President wants tourism development efforts stepped up

Jakarta (ANTARA News) - Indonesia`s tourism sector is not yet being developed optimally and therefore the efforts should be further expanded by involving all parties such as business associations and regional governments, President Susilo Bambang Yudhoyono said here on Tuesday.

"Concrete actions have already been taken but in my opinion the tourism development effort should be continuously improved because it is not yet being done optimally," the president said at the opening of a national coordination meeting on tourism and culture at the State Palace here on Tuesday.

The head of state said conditions in the country`s tourism sector had continued to get worse since the economic crisis, and therefore it should be supported by other sectors such as transportation, security, infrastructure and cultural sectors.

"And then access to visa should not be made difficult. Regional infrastructure facitilities should be improved. Handicraft industry and security measures should also be stepped up," Yudhoyono said.

He added that the country`s tourism sector actually had bright prospects and had great potential to support the national economy because Indonesia had a lot of cultural and natural resources compared to other countries.

"What don`t we have in our country? Historical and cultural heritage objects we have in abundance," the president said, adding that they had to be preserved and protected.

According to the president, Indonesia`s geological conditions which were prone to disasters such as volcanic eruptions, hot mudflows and the like could be a special attraction to foreign tourists to visit the country.

"Let us be smart, creative and innovative because we have great potentials that must be developed for the welfare of the whole people," the president said.

About the cultural sector, Yudhoyono said it was the main pillar to realize a developed and prosperous nation because a developed nation should have a strong character and high technological innovations.

"They are all part of culture in a wider sense. If we want to be a developed and prosperous nation, we have to be independent and preserve our culture to be a self generating nation," the head of state said.

Antara reopens Beijing bureau

The Jakarta Post

CHINA: The Indonesian state-run news agency Antara has reopened its bureau in Beijing, attesting to the growing importance of China to its foreign news coverage. The bureau was closed in 2001 as part of an efficiency measure.

"Antara will play a significant and strategic role in efforts to develop the two countries' relations," Secretary General of the Communication and Information Ministry, Ashwin Sasongko, said in Beijing Thursday.

Antara Managing Director Asro Kamal Rokan said the news agency is also reopening its offices in Tokyo, Kuala Lumpur and Canberra, and has maintained its office in New York all along.

"We will extend our wings to the Middle East, Africa and Europe next year," Asro said. --JP

Govt to reduce number of sectors in negative investment list

Jakarta (ANTARA News) - The Indonesian government will slash the number of sectors on its negative investment list to attract more investors after the House of Representatives passed an investment bill into law on Thursday, an official said.

"Actually, only three sectors are highly regulated, namely transportation, broadcasting and energy," Capital Investment Coordinating Board (BKPM) Chief M Lutfhi said on Thursday.

He said he would discuss the matter with Coordinating Minister for Economic Affairs Boediono on Friday.

Assistant to the coordinating minister for economic affairs Edy Putra Irawady said the present negative investment list must be made more open to investment.

The plan to slash the number of sectors on the list would be adjusted to a plan to develop the industrial sector in the long run as recommended by the Industry Ministry, he said.

Liquor and arms industries are among those put on the negative list of investment. The sectors which were previously put on the list but are now open to investment under tight regulation are small and medium enterprises, among others.

Investment in the small and medium industry requires partnership with local enterpreneurs.

Indonesia expects investment to grow by 10 percent

Jakarta (ANTARA News) - Indonesia is expecting this year`s investment to grow like before the economic crisis reaching around 10 percent following the passage of the new investment bill into law by the House of Representatives on Thursday.

"Before the crisis the investment growth reached around 10 percent. Between 2000 and 2006 the growth was at an average of seven percent but last year only three percent. We must now set the target of investment growth at around 10 percent again in real terms," trade minister Mari Elka Pangestu said here on Thursday after attending a plenum of the House of Representatives to pass the bill into law.

She said to improve the investment atmosphere the country needed to improve not only the investment law but also other relevant laws such as taxation law, simplify licensing procedures, reducie red tape and economic cost.

Following the passage of the investment bill into law the government planned to finalize several implementation regulations, she said, adding that two of them could likely be finished soon.

She said the two presidential decrees that would soon be completed were about criteria and listing of businesses which were open and closed to investemnt and on implementation of integrated services.

The minister said the new investment law also provided simplification of investment application and licensing procedures and services and confirmed the role of the Capital Investment Coordinating Board as coordinator of investment policy implementation.

She hoped that with the simplification of procedures, tbe time to process licensing and investment applications could be reduced from 97 to 30 days only.

She said the new investment law would replace the domestic and foreign investment laws of 1967 and 1968.

"The essence of the new law is legal certainty as it provides equal treatment to domestic as well as foreign investment, transparency, accountability, guarantees against nationalization and in dispute settlement," she said.

CNBC Exclusive: Unilever Bullish on Emerging Markets Potential

By CNBC.com , 29 Mar 2007 , 06:37 AM

After years of being concentrated in two regions, emerging market interest is spreading all across Asia, Harish Manwani, president of Asia Africa for Unilever, told "Squawk Box Europe."

“The point of difference is we are seeing far widespread growth across Asia, it’s not just China and India," Manwani said. "You look at Indonesia, Vietnam, Africa or Turkey, we’re seeing an all-round growth … and in my mind that is what’s different this time.”

The recent rush to join in with Asian growth has far from saturated the market place according to Manwani.

“There is a long way to go before you can call these markets mature (and there are) still big opportunities in terms of market development, penetration of products is still relatively low," he said.

Opportunities exit both at the top end of the market and the bottom, given the large swaths of population living in rural areas that have limited access to consumer products, Manwani added.

House cancels free laptops for legislators

JAKARTA (The Jakarta Post): The House of Representatives leaders canceled Tuesday to give legislators with free laptops following protests from public.

Metro TV station reported the House speaker Agung Laksono deemed the cancellation was necessary due to numerous questions over the use of the laptops.

HSBC to get into sharia banking

The Jakarta Post, Jakarta

HSBC Indonesia is set to accommodate increasing Indonesian demand for sharia financial services, after providing similar services globally for more than a decade.

"Indonesia is the largest Muslim country in the world. We see a growing number of Islamic customers who want to have sharia financial services, and we think we should provide that," HSBC Group chairman Stephen K. Green said Monday.

"It's also good momentum as the macroeconomic environment is quite attractive. This young market is about to develop."

The bank, which initially introduced Islamic financial services in Malaysia in 1994, sees potential market growth as fast as that projected by Bank Indonesia (BI), the nation's central bank.

"At the moment, only 1.5 percent of the overall banking market is Islamic. BI has said by the end of 2008... that (figure) would move up to 5 percent," said HSBC's Indonesia CEO Richard McHowat.

The bank has targeted attracting 200,000 new sharia customers over the next three years, raising about US$300 million in liabilities.

According to HSBC's survey, about 40 percent of conventional banking customers here are interested in sharia financial services.

In 2003, HSBC also established a sharia unit providing sharia-based corporate financial services.

Meanwhile, Din Syamsuddin, the chairman of Indonesia's second-largest Muslim organization, Muhammadiyah, said the government should provide more assistance to encourage sharia banking in the country.

"The government should provide regulations to guarantee the flourishing of sharia banking because such mechanisms can be a solution to economic problems," he said.

In addition, he said, sharia financial practices did not necessarily correspond with the implementation of Islamic bylaws. "(Sharia banking) merely provides alternative products in the banking industry."

Indonesia will be the eighth country -- after Malaysia, the United Arab Emirates, Saudi Arabia, the United States, Britain, Brunei and Singapore -- where HSBC provides sharia retail products.

Similar sharia products are currently provided in Indonesia by various banks, including sharia banking pioneer Bank Muamalat Indonesia, Bank Syariah Mandiri, Bank Mega Syariah, Bank Negara Indonesia and Bank Rakyat Indonesia.

Bankers summit showcases RI progress

Andi Haswidi and Urip Hudiono, The Jakarta Post, Jakarta

Having gone through years of slow, painful and costly recovery since the 1997-1998 monetary crisis, the country's banking sector is now ready to take the lead in supporting economic growth, Bank Indonesia Governor Burhanuddin Abdullah said Monday.

In a keynote speech at the Asian Bankers Summit, being held March 25-28 at the Shangri-La Hotel in Jakarta and attended by hundreds of bankers from across the Asia Pacific, Burhanuddin said Indonesia's banking sector has come a long way since the crisis, when the government was forced to inject huge amounts of public funds into the industry to prevent its collapse.

The central bank, he said, has improved the industry's regulatory framework, having launched in 2004 the Indonesian Banking Architecture (API), a definitive blueprint to create a stronger and more robust banking sector.

He said the API laid out such best practices as good corporate governance and risk management -- the lack of which was partly to blame for the crisis. The API also incorporates a policy road map for mergers and acquisitions, to pare down the country's 130 lenders into fewer banks with stronger capital.

"With all this, the banking industry should now be able to return to its basic function of intermediation, of disbursing more lendings to support higher economic growth.

"This the main challenge now, and the challenge of intermediation is not Indonesia's alone, but also in other countries having experienced a crisis," he said.

Bank lending in Indonesia grew by 14 percent to Rp 792.3 trillion last year, as high inflation and interest rates since 2005 dampened loan demand. Lending had averaged 20 percent growth the previous two years.

Many bankers attending the event acknowledged that Indonesia's banking sector has recovered from the crisis

Summit director Fiona Shaw said the Indonesian banking sector had made tremendous progress since 1997 through a series of mergers, acquisitions, consolidations and fairly successful micro-financing schemes.

"We would like to, in a way, make Indonesia a showcase for other developing countries, to learn from the success achieved by the banking sector here.

"We decided to pick Jakarta (for the summit venue) because we thought it was time to showcase the progress to the rest of the world," Shaw said.

The summit itself is a multifaceted event that involves visits to local banks, an awards ceremony that will bring together bank CEOs from across the region and three key conferences on the different aspects of the industry: risk management and governance, cash, and treasury and trade.

In addition, the technology council will hold its annual meeting.

As part of efforts to showcase the progress of Indonesia's banking industry, all summit participants are scheduled to visit the headquarters of the state Bank Rakyat Indonesia (BRI), to hear about its success with microfinancing schemes.

During the summit's opening ceremony Sunday, BRI small and medium enterprises director Sulaiman Arif Arianto said the bank was committed to allocating 80 percent of its total loans for micro-credits this year, and the remaining 20 percent for corporation projects.

RI economy to grow 6 percent in 2007, says ADB

Jakarta (ANTARA News) - The Asian Development Bank (ADB) predicts that government expenditures and investment will boost Indonesia`s economic growth to 6 percent in 2007 and 6.3 percent in 2008.

"It is expected that the lowering of bank interest rates will fuel investment and consumption growth," Edgar A Cua, ADB representative in Indonesia, said here on Tuesday.

Edgar A Cua made the remarks when he presented his report on the Asian Development Projection 2007.

He said that the Indonesian government should finish its reforms agenda in the coming six months and carry out infrastructure projects to attract investments.

The ADB representative also suggested that the government accomplish its unfinished regulations because in 2008 the focus of business makers would shift to the political sector in the run-up to the 2009 general elections.

The government should pay attention to legal certainty, regulations and transparency in order to attract investment, he said.

He said that the adoption of an investment law would not automatically attract foreign investment because its executing regulations must be prepared first.

In the meantime, ADB`s project officer for small- and medium- scale businesses, Hari Purnomo, said that the ADB had projected Indonesia`s inflation rate at 6.2 percent in 2007 and at 6.2 percent in 2008.

This is on condition that the government would provide subsidy for electricity and consistently maintain a moderate level in food prices, particularly in the rice price.

He said gross capital investments would grow 25-27 percent of the Gross Domestic Product (GDP) or an increase by about 9 percent from the figure last year.

Export performance which greatly contributed to economic growth in 2006, would increase slighly in 2007 from 9.2 percent in 2006 to 10 percent in 2007.

He said the slight increase would mainly be due to slower growth in several export markets.

"Import performance is expected to follow developments in investment," Purnomo said.

RI seen to become 5th largest economy

M. Taufiqurrahman, The Jakarta Post

Jakarta, March 23, 2007 (The Jakarta Post) - A strategic group consisting of business-people, academics and government officials has set an ambitious target of transforming Indonesia into one of the 'world's major powers in the next 20 years.

In a document called Indonesian Vision 2030, the group Indonesia Forum said Thursday the country would join the ranks of major economies after China, India, the United States and the European Union.

It sets a target of reaching a per capita gross domestic product of US$18,000 by 2030.

The group assumed the country's economy would grow by 7.26 percent annually, with an annual inflation rate of 4.95 percent and a population growth rate of 1.12 percent.

By the year 2030, Indonesia's population would reach 285 million, with a gross domestic product of US$5.1 trillion.

The group also set a target of having at least 30 Indonesian companies among the 500 world-class companies listed each year by Fortune magazine.

The group said the goals could be 'achieved only if Indonesia took the necessary steps, including integrating the country's economy with the world market, implementing good governance principles and constructing adequate infrastructure.

The group also proposed a synergy between labor, government and the business sector to improve the country's competitiveness in the global environment.

The foundation chairman, Mega group tycoon Chairul Tanjung, said the vision constituted a road map for Indonesia's journey toward becoming a developed nation.

The Indonesia Forum Foundation presented the vision to President Bambang Yudhoyono on Thursday in a ceremony at the State Palace.

Other prominent businessmen such as Angky Camaro of Sampoerna group and Anthony Salim of the Salim group are also members of the foundation, along with economists Anggito Abimanyu and Muhammad Chatib Basri.

Yudhoyono said he was optimistic Indonesia would achieve the targets and develop beyond its present condition.

The president acknowledged that the targets are ambitious. "I know that after hearing this, some will say "dream on", but I say do not hesitate to dream. Not only big nations strive to realize their dreams," he said.

Economist H.S. Dillon criticized the vision, saying it was unrealistic to project Indonesia as becoming a major economy without taking into account emerging powers such as Brazil and Russia which are also starting to catch up with developed countries.

"Brazil and Russia could make rapid gains," he said.

Govt affirms commitment to investment projects

The Jakarta Post, Jakarta

The government has reiterated its commitment to attracting more foreign investment, affirming its guarantees for major infrastructure projects and longer-term land and property use titles for foreign investors.

The policy affirmation comes as the House of Representatives wraps up deliberation on a new investment bill, which is expected to become law by the end of the month.

"We will of course provide support for the main infrastructure development projects. One form this support will take will be providing guarantees for multi-year projects," Coordinating Minister for the Economy Boediono told Antara news agency last week.

Investors in projects such as toll roads, power plants, and mass transport systems have recently been seeking guarantees from the government to ensure returns on their investments.

The government on its part has said its seeking investors' assurance that projects will be done well and done on time.

The Finance Ministry has formed a unit to assess suitable guarantee schemes for the infrastructure projects.

The government, Boediono said, would also provide suitable support for public infrastructure projects -- mainly concerning land clearance -- privately financed outside of the government's budget.

"We already have regulations to settle problems such as the price of land (for infrastructure projects) turning out to be higher than its actual value," he said.

"This is some of the support we can give."

The president has already issued a regulation allowing for the compulsory acquisition of land for crucial public infrastructure projects, with compensation for the owners based on the taxable value of their land and property (NJOP).

The regulation was aimed at addressing complaints from many investors who were turned off by speculation over land necessary for their projects.

Speaking separately on the issue of land for investment, National Land Agency (BPN) deputy head for land and registration affairs Bambang Eko H.N. said the new investment bill would also allow longer fixed-term use titles for business (HGU) of up to 95 years, for buildings (HGB) up to 80 years, and for land (HP) up to 70 years.

A previous 1996 regulation on foreign property ownership only allowed foreigners to purchase fixed-term HGB titles for up to 25 years.

Bambang said the government may consider a longstanding proposal by the Indonesian Real Estate Developers' Association (REI) to allow foreigners to own land and building ownership titles, with the proviso that they made direct investments in Indonesia.

FM Wirayuda urges diplomats to build corporate culture

Jakarta (ANTARA News) - Indonesian Foreign Minister Hassan Wirajuda called on the country`s diplomats to build corporate culture and provide easy, fast and cheap public services as part of the efforts to imporve the performace of foreign ministry officials and diplomats overseas.

"We want to make sure that foreign ministry officials and diplomts overseas will provide fast, easy and cheap public services. Our diplomats will always take side with the Indonesian corporate bodies or individuals abroad," the foreign minister said in dialog with the Indonesian Chamber of Commerce and Industry (Kadin) here on Sunday night.

He said that diplomats assigned abroads were always briefed with marketing knowldege in order that they would be able to promote Indonesia in foreign countries.

"We stress that representatives overseas originate from the people at home. Therefore, they must be able to send back foreign exhanges," Wirajuda said.

He said that ambassadors could only make a visit at home if they took a significant number of foreign businessmen with them.

Wirajuda said that all sides in Indonesia should unite and work to attract investors and encourage exports.

The minister made the remarks in response to a request by the Kadin that the foreign affairs ministry should set a target for ambassadors overseas to measure their performance.

"There should be additional parameters to assess the performance of ambassadors overseas, particularly those assigned in potential countries," Kadin Chairman MS Hidayat said on the occasion.

He said that the foreign affairs ministry should set certain targets for ambassadors and Kadin was ready to help prepare the targets.

The Kadin chairman also proposed that the ambassadorial posts should not always be filled with career diplomats but also with private businessmen or officials from the state-owned enterprises.

"So, ambassadors must have targets as Singaporean government sets for its ambassadors," Hidayat said adding that ambassadors must be directed toward achievements.

He said that Singapore named its ex-trade minister as its foreign minister. "Possibly because the aim of its politics is economy," the Kadin chairman said.

Fujaira Emirate ready to help promote RI products

Sana`a (ANTARA News) - The emirate of Fujaira which is part of the United Arab Emirates (UAE) has expressed its readiness to establish cooperation with the Indonesian Trade Promotion Center to promote Indonesian products through exhibitions in the emirate.

Al-Bayan daily said in its Friday edition that the chairman of the Fujaira Chamber of Commerce and Industry, Khalid Al-Jasem, had expressed the chamber`s preparedness to encourage local businessmen to establish direct contacts with Indonesian counterparts.

He said the chamber also wished to have a chance to learn from Indonesia`s experience in developing the small-scale business sector because it wanted the emirate`s youth to run such businesses.

Khalid made the statement after a meeting with Husein Bagis, the head of the Indonesian Trade Promoting Center in the UAE.

Bagis, meanwhile, had indicated the Indonesian government`s wish to increase its cooperation with the UAE in many sectors, including in economy and trade.

He called on UAE busines people to study investment opportunities in Indonesia, mainly in the tourism and hotel sectors.

Bagis also invited UAE businessmen to visit an annual exhibition of Indonesian products held every October in Jakarta.

9.7 million bank accounts closed or emptied in three months, says official

Urip Hudiono and Yuli Tri Suwarni, The Jakarta Post, Bandung

Some 9.7 million bank accounts have in the past three months been closed or been emptied of funds, the National Development Agency (Bappenas) has found, raising alarm bells for the country's banking sector and the economy as a whole.

The data, which Bappenas compiled from figures produced by the Deposit Insurance Agency (LPS), referred mostly to accounts containing deposits of under Rp 100 million (some US$11,000) -- not surprising given that the LPS recently lowered the upper deposit-guarantee ceiling to Rp 100 million.

The Bappenas director for financial institutions and monetary analysis, Sidqy Lego Pangestu, said that he was still investigating the cause of the phenomenon, and whether it would have an adverse impact on the economy.

"There are several possibilities," he said earlier this week at an economics seminar in Bandung. "It could mean that people with savings of under Rp 100 million are getting poorer because their savings are being spent on their everyday needs, or it could be because they have no jobs or regular income, or because of a disaster, or the stagnant situation in the real sector."

Sidqy admitted that Bappenas had no data on whether such a phenomenon had occurred before, or how much the money from the closed accounts amounted to.

However, senior LPS official Firdaus Djaelani dismissed worries about the phenomenon, saying that the closed accounts were mostly held with Bank Rakyat Indonesia (BRI).

BRI, he said, had reported to the agency that it had closed a large number of inactive accounts, and expunged them from its records.

The amount of money was also insignificant, he said, adding that the closing of the accounts had nothing to do with the lowering of the LPS's guarantee ceiling.

"Many of the accounts were probably opened just as formal prerequisites to obtain loans from the bank," Firdaus said. "I think it would be too hasty to jump to any conclusions that it is related to lower purchasing power on behalf of the public."

However, Sidqy pointed to a Central Statistics Agency (BPS) report that showed that 1.7 percent of bank accounts in Indonesia accounted for 80 percent of the country's deposits, a finding that has been backed up by the LPS.

According to Sidqy, this reflected the gaping disparities in the economy, and could represent a time bomb for the banking sector should problems in the industry and the economy result in a run on funds.

Another problem looming on the horizon for the banking industry, he said, was the significant amount of undisbursed loans, which had risen to Rp 179 trillion at present from Rp 160 trillion at the end of last year, or a fifth of total lending, which in 2006 grew by a less-than-expected 14 percent to Rp 792.3 trillion.

"Policies should, therefore, be more pro-business in terms of tax incentives, regulations, and the time needed to obtain business permits," Sidqy suggested, to remedy the current situation where many businesses are reluctant to take out loans due to the high risks involved, despite recent improvements in the macroeconomic situation.

House to procure 550 laptops

The Jakarta Post

Despite strong criticism, the House of Representatives will go ahead with its plan to procure laptops for all of its 550 legislators.

Speaker Agung Laksono said here Friday it was impossible for the House to suspend the laptop procurement because it was already approved and included in the 2007 state budget following a House decision in October 2005.

"The procurement project will go ahead, but the supervision will be enhanced. The laptops will be loaned to legislators, who are later required to return them after completing their terms in parliament," he said.

"The most important thing is that the procurement will be conducted transparently and their use will be closely supervised."

Chairman of the House's Internal Affairs Committee, Ebby Djauhari, said the procurement was based on a recommendation from the joint team appointed to assess the House's performance.

"The laptops should not be seen as gifts to legislators, but as state facilities made available in the parliament. The Internal Affairs Committee decided to provide not only laptops, but also expert staff to assist legislators in doing their tasks," he said during a House discussion on Friday.

Telematics expert Roy Suryo questioned the urgency of the laptop procurement, insisting legislators were not prepared to utilize the sophisticated technology.

"It would be better for the House's secretariat-general to first find out who among the legislators is really in need of a laptop, and to provide a short course for those unfamiliar with the technology," he said.

Arbi Sanit, a political analyst at the University of Indonesia, said he doubted the laptops -- which cost Rp 21 million (US$2,300) per unit -- would improve the House's overall performance.

"Legislators behave like soldiers, whose necessities, from pants, food, electricity, telephones and foreign trips, are financed by the state, while their constituents are left malnourished, sick and uneducated," he said.

"If the House is committed to improving its performance, it should repair its operational system and internal rulings and set itself a minimum target of tasks to achieve. At the same time, legislators should change their mindset," he said.

He said the drafting of political bills was the best way for the House to improve its performance, in addition to establishing strong political parties and organizing high-quality legislative elections to yield qualified and dedicated legislators.

In related developments, the National Mandate Party (PAN) has requested that the House's Internal Affairs Committee prioritize the much-needed recruitment of staff to aid legislators in performing their tasks.

"It is not an appropriate time for the House to equip legislators with laptops. The project should be suspended until the country's economic condition makes it more feasible. The secretariat-general should focus on recruiting expert staff and allocate an adequate budget to pay them well," said Zulkifli Hasan, secretary of the House's PAN faction. (JP/Ridwan Max Sijabat)

SBY warns of climate change fallout

M. Taufiqurrahman, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono on Friday warned Indonesians to brace for the adverse impacts of global climate change.

Addressing the commemoration of World Meteorology Day here, Yudhoyono said signs of climate change were already upon the world, as indicated by the high incidence of major natural disasters -- 70 incidents between November 2004 and March 2007.

"I warn everyone to be on alert for the impacts of global climate change on life, security and welfare," the President said in his speech, adding that weather conditions and crop cycles would likely be effected.

Yudhoyono said Indonesians had the ability to live with recurrent disasters, given the country's geographical position.

"I am not trying to scare (Indonesians). But what we have to do is physically and mentally prepare for the threats," he said.

The President ordered the Meteorology and Geophysics Agency (BMG) to study changes in environmental conditions and deliver accurate information to the public on possible disasters.

Indonesia has been the victim of a string of natural disasters, some of which have been said to be the result of climate change.

In January, Jakarta suffered from severe downpours and floods after a lengthy dry period in what should have been the rainy season.

Earlier this month, a landslide killed 43 people in Manggarai, East Nusa Tenggara, traditionally known as a dry province.

Most scientists now agree average global temperatures will rise by between two and six degrees Celsius by the end of the century. It is believed this process is being driven by an atmospheric build up of greenhouse gases, which are commonly released in the burning of fossil fuels for power and transportation purposes.

With a mere rise of two degrees, scientists predict a massive upsurge in species extinction and extreme weather events such as storms, droughts and floods. This could potentially threaten hundreds of millions of lives around the world. Under forecasts, polar icecaps will melt, raising sea levels by several meters.

Chairwoman of BMG, Sri Woro Harijono, said Indonesians must understand that they live in a disaster zone.

"The people here should always be prepared to face all types of disasters, be they earthquakes, floods, volcanic activities or tsunamis," Sri Woro said.

During the ceremony, the President presented awards to local administrations and the media for their contribution to informing the public on the risks posed by climate change.

The provincial governments of Central Java, Gorontalo and West Sumatra, as well as Nabire regency, all received awards.

Award recipients from the media were private TV station Metro TV, state-run TV station TVRI, Kompas, Media Indonesia and private radio stations Elshinta and Trijaya FM.

Govt easing procedures of doing business in densely-industrialized areas

Jakarta (ANTARA News) - The Indonesian government is trying to loosen six procedures for doing businesses in the country`s eight densely-industrialized regions to raise its investment privilege rating to 75th in 2008 from 135th in 2006, an official said.

"We will launch the project in eight densely-industrialized regions first," Head of the Investment Coordinating Board (BKPM) Mohammad Lufti said following a limited coordination meeting with Vice President Jusuf Kalla at the Office of the Administrative Reforms Minister here on Friday.

The meeting also agreed on the formation of a small team with Administrative Reforms Minister Taufiq Effendy as its chief and the BKPM chief Mohammad Lufti as executive chief to relax the procedures for doing businesses in the regions.

The eight regions are Jakarta, Banten, West Java, Central Java, East Java, Sumatra and Sulawesi.

The six procedures cover exports and imports, enforcing contracts, paying taxes, applying for building permits, and starting a business.

"Under the current circumstances, we will be able to improve our rating to 56th from 135th on condition that other countries do nothing to improve their investment privileges," Lufti said.

Under the present procedure, a foreign investor needed 97 days to start a business in the country and the government had been trying to reduce the period to 23 days, he said.

"God willing, a foreign investor can start doing business within 23 days," he said.

Japan provides 23.5 billion yen loans to Indonesia

Jakarta (ANTARA News) - Japan has agreed to extend soft loans worth 23.554 billion yen (equivalent to Rp1.86 trillion) to Indonesia to develop its economic and social sectors.

The loan agreement was signed by Japanese Ambassador to Indonesia Shin Ebihara and Indonesian Foreign Ministry`s Director General for Asia-Pacific and African Affairs Primo Alui Joelianto at the latter`s office here on Friday, the Japanese Embassy said in a statement.

The loan which carries an annual interest of 1.5 percent with a grace period of 30 years will be used to finance two major projects, namely third development policy and infrastructure reform projects. The projects will cost Rp933.65 billion each.

The third development policy project will focus on improving the macro-economic stability, investment climate, and poverty alleviation. The infrastructure reform project is designed to speed up the building of infrastructure facilities.

The two projects will also be financed with loans from the World Bank and the Asian Development Bank.

Early this month Japan provided 200 million yen (Rp15.86 billion or US$1.72 million) in grants to Indonesia to support programs to promote food production and lift the people out of poverty.

House agrees on investment bill with major changes

Andi Haswidi, The Jakarta Post - 2007-03-23 09:54

Jakarta, March 23, 2007 (The Jakarta Post) - A working committee of the House Representative has finally concluded the prolonged debate on the investment bill, which is now expected to be endorsed by a House plenary session scheduled for March 29.

"With a sigh of relief, we "have finally arrived at the end of a long journey," Trade Minister Mari Elka Pangestu said in her capacity as the government's representative at what became the final meeting with the committee on the bill Thursday.

Despite major changes from the original draft submitted by the government to the working committee set up by House Commission VI in June 2006, the underlying spirit of *the bill, which is to provide equal legal status to domestic and foreign investors, remains intact.

Commission VI chairman Didik J. Rachbini said he was satisfied with the end result of the long series of meetings as the aim of improving the investment climate by being more open to foreign investment could now be achieved without having to sacrifice the interests of the public at large.

A professor in international investment law from the University of Indonesia, Erman Rajagukguk, who was actively involved in the deliberation process as an expert advisor, said he considered the bill to be on a par with the legislative frameworks applied by Indonesia's competitors.

"I have studied many investment laws. And what we have now is comparable to those in foreign countries. We have a competitive incentive scheme, comparable land titles, and support for small and medium enterprises," he said.

Upon being enacted into law, the bill, which will become the 2007 Investment Law, will supersede the 1967 Foreign Investment Law and the 1968 Domestic Investment Law.

The new legislation will cover all business sectors, including investment in the mining, and oil and gas sectors, although the technical aspects of investing in these sectors will continue to be governed by the Oil and Gas Law, and the Mining Law.

With regard to property rights, the maximum duration of a land cultivation right under the new law will be extended from 35 years at present to 95 years, and building rights from 50 to 80 years.

Meanwhile, land usage rights, the length of which used to be determined by local administrations, will now be acquirable for a maximum period of 70 years.

Under the new law, both foreign and local firms will be entitled to enjoy the same incentives as long as they meet the requirements, such as investing in labor intensive industries, infrastructure projects, projects involving the transfer of technology, and so-called pioneering industries.

Fiscal incentives, such as, tax reductions, tax breaks and tax deferments, are to be further provided for by government regulation To reduce immigration obstacles, foreign investors will be entitled to two-year residency permits that will be subsequently convertible into permanent residency permits.

High-powered Korean delegation to visit RI

The Jakarta Post, Jakarta

A high-powered South Korean delegation will meet Indonesian government and business representatives next month to follow up on an economic cooperation pact signed last December, an official from South Korea's Commerce Ministry says.

"Unlike the last meeting, which only involved talks, we will have signed an agreement on various strategic projects by then (next month's visit)," a deputy minister from the South Korean Commerce Ministry, Kim Junggwan, said Thursday.

The delegation will consist of a number of government officials and close to one hundred top Korean entrepreneurs.

On Dec. 4, South Korean President Roh Moo-hyun, accompanied by a group of entrepreneurs, and Indonesian President Susilo Bambang Yudhoyono signed a joint declaration in Jakarta on the creation of an extensive strategic partnership.

"Later on in late April, with the task force we have established to carry out our plans, we will determine which projects South Korea will take part in," Kim said.

Under the December deal, South Korea will establish business partnerships in seven sectors -- policy support; trade, investment and technology; the forestry and marine industries; energy and natural resources; infrastructure and construction; information technology; and the defense sector, with the last four sectors being the main focuses.

The task force, which is answerable directly to President Roh, is made up of representatives of the South Korean Commerce Ministry and the private sector, led by the Korean Chamber of Commerce and Industry.

"I'm personally amazed that South Korea has already established a task force, while the (Indonesian) government has yet to do its part," said Jongkie D. Sugiarto, the Indonesian Chamber of Commerce and Industry (Kadin)'s Korea Committee chairman.

Indonesia is South Korea's No. 1 trading partner in Southeast Asian and the 10th in the world, with bilateral trade valued at US$13.7 billion in 2006.

Meanwhile, Indonesia is South Korea's fourth biggest investment destination, with a total of $4.77 billion having been invested here, giving employment to 500,000 workers.

"Despite the unstable investment climate here, South Korea still regards Indonesia as among the best countries to invest in," Kim said, adding that resource-rich Indonesia helped Korea cope with its lack of energy and natural resources.

Govt plans minimum service levels

Ridwan Max Sijabat, The Jakarta Post, Jakarta

The government has announced it will set minimum public service standards to ensure good governance and improve public welfare in an effort to accelerate the implementation of regional autonomy.

Home Minister M. Ma'ruf said Thursday that the standards would serve as an indicator to measure the government's performance.

"The government is formed or elected to serve the people in return for their taxes, therefore all services given to the public must be measurable," he said after opening a technical meeting to set the minimum service standards.

To implement a 2005 government regulation on minimum service standards, the government has set up a joint team involving the Home Ministry, the Finance Ministry, the State Ministry for Administrative Reforms and the National Development Planning Board.

Regional autonomy requires the central government to provide public services in five fields -- financial and monetary; security and defense; courts; foreign affairs and religious affairs.

Meanwhile, regional administrations are required to provide minimum services in other domestic affairs.

Ma'ruf said that Indonesia had lagged behind its neighboring countries because after 60 years of independence it still had not set service standards.

"The government has already served the public but there have been no nationally-accepted standards to measure whether services have reached the minimum or are below-standard," he said.

State Minister for Administrative Reforms Taufik Effendy concurred and said public services, including the provision of birth certificates, identity cards and other documents for foreign investments and working permits, had to be measurable and meet certain standards.

"The government will set at least 388 minimum service standards in the next two years," he added.

Taufik told government officials and public servants that their main task was to serve rather than govern the people under regional autonomy, saying autonomy was aimed at bringing the state closer to the people.

"While setting minimum standards, we are reforming the administration and the bureaucracy. All public officials and servants should bear in mind that their main task is to satisfy the public.

"Therefore, it is very urgent to stress the importance of reforming the mind-set of the government apparatus," he said.

Taufik said the public had been disappointed by regional autonomy, which placed a strong emphasis on authority instead of public service.

"The central government has decentralized its authority in some sectors to shorten the complicated bureaucracy, or speed up the provision by the government of at least minimum services to the public," he said.

He said minimum service standards were needed to create clean and good governance and were mandated under the Constitution, the 2004 Regional Administration Law and the UN's Millennium Development Goals.

Indonesia awards multi-billion dollar energy contracts

Jakarta (ANTARA News) - The Indonesian government on Wednesday awarded 37 energy contracts worth billions of dollars in total, a report said.

The contracts included exploration deals worth 4.1 billion dollars, domestic gas supply agreements worth 1.61 billion dollars and oil and gas sector contracts amounting to 1.39 billion dollars.

There were also 21 electricity supply contracts and amendments to coal deals at the meeting on the main island of Java, the Detikcom news website report said.

The projects are expected to create 26,000 jobs, Detikcom was quoted by AFP as saying.

"From January to March, investment commitments in the energy sector have already reached 19.4 billion dollars," Energy and Mineral Resources Minister Purnomo Yusgiantoroso was quoted as saying at a signing ceremony.

"We are optimistic that by the end of 2007, the investment can rise further and exceed that in previous years," he said.

Separately, President Susilo Bambang Yudhoyono inaugurated four projects by state oil and gas firm Pertaminain.

They included the development of two oil and gas fields, a fossil fuel transit terminal and a fuel depot.

2008 Economy Targeted to Grow by 6.6 Percent

Wednesday, 21 March, 2007 | 16:17 WIB

TEMPO Interactive, Jakarta: The government has estimated that the economic growth target in the 2008 State Budget will be 6.6 percent.

The growth target was discussed in a cabinet plenary session yesterday (20/3) regarding the Government's Working Plan at the Presidential Office, Jakarta.

Finance Minister Sri Mulyani Indrawati said that the government wanted a higher economic growth compared to this year.

She said that growth of 6.6 percent was still realistic.

“But we'll have a look at the first half of this year,” she said after the session.

The cabinet session took about five hours yesterday from 10am WIB (Western Indonesian Time) to 3pm WIB.

After the session, not a single minister gave a press statement regarding the government's working plan that had been discussed.

For 2007, the Finance Minister is still certain that 6.3 percent growth target will be met.

However, she acknowledged the government must work hard in pushing economic growth to reach this target.

In addition, according to Sri Mulyani, all observers, Bank Indonesia and investors have predicted that the economic growth realization will be below the target.

Similar predictions have been mentioned by the World Bank, the Asian Development Bank (ADB) and the International Monetary Fund (IMF).

According to these organizations' estimations, Indonesia's economic growth in 2007 will be between 5.5 and 6.5 percent.

The organizations consider that there has not been any significant investment increase yet to push economic growth.

For growth of 6.3 percent, the required investment increase is 12.3 percent.

SUTARTO

Thailand to hold exhibition in Jakarta

Jakarta (ANTARA News) - The Thai embassy in Jakarta will organize the 2007 Thailand Exhibition of the products of small and medium businesses at the Jakarta Convention Center from March 22 to 25, 2007.

The Thai business exhibition would be a showcase of many different products of 46 Thai companies displayed at 60 booths, Supawadee Yamgamol, Commercial Affairs Attache of the Thai Embassy in Jakarta, said in a press conference here on Tuesday.

The Exhibition will be officially opened by Thail Ambassador to Indonesia Mrs Atchara Seriputra in the presence of Hatanto Reksodipoetro, Secretary General of the Indonesian Trade Ministry representing Trade Minister Marie Elka Pangestu.

According to her, many different Thai products will be on display during the exhibition, including food and beverages, garments and textile, fashion accessories, hardware products, general merchandize, health & beauty products as well as tourism.

"We are also very happy to inform you that our country will present here our OTOP (One Tambon One product) products. Tambon means village. OTOP is a Thai initiative to promote and identify unique products made by village communities (tambons) as a means of expanding the country`s domestic and international trade as well as raising the income of villagers," she said.

"Moreover, we also have brought a variety of famous and delicious Thai fresh fruits such as longan, longkong, rambutan, green mangoes, yellow mangoes and sweet tamarind most of which are fresh from Thailand for you to taste at the exhibition," she said.

The exhibition is also an indication of the close trade relations between her country and Indonesia. The relations betweem the two countries have been going on for over five decades, she said.

In 2006, the trade between Thailand and Indonesia reached a value of UD$6,7 billion. Indonesia is the 10th on the list of Thailand`s trading partners, while Thailand is 9th on Indonesia`s list of trade partners. (*)

China approves plan to build large jet to rival Boeing, Airbus

Beijing (ANTARA News) - China has approved a plan to build large passenger aircraft to compete with Boeing and Airbus, who together currently dominate the market here, the government and state-run media said Monday.

The decision was made at a meeting of the Cabinet presided over by Premier Wen Jiabao after listening to details of a feasibility study on the project, the State Council said in a statement posted on the government's website.

The plan is to "design and build airplanes that can carry more than 150 passengers and compete with Airbus and Boeing," the state-run China Daily was quoted by AFP as saying in a report.

The newspaper characterised the move as "a major strategic decision" and said the project will begin "as soon as possible."

In the statement, the Cabinet also said it has approved a plan to set up a company to manufacture large aircraft.

China has the technical and material capabilities to develop large aircraft, having been building its aviation industry for 50 years, the statement said.

China's experience has so far been limited to manufacturing smaller, regional aircraft, with the ARJ-21, holding up to 105 seats, expected to begin delivery in 2009, according to state media.

The Cabinet meeting was held on February 26. It did not explain why it took three weeks to announce the decision to the public.

There have been previous indications in public statements and media reports that China had ambitions in the market for large passenger aircraft.

China Aviation Corp I, a major aerospace company, said earlier this month it was looking to develop a new generation of aircraft engines to reduce its reliance on foreign manufacturers.

"As a country with a huge demand for large-sized planes, it is absolutely unimaginable to rely on imports of aero-engines for long," Liu Daxiang, the company's deputy chief of science and technology, told the China Daily.

China's new-generation engines must be more powerful than those in use in current Airbus or Boeing aircraft, Liu said.

According to the latest market outlook from China Aviation Corp I, China will need 2,230 large aircraft by 2025.

This forecast comes on the back of impressive growth rates in civil aviation in China, fueled by an economy that expanded by 10.7 percent last year.

Some 160 million passengers flew on Chinese airlines during 2006, a rise of 15 percent on the previous year, according to previously released local aviation statistics

British Entrepreneurs Ask Removal of Investment Obstructions

Friday, 16 March, 2007 | 16:18 WIB

TEMPO Interactive, Jakarta: British entrepreneurs said they hoped that the government would solve matters on legal and capital investment obstruction in the Draft Bill on Capital Investment, now being prepared by the House of Representatives (DPR).

Director of Jardine Group Lord Powell of Bayswater said that in the past, British entrepreneurs were always troubled by the changing of investment climate. “Entrepreneurs were also facing difficulties in obtaining an assurance due to hampering regulations,” he said after meeting with Vice President Jusuf Kalla yesterday (03/15).

Jardine is a large real estate company (office buildings), hotels (Mandarin Oriental), supermarkets and vehicles. In Indonesia, Jardine cooperates with Astra and Mandarin Oriental.

Bayswater was accompanied by Leonard Rous, Pers Attaché of the British Embassy in Indonesia, delivering a special message from British Prime Minister Tony Blair to President Susilo Bambang Yudhoyono. “I am not only coming for business interest, but also conveying the Prime Minister's message regarding capital investment. The main concern, is still focusing on legal issues,” he said.

He said he hoped that the Draft Bill on Capital Investment could boost foreign investment. “We are absolutely certain that investment in Indonesia will increase. I am ready to consolidate more investment and trading in Indonesia,” he said.

Bayswater, also the adviser of British PM Margareth Tatcher in 1995, said that the government may consider tax regulations that are applied to foreign investors as well, especially mineral resources. “Many entrepreneurs want to invest. However, there are many restrictions.”

BADRIAH

Indonesia to host Asian Bankers Summit

Jakarta (ANTARA News) - Indonesia will for the first time host the Asian Bankers Summit established eight years ago, a statement said.

The 2007 Asian Bankers Summit in its press release made available to Antara here on Friday said that the event would be held at Shangri-La hotel here on March 25 to 28.

In the annual meeting, the world bankers would present an "Outlook" on the industrial finance services in the country.

The growth prospect of industrial finance services in Indonesia is above the average regional growth of 17 countries as mentioned in the "Outlook" presented in the Asian Bankers forum relating to credit services growth and the steady inflation decline from the previous year.

Several issues which would be discussed include information and operational technology, risk management and corporate governance.

Several important thoughts on the global financial services relating to transformatory issues would be discussed in the Asian Bankers Summit presided over by William Seidman, former chairman of the U.S. Federal Deposit Insurance corporation.

Some prominent figures who will deliver a keynote address include former Australian Prime Minister Paul Keating, IMF director Jaime Karuana, and Robe close OB, former Bank of Spain governor.

The event would be opened by Bank Indonesia (Central Bank)governor Burhanuddin Abdullah on March 26, 2007.

Kadin asks govt to pay more attention to long-established investors

Jakarta (ANTARA News) - The government should not only favor new investors but also pay attention to old investors with good track records in Indonesia so that they will continue to expand their operations in the country, a senior Indonesian Chamber of Commerce and Industry (Kadin) executive said.

"The government should pay more attention to established investors in the country. The more so, because of the difficulty in attracting new foreign investment," Rachmat Gobel, Kadin vice chairman, said here Thursday.

He made the remarks after the laying of the first corner-stone of PT Panasonic Gobel Battery Indonesia (PGRI)`s second lithium battery plant. Rachmat is the company`s president commissioner.

Noting that most of the world`s major multinational companies engaged in elctronic and automotive industries were already present in Indonesia, he said : "If the government pays more attention to them, I think they will step up their investment in this country. Today, we have seen concrete proof of this."

Rachmat related that after Industry Minister Fahmi Idris paid a visit to the Matshushita battery factory in Japan last November, the Japanese company which is owner of the Panasonic trademark eventually chose Indonesia (from among a number of Southeast Asian countries) as the location of a lithium battery plant whose output would be marketed world-wide.

"In terms of production costs, setting up the plant in another Southeast Asian country, might have been more economical for Matshushita but thanks to our lobbying together with the government, they were successfully persuaded to increase their investment in Indonesia," Rachmat said.

He said he was envious of prospective new foreign investors to whom the government was offering special privileges like incentives although it was still uncertain whether they would really come to Indonensia and feel committed to developing domestic industry.

"Let it not happen that new investors whose commitment is atill unclear are given a `red-carpet` treatment in the form of all sorts of incentives while long-established investors are forgotten. If this happens, the old ivestors may eventually relocate to other countries that offer more attractive treatment," Rachmat said.

He said old investors with good track records should also be given facilities to maintain and develop their businesses in the country. To determine what kinds of facilities and incentives should be granted to old investors, Indonesia could learn from other Southeast Asian countries that are its competitors in attracting foreign investment, he added.

In response to Rachmat`s statements, Industry Minister Gahmi Idris said in a new investment law which was now still in the making, there would be provisions on incentives for pioneer industries producing goods and using technology.

In Government Regulation No 1/2007 the government had also opened the possibility for old investors that expand their operations in certain industries outside Java to enjoy incentives in the form of tax allowances, Fahmi said.

The minster called on industries to report to the government when they use state-of-the art technology in their production processes or are pioneers in the production of certain goods. "If they keep quiet, it will their own fault (if they don`t enjoy the available incentives}," the minister said.

Rising commodities prices: The other side of the coin

The Jakarta Post

Achmad Syafriel, Research Analyst

The biofuel and food processing industries are currently going head to head in competing for agricultural commodities, and to envisage a decline in commodities prices from here on is difficult.

The impact of this could be threefold. First, the man on the street could be faced with rising prices for staple foodstuffs; second, the margins of firms that make consumer products could feel the heat; and, third, environmental implications could result that will have to be dealt with.

With oil prices staying high and volatile, many countries have been encouraged to seek alternative fuels. For example, the European Union has issued regulations that require biodiesel use in all member countries to account for 5.75 percent and 20 percent of diesel consumption for transportation purposes by 2010 and 2020, respectively.

Meanwhile, Indonesia launched a biofuel development program last year to reduce consumption of fossil fuels. Indonesia hopes to substitute 10 percent of its fossil fuel consumption with biofuel by 2010.

Biofuel can be produced from several agricultural commodities, or what are known as "soft commodities". Bioethanol can be made from sugarcane, corn or wheat, while biodiesel is made from crude palm oil (CPO), rapeseed oil and jatropha oil.

Bioethanol is a mix of gasoline and ethanol, while biodiesel is a mix of diesel and methyl ester. They are graded depending on the biofuel content of the particular fuel. For instance, Biodiesel 10 (B10) means the fuel contains a 10 percent methyl ester mix, while Ethanol 60 (E60) refers to a 60 percent ethanol mix.

The increased demand for soft commodities from the biofuel industry comes at a time when the supply is limited.

Traditional soft commodity demand (e.g. for food and soap) is already high. For example, the compounded annual growth rate in traditional CPO demand over the past 11 years up to 2005 has been higher than supply; 7.6 percent versus 7.4 percent.

Similarly tight conditions can also be seen in the case of corn and wheat. Traditional demand for these products had been high even before biofuel came into the equation. Bear in mind that corn and wheat are the staple foodstuffs of the majority of people around the world, with wheat being the main raw material for the production of bread and noodles.

Add to this the possibly of a prolonged drought this year, which has led the U.S. Department of Agriculture to lower its estimate of the level of U.S. corn stockpiles at the end of this year to 752 million bushels from 935 million bushels previously.

At the same time, U.S. President Bush has proposed increasing the U.S. mandate for alternative fuels fivefold to 35 billion gallons by 2017. This higher ethanol demand may require up to 6.5 million more corn acres in 2007.

Farmers in the U.S. may plant less wheat and soybean in order to benefit from rising demand for ethanol. This comes at a time when drought in several wheat producing countries, such as Australia, threatens wheat production.

Global wheat supply will have fallen to 119.3 million tons by the end of May, according to the U.S. Department of Agriculture. In sum, these conditions may lead to rising prices for CPO, wheat and soybeans.

What implications will all this have? Well, for us average people, we may be faced with higher prices for staple foods.

Indonesia is no exception in this regard as the country imports a significant amount of wheat. This is an issue that the government must calculate carefully, as food prices are directly linked to poverty levels.

Second, consumer product firms will face challenges in maintaining margins. The Indonesian consumer is known for his sensitivity to prices. So, with minimal room for pass-through, margin pressure will be felt.

Third, efforts to respond to supply constraints through increased production may have environmental implications. There have been numerous cases around the world where the opening up of new CPO plantations has been at the expense of the rain forests; Indonesia appears to be no exception in this regard.

So far we have only seen the good side of rising soft-commodity prices, i.e., in the form of stronger export growth and increased cash turnover in rural Sumatra. How prepared are we for the adverse consequences?