in January from Rp 684.7 trillion in December.

A growing trend in NPLs may also have contributed to the trend.

The BI report shows that NPLs have been on the rise since December.

The percentage of loans that are NPLs increased to 4.2 percent in January from 3.8 percent in December. Last Friday, BI Governor Boediono said that in February, national banks’ gross NPL rate rose by another 0.1 percent to 4.3 percent.

The report says that NPLs increased by 10.5 percent on average in three major segments — working capital, investment and consumption — ever since the first BI rate cut in December.

By function, the NPLs dedicated for the working capital segment rose 10.5 percent in January from the previous month; for the investment segment they increased 13.5 percent, and for the consumption segment they rose 7.7 percent.

Aviliani, an economist from the Indonesian Development of Economics and Finance (INDEF), shared the same opinion with Agus that scarcity in liquidity as well as rising NPLs had slowed down growth in bank lending.

“The first factor is from the funding side: large corporate banks have no problem giving out loans, but smaller and mid-size banks are currently facing a liquidity problem that prevent them providing loans,” she said Saturday.

“Second, smaller banks set high annual deposit rates of between 12 and 14 percent in order to gather cash from the public to increase liquidity. With such a high percentage on the deposit rates, no wonder they choose to set around credit rates of around 16 to 17 percent.” (hdt/fmb)

Credit of Commercial Banks Based on Type of Use (In Bilion Rp)

Types of Use October 2008 November 2008 December 2008 January 2009

• Working Capital 687,229 705,366 684,672 663,357
• Investment 250,188 255,984 255,900 259,317
• Consumption 360,443 363,973 367,117 367,165
• Total 1.297,860 1.325,323 1,307,688 1,289,839

Non Performing Loan of Commercial Banks Based on Type of Use (In Billion Rp)

Types of Use October 2008 November 2008 December 2008 January 2009

• Working Capital 22,250 24,637 22,953 25,361
• Investment 11,403 11,807 9,607 10,904
• Consumption 9,669 9,750 9,313 10,030
• Total 43,322 46,194 41,873 46,295
• 
  

President: Teachers should be listened to and serve as model

Surabaya (ANTARA News) - President Susilo Bambang Yudhoyono said teachers will be playing an important role in the future, as he or she should serve as model to their students.

"If the teachers` advice and guidance are accepted and practiced in the daily life of their students, it means they are good teachers," the head of state during a get together with teachers engaged in `For you, my teachers` program organized by the Jawa Post group here on Friday evening.

The president also asked the teachers not only to teach their students but also develop their character and mentality .

"Teachers should be listened to, their advice heeded and their character should also serve as a model of their students," Yudhoyono said.

Accompanied by his wife, Madame Ani Yudhoyono, the president said this condition would be better if the teachers made innovations in teaching and record such achievement.

Also present on the occasion were State Secretary/Minister Hatta Radjasa, National Education Minister Bambang Sudibyo, People`s Welfare Coordinating Minister Aburizal Bakrie and Jawa post group chairman Dahlan Iskan.

BI moves to bolster growth

The Jakarta Post, JAKARTA | Sat, 04/04/2009 10:25 AM

For the fifth month in a row, the central bank slashed its key interest rate to bolster domestic demand and stimulate economic growth slowed by a sharp drop in exports.

The Bank Indonesia rate was cut by 25 basis point to 7.5 percent, BI Governor Boediono said Friday at a press conference, adding it had room for even more cuts.

“We decided to cut the rates after a thorough evaluation of the economy and the financial situation, both abroad and domestically,” Boediono said.

“Positive sentiments have been growing in the global economy following the G20 meeting, at which agreements were made on improving financial and capital market performance.”

The central bank earlier cut its growth forecast for this year as the impacts on the country of the global economic meltdown worsened. It predicts the economy to grow by 3 to 4 percent this year, instead of initial forecasts of 4 to 5 percent.

Data from the Central Statistics Agency (BPS) showed exports had dropped 32.8 percent in February from a year earlier.

A lower BI rate will force banks to lower their lending interest rates, boosting loan demand from companies and individual consumers alike, thus spurring economic growth.

Indonesia's economy relies heavily on domestic consumption, which makes up around 70 percent of gross domestic products (GDP).

With inflation also easing, the rate cut was fairly understandable, according to Sri Adiningsih, an economist at Gadjah Mada University in Yogyakarta.

“I see that inflation will continue to ease in the next few months to come, and the BI rate should be able to decline down to 7 percent,” she said.

She added state-owned banks should lead the way in giving out loans at lower interest rates.

“Private banks will prefer to go for profit by maintaining the spread between deposits and interest rates, so it's important for state-owned banks to be the pioneers and encourage other banks to take the same policy,” she said.

She added current national bank credit loan rates stand between 12 and 15 percent.

Muliaman Hadad, a BI deputy governor, said the central bank would put more effort into building positive perception within the banking industry.

“Credit loan rates from public banks are gradually decreasing, and we will continue to encourage bankers to continue lowering their loan rates,” he said.

BI has been cutting its benchmark interest rate since December. However, it has so far failed to jack up bank lending demand.

BI data shows that as of the end of December, outstanding bank loans stood at Rp 1,307.7 trillion, but dropped to Rp 1,289.8 trillion at the end of January.

Households begin to reduce consumption, spending: Survey

Erwida Maulia, The Jakarta Post, Jakarta | Fri, 04/03/2009 2:18 PM

Upper-middle class consumers may not have suffered a reduction in income as a result of the global monetary crisis, but most have cut their spending on tertiary and even secondary products, a survey revealed Thursday.

The survey, conducted in February by market research firm PT Ipsos Indonesia, found that 70 percent of nearly 600 upper-middle class women surveyed in Jakarta had reduced their household expenses and were saving cash in anticipation of financial difficulties in the future.

Twenty seven percent of respondents preferred to cut their bill costs, 24 percent reduced consumption, 19 percent shifted to products with less packaging, 13 percent switched to cheaper brands, 8 percent chose to delay buying certain purchases and 8 percent said they would stop consuming some products.

"They tend to reduce tertiary expenses such as buying outfits, eating at restaurants, visiting malls and cutting pocket money for children," Ipsos Indonesia managing director Iwan Murty said at the announcement of the findings at a press conference.

"They also cut some costs for secondary expenses, such as electricity bills, cell phone bills and cosmetic and skincare products," he added.

Respondents opted to reduce their consumption of milk and snacks and their need for laundry detergent and home cleaning products.

"One respondent even said she reduced milk consumption for her infant from five to three times a day while others said they used less moisturizer," Iwan said.

The changes in consumption patterns were not the result of declining income, he said, with only one respondent saying her household experienced a slide in revenue.

This spending behavior is in response to the soaring prices of many products and because of media coverage of the global financial recession, Iwan said.

"Had the media taken a more positive spin on the crisis, these women would most likely have not changed their spending patterns.

Besides reviewing their attitudes to consumption, half the respondents said they planned to earn additional incomes.

This situation is not unique to Indonesia, Ipsos said, and resembled patterns in other Asia-Pacific countries.

Ipsos Asia Pacific chief executive officer Rodrigo Tony said in a press statement that according to surveys involving 1,000 respondents in India, South Korea, China, Japan and Australia, most households in the region were trying to reduce their expenses by cutting consumption.

Industry, however, should not be discouraged by this condition, Iwan said.

They should not cut prices or stop advertising because that would have long term effects on weakening brand positions and, subsequently, future profits.

Obama plans to visit Indonesia this year: Yudhoyono

The Jakarta Post, Jakarta | Fri, 04/03/2009 11:22 AM

Back to the battle: President Susilo Bambang Yudhoyono speaks at a news conference Thursday night on board a Garuda Indonesia flight returning from the G20 Summit in London, as First Lady Ani Yudhoyono (right) looks on. The President arrived back in Indonesia on Friday and immediately headed to Surabaya, East Java, to campaign for his Democratic Party a week ahead of the legislative elections. Courtesy of Presidential Office/Abror Rizki

US President Barack Obama has planned to visit Indonesia this year, President Susilo Bambang Yudhoyono told reporters during a flight from London to Surabaya, East Java, on Thursday night.

Obama told his plan to his Indonesian counterpart when the two leaders sat next to each other at a working breakfast during the G-20 summit in London on Thursday morning local time.

"When I told Obama that the people of Indonesia were awaiting Obama's visit, he said he planned to do so this year," Yudhoyono said as quoted by Antara news agency.

In response to Obama's plan, Yudhoyono said if it was realized, the US president would again meet his former elementary school friends in Jakarta.

According to Yudhoyono, Obama still remembered lot of Indonesian words.

On a moment during the G-20 summit, Obama surprisingly tapped Yudhoyono on the shoulder and asked, "Feeling tired?"

"Then I said, 'No, I am OK.' He still remembers a lot of Indonesian words such as 'apa kabar' for how are you, and 'capek' for feeling tired," Yudhoyono said.

When speaking about Indonesia's view and attitude toward the current global financial crisis at the working breakfast, Yudhoyono used Bahasa Indonesia.

In his introduction, Yudhoyono said he hoped Obama could understand what he said.

"Obama then laughed and said, he had to learn to speak Bahasa Indonesia again," Yudhoyono said.

According to him, the US president was a good listener and was able to approach anybody.

"I saw that Obama continued to listen attentively to anybody, and hopefully it will be a new chapter for the United States to see our common views," Yudhoyono said. (dre)

New economic world order emerges

Mustaqim Adamrah, THE JAKARTA POST, LONDON | Fri, 04/03/2009 8:48 AM

The world’s 20 most powerful economies ended their summit Thursday with a set of measures that are hoped to function as a panacea to immediately cure the failing global economy.

Leaders of the G20 member countries walked out of the group’s summit venue in London with a united optimism of turning the course of the world’s economy into a more transparent and accountable financial system.

The group said in a statement that confidence would not be restored until trust in the financial system had been returned.

“Strengthened regulation and supervision must promote propriety, integrity and transparency; guard against risk across the financial system; dampen rather than amplify the financial and economic cycle; reduce reliance on inappropriately risky sources of financing; and discourage excessive risk-taking,” the group said.

Aside from setting out stricter rules for financial companies, the G20 also agreed to shame and name blacklisted tax havens. It will also set out new rules on pay and bonuses for corporate chiefs, and draft details to curb speculation among hedge fund companies, which have been widely blamed for the financial turmoil in the United States that proliferated to other countries.

“Our interests right now are to restore confidence and economic growth at the global level,” Indonesian President Susilo Bambang Yudhoyono told the accompanying Indonesian reporters.

“And that can only be reached with a high degree of financial system transparency, a stimulus package and monetary policies as counter-cyclical measures to help revive global demand and to make the economy run again.”

UK Prime Minister Gordon Brown said he believed a new world order had emerged from the summit.

“A new world order is emerging, and with it we’re entering into a new era of international cooperation,” he said in a press conference.

Other key measures agreed upon included pouring an extra US$1 trillion into international agencies, including tripling the International Monetary Fund's (IMF) financing to US$750 billion.

Yudhoyono said it would require more efforts by developed countries to help strengthen the multilateral financial institutions to help developing and poor countries recover from the crisis, as the cause of the problems stemmed primarily from developed countries.

The group said it had agreed to make available an additional $850 billion of resources through the global financial institutions to support growth in emerging markets and developing countries by helping finance counter-cyclical spending, bank recapitalization, infrastructure, trade finance, balance of payments support, debt rollover and social support.

"It's unfair for underdeveloped and developing countries to be held responsible for the mistakes they didn't make, without the help from the international community," Yudhoyono said.

The G20 members also vowed to promote global trade and investment and reject protectionism, to underpin prosperity, and to build an inclusive, green and sustainable recovery.

The G20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the US, the UK and the EU.

G20 key measures

1. G20 countries expect to have spent $5 trillion to counter the economic crisis by the end of 2010.
   
   
2. Multilateral agencies will get financing boost worth $1 trillion. This includes a three-fold rise for IMF capital to $750 billion.
   
   
3. The IMF will sell billions of dollars of gold reserves to help finance poor countries.
   
   
4. To smooth the trade flow, an extra $250 billion will be allocated for trade financing.
   
   
5. A concerted effort to shame and name blacklisted tax havens.
   
   
6. Setting out new rules on pay and bonuses for corporate executives.
   
   
7. Agreement to "act urgently" to conclude the WTO’s Doha round.
   
   
8. Establish a new Financial Stability Board (FSB) with a strengthened mandate.
   
   

Japan Offers $22 Billion Trade Aid, Warns Against Protectionism

Bloomberg, Toko Sekiguchi

April 1 (Bloomberg) -- Japan’s Prime Minister Taro Aso pledged $22 billion in trade assistance before tomorrow’s summit of leaders from the Group of 20 nations.

In a meeting with Indonesian President Bambang Yudhoyono, Aso in addition said the government in Tokyo will also give $20 billion in overseas aid to developing countries in Asia.

U.K. Prime Minister Gordon Brown, who is hosting the talks in London, wants world leaders to agree a $100 billion package to make up for credit lines lost during the turmoil in financial markets. Trade loans finance 90 percent of deliveries worldwide.

“We must send a strong message against protectionism,” Aso said, according to a Japanese government official who was at the meeting. “A recovery in Asian economies is key.”

Southeast Asian exports, which grew 14.7 percent last year, may shrink 10.3 this year, according to a report by the Asian Development Bank. Indonesia has the largest Southeast Asian economy. It’s the only G-20 nation in the 10-member Association of Southeast Asian Nations.

Japan in February pledged to guarantee $1.5 billion of Indonesian yen-dominated bonds, called samurai bonds. Yesterday, the government announced that it will provide a 71 billion-yen ($718 million) loan for Indonesia’s infrastructure projects. Indonesia is the largest recipient of Japan’s overseas aid.

Earlier today, Aso met with South Korean President Lee Myung-bak and won support for Japan’s plans to deploy a system capable of shooting down missiles launched from North Korea. Japan may test the system in early April.

“Japan may take any necessary measures to protect its people,” the Japanese government official quoted Lee as saying at the meeting.

Aso will speak with Brown and Italian President Silvio Berlusconi and before the G-20 meeting tomorrow.

To contact the reporter on this story: Toko Sekiguchi in Tokyo at Tsekiguchi3@bloomberg.net.

BI to tighten up rural bank supervision

The Jakarta Post, Jakarta | Thu, 04/02/2009 3:16 PM

The central bank will soon bring in a rating agency to continuously assess and monitor the performance and financial health of the country's rural banks (Bank Perkreditan Rakyats BPRs).

This step is considered necessary to ensure supervision of almost two thousand BPRs spread across the archipelago, as well as to help provide an early warning mechanism to help detect potential financial problems in the huge rural banking system.

"The sooner we can introduce the agency, the better. We don't have a clear time frame yet. Basically, it will provide ratings on rural banks financial performance," Bank Indonesia's deputy governor Muliaman said on Tuesday.

BI data shows that as of the end of January, the number of BPRs in the country was 1,767 with total credit disbursed amounting to Rp 25.4 trillion (about US$2.1 billion).

Rural Banks Association (Asbanda) chairperson, Winny E. Hassan, welcomed the plan, saying it was essential to avoid more scams and scandals like the one involving Bank Tripanca in Lampung recently.

"We cannot generalize that all rural banks could be in the same position as Bank Tripanca, but the scandal gave us an early warning that we can take note of so as to avoid worse situations in the future," she said.

Bank Tripanca was a business subsidiary owned by the owner of Tripanca Group, Sugiarto Wiharjo (Alay). The group specialized in coffee commodity trading.

Business was looking bright for Alay and his businesses until the price of coffee dropped in mid-2008. The group acquired mounting debts with Rp 450 billion (US$37.5 million) owed to 70 coffee suppliers and another Rp 1.7 trillion ($141.7 million) owed to five local banks, such as Bank Mega and Bank Mandiri.

Like a virus, the liquidity problem within the group spread to Alay's Tripanca Bank. Alay then allegedly fled abroad last November and took with him around Rp 4 trillion ($333 million) of the customers deposits.

Alay then surrendered himself to the authorities last December, claiming that his disappearance abroad was because he was looking for medical help in Singapore.

Halim Alamsyah, BI's director for banking research and regulation, said that the rating agency would use risk management measurements in determining the ratings.

"The agency will use measurements such as financial *indicators*, good corporate governance and risk mitigation for its ratings on rural banks," said Halim.

In addition to strengthening BI supervision, Muliaman said the availability of a rating would make it easier for commercial banks to measure their confidence level before taking a decision to cooperate with rural banks to bolster the banking sector's intermediary role.

Muliaman pointed out as an example the BI-initiated partnership program called the linkage program.

This revolved around cooperation between commercial and rural banks aiming at increasing loan distribution capacity for micro, small and medium enterprises (MSMEs).

"The MSME sector still has a huge potential to grow. Currently, around 50 percent of bank loans are given to the sector," Muliaman said.

"Therefore, rural banks will play a vital role as partners to public banks in providing more loans to the sector," he added.

As of February 2009, the linkage program has provided a total of around Rp 6.4 trillion in loans since its inception by BI in 2002. (hdt)

Indonesian GDP Growth only 3.6 Percent

Wednesday, 01 April, 2009 | 12:40 WIB

TEMPO Interactive, Hong Kong: The Asian Development Bank (ADB) has predicted that gross domestic product (GDP) growth in Indonesia this year will be only 3.6 percent.

This is much weaker than the economic growth of 2008, which was 6.1 percent.

The ADB's report entitled 'Asian Development Outlook 2009' that was released yesterday (31/3), mentioned that the lower growth was caused by lower Indonesian exports to countries like European Union, Japan, Korean, Singapore, and the United States.

Total exports have reduced by around 25 percent.

Two of ADB's Indonesian mission residents, Jorn Brommelhorster and Priasto Aji, explained that the schedule of fiscal stimulus implementation will significantly affect growth of the Indonesian economy.

But the state budget usually is distributed in the second half of the year.

They went on to say that lower domestic demand as well as the price of fuels and commodities cut the annual inflation to 8.6 percent in February this year.

It is expected that this trend will continue so annual inflation will decline to 6.3 percent.

This will provide room to reduce interest rate.

They suggested Indonesian government to watch number of poor people that is reduced insignificantly. It was 16.6 percent on March 2007 from only 15.4 percent on March 2006.

In addition, more than 55 percent of the Indonesian employed population have incomes of less than US$2 per day.

“Protection for poor people during the economic slow growth will be the biggest challenge for government,” they said.

The ADB is predicting that the number of unemployed this year will increase to more than nine percent because of more lay-offs within the country and abroad.

The economy growth of developing countries in Asia will also slow down to only 3.4 percent.

This is a reduction from 6.3 percent in 2008 and 9.5 percent in 2007.

RIEKA RAHADIANA | EFRI

KLM upbeat on Indonesian market, brings in new aircraft

Novan Iman Santosa, The Jakarta Post, Jakarta | Wed, 04/01/2009 2:56 PM

KLM, the Royal Dutch Airline is upbeat about the Indonesian passenger market, describing it as a strong one, despite the current global economic downturn.

"Indonesia is withstanding the global crisis quite well while Singapore, Australia and New Zealand are hit much harder," Air France KLM general manager for the region (comprising Singapore, Indonesia, Australia and New Zealand), Paul Rombeek, told reporters Monday.

"However, we do see worldwide that all economies are in trouble."

Rombeek, appointed in February, quoted IATA suggesting airlines worldwide might suffer losses of up to US$4.6 billion this year.

Meanwhile, Air France KLM country manager Axel Theo Colen said the airline was experiencing a fall of 10 to 20 percent in bookings.

Colen emphasized however that Indonesia reached its budgeted target for the year ending March 31.

"This means that there was growth in Indonesia compared to the 2007/2009 fiscal year," he said.

"Indonesia has big potential despite negative trends in bookings."

Colen, however, declined to reveal any load factor figures from Jakarta saying this was confidential.

KLM serves daily the Jakarta-Amsterdam route via Kuala Lumpur.

Both Rombeek and Colen were speaking before a ceremony to welcome the new Boeing 777 at the Soekarno-Hatta International Airport in Cengkareng, Banten.

Previously the route was served by the 428-seat Boeing 747-400 aircraft which flew the route four times a week. The 280-seat 747-400 Combi (combined with freight) flew the other three times a week.

KLM currently has 15 Boeing 777-200s in its fleet, with two more expected later this year.

The airline also has two Boeing 777-300s with two more expected to arrive in May and August.

The 200 series has 327 seats while the 300 series has 425 seats. Both series have 35 business class seats while the rest are economy seats.

The 300 series will fly every Monday, Wednesday, Thursday and Saturday with the 200 series flying on Tuesday, Friday and Sunday.

The use of the Boeing 777 provides an additional 150 seats per week or an increase of 6 percent.

"Not only is the new airplane a reward for the route for good performance but it also offers a better product to passengers," Colen said.

With better technological advances Colen said the Boeing 777 burned less fuel than the 747.

A round trip with a 747 needs 300 tons of fuel while the 777 only needs some 230 tons," he said.

Indonesia’s Inflation Slows to 13-Month Low of 7.92%

Bloomberg, By Aloysius Unditu

April 1 (Bloomberg) -- Indonesia’s inflation slowed to a 13-month low in March, increasing the likelihood of the central bank reducing interest rates this week.

Consumer prices rose 7.9 percent last month from a year earlier after gaining 8.6 percent in February, the Central Statistics Bureau said in Jakarta today. Economists expected a 7.96 percent increase.

Easing inflation may allow Bank Indonesia to cut borrowing costs for a fifth straight month to help stoke consumer demand in Southeast Asia’s largest economy as exports decline. The value of overseas sales may shrink as much as 20 percent this year, Trade Minister Mari Pangestu told Bloomberg News last week. Overseas sales plunged 32.8 percent in February.

“While Indonesia is not suffering the kind of sharp, protracted pull-back in demand experienced by some other economies in this downturn, the externally-led downturn has inevitably taken a toll and led to greater slack in the economy,” said Lim Su Sian, an economist at DBS Group Holdings Ltd. in Singapore. “We see no reason for Bank Indonesia to scrimp on policy accommodation.”

Indonesia’s economy may expand as little as 3 percent this year, the slowest in a decade, as exports slump and commodity prices plunge from record levels, Minister Pangestu said March 26. The Asian Development Bank yesterday forecast growth for the $433 billion economy to weaken to 3.6 percent in 2009 from 6.1 percent last year.

Interest Rates

Bank Indonesia, which cut its benchmark interest rate to 7.75 percent from 8.25 percent on March 4, next meets to decide on monetary policy on April 3.

Consumer prices rose 0.22 percent in March from a month earlier after increasing 0.21 percent in February. Core inflation, excluding fuel prices, was 7.15 percent compared with 7.42 percent in February.

Indonesia’s exports declined 32.8 percent in February from a year earlier to $7.08 billion, the statistics agency also said today. That was less than the median forecast of a 37.2 percent fall in a Bloomberg News survey and the 35.5 percent drop reported in January.

“The slowdown in the rate of export contraction is good news for the government,” said Juniman, senior economist at PT Bank Internasional Indonesia in Jakarta. “Considering that imports are falling faster than exports, the net effect on the economy is even better. We think exports may still drop about 17 percent by year end.”

Imports outside trade zones plunged 42 percent to $4.56 billion, the statistics agency said.

To contact the reporter on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net

Mandiri, BCA, BNI expect hard times in ‘09

Aditya Suharmoko and Benget Besalicto Tnb., THE JAKARTA POST, JAKARTA | Tue, 03/31/2009 11:15 AM

Although the global economic crisis has hit Indonesia’s financial sector since last October, three of the nation’s top-five banks posted healthy growth in 2008 profits.

State-run Bank Mandiri and Bank Negara Indonesia (BNI), as well as privately-owned Bank Central Asia (BCA), enjoyed more than 20 percent increases in net profits last year as lending rose.

The rate of non-performing loans (NPLs) of the three lenders, all publicly listed, also improved, staying below the central bank’s maximum tolerance limit of 5 percent.

Mandiri, the largest bank by assets, posted a 22 percent growth in net profits last year up to Rp 5.31 trillion (US$459.8 million) from 2007, president director Agus Martowardojo told a press conference.

BNI, the fourth largest bank, scored higher net profit growth of 36 percent last year to Rp 1.22 trillion from a year earlier, said BNI president director Gatot M. Suwondo.

BCA, the largest bank, reported a 29 percent growth in net profits last year to Rp 5.8 trillion.

The bank also had its biggest quarterly gain in profits in nearly five years in the fourth quarter of last year, just when the impacts of the global financial turmoil started to hit home.

“During the hard times last year, which were full of challenges, BCA remained focused on maintaining sufficient liquidity and a strong capital base,” BCA president director Djohan Emir Setijoso told a press conference.

The encouraging performance of the banks was largely due to the rapid expansion of lending last year, although lending growth slowed in the last quarter. Full-year, the country’s banking industry booked around 30 percent growth in lending last year, from a year earlier.

Turning to this year however, it is anticipated the negative impact of the global credit crunch

is likely to peak soon, which has forced the central bank to cut Indonesia’s forecast economic growth, so the banks expect hard times during this year.

Earlier, the central bank expected lending this year to reach around 16 percent, only about half of last year’s lending growth.

Greater challenges are expected this year from weakening demand as a slowing economy means businesses will stop expansion, which in turn will push demand down.

Meanwhile, as demand falls, businesses may have problems repaying existing loans, triggering a rise in Non Performing Loans (NPLs).

Mandiri chief financial officer Pahala N. Mansury admitted there could be a potential increase in NPLs, although “not by much.”

“We have prepared (for a rise in) NPLs against the recent macroeconomic conditions.”

Mandiri’s gross NPLs stood at 4.7 percent last year, just below the 5 percent maximum tolerance set out by the central bank.

Pahala also said Mandiri still aimed at lending growth of between 10 percent and 15 percent this year despite the fact the central bank had cut its economic growth forecast to between 3 and 4 percent.

“We are still optimistic even though there is a (BI) revision for our gross domestic product (GDP). But if the economic conditions get worse, we might revise our lending growth” he said.

Mandiri corporate banking director Abdul Rachman added the bank had talked with debtors regarding a possible rise in bad debts.

Echoing Mandiri’s optimism, BNI also expects a modest increase in NPLs. “For 2009, we will not be too confident. We will see real sector (problems), but we will try to keep (NPLs) below 6 percent,” said Gatot.

Last year, BNI’s gross NPLs stood at 4.9 percent.

BCA also predicted a rise in NPLs as exporters were affected by the global financial crisis. The central bank has said exports may contract by as much as 28 percent this year.

“BCA’s NPLs this year will increase due to the economic hard times, particularly from lending in the export sector,” said Setijoso.

”And if possible, we can always increase our provisions. In case there may be one or two troubled debtors, we are ready,” he added.

BCA expected a 15 percent increase in lending growth this year. “This is the minimum (growth). If the economy is growing better than expected, it could be more.”

Setijoso said the BCA loan portfolio would include 35 percent for corporates, 40 percent to small and medium firms, 20 percent to property and 5 percent for personal loans.

SBY pledges special decree to uphold graft court

Abdul Khalik, THE JAKARTA POST, JAKARTA | Tue, 03/31/2009 9:25 AM

Strengthening his stance against corruption ahead of the upcoming elections, President Susilo Bambang Yudhoyono has unveiled a plan to issue a government regulation-in-lieu-of-law (Perppu) should lawmakers fail to pass a corruption court bill by the end of this year.

“The President will issue a Perppu to save the Corruption Court if the House cannot create the law before Dec.19,” Denny Indrayana, an advisor to the President on legal issues, said in Jakarta on Monday.

In 2007, the Constitutional Court concluded that the Corruption Court had violated the Constitution when it was established under the 2002 law on the Corruption Eradication Commission (KPK), instead of the law on judicial powers.

The Corruption Court then ruled that a new law on the Corruption Court had to be enacted by December 2009, or else the existing Corruption Court would lose its legal basis, be dissolved and forced to hand over trials under its investigation to the district courts.

Observers and civil society groups have expressed concerns over the chance that corruption cases could be delegated to the district courts when they are widely regarded as one of the country’s most corrupt institutions.

The current Corruption Court is the only court of its kind where prosecutors from the Corruption Eradication Commission (KPK) bring the accused to trial.

However, the House of Representatives appears reluctant to complete the deliberation process on time, sparking outrage among anticorruption campaigners.

With the legislative elections just over a week away, legislators have been accused of ignoring the deliberation process of crucial bills, including the Corruption Court bill, to focus on their campaign efforts.

“It would be best if the House could pass the bill so we don’t have to use a Perppu. But if there is no law decided upon by the deadline, then the President can issue a Perppu on grounds of an emergency situation,” Denny said.

He said the bottom line was that the Corruption Court must be saved by either a law or a Perppu.

“If we issue a Perppu, we can use the draft bill currently being discussed in the House, with some adjustments and input from the public,” Denny said.

Two articles within the bill are of particular concern to corruption watchdogs. One designates district court heads to chair regional corruption courts while another assigns the district court chief the authority to select judges overseeing certain cases, such as those under review.

The bill also grants the Supreme Court head and district court chief the prerogative to decide on the balance of career and noncareer judges in district-level corruption courts.

The bill states the number of judges be odd, either three or five.

District court and career judges have a notorious history of colluding with corruption suspects appearing before them, which created a veritable “court mafia” embedded in the country’s

judicial system. Many anti-corruption activists say the bill could be a strategy to weaken the fight against graft.

It is feared that if the Corruption Eradication Commission (KPK) is defeated each time it presents cases to the Corruption Court, its power and authority could be undermined.

President`s participation in G-20 Summit is honor, responsibility

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono`s participation in the upcoming G-20 Summit is an honor and at the same time a responsibility to the international world, according to a presidential spokesman.

"One thing I want to emphasize now is that although the general election campaign period is also a busy time for the president, he has decided to attend the G-20 Summit because it`s not only an honor for Indonesia, but also a big responsibility," Dino Patti Djalal said at Halim Perdanakusuma Air Force base here on Monday, moments before leaving for London as a member of the presidential entourage.

Indonesia`s role in the G-20 was very unique as it would be for the first time for Indonesia to stand in the forefront of efforts to manage the world economy which were previously dominated by G-7 countries, he said.

"Now, it is the responsibility of the G-20, and Indonesia is now part of the new world economic power grouping. So, it is a big responsibility because we have been invited to participate in the world economic recovery efforts, and the global economic recovery will also affect our welfare," he said.

In London, President Yudhoyono will also have bilateral meetings with the Japanese prime minister, the British prime minister, the Australian prime minister, the UN Secretary General, and British Crown Prince Charles.

Yudhoyono and Prince Charles would talk about forest preservation efforts, he said. The head of state would also deliver a speech at the London School of Economic and Political Sciences, he added.

A bilateral meeting between Yudhoyono and US President Barack Obama was so far not scheduled on the sidelines of the G-20 Summit, he said.

"The President will sit next to Obama during a dinner. That`s the format," Djalal said.

Among members of the presidential entourage are First Lady Ani Yudhoyono, Coordinating Minister for People`s Welfre Aburizal Bakrie, Trade Minister Mari Elka Pangestu, Environmental Affairs Minister Rachmat Witoelar, Legislator Theo Sambuaga, Chairman of the Investment Coordinating Board M Lutfi, and Chairman of the Indonesian Chamber of Commerce and Industry (KADIN) MS Hidayat.

Indonesia`s consumption rate still high: official

Jakarta (ANTARA News) - Indonesia`s consumption rate is currently still high so that it is able to absorb the country`s unexported goods, according to a senior economic official.

"There is no problem with national consumption because it is still high," Edy Putra Irawady, deputy for industrial and trade affairs to the coordinating minister for economic affairs, said here on Monday.

With a population of more than 200 million, Indonesia`s domestic market was considered large, moreover the country was going to hold the general elections later this year, he said.

"In this part of the world, we are a large market, we are a larger market than any other parts of the region," he said.

The contribution of Indonesian products to international consumption was around three percent from the total international consumption, he said.

"The value of our products `eaten up` by the global recession is only about three percent or around US$1.8 trillion per year," he said.

Indonesia has so far been conducting its exports through third parties such as Singapore, he said.

International demand for Indonesia`s main products was actually still high, only that trading companies which had so far bought Indonesian products went bankrupt, he said.

"Currently, many trading companies especially those in Singapore had collapsed due to the global crisis, so that Indonesia had to be brave enough to export directly," he said.

President leaves for London

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono and First Lady Ani Yudhoyono left Jakarta on Monday for a three-day visit to London to attend G-20 summit.

Boarding special presidential aircraft A-330, the president and his entourage departed from Halim Perdanakusuma military airbase in East Jakarta at 11 a.m. local time on Monday.

On his trip to London, President Yudhoyono is accompanied by a number of cabinet ministers among others Coordinating Minister for People`s Welfare Aburizal Bakrie, Trade Minister Mari Elka Pangestu, State Minister for Environment Rachmat Witoelar, and House of Representatives (DPR) member Theo L Ambuaga.

Then, Investment Coordinating Board (BKPM) chairman M Lutfi, and Indonesian Chamber of Commerce and Industry (Kadin) chairman MS Hidayat.

Meanwhile, Foreign Affairs Minister Hassan Wirayuda and acting Coordinating Minister for Economy Sri Mulyani Idrawati had left Jakarta earlier and were to join the president`s entourage in London later.

After about 18 hours in the air, President Yudhoyono and his entourage will arrive at London`s Gatwick airport at 11.30 p.m. local time.

During the visit, the president is scheduled to hold a series of bilateral meeting with several heads of state/government of G-20 member countries.

On Tuesday, March 31, Yudhoyono will meet consecutively with British Prime Minister Gordon Brown, British Conservative Party leader David Cameron, and Australian Prime Minister Kevin Rudd.

Later in the day, the head of state will deliver a lecture on "Indonesia: Regional, Role, Global Reach" at London School of Economics and Political Science and then have a meeting with Indonesian community in London.

Then on Wednesday, April 1, 2009, President Yudhohono will have bilateral meeting with Thai Prime Minister Abhisis Vejjajiva, Duke of York Prince Andrew, Japanese Prime Minister Taro Aso, and Prince Charles.

And in the evening, Yudhoyhono and other leaders of G-20 member countries will attend a joint reception with Queen Elizabeth II and a banquet hosted by British prime minister at 10 Downing Street.

After that, President Yudhoyono will attend G-20 Summit at London Exhibition Center on Thursday, April 2, before returning to Indonesia.

The head of state is scheduled to arrive at Juanda International airport in Surabaya, East Java, at 11 on Friday morning to attend election campaign rally of Democrat Party in the province.