Germany to write off RI`s debts if nat`l parks in Sumatra are preserved

Kota Agung, Lampung (ANTARA News) - The government of Germany has agreed to write off half of Indonesia`s foreign debts if the country could properly preserve the national parks in Sumatra.

Chief of the South Bukit Barisan National Park (TNBBS) Task Force Ir Lusman Pasaribu said here on Friday the agreement made in the form of an MoU would be effective 2007 to 2011.

However, the government of Indonesia provided 6.25 million euros for the preservation of the South Bukit Barisan, Mount Leurse and Kerince Slebat national parks.

"If our government is able to implement the agreement, Germany has agreed to write off twice the value of fund allocated to the national parks," Lukman said.

It was reported that some other countries who acted as creditors for Indonesia as well as international non governmental institutions (NGO) had expressed readiness to provide such support under this facility and fund for the preservation of the three national parks in Sumatra.

Therefore, according to Lukman, the government of Indonesia along with the management of the three national parks should work hard to show to the international community that this country is really able to manage and preserve their flora.

"We should show them our ability to implement the agreement and manage the preservation of the South Bukit Barisan national park," he said.

Covering 356,800 hectares of land, the South Bukit Barisan National Park has a number of protected exotic and rare flora and fauna. Together with two other national parks, South Bukit Barisan national park was nominated as a cluster natural world heritage site as the last shield for the conservation of tropical forests in the world.

Moody's gives thumbs up to RI economy

Urip Hudiono, The Jakarta Post, Jakarta

The chances of a rating upgrade are looking good for Indonesia, with Moody's Investor Service citing ongoing improvements in the macroeconomic situation and fiscal position, all of which are impacting favorably on the country's creditworthiness.

The global rating agency affirmed Thursday its "positive outlook" on Indonesia's B1 local and foreign currency bond ratings, reflecting greater political and economic stability, a more diversified economy supporting stable growth and a prudent fiscal policy.

It also reflects the country's improving sovereign debt and balance of payments positions.

Highlighting in particular the country's fiscal and balance of payments positions, Moody's Asia regional credit officer Tom Byrne said Indonesia could "within the next year be in a strong position to be in the `Ba' area."

The country's current "B1" sovereign rating is still four rungs below Moody's "Baa3" investment-grade rating, with the lower "Ba" ratings having to be gone through first before reaching that level.

Moody's upgraded Indonesia's rating from B2 in May last year, and in February of this year upgraded its outlook to "positive" from "stable".

"Indonesia's 6 percent inflation is still higher than the region, but it's an improving trend, while the exchange rate is also more stable. Its external payments position has improved as exports has been seeing double-digit growth, building up forex reserves to US$50 billion," Byrne said.

"If this momentum can be sustained until the runoff in the 2009 elections and even after that, then it will bode well for Indonesia's sovereign rating."

Byrne noted that Indonesia's fiscal deficit would likely exceed the government's original target of 1.1 percent of gross domestic product (GDP), and could even hit 1.8 percent, due to higher tax refunds, and spending on infrastructure and disaster mitigation.

The overall trend of a falling government debt-to-GDP ratio would however remain on track, declining to 38 percent this year from last year's 42 percent.

"We believe the government can manage the fiscal deficit, with revenue performance improving from 15 percent to 21 percent, so that the government can consider spending more to jump-start public infrastructure development projects," he said.

Low levels of investment, as well as continued weakness in some areas of governance, were also noted by Moody's as representing other challenges to Indonesia's economy and growth rate.

"There is, however, the new Investment Law, which is expected to especially attract foreign investment."

Indonesia's private sector debt was also looking good, with Moody's regional corporate finance director Brian Cahill noting that there was no broad country-specific issues in evidence that could negatively affect the current stable outlook of 28 out of a total of 37.

Similarly, Moody's financial institutions credit officer, Deborah Schuler, saw the banking industry's prospects as being positive on the back of lower interest rates, higher earnings and improving bad loans.

Higher credit ratings enable governments and corporations to obtain cheaper loans with lower risk premiums from the global debt markets.

The government sold $1.5 billion worth of dollar-denominated global bonds in February. Other global credit rating agencies have given Indonesia similar below-investment-grade ratings, with Standard & Poor's giving the country a "BB-/Stable/B" rating, and Fitchs a "BB-" with a "positive outlook".

The young hold the future, but don't expect radical change

The Jakarta Post

Debnath Guharoy, Consultant

Revolutions happen quickly. Progress is made at a slower pace. Literacy paves the way to education, which usually leads to emancipation, tolerance and secular values. Is Indonesia's youth heralding any radical changes for this young democracy any time soon? Not really.

Traditional values are alive and well among Indonesia's 14 to 24 year-olds, promising the continuity of this ancient culture despite the polarizations of the world we live in. That's a good thing, for conservatives and liberals alike.

What is worrying, though, is that only 10 percent of the nation's young view themselves as "progressive" in their attitudes to social issues. 55 percent believe they are "middle of the road", 30 percent are "somewhat traditional" and 5 percent are "very traditional".

Young people have a universal reputation for thinking free of shackles, for questioning old rules and demanding change.

Pragmatism and responsibility change these pure thoughts and raging emotions over time, and most of us fall in line as we age, in the image of our parents more or less. Life goes on.

But if the questions aren't being asked by tomorrow's leaders today, if introspection and criticism aren't part of their lives, who's going to bring about the social improvements in the years ahead? Hopefully, the 10 percent.

These observations are based on Roy Morgan Single Source, the country's largest syndicated survey with quarterly updates, with 27,000 respondents annually and projected to reflect 90 percent of the population over the age of 14.

From a commercial perspective, 360-degree profiling of consumers becomes a reality, regardless of their demographics. At 30 percent of the population above the age of 14, Indonesia's 14-24 year-olds are a particularly important group of consumers for just about every category of product or service.

Fifty-one percent of them are residents of the country's cities and towns, 49 percent live in the villages. That's a sign of the times, a changing ratio that's different from the national urban-rural picture.

Indonesia's youth are markedly different from their elders with regard to their "main goal in life". While only 15 percent believe that it is "important to have a prosperous life", this is double the number of members of the older generation who share that view.

Similarly, 18 percent of them believe that "an important life is most important", again twice as likely as their elders to agree with that statement. Over 18 percent of them speak some English today, more than twice as likely to be speaking the world's most popular language than older Indonesians.

While soccer is the nation's most popular sport, basketball comes a close second with this demographic. While over 9 million 14-24 year-olds play soccer regularly or occasionally, over 7 million play volleyball. Girls also add to the big numbers jogging around the country, making it the leading form of exercise with youth, accounting for over 7 million of the 15 million Indonesians who jog. At their age, they are doing more of just about everything, not just sports and exercise.

That includes shopping. Nationalists, 80 percent, "try to buy products made in Indonesia". Quality-conscious, 78 percent, believe that "quality is more important than price", but only 44 percent will buy a product "because of its label". Fifty-two percent, predominantly the girls, "enjoy clothes shopping".

Clear leads among shampoos followed by the declining grip of Sunsilk and the increasing popularity of Pantene among young people. Contrary to popular belief, youngsters of both genders do a lot of their grocery shopping themselves, but only the females "enjoy grocery shopping".

Among cellular networks, IM3 is one of the smaller brands but has a growing and disproportionate popularity with the younger generation. Regardless of the spin that analysts are prone to promote, three out of four youngsters do not yet have a mobile phone, constrained by economic realities.

On the other hand, there are over 23 million young people planning to buy or upgrade their handsets "sometime in the future".

In contrast to their counterparts in the West, Indonesian youth are relatively easy to reach via television. Equally remarkable is the fact that 62 percent of this demographic "try to watch the news on TV to keep me up-to-date". Almost 40 percent would use a coupon or redeem a special offer, 25 percent enjoy buying magazines.

A surprising 72 percent find TV advertising interesting, 32 percent of them often feel that the advertisements are more interesting than the programs, but another 22 percent find nearly all TV commercials "annoying".

These numbers and percentages change dramatically among youngsters hailing from middle and upper income homes.

Like so many countries in Asia and in the rest of the developing world, there are at least two if not three Indonesias, from a marketing viewpoint: Big Cities, Small Towns and Rural. Life just isn't the same across the board, there is little homogeneity. Economic realities create the biggest divisions.

Looking at those differences from the perspective of each brand, understanding the consumers of each brand across these wide divisions can be crucial to charting the way forward. Demographics just aren't enough. Neither are popular myths and old assumptions.

The writer can be reached at Debnath.Guharoy@roymorgan.com

Banks urged to increase credits for sugarcane-based industries

Jakarta (ANTARA News) - Bank Indonesia (BI) is urging banks to increase their credits for sugarcane-based industries, BI Deputy Governor Muliaman D. Hadad said here on Tuesday.

"Banks` role in providing credits for sugarcane-based industries has remained small because the industries have not shown their real potentials," the central bank deputy governor said on the sidelines of a seminar on the prospects and financing of sugarcane-based industries.

He said there were actually a lot of banks which had provided credits for sugar industries. This was because the industries` non-performing loan level was low and they had good prospects not only in sugar production but also in the making of down-stream products such as ethanol.

Muliaman said BI had recorded that a total of 32 banks had financed projects in this sector with credits totaling Rp1.6 trillion.

He said the credit amount was relatively big but it still could be increased further. After all, this sector had good potentials

"Banks have begun to understand and to provide relatively big credits after these industries` experience was exposed to them," he said.

He said the sugarcane-based industires non-performing loan ratio was also small, namely only 0.33 percent in the plantation sector and 2.11 percent in sugarcane industries and its down-stream actvities.

The prospect of the financing in this sector was categorically bright as these industries needed some Rp8.3 trillion in the 2005-2010 period throughout the country.

But the BI official also said the problem faced by these industries did not only have to do with financing but also with technical aspects.

"The problems are not only related to financing but also to techincal aspects which we and other relevant agencies have to think of. This of course will need coordination," he said.

The industries also needed support in the form of clear policies with regard to environmental impact analyses in accordance with their condition without sacrificing the environment.

Australian trade minister visits Jakarta

Jakarta (ANTARA News) - Australian Trade Minister Warren Truss MP is slated to arrive here on Monday for a three-day visit to attend a meeting with his Indonesian counterpart.

Australian Ambassador to Indonesia Bill Farmer said on Friday that his government was looking forward to working closely with Indonesia to identify areas to increase two-way trade and investment during high-level business and official consultations in Jakarta in the next few days.

"Australian Minister for Trade, Warren Truss MP, will visit Jakarta from June 24 to 26, to take part in the 7th Trade Ministers` Meeting on Monday with his Indonesian counterpart Mari Pangestu," the ambassador said in press statement here on Sunday.

Farmer said that the minister will also lead a delegation of senior Australian businesspeople to Jakarta to review their current investments in Indonesia and look into more commercial opportunities.

The Ambassador said the annual Trade Ministers` Meeting had been established in 2000 to cement closer commercial cooperation between the two countries.

"Discussions will focus on reviewing the implementation of the bilateral Trade and Investment Framework (TIF), initiated by former Minister for Trade Mark Vaile, and Dr Pangestu in 2005," Farmer said.

While in Jakarta, Minister Truss and accompanying business delegation will meet Coordinating Minister for the Economy Boediono, Minister for Finance Sri Mulyani Indrawati, Minister for State Enterprises Sofyan Djalil, and Minister of Agriculture Anton Apriyantono.

The senior business delegation will also take part in a Policy Dialogue and Experts Group, held in conjunction with the trade talks on 25 June.

The Policy Dialogue brings business and policy leaders together to identify ways to increase commercial activities in priority sectors. The Experts Group, which convened in May 2007, will advise Truss and Pangestu on practical ways to strengthen the bilateral trade and investment relationship.

Trade between Australia and Indonesia has grown steadily in recent years, with current annual two-way trade worth about A$10.4 billion.

Indonesia currently enjoys a merchandise trade surplus with Australia of A$135 million, with major exports to Australia including crude oil, non-monetary gold, paper and wood. Indonesia`s major imports from Australia include wheat, sugar, crude oil, education services, aluminium, cotton and animals.

Indonesia January-May realized FDI $3.71 billion

Jakarta (ANTARA News) - Realized foreign direct investment (FDI) in the five months to May rose to 3.71 bln usd from 3.14 bln in the same period last year, Investor daily reported, citing data from the National Investment Coordinating Board (BKPM).

It said realized domestic investment for the same period also rose to 18.62 trln rupiah from 10.47 trln a year ago.

Analysts have warned the country needed to improve its investment climate and reduce its reliance on commodity exports to achieve its growth target.

Under EPA Indonesia must improve Japan`s business confidence

Tokyo (ANTARA News) - With the planned signing of an Economic Partnership Agreement (EPA) with Japan , one of the important things Indonesia will have to do is to improve Japan`s business confidence (in Indonesia), an Indoneisan trade official said.

Halida Mujani, special advicer for international cooperation at Indonesia`s Trade Ministry, made the statement here Friday night after the conclusion of Indonesian-Japanese technical talks on the substance of the EPA and the signing of the agrement`s final draft.

Teams from the two countries had been holding marathon meetings since last Tuesday to agree on the EPA`s final draft for eventual signing by the heads of the Indonesian and Japanese governemnts in Jakarta next August.

"Indonesia is expected to launch more active business promotions in Japan in order to increase the confidence of Japanese businesses. This will also serve as in important indicator in assessing the success of the EPA," Halida said.

She said the problem on the Indonesian side now was to what extent it had prepared itself to be able to seize the opportunities arising from the opening of the Japanese market to Indonesian goods under the EPA.

According to Halida , Japanese businesses were still harboring doubts about the prospects of investing in Indonesia although they often say Indonesia remains a prospective country for investment.

"Japan is still waiting for the promulgation of the new Investment Law and wants to know how it is implemented in the field. They are also closely monitoring developments in taxation and labor affairs in Indonesia," she said.

She said Indonesia`s weaknesses lay in the supply of goods. "We have to work hard to increase our production and supply capabilities," she said.

The same opinion was expressed by Asianto Sinambela, director of trade, industry and investment at Indonesia`s Foreign Ministry, who said the EPA should encourage Indonesia to be more aggressive in seizing the market opportunities the agreement would open.

He said Indonesia was facing new challange from Japan. "The problem will lie in our ability to utilize the opportunities. The EPA will encourage bigger exports to Japan," he said.

Indonesia`s agricultural, plantation, fishery and manufacturing products must meet international standards to enter the Japanese market, he said.

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RI, Japan sign economic partnership agreement in Tokyo

Tokyo (ANTARA News) - Indonesian and Japanese delegations have signed the final draft of an economic partnership agreement marking the end of negotiations they had since June 20, 2007.

The Indonesian delegation in the negotiations held at the Japanese foreign ministry building in Tokyo, was headed by Soemadi Brotodiningrat, while the Japanese delegation included Japanese deputy foreign minister for economic affairs Masaharu Kohno.

The Indonesian delegation also includes special staff of the Ministry of Trade Halida Mujani.

The signed record of discussions will be brought to the legal scrabbing stage for turning it into a legal document.

"Only after the legal form of the cooperation agreement had been in place, the document will be brought to Jakarta," the senior diplomat said.

Masaharu Kohno on a different occasion said that Indonesia is very important to Japan, and the economic cooperation between the two countries needs to be maintained and expanded.

Before being taken to Jakarta, the document will first go to through the internal procedures stage which will last less than two months, and later to be signed by the heads of state of the two countries, respectively Japanese Prime Minister Shinoz Abe and Indonesian President Susilo Bambang Yudhyono at a meeting scheduled in August 2007.

Expos managed by Indonesia embassies overseas still ineffective to SMES

Jakarta (ANTARA News) - Many of the exhibitions managed by the Indonesian embassies abroad are still ineffective in the development of Indonesian small and medium businesses (SMEs) as many of such events are more oriented to tourism promotion.

Speaking during an orientation meeting for journalists, Assistant to the Production and Business Promotion Deputy at the Cooperatives, Small and Medium Entrepreneurs Ministry Priyadi Admadja said here on Friday that only a few number of SMEs were keen to participate the exhibitions managed by Indonesian embassies because the events are more tourism promotion-oriented.

However the role of Indonesian embassies in foreign countries is helping economic missions, especially by diplomatic means and information on the ways and procedures the SMEs have to follow to enable them to take part in the exhibitions.

Furthermore, he pointed out that to market SMEs` products, including handicraft articles, furniture and garments overseas, such exhibitions played a crucial role.

"Almost all the products produced by SMEs are seasonal in nature," he said, adding that the participation of SMEs in the exhibitions overseas will enable them make direct contacts with the buyers and to learn about the competition in those countries.

It is for these purposes that facilities for the Indonesian cooperatives, small and medium entrepreneurs in such exhibitions or trade missions are very important, because they are trying to seek better market access and increased market shares on international markets.

SMEs participating in these overseas exhibitions, in testing the market of their products, should be able to identify the trend of the overseas market toward their products.

Besides helping develop the international marketing network of SMEs, the exhitions are also aimed to boost their marketing capacity by providing them with learning facilities with a view to motivating them to innovate their products and businesses.

According to him, not only their participation could help them market their products overseas, the government could also help develop the businesses by setting up trading houses in those foreign countries.

The trading houses would be able to develop the marketing of SMEs` products and services in foreign trade, he noted.

Govt has five commitments to help MSMEs

Jakarta (ANTARA News) - Indonesia's Cooperatives, Small and Medium Entrepreneurs Minister Suryadharma Ali said there were five government commitments in helping micro, small and medium entrepreneurs (MSMEs).

Among them were the empowerment of Business Development Service Providers (BDS-P), funding, creation of job opportunities and empowerment of civitas academic cooperatives as well as harmonization in understanding MSMEs through the law.

Speaking at a journalists orientation forum here on Thursday, the minister stressed that the first government commitment had to do with efforts to empower business development service providers (BDSP).

This institution played a key role in providing consultation services to MSME centers in Indonesia in addition to giving non financial assistance to MSMEs in developing the potential of their businesses. Besides, this institution was also attempting to bridge productive sources like information on capital, markets, technology and human resources.

Data from the Cooperatives, Small and Medium Entrepreneurs Ministry indicated that the empowerment of BDSP had already been developed since 2001.

At present there are about 957 BDSPs, most of which are scattered in 33 provinces and 339 districts/cities.

The second government commitment was linked particularly to funding sector. Talking about funding, many MSMEs were unbankable even though their business prospects were good. They often ran into difficulties in their efforts to obtain working capital.

MSMEs had such assets as plots of land or business buildings. Unfortunately their ownership right could not be made as a collateral in getting credit from banks.

Hence, the ministry had cooperated with the National Land Agency (BPN for many years to make certification program over their right, Suryadharma said adding that it was a chance for MSMEs to solve their funding problems.

"The funding aspect for MSMEs is one of the realizations of the government`s policy package in the real sector," he said adding that improving the aspect of funding, the government will take two steps, namely developing micro financial institutions and credit quaranty program for MSMEs.

Suryadharma also reiterated the third commitment which had to do with the efforts to create job opportunity through university graduates` self employment program (Prospek Mandiri).

This program is directly oriented to business by creating new business opportunities and not to create new job seekers.

In 2006, university graduates` self-employment and job-opportunity creation program was more focused on six provinces, namely East Java, Yogyakarta, West Kalimantan, Maluku, West Nusa Tenggara and Riau islands.

According to a plan, at least 925 university graduates who had set up around 37 cooperatives were reported to be members of the program.

In addition, the cooperatives, small and medium entrepreneurs ministry also had the fourth commitment for the employment of civitas academic cooperatives (Kocika).

The government had allocated a budget of about Rp5 billion for strengthening their capital in the form of revolving funds in 10 Kocika cooperatives in ten higher learning institutions.

Furthermore, the minister said the budget for Kocika program would rise to Rp13 billion in 2008.

The fifth comitment, he added, had to do with harmonization of MSMEs understanding under the law which until now is still under discussion at the House of Representatives.

Under the law, there will be a legal umbrella for the cooperatives, small and medium entrepreneurs ministry to execute their task in helping MSMEs in the country.

Indonesia 2nd quarter GDP growth likely exceeded 1st quarter

Jakarta (ANTARA News) - The Indonesian economy likely grew more strongly in the second quarter than the first, on the back of higher levels of realized domestic and foreign investment, Coordinating Minister for the Economy Budiono.

In the first quarter to March GDP rose 6.0 pct year-on-year

"I'm optimistic second quarter GDP growth (year-on-year) will be higher than in the first," Budiono was quoted by XFN Asia as telling reporters, without providing any specific figure.

Foreign direct investment (FDI) approvals by value in the first quarter rose almost six-fold to 14.13 bln usd from 2.36 bln a year ago, while domestic approvals also rose sharply to 77.15 trln rupiah from 16.1 trln.

Investment in agricultural sector grows rapidly in 2006, minister

Jakarta (ANTARA News) - Agriculture Minister Anton Apriyantono said on Friday investment in the agricultural sector grew rapidly last year with domestic investment jumping to Rp9.2 trillion and foreign investment doubling to US$848.7 million from a year earlier.

In the first eight months of 2006, domestic investment grew 30.6 percent and foreign investment 9.1 percent compared to the same period last year, he said.

In addition, the number of domestic and foreign investment projects approved in the January-August 2006 period also rose 38.64 percent and 87.63 percent respectively, he said.

"This means that the Agriculture Ministry`s policies have been able to create a conducive investment climate in the agricultural sector," he said.

He said domestic investment in the agricultural sector more than doubled to Rp4.3 trillion in 2005 from Rp1.9 trillion in 2004. The figure further moved up to Rp9.2 trillion in 2006.

Meanwhile, foreign investment climbed 127 percent to US$461.8 million in 2005 from US$208.3 million the year before. In 2006, foreign investment in the agricultural sector reached US$848.7 million.

Survey shows Indonesian SMEs to be reveling in optimism

Andi Haswidi, The Jakarta Post, Jakarta

Indonesian small-and-medium enterprises (SMEs) have the highest investment expectations among to their peers in eight Asian markets, plus Australia, according to a survey conducted by HSBC.

The investment expectations survey, the first of its kind to be conducted by the London-based bank, indicates that about 64 percent of all respondents in Indonesia plan to increase their investment this year, leaving mainland China in second place on 54 percent, followed by Australia on 45 percent.

The survey was conducted in collaboration with ACNielsen in the first quarter of 2007, and covered 1,800 SMEs in nine countries and territories: Hong Kong, mainland China, Taiwan, Singapore, India, Korea, Malaysia, Indonesia and Australia.

"We conducted this survey as SMEs are one of the main engines of economic growth as they employ the largest number of employees. In Indonesia alone, about 50 million people work for SMEs," HSBC Indonesia head of commercial banking Khuresh Faizullabhoy said, citing figures from the Central Statistics Agency (BPS).

With the exception of Australia, the countries were chosen because they were representative of the economies of East Asia, Khuresh said, adding that the survey would cover more countries in the future.

A key finding of the investment expectations survey was that none of the Indonesian respondents were planning to cease trading any time soon. This was also the case in India.

"This shows that Indonesian businesses are very optimistic about the future. This is obviously the result of how they perceive the country's economic outlook," said HSBC senior vice president for business banking Andre S. Sudjono.

According to the survey, about 55 percent of Indonesian businesses expect faster economic growth this year, while 29 percent see it continuing at the same pace and 15 percent expect slower growth.

As investment plans directly affect hiring, the survey says that 22 percent of Indonesian small businesses expect to increase the number of their employees by more than 10 percent, while another 22 percent expect the figure to be lower than 10 percent, meaning that a total of 44 percent of the 209 Indonesian respondents are positive about recruiting more workers this year.

This means that Indonesian SMEs are the second most optimistic on hiring after mainland China, where 57 percent of SMEs expect to recruit more workers this year. After Indonesia in third place on 43 percent is India.

In terms of trade growth, 63 percent of Indonesian SMEs expected trade with mainland China to grow, 72 percent saw trade with the rest of Asia growing and 61 percent said trade with the rest of the world would grow.

"Compared to other countries, Indonesian SMEs on 72 percent show the highest expectations of increased trade with other Asian countries rather than China, while in countries such as India and Singapore, SMEs expected more trade with mainland China," Andre said.

Overall, HSBC concludes that the optimism of Indonesian SMEs provides a very good barometer of economic health as they are major job creators and form a critically important part of the economy.

"Their optimism, therefore, is a clear reflection of economic growth," Khuresh said.

RI courts shun reform: Academic

The Jakarta Post, Jakarta

Indonesia's judicial system is still reluctant to reform itself and is neglecting calls for greater transparency in its court verdicts, a legal expert says.

"The most difficult problem for judicial reform in this country is to change the mindset of those individuals working in the judiciary," the dean of the Faculty of Law at the University of Indonesia, Hikmahanto Juwana, told a meeting of donors to the Partnership, a non-governmental organization pushing governance reforms in Indonesia, here Wednesday.

He added: "It's not enough to only reform the structure of the system and it's not enough to only have the regulation. There should be a change of mindset."

He also said technology could be used to electronically record court verdicts to enable the public to easily access them. "Some judges oppose the idea by saying a certain law prohibits them from giving the public access to the verdicts," Hikmahanto said.

Some lower-level judiciary staffers also reject the idea because they fear loosing their source of income, he said.

"Students of mine have to pay Rp 250,000 (about US$28) to Rp 500,000 ($56) to obtain a verdict (to read)," he said, adding that even judges must pay to retrieve recorded court verdicts.

Hikmahanto said the shift in mindset should also focus on the recruitment process. "Even up until now, professionals who want to work in the judicial system are being asked to pay to do so."

It has been reported that anyone seeking appointment to a judgeship is required to pay at least Rp 100 million to be made eligible.

Hikmahanto also said the government must be able to pay decent salaries to judges and prosecutors in order to attract high-quality professionals to the sector. "Incentives for those judges that are sent to remote areas are also important.

"Before the reform, the law was marginalized due to the (government's) focus on economic development. So, changing the mindset is very difficult," he said.

Hikmahanto added that judicial reform was arduous because of the common expectation of a "trickle-down effect" from the highest judicial body, the Supreme Court.

A high court in Makassar, South Sulawesi, has, however, initiated mild reforms by uploading its verdicts to its Web site, which, Hikmahanto said, "is a remarkable thing that I cannot find in other high courts".

The Supreme Court began uploading its verdicts at the beginning of this year, according to Wiwiek Awiati, a consultant for the Judicial Reform Team at the Supreme Court.

"However, the problem remains in the lack of funds. The Supreme Court supports this effort to open public access to court verdicts as long as it is financed by individual lower courts," she said.

Wiwiek said the Supreme Court has already formed a task force to formulate a regulation on judicial transparency.

"The progress (of the task force) has reached over 75 percent. In the next two months this regulation will be signed by the chief justice," she said.

"The main spirit of this regulation is that the public should be able to access every court verdict freely." There should not be any additional charges other than copy fees, she added.

The upcoming Supreme Court regulation, according to Wiwiek, will also consider the partial confidentiality rule for verdicts that concern, for example, an individual's privacy, such as verdicts on rape cases.

Govt slapped on wrist by BPK, again

The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) has entered a disclaimer to the government's 2006 budget accounts for the third consecutive year, and will continue to do so until it is allowed to directly audit the tax service.

Inadequate regulations and incompatible infrastructure had lead to another disclaimer this year, BPK chairman Anwar Nasution said Tuesday after submitting the agency's findings to a House of Representatives' plenary session.

"The inadequate accounting system, incompatible IT systems, the absence of a single treasury account, and disorder in the collection of non-tax revenue have forced the BPK to enter a disclaimer," he told reporters.

The BPK has done so three times in a row since the coming into effect of the 2003 State Finances Law, 2004 State Treasury Law and 2004 State Expenditure Law, which Anwar said had largely resulted in the mushrooming of secretive ministerial accounts.

Regarding this issue, BPK in 2004 found 964 unreported government-related bank accounts -- mostly escrow accounts -- containing Rp 26.25 trillion (US$2.95 billion). The number rose in 2005 to 1,303 accounts containing Rp 8.5 trillion, and to 2,423 accounts containing Rp 2.7 trillion in 2006.

The government, through the Finance Ministry, has also traced 2,169 dubious accounts holding Rp 9.12 trillion as of Feb. 28 this year, adding to the accounts already discovered by the BPK.

Anwar said the BPK might have to continuing entering disclaimers on the government's accounts in the years to come should the rules prohibiting it from auditing the tax service continue.

"Indonesia is one of the few countries in the world that does not allow its official auditor to audit the tax service. It's a completely untenable situation," said Anwar.

"The taxpayers must know what their money is being used for."

Under current regulations, the BPK is required to get the Finance Ministry's approval should it want to audit the tax service.

"The ministry, however, never gives its approval, claiming that approval can only be given for audits of the tax affairs of people believed to be implicated in crime," he explained.

Indonesia, Malaysia to set up cooperation body

The Jakarta Post, Jakarta

Indonesia and Malaysia are to set up a joint body tasked with exploring opportunities for economic cooperation between the two nations in such lucrative sectors such as crude palm oil, Islamic finance and the halal industry.

This was announced Tuesday after a meeting between Indonesia's Coordinating Minister for the Economy Boediono and Malaysia's Minister in the Prime Minister's Office Dato Sri Mohd. Effendi Norwawi.

"We expect the establishment of the body to enhance collaboration between our two neighboring countries through the identification of potential new opportunities," Boediono said after the meeting, which followed Monday's Malaysia and Indonesia Investment and Finance Summit.

Malaysia has seen its investments in Indonesia increase rapidly in recent years. In 2006, Malaysia's capital inflows into Indonesia rose threefold to $2.2 billion from the previous year.

The government-to-government body will also serve as a facilitator for the private sector in exploring business opportunities in both countries.

"Basically, we're going to sound out all areas where we can work together, and we will share our competitive advantages," Norwawi explained.

"Together, we can become very strong players in many sectors -- including the CPO, halal industry and Islamic finance sectors -- on the global market."

In the CPO industry, for example, the two countries have agreed to develop Indonesia's downstream sector by formulating strategic plans for the sector's growth.

Indonesia and Malaysia are the world's largest CPO producers, with a combined production that supplies some 85 percent of the CPO on the global market.

The two countries, whose citizens are mostly muslims, have also agreed to develop joint Islamic financial products, and the halal industry, including both food and other products.

In addition, the body will also look into the possibility of cooperation in the tourism sector by promoting joint tourism packages, as well as in the SME sector.

The "Malaysia and Indonesia Investment and Finance Summit" was held Monday, and resulted in a number of memorandums of understandings (MOUs) being signed between companies from the two countries.

Indonesian property developer Gapura Prima Group and Malaysian financial services firm Amanah Raya Berhad signed an agreement for the issuing of regional real estate investment trusts (REITs) -- stock-market instruments in the property business -- worth US$250 million.

The REITs, to be listed on the Singapore Stock Exchange by the end of this year, will be focused on the retail property business, Amanah Raya managing director Datuk Mohamed Azahari Kamil.

"We are considering the acquisition of five shopping malls in Indonesia and another two in Malaysia to be warranted in the REITs," Kamil said.

The shopping malls in Indonesia are located in Jakarta, Bandung, Surakarta and Surabaya, while those in Malaysia are located in the Klang Valley and Melaka.

Also on Monday, Gapura Prima and Amanah Raya signed an agreement with state-owned contractor PT Pembangunan Perumahan (PT PP) for the purchase of another shopping mall project in Surabaya.

Govt to restructure the bulk of state assets

M. Taufiqurrahman, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono ordered on Tuesday a massive reevaluation of all assets controlled wholly or partly by the government in an effort to prevent their misuse.

Yudhoyono also demanded a revamp of all agencies tasked with managing state assets.

"The Presidents expects a complete report on state assets in the next month or two... The report will not be concerned only with the amount of assets but also the managing agencies, some of which are no longer consistent with existing regulations," State Secretary Hatta Rajasa told a media briefing at the Bina Graha Presidential Office on Tuesday.

He said that assets under the control of the State Secretariat and the Finance Ministry would be among those audited.

The Gelora Bung Karno sports complex in Senayan and the Kemayoran fairground, both in Central Jakarta, are under the management of the State Secretariat. Land in both areas has been rented or sold to outside operators in the past and the President has ordered that they be returned to their original uses.

"Restructuring the assets will not concern only their legal aspects but also issues related to the use of the assets," Hatta said.

Hatta added that pending the outcome of the restructuring, no new contracts would be made with private companies in the management of the assets.

"However, we will honor existing contracts," he told reporters.

A number of private companies have signed contracts for land use in Senayan, erecting malls and plush apartments.

As for assets under the control of the Finance Ministry, Finance Minister Sri Mulyani Indrawati said the government would issue new regulations that would mandate the revamping of organizations managing state assets.

"The new organizations must be made consistent with good governance principles," Sri Mulyani said, adding that two presidential decrees would be issued to serve as a new legal basis for the management of state assets.

She said that assets under the finance ministry included land, buildings and premises controlled by government agencies, state-owned enterprises and seven state universities, shares controlled by the government in state-owned companies, assets of the now-defunct Indonesian Banks Restructuring Agency, legally disputed assets, treasure retrieved from ship wrecks and assets seized from contractors in government projects.

According to the Finance Ministry's estimate the assets are valued at Rp 335 trillion (US$37 billion), a figure that has been disputed by the Supreme Audit Agency (BPK).

"This is a historical value, not the actual, proper value of the assets. That's why the BPK issued a disclaimer as its proper value is yet to be determined," Sri Mulyani said.

She said that in collaboration with other ministries, the restructuring of the state assets would be conducted in stages and was expected to wrap up in 2009.

Press freedom is safe: Govt

Ridwan Max Sijabat, The Jakarta Post, Jakarta

A top official has maintained that the government remains committed to protecting Indonesian press freedom as well as those working in the media industry.

"There have been no such ideas to revise the 1999 Press Law ... We don't know where the issue has come from," Communications and Information Minister M. Nuh told a hearing with the House of Representatives Commission I for information, defense and foreign affairs here Monday.

The minister was responding to questions raised by commission members who warned that the nation's press would return to its former state under the authoritarian New Order regime if the government pursued a revision of the press law.

Agreeing with the commission, acting director general for information services and the dissemination of information at the ministry, Widiatnyana Merati, said the ministry is currently studying ways to empower the media, provide social security programs for media workers and seek support from relevant authorities to make the press law a lex specialis (special law) in handling cases involving the media.

"So far, we have held discussions with the University of Indonesia and the Padjadjaran University in Bandung, West Java, to prepare the necessary regulations or decrees to enforce the press law," he said.

Jeffrey Massie of the Prosperous Peace Party (PDS) and Abdillah Toha of the National Mandate Party (PAN) said the House commission appreciated the government's prudent treatment of the media, but warned the nation would pay a high price if the state did not respect press freedom, which, they said, was a "precious fruit" from the reform movement launched in 1998.

"The government is carrying out seven flagship programs, namely e-Leadership, e-Education, e-Infrastructure, e-Industry, e-Procurement, e-Budget and e-Government, in its strategy to achieve a so-called 'information society' by 2015 to show the government's political will in building an information-literate society. But it looks strange if the government has plans to reimpose censorship on the press," Jeffrey said.

The minister said bills on the free flow of information and on information and electronic transactions, expected to be approved this year, would provide a legal basis for access to and encourage the use of information.

"The government is even preparing a cybercrimes bill in anticipation of a new crime modus through the Internet and computers," he said.

The commission also asked the government to review the allowance of foreign ownership in the telecommunications industry, which it alleged has caused huge losses to the state.

"The government should take concrete action in line with the increasing protests over foreign ownership in the telecommunications industry," said Theo Sambuaga, who presided over the hearing.

Citing Singapore's Temasek Holdings' stake in Indosat, Jeffrey said the government must decide whether to renegotiate Temasek's ownership -- through its subsidiary Singapore Technologies Telemedia -- of Indosat, repurchase its share or nationalize it over reports that Temasek's monopoly of Indonesia's telecom industry has caused huge losses to the state.

At the meeting, Abdillah, Djoko Susilo of PAN and Effendy Choirie of the National Awakening Party also asked the government to prohibit quiz shows, call girls and other TV programs from incorporating short message services (sms) in their programming because their motives were purely business related.

"The programs must be barred from using sms because they have grabbed billions of rupiah from participants who are mostly unaware of the (premium rate) tariff of Rp 2,000 (22 U.S. cents) per sms," Djoko said.

RI, India agree to expand economic, energy cooperation

Jakarta (ANTARA News) - Indonesia and India on Monday agreed to expand bilateral cooperation to cover a range of new areas, including exclusive economic zone cooperation, alternative energy development, and mutual legal assistance.

Indonesian Foreign Minister Hassan Wirajuda and his Indian counterpart, Pranab Mukherjee, signed the agreement at the end of the third ministerial joint commission meeting held at the Indonesian Foreign Ministry building here on June 15-18.

"The meeting was held in a cordial and constructive way. The delegations of the two countries held talks and exchanged views on various spheres of cooperation to explore and develop potentials of cooperation in all fields," Wirajuda said.

The various spheres of cooperation cover politics, defense and security, economy, trade, industry, tourism and culture, transportation, energy, health and pharmacy, education and training, as well as science and technology.

"We realize the unique characteristics of relations between Indonesia and India as Asia`s two largest democratic countries which have had historical ties since several centuries ago," he said.

Therefore, he added, the two governments were highly convinced that the outcome of the joint commission meeting would lay a firm basis for the continuation of the bilateral cooperation for the benefit of the two peoples.

"Indonesia warmly welcomes the Indian prime minister`s offer to help restore the Prambanan temple compounds as well as to follow up on the results of the joint commission meeting, especially those related to the development of nuclear technology," he said.

Meanwhile, Foreign Minister Mukherjee said relations between Indonesia and India had increased significantly, particularly since the signing of a new strategic partnership agreement between the two countries during President Susilo Bambang Yudhoyono`s visit to India in November 2005.

To follow up on the agreement, the two nations had agreed to an action plan to implement all bilateral cooperations in a concrete and measurable way, he said.

Indonesia and India established diplomatic ties on March 3, 1951.

Two-way trade amounted to US$4.2 billion in 2006 compared to US$3.9 billion a year earlier. The figure is projected to reach US$10 billion by 2010.

Kim Chance offers blunt advice on Indonesia investment

Duncan Graham, Contributor The Jakata Post, Surabaya

Kim Chance offered a blunt message to the Nervous Nellies of Australian business fearful of investing in Indonesia, the perceived land of terror: "Go to Indonesia and learn that it is safe or the competition will cut the ground out from under you," he said.

"Of course there are sharks in Indonesian business -- and crocodiles in Australian business. But they're a minority."

Western Australia's minister for agriculture and food has an unusual approach to the media; he's been a politician for 15 years and a minister for the past six so by now should have mastered the art of doublespeak.

Maybe he guards his words back in his home state where journalists think they have a mortgage on cynicism. But in Indonesia Chance was so upbeat about promoting trade that his edgy minders were constantly trying to insert qualifiers and disclaimers into his enthusiastic predictions.

As he rattled off a list of present and future possibilities -- halal meat exports from Indonesia using cattle imported from Australia, Boer goats into Sumatra, Australian raw stock for steel mills, Indonesian laboratories providing tissue culture services, Indonesia manufacturing parabolic solar collectors, village bio-diesel plants using sunflower seeds, importing windmills to lift deep-well water -- the bureaucrats blanched.

But however difficult the implementation of these plans, any public servant keen to stay on the payroll doesn't gainsay a minister setting out his vision -- even when adding measurably to the workload.

"International relations tend to be over complicated," Chance said.

"I'm here to talk trade but that's not the most important thing. This is about people, about developing good relationships and helping Australians understand more about Indonesia.

"We need to stop considering each other as separate countries. It's far more helpful to take a regional approach. We (in WA) have the raw commodities -- you in Indonesia have the labor and the skills for value adding.

"What sort of opportunities? It's as broad as your imagination. Think of the synergies."

WA is a resource rich, export-dependent state. It produces huge quantities of food -- mainly grains -- and mines vast reserves of minerals, particularly iron, gold, nickel and bauxite, used to make aluminum.

Though it has a population of little more than two million, WA is currently riding an economic boom. There's a huge shortage of skilled labor. Wages are high ensuring that manufacturing can't compete against imports from low-cost workforce countries.

But in the nation next door to the north there's a surplus of labor, and according to Chance, a keenness to use local skills in innovative ways and develop new industries.

Later this year Indonesia will have the chance to showcase its products at the Perth Royal Show, WA's most prestigious annual event, staged for a week in the big state's capital city. (Perth is just over three hours flying time from Denpasar)

Past guest nations at the show have included China, Germany, Japan and Malaysia. East Java, which has a 17-year sister-state relationship with WA, has booked a third of the floor space at the Indonesian stand to push its goods and culture.

Chance was in Indonesia for five days in June to check progress with the Royal Show arrangements and help boost two-way trade.

He's been to Indonesia before and several times to the Middle East, ramping sales of cattle and farm produce and checking end-use arrangements.

In Batu, a hillltown outside Malang in central East Java famous for its floriculture and horticulture, Chance watched the signing of a memorandum of understanding. This was between a local company and Western Potatoes Ltd for the supply of seed potatoes.

Growers based at Nongkojajar on the uplands of the Bromo-Semeru massif have been importing spuds from other WA suppliers for the past decade, boosting yields by two to three times.

"WA is geographically isolated from the Eastern states of Australia (there's a desert in between) so we can maintain high standards of quarantine," said Chance.

"We don't suffer from potato blight, which stops exports from countries like the Netherlands. Consumer demand for potatoes in Indonesia is phenomenal -- it's growing at about 50 percent a year.

"At the moment most of this is going into the snack food market. But in the future potatoes are likely to help provide food security for Indonesians as the margin between rice production and rice consumption narrows.

"In Australia we have expertise in agricultural science, stock genetics, veterinary medicine and animal nutrition. The trade in services follows trade in commodities." (see side bar)

The other rural boom product is milk. As Indonesian consumers move from powdered to long-life UHT (ultra-high temperature) processed milk, the demand for the liquid product is booming.

Many of the high-yield Friesian dairy cattle now being farmed in East Java originally came from WA.

"I'd like to see Indonesian investors getting involved in the Kimberley (north-western Australia) by buying the leasehold of cattle stations (ranches)," he said. "That helps lock in the supply of animals to Indonesia.

Big, growing but unbalanced

Indonesia is Australia's 10th largest export market.

Apart from petroleum products, Australia's major exports to the archipelago include aluminum, live animals, wheat, sugar and cotton.

And there seems to be plenty of demand -- sales of Australian goods to Indonesia jumped 22.6 percent last year.

In return, Indonesia sends Australia large quantities of gold, paper and wood -- including furniture.

But investment is one-sided.

According to the latest figures from the Australian Bureau of Statistics, Australia has AUD$2.6 billion (Rp 182 trillion) invested in Indonesia.

But Indonesians have sunk just one fifth of this sum into business and property in Australia.

And figures show there are more than 400 Australian companies in Indonesia, with most operating out of Jakarta.

Self-employed encouraged to insure by state company

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Three ministries have signed an agreement with state-owned insurance company PT Jamsostek to encourage more small- and medium-sized business owners and their workers to take out social security insurance.

The Ministry of Manpower and Transmigration, the Ministry of Industry and Cooperatives and the Ministry of Small- and Medium-sized Enterprises have signed a memorandum of understanding (MOU) with the insurance company.

The agreement would see the three ministries encourage small-and medium-sized enterprises (SMEs) employing tens of millions of workers in the informal sector to register their workers with the social security programs.

Approximately only 80,000 of 60 million workers in the formal sector have to-date participated in social security programs.

Jamsostek has so far netted more than 24 million workers in the formal sector. Their total assets are greater than Rp 49 trillion (US$5.4 billion).

But 7.9 million workers became "non-active" following the 1997 economic crisis.

Director General of Industrial Relations and Labor Standards at the Manpower and Transmigration Ministry Masri Hasyar said after the signing of the agreement over the weekend it was difficult for the government and Jamsostek to net workers in the informal sector because many were self-employed.

"Unlike the formal sector, workers in the informal sector have no industrial relations and their protection is not under the jurisdiction of the labor law," Masri said.

"Their participation in social security programs is voluntary."

Masri said the three ministries would persuade home industries, SMEs and informal workers associations to take the lead and introduce a number of selected programs to their sector.

He said street vendors, traders and food stall attendants could choose from four programs.

Jamsostek's director of planning and information systems H.D. Suyono said his company had given more attention to the informal sector to help the government provide protection for a larger part of the work force.

Suyono said the programs would be financially strong but indicated the strength of protection provided would depend on numbers.

Director of operation and service Achmad Anshori said Jamsostek's strength relied on increasing the number of workers in the programs.

"Fishermen, ojek (motorcycle taxi) drivers, traders in traditional markets and housemaids could join the social security program through their own association," Achmad said.

UGM starts CIO postgraduate program

The Jakarta Post

Gadjah Mada University (UGM) in Yogyakarta started its Chief Information Officer postgraduate program this year with an inaugural lecture on June 4.

The program offers classes and training to improve the competency of people working in the communications and information field.

This program is designed by UGM's information technology postgraduate program (MTI). Each student will follow classes for 16 months focusing on strategy and management of information technology.

The school perceives communication and information technology as the application of technology with a sociocultural approach. Consequently, students will also take nontechnical subjects such as law, economics and management.

NGOs told to publish financial reports

The Jakarta Post, Jakarta

Non-governmental organizations and other fund-receiving bodies should increase their accountability by publishing financial reports, which will in turn earn the public's trust, NGOs themselves are saying.

Darwina Sri Widjajanti, executive director at the Sustainable Development Foundation, said the accountability of NGOs is often brought under question and that many in the general public are unaware what an NGO is.

"Therefore, NGOs should make themselves credible. If we want other people to be transparent, we should start with ourselves," Darwina said at the launching of the Indonesian Philanthropy Association on Friday.

She said NGOs and other fund-recipient organizations should undergo both program and financial auditing to gain the public's trust. A program audit would be used to determine the impact of a program on a community, while a financial audit would check the usage and flow of money in the organization.

"The operational cost should not exceed 20 percent of the program cost. If this happens, the activity of an organization could be construed as an attempt to enrich itself," she said.

A researcher from the Public Interest Research and Advocacy Center, Hamid Abidin, said people often prefer to donate directly to those needing assistance rather than through charitable bodies due to mistrust.

"There's a fear that donations will not reach the needy people if donated through an organization. Giving through an organized body means you may have to wait a few years to see the results," he said.

He added that in America, several organizations had launched a donor's bill of rights to provide clear guidelines on their responsibilities and rights in donation matters.

"It has something to do with public trust building and the relationship between donors and social organizations. Once that is understood, organizations would make financial reports because people demand accountability. We will have to have donor training to get people to realize that it's better to give in an organized way," he said.

Chief executive of the Robin Hood Foundation of New Zealand Jude Mannion said that in her country the accreditation was given through a tax exemption. She added that a simple accreditation process that is not burdensome for NGOs would be ideal.

Indonesia currently has no such accreditation system.

"An NGO in New Zealand can get a tax exemption just by applying to the tax department, showing its books, accounts and being transparent. It's not arduous, it's a very simple process. A company can give NGOs up to five percent of its net revenue as a donation and that's tax deductible. It works really well," she said.