New regulation restricts modern retail expansion

Andi Haswidi, The Jakarta Post, Jakarta

The government has issued a regulation to restrict the expansion of modern retailers including supermarkets, hypermarkets and convenience stores, which have been widely criticized for edging out traditional retailers.

During an impromptu encounter with reporters Friday, Trade Minister Mari Elka Pangestu confirmed that the President had already signed the regulation and that it had taken effect beginning Thursday.

"The main point is the zoning issue, how to better regulate the location of traditional markets and modern retailers," she said, adding that local governments would be responsible for the implementation of zoning laws.

According to Trade Ministry director for market development and distribution Gunaryo, the presidential regulation only serves as a guide, which will be supplemented by a more detailed ministerial-level regulation to be issued shortly.

He said the central government gave the authority to manage the location of modern retailers to the local governments down to the level of regencies so as to give a more accurate and context-based assessment of the zoning issue.

Aside from proximity, the ministerial regulation will take into account other variables such as regional economic growth, population and local consumers' purchasing power.

Taking Jakarta as an example, he said that hypermarkets could only be opened on the outskirts of the city.

On the issue of trading terms, which cover the crucial listing fees that have to be paid by suppliers to hypermarket operators, the presidential regulation does not impose restrictions, but demands transparency so as to avoid excessive charges and ensure fairness.

"Retailers do have expenses such as in sanitary and power maintenance, which should be shared with suppliers. However, they must be transparent in charging the listing fees," he said.

Last but not least, he said, the presidential regulation demanded local governments empower traditional markets through various programs that could be funded by the regional budget, the state budget or through cooperation with the private sector, particularly with modern retailers.

According to a study by AC Nielsen, the total value of the Indonesian grocery trade stood at Rp 63.5 trillion (about US$7 billion) in 2006, which was 14.3 percent higher than in 2005. Of this total, the value of groceries sold through traditional outlets grew by 9.6 percent, while the value of those sold through modern outlets increased by 23.8 percent.

However, the study also found that 99 percent of Indonesian people still do their shopping in traditional markets, and that the market share of modern markets in revenue terms stands at about only 16 percent.

SBY book shows 'true face' of Indonesia

Alfian, The Jakarta Post, Jakarta

President Susilo Bambang Yudhoyono launched Friday Indonesia on the Move, a compilation of his articles and speeches depicting a "true picture" of Indonesia.

Yudhoyono said the book could be used to tell the global community about Indonesia.

"We have often been judged by perceptions, instead of reality ... and that is not fair," he said.

"I agreed that my articles and speeches could be published as a book because I want Indonesia to be better understood by the world," he said.

Yudhoyono said the title was chosen because the phrase accurately portrayed the development of the country.

"Indonesia is moving forward with all its challenges and problems," he said.

The President said that although Indonesia had yet to completely survive the impact of the economic crisis, the country had made significant progress in the last 10 years.

"New problems emerge, but if we honestly evaluate them, we will find some achievements and progress along the way," he said.

"Don't you think that democracy and human rights protection are getting better in this country?" Yudhoyono said.

Indonesia, he added, had also moved forward in terms of economic growth.

"From 7 percent (before the crisis), it dropped to minus 13 percent (when the crisis hit in 1997), which was a huge contraction. But now we can reach at least 6 percent growth," said Yudhoyono, adding that if Indonesians continued to work hard, the country could reach 7 percent growth again, but with better underlying systems.

He said that Indonesia had also shown progress in eradicating conflicts and corruption. "The conflicts in our society are getting smaller and milder," said Yudhoyono.

"Although we are not satisfied yet, but as a grateful people let's declare 'we are on the move'," said Yudhoyono, to applause from the audience, which consisted of national leaders, cabinet members and some ambassadors.

Indonesia on the Move contains Yudhoyono's speeches and articles from the end of 2005 until the end of 2006. The book includes other authors' articles and comments on Yudhoyono's leadership. The book was edited by presidential spokesman Dino Patti Djalal and published by Bhuana Ilmu Popular, under the Kompas and Gramedia Group.

The book launch was accompanied by the opening of a new Gramedia book store on Jl. Matraman, Central Jakarta.

Yudhoyono urged the audience to support efforts to increase reading among Indonesians. He said reading was needed for Indonesia to become an advanced society. "An advanced society comes from a learning society and a learning society comes from s reading society," said Yudhoyono.

Indonesian Stock Exchange third best in Asia Pacific

Jakarta (ANTARA News) - The performance of the Indonesian Stock Exchange (BEI) has been rated the third best among stock exchanges in the Asia and Pacific region, BEI Director Erry Firmansyah said on Friday.

"In terms of major indice, BEI is the third best performer in the region after the stock exchanges of Shenzen and Shanghai in China," he added.

He said in 2007, BEI booked a relatively huge gain, namely 51.74 percent.

In its 2006 closing, the indice were recorded at 1,805.52 points, and the figure increased 51.74 percent to the level of 2,739.704 points in 2007.

Meanwhile, the Shenzen and Shanghai stock exchanges booked a gain of 163.98 and 98.43 points respectively.

Ranked after Indonesia`s Stock Exchange were those of Mumbai (India), Hong Kong, Malaysia, Thailand, the Philippines, Singapore and Dow Jones.

Meanwhile, the capitalization value of BEI increased 58.73 percent from Rp 1,249,1 trillion at the end of 2006 to Rp 1,982.7 trillion at the end of 2007.

Share transactions booked an increase of 133.99 percent to Rp 1,0442.9 trillion, while daily transactions increased 131.52 percent from Rp 1.84 trillion to Rp 4.26 trillion per day.

Economy doing well, ready to enter fast lane

Hendarsyah Tarmizi, The Jakarta Post, Jakarta

Despite much criticism over its inability to cope with growing unemployment and poverty, the government has in general managed to get the economic wheels back on the right track this year.

The government's success in achieving the economic targets set out in the 2007 budget can be seen from the improvements in most economic indicators.

Almost all economic indicators, such as inflation, gross domestic product (GDP) growth, the rupiah exchange rate, the central bank's benchmark rate, the balance of payments and foreign exchange reserves all closed the year encouragingly.

According to the Central Statistics Agency (BPS), GDP growth during the first nine months of this year hit the government's target of 6.3 percent, thanks to healthy growth in consumption spending, exports and investment.

As no major changes are expected in the rates of the three main economic drivers during the fourth quarter, GDP should comfortably surpass the government's growth target.

It is also important to note that GDP growth could be sustained at above the 5.48 percent recorded last year despite a slowdown in exports during 2007 thanks to a remarkable increase in actual investments from both domestic and foreign investors.

Indonesia's exports rose by 19.75 percent to US$100.7 billion in 2006, exceeding the US$100 billion mark for the first time in history amid the surge in commodities' prices, which contributed a larger slice of the total exports.

During the January-October period, total exports grew only 13.3 percent, below the government's target of 15 percent, to $93.26 billion from the same period last year, amid a decline in commodity prices.

However, with the expected higher growth in revenues from oil and gas exports during the fourth quarter as the result of a sharp increase in crude oil prices, the 15 percent target will be achieved.

Unlike exports, investment has shown a remarkable recovery since the beginning of the year as investors, who had delayed their investments the year before, have begun to realize their investment plans amid the strong signs of economic recovery.

According to the Investment Coordinating Board (BKPM), actual foreign direct investment (FDI) reached a total of US$10.2 billion as of mid-December, the highest since 2002.

The figure is about 70 percent higher than the US$5.97 billion recorded for the whole of 2006 amid an improving investment climate. About US$3.29 billion of FDI went into the transportation, communications, chemicals, storage and food processing industries.

Singapore was the biggest source of actual FDI at US$3.74 billion, followed by the United Kingdom on US$1.69 billion, South Korea on US$626.8 million, Japan on US$602.7 million and Taiwan on US$469.6 million.

Meanwhile, actual domestic investment reached Rp 34.14 trillion (US$3.6 billion) in the same period, exceeding the Rp 20.78 trillion for all of last year. Nearly half was poured into eight major projects in the paper and plastics industries.

The more stable monetary situation as the result of the easing of inflationary pressures, the cut in the central bank's benchmark rate and the more stable rupiah have all played an important role in the improvement of business confidence.

Inflation -- one of the most important factors affecting the stability of the economy, grew modestly to 5.3 percent in January to November, although the year-on-year rate was still higher at 6.71 percent.

Inflation, which jumped to 17 percent in 2005 as the impact of the rise in fuel prices in October of that year, has dropped significantly during the last two years.

In 2006, the inflation rate was held at below 6.6 percent, and hopefully, it will close this year below the government's target of 6.5 percent.

Low inflation has given the central bank, Bank Indonesia, leeway to maintain the exchange rate of the rupiah against the U.S. dollar at around the government's target of Rp 9,100, and to cut its key interest rate to 8 percent early this December from 9.5 percent in January.

The government had hoped the central bank's key rate could be further lowered to 7.5 percent by the end of this year, but it is unlikely that Bank Indonesia will make another cut, given the higher inflation rate at the end of the year, when inflationary pressures are traditionally much stronger due the higher consumer spending over the year-end holiday.

Economic Indicators

2007* 2008

• GDP Growth 6.3% 6.8%
• In nominal value ( Rp trillion) 3,804.2 4,306.6
• GDP per capita ( US$) 1,858 2,077
• Rupiah against U.S. dollar 9,125 9,100
• Inflation 6.4 6
• Bank Indonesia's benchmark rate 8% 7.5
• Oil prices (US$) 72 60
• Budget Deficit 1.3% 1.7%
• Unemployment rate 10.55% 8%-9%
• Poverty rate 16.6% 15%-16.8%

*Estimate

Source: Finance Ministry

The central bank's success in gradually cutting its benchmark rate to as low as 8 percent has allowed commercial lenders to also reduce their lending rates, which has in turn resulted in a significant increase in borrowing, an important factor contributing to the higher economic growth.

According to Bank Indonesia, the country's banks extended new loans totaling about Rp 183.9 trillion in the January to October period, an increase of 23 percent over the figures recorded in 2006. This lending growth is considerably higher than the 14 percent recorded the previous year.

The country's balance of payments also recorded a surplus of about US$1.1 billion during the third quarter, much higher than the US$0.4 billion booked in the same period last year.

In addition to the increase in the balance of payments surplus, the country's foreign exchange reserves also recorded positive growth, rising from US$50.9 billion at the end of June to US$52.9 billion at the end of September.

Given this figure, the forex reserves are enough to pay for imports and the government's foreign debt repayments for almost six months, much higher than the minimum standard of four months.

The central bank expects that with the increase in foreign direct investment, the surplus in the balance of payments will further swell to US$13.36 billion by the end of the year, exceeding the initial estimate of US$10.9 billion.

The stock market has also marked another boom year, with the Jakarta Composite Index rising by nearly 50 percent to close at 2,657.98 on Dec. 19, up from 1,805.52 at the start of the year, making it as the second-best performing market in Asia after China.

The rise in the benchmark price index is almost the same as the 55 percent recorded last year, which also made the Jakarta stock market among Asia's best performing stock exchanges.

The lower interest rates, more stable rupiah and rising global commodity prices have aroused interest from foreign companies in the Indonesian stock market, especially the resources-based companies, which have become the main drivers of the price-index surge.

If the improvements in the economic fundamentals are used as yardsticks for judging whether or not the government has successfully run the economy, there is no question that it deserves to get high marks for its achievement of getting the economy back on track again.

Kadin urges focus on labor-intensive industries

The Jakarta Post, Jakarta

The government needs to place more focus on the development of labor-intensive manufacturing industries, and the agricultural and mining sectors in order to maintain sustainable growth and reduce the country's high unemployment, the Indonesian Chamber of Commerce and Industry says.

Speaking at the chamber's year-end economic review last week, Kadin chairman Muhammad S. Hidayat said the development of the agricultural, manufacturing and mining sectors should serve as the backbone of the country's future growth given their greater impact on people's lives.

He said the government's current policy, which provided incentives only to certain business sectors, such as telecommunications, property and financial services, had contributed to slower growth in such sectors as manufacturing and agriculture.

"The government needs to focus on the development of agriculture and manufacturing to put them on a par with the growth in the non-trade sector, such as the telecommunications and property sectors," Hidayat said.

Over the past five years, he said, the growth structure of the country's economy indicated widening gaps between different sectors as the result of the differing treatment handed out by the government, the chamber said.

Citing data from the Central Statistics Agency (BPS), the chamber said that growth in the trade sector, which included the mining, agricultural and manufacturing sectors, lagged far behind growth in the telecommunications, property and services sectors.

Although the plantation sector showed high growth of 8.9 percent during the first nine months of this year thanks to sharp increases in commodity prices overseas, other sub sectors of agriculture, such as aquaculture, cattle-raising and the forestry industry, had suffered lower growth. The mining industry had also shown low growth.

"The numbers show that the government has been neglecting the trade sector," the Kadin report said.

In addition to the agricultural, manufacturing and mining sectors, the government also needed to pay more attention to the development of small and medium enterprises (SMEs).

The SMEs should be strengthened so that they can play important roles in supporting larger firms, either as suppliers or subcontractors.

Kadin said the revitalization of the trade sector should be made one of the government's priorities in its short-term economic development policy if it wanted to provide more jobs and reduce poverty.

He said that the government could no longer rely on foreign companies for job creation as many that were involved in labor-intensive industries had relocated their plants to other developing countries, such as Vietnam and China.

Kadin hailed the government's efforts to put the economy back on track this year, as indicated by the improvements in most economic indicators, such as GDP growth, inflation and the central bank's benchmark rate.

The chamber, however, said that growth had failed to provide jobs as expected because most of the drivers of economic growth came from sectors that were not labor intensive. (adt)

FM calls for improved human resources to face Asean economic integration

Pangkalpinang (ANTARA News) - Foreign Minister Hassan Wirajuda said Monday the Indonesian nation must be able to improve its human resources in the face of full ASEAN economic integration in 2015.

"The full ASEAN economic integration in 2015 of which the blueprint has already been launched has its minuses and pluses for the Indonesian nation. To face it, we need to improve our human resources so it will not harm but will benefit this nation in its effort to speed up the attainment of its progress," he said.

Unless the Indonesian nation made preparations for the ASEAN economic integration which will allow free flows of goods, service and investment among ASEAN member states, it would lag behind other nations, he said.

One of the arrangements to be applied soon was an ASEAN open-sky policy which would have negative and positive impacts on Indonesia and that the country needed to produce professional human resources, he sad.

"One of the efforts to promote human resources is improving the educational sector. Both the central and regional governments are making efforts to improve our educational system which is considered quite successful. As a matter of fact, Indonesia is one of the Asian countries which see fairly high educational growth in terms of the even distribution of education and not the quality of education," he said.

Year-ender -- Indonesia hopes better economic improvement in 2008

By Andi Abdussalam

Jakarta (ANTARA News) - The government believes that Indonesia is moving towards total recovery from the economic crisis that has hit the country since 1998.

Inspired by better economic performance in 2007 which is likely to achieve its growth target of 6.3 percent, the government set an economic growth based on optimistic assumption at 6.8 percent in 2008.

Observers, however, predicted that Indonesia`s economy would grow at a range between six to 6.5 percent only due to various factors such as increase in crude oil price in the world market, sluggishness of the world economies and effect of the subprime mortgage crisis in the United States.

Due to the external factors, the Indonesian Institute of Sciences (LIPI) predicted that Indonesia`s economy would grow within the 6-to-6.5-percent range, while the World Bank (WB) put an estimate of 6.4 percent. The estimates are lower than the government`s projection of 6.8 percent as set in the 2008 State Budget.

"Indonesia`s economic growth rate next year is estimated to settle at between six and 6.5 percent only. The higher figure can be reached only if the economic performance level in 2007 can be maintained next year," Latif Adam, an economic researcher at the LIPI said.

The weak economic agenda of the Indonesian cabinet, the sluggishness of world economic growth and the increase in oil prices in the world market would have a significant effect on Indonesia`s economic growth rate next year.

According to Finance Minister Sri Mulyani, the surge in the world oil price to US$80 per barrel will affect Indonesia`s economic growth although it showed a positive trend in the past year.

"Though the economic growth rates in the third and fourth quarters were relatively high at over six percent, the increase in the people`s purchasing power to above five percent and the higher exports, we must stay alert about a possible rise in inflation and a decline in people`s purchasing power next year," she said.

According to a study, an increase by 10 dollars a barrel would cause a cut of 0.44 percent in the gross domestic product (GDP) of high-income countries, a decline by 1.47 percent in the DDP of poor countries, or even a reduction by 4.0 percent in the GDP of the least developed nations. After all, the oil prices in the world market last month almost reached US$100 per barrel.

William Wallace, the World Bank Indonesia`s lead economist, meanwhile warned of downside risks as the external environment remained unsettled.

"On the one hand Indonesia is endowed with high priced commodities that have been translating into trade and growth advantages. On the other, these high prices, compounded by a slowdown in the US economy, risk feeding into slower world growth and higher inflation," he said.

The International Monetary Fund (IMF) has also predicted that the world`s economic growth would slow down from 5.2 percent to 4.8 percent in 2008.

"Only Africa will experience an increase in economic growth from 5.7 percent to 6.7 percent in 2008," Adam of the LIPI said.

The United State would see economic growth stagnation at 1.9 percent while the growth of the European Union`s economy would drop from 2.5 percent to 2.1 percent and Japan`s from two percent to 1.7 percent.

About 45 percent of Indonesia`s direct exports would be shipped to the three destinations. There were also indications that Indonesia`s exports to Singapore, Hong Kong and China would be re-exported to the United States, Europe and Japan.

"Economic sluggishness in the three destinations of Indonesia`s exports will automatically disturb Indonesia`s economic performance. And the world`s hope for economic drive is likely to turn to China, India and Russia," Adam said.

Despite this however, the World Bank, which predicted a growth rate of 6.4 percent for Indonesia next year, still sees some good momentum.

"We expect economic momentum and high regional growth, combined with higher government investments, to sustain Indonesia`s good economic prospects in the year ahead even though there will be some global slowdown," World Bank Country Director for Indonesia Joachim von Amsberg said. The positive macroeconomic environment will create a unique window of opportunity for microeconomic reforms in Indonesia.

"Reforms to improve the investment climate will quickly attract additional investments that will lead to more vibrant competition and higher incomes that reduce poverty."

In the meantime, Bank Indonesia (BI) also expressed its optimism that next year`s economic growth would be better than this year`s.

Senior Deputy Governor of BI Miranda Swaray Goeltom said the central bank was optimistic the economic growth in 2008 would remain above six percent.

She said the economic growth in 2008 could be better than that in 2007 so that the growth in the third quarter would reach 6,3 percent.

In order to meet Indonesia`s economic target, the central bank hoped investment in 2008 would reach Rp1,165 trillion. With the need of investment amounting to Rp1,165 trillion, banks will have bigger opportunities to finance investment, she said.

"In a few years ahead, Indonesia will really recover from the economic crisis," President Susilo Bambang Yudhoyono said recently.

The president was not alone in voicing such an optimism. World Bank President Paul Wolfowitz, who is also a former US ambassador to Indonesia, shared Yudhoyono`s projection.

Indonesia`s economy will slowly, though not yet fully, recover from the economic crisis that had taken place since 1989, he said.

Investment Monitoring Team to Start Work Next Week

Wednesday, 19 December, 2007 | 17:39 WIB

TEMPO Interactive, Jakarta: Next week the government will assign the Implementation and Monitoring Team for Investment Climate Improvements to major cities.

This effort is for supporting the government's target to raise the “doing business” rating in 2009.

“The monitoring team will make certain that all matters—policies or procedures-relating to investment improvements run well in accordance with the investment climate improvement package's outline,” said Taufik Effendi, State Minister for State Administrative Reform, after the “doing business rating” meeting led by Vice President Jusuf Kalla at the Vice President's office, Jakarta.

Also attending the meeting were State Minister for State-Owned Enterprises Sofyan Djalil, State Minister for National Development Planning concurrently Head of Bappenas (National Development Planning Agency) Paskah Suzetta, Manpower and Transmigration Minister Erman Soeparno, Industry Minister Fahmi Idris, Trade Minister Mari Elka Pangestu, Information and Telecommunication Mnister Muhammad Nuh, Justice and Human Rights Minister Andi Mattalatta, Investment Coordination Board Head M. Lutfi, Home Affairs Minister Mardiyanto and Finance Minister Sri Mulyani.

Anton Aprianto

Polish PM congratulates RI for successfully hosting UNFCCC

Jakarta (ANTARA News) - Polish Prime Minister Donald Tusk has congratulated Indonesia for its success in hosting the United Nations Framework Convention on Climate Change (UNFCCC) which has produced a `Bali Roadmap.`

Indonesian Ambassador to Poland Hazairin Pohan said in a statement made available to ANTARA here on Wednesday that Donald Tusk congratulated Indonesia when he received Indonesian House of Representatives (DPR) Speaker Agung Laksono in Warsaw.

"Poland wants to learn from Indonesia`s experience in hosting the UNFCCC conference as in 2008 it will be its turn to host a similar meeting," the ambassador said.

The UN conference on climate change in Bali last week endorsed the Bali Roadmap after tough debates and even a deadlock in talks on crucial issues toward its closing session.

It marked the first time for world leaders to come together to to produce a new climate change framework.

Among the important achievements the Bali meeting made was getting the US to agree to take part in a new consensus. This meant the US will participate in the Warsaw negotiations in 2008 and in Copenhagen, Denmark, in 2009.

The UNFCCC in Copenhagen will discuss a framework to replace the Kyoto Protocol which will expire in 2012.

Govt wants RI`s investment rating to rise to 75th place

Jakarta (ANTARA News) - The Indonesian government intends to do its best to have the country`s investment rating rise to 75th from the present 135th place among the 175 countries usually surveyed by the International Finance Corporation, a minister said.

"We want to rank 75th next year," Administrative Reform Minister Taufiq Effendi said after attending a meeting on "doing business in Indonesia" at the vice presidential office here Wednesday.

He said the government had formed a team to monitor all activities aimed at raising the country`s investment rating.

The team would soon monitor investment services in the country`s major cities such as Jakarta, Surabaya and Medan, he said.

"The main task of the team is monitoring services to those wishing to invest in Indonesia," he said.

Vice President Jusuf Kalla who chaired the meeting gave the team two months to monitor investment services and one month to solve various problems in the field.

Capital Investment Coordination Board (BKPM) Chief M. Lutfi said on Tuesday investment in Indonesia hit a 40-year record high of Rp125.94 trillion (US$13.99 billion) in the first nine months of 2007.

The figure represented a 169.02 percent rise compared to last year when it was Rp74.51 trillion (US$8.28 billion), he said.

Investment in 2007 consisted of foreign investment worth Rp91.8 trillion (US$10.20 billion) and domestic investment worth Rp31.14 trillion (US$3.79 billion), he said.

Foreign investment jumped 170 percent from last year when it was Rp53.73 trillion (US$5.97 billion), while domestic investment climbed 164.29 percent from Rp20.78 trillion (US$2.30 billion) last year, he said.

Govt bodies agree to speed up food vulnerability

Jakarta (ANTARA News) - A number of government institutions and ministries have agreed to speed up efforts to reduce the country`s food vulnerability and poverty rate over the next two years.

Efforts to lessen food vulnerability would be made through integrated programs to be carried out by government institutions and ministries, Agriculture Minister Anton Apriyantono said here on Wednesday following a meeting of the Food Resilience Council.

The meeting was attended among others by the agriculture minister, the trade minister, the transportation minister, the cooperatives minister, the president director of the National Logistics Board (Bulog), as well as officials from the marine and fisheries ministry and the economic coordinating ministry.

The government had set itself the target of reducing food vulnerability and the poverty rate within five years but the meeting decided to shorten the time, Apriyantono said.

Some 16 ministries and government institutions, including state-owned companies (BUMNs) would support the programs, the minister said.

Apriyantono said food vulnerability was closely related to poverty. The country`s poverty rate in 2005 was recorded at 16.69 percent and it increased to 17.75 percent due to the impact of the fuel price hike in 2006.

However, the poverty rate in 2007 dropped to 16.58 percent as the impact of the fuel price hike had been overcome, he said.

The fuel price hike had affected people facing food shortages whose energy consumption rate was below 70 percent of the energy adequacy rate.

In 2005, a total of 5.11 million people (or 2.32 percent of the country`s population) lived with an energy consumption rate below 70 percent. In 2006 the number rose to 9.95 million or 4.52 percent of the population, but in 2007 it decreased to 5.71 million or 2.55 percent of the population.

"As we are now in the improvement stage, we are moving to the next stage, namely acceleration in order to speed up the reduction of the poverty rate," he said.

The food vulnerability rate had significantly dropped over the past 10 years from 7.9 percent in 1999 to 2.5 percent in 2007, the minister said. Meanwhile, the number of poor people during the 2001-2007 period decreased from 19.1 percent to 16.6 percent.

The head of the agriculture ministry`s Food Resilience Body, Kaman Nainggolan, said one of the efforts to reduce the poverty rate would be the launching of non-formal education programs to fight illiteracy.

"In India, literate mothers have a better understanding and awareness of adequate food intake so there are no more malnourished children there," he said.

In Indonesia, illiteracy-related problems were still to be found in West Java, Banten, East Java and a number of provinces outside Java Island, he said.

Indonesia`s economy to grow only 6 percent in 2008

Jakarta (ANTARA News) - Indonesia`s economic growth rate in 2008 is expected to reach six percent only, instead of 6.8 percent as officially projected, an economic researcher said here on Monday.

"Indonesia`s economic growth rate next year is estimated to settle at between six and 6.5 percent only. The higher figure can be reached only if the economic performance level in 2007 can be maintained next year," Latif Adam, an economic researcher at the Indonesian Institute of Sciences (LIPI) said.

He said the weak economic agenda of the Indonesian cabinet, the sluggishness of world economic growth and the increase in oil prices in the world market would have a significant effect on Indonesia`s economic growth rate next year.

Adam said the global economy had been discouraged by the oil price hikes in the world market and the subprime mortgage crisis in the United states.

The International Monetary Fund (IMF) has predicted that the world`s economic growth would slow down from 5.2 percent to 4.8 percent in 2008.

"Only Africa will experience an increase in economic growth from 5.7 percent to 6.7 percent in 2008," he said.

The LIPI researcher said the United State would see an economic growth stagnation at 1.9 percent while the growth of the European Union`s economy would drop from 2.5 percent to 2.1 percent and Japan`s from two percent to 1.7 percent.

He said about 45 percent of Indonesia`s direct exports would be shipped to the three destinations. There were also indications that Indonesia`s exports to Singapore, Hong Kong and China would be reexported to the United States, Europe and Japan.

"Economic sluggishness in the three destinations of Indonesia`s exports will automatically disturb Indonesia`s economic performance. And the world`s hope for economic drive is likely to turn to China, India and Russia," Adam said.

But the problem was that the IMF prediction indicated that China`s and India`s economies would also slow down. In the 2007- 2008 period, China`s economic growth was expected to drop from 11.5 percent to 10 percent and India`s from 8.9 percent to 8.4 percent, he said.

UN Conference finally adopt Bali Roadmap

By Andi Abdussalam

Jakarta (ANTARA News) - After an extension for 24 hours, the 13th Conference of Parties (CoP) to the United Nations Framework Convention on Climate Change (UNFCCC) adopted the Bali Roadmap before it closed on Satuday evening.

"Bali Roadmap is a concensus reached by the UNFCCC for all countries to carry out their respective commitments to safeguard the earth," COP-13 Chairman Rachmat Witoelar said Saturday night.

The adoption of the Bali Roadmap came after marathon negotiations overnight which first settled a battle between Europe and the U.S. over whether the document should mention specific goals for rich countries` obligations to cut grenhouise gas emssions.

Witoelar said that negotiations were going at snail`s pace over the a demand how far developed countries would cut their greenhouse gases. In the draft developed nations had binding commitment to cut their emissions by 25 to 40 percent below 1990 level by 2020.

The UNFCCC conference, which was previously scheduled to be closed on Friday, was extended until 10 am on Saturday. But it was once again delayed until Saturday evening because India and China rejected a point in the draft on emission-cutting targets.

They argued that developed nations which had become gas emitters long before developing states should agree to cut their emissions more than developing countries.

India wanted the final text of the draft reviewed to allow developed nations to play a greater role in clean technology and funding for parties vulnerable to the impact of global warming.

The Bali Roadmap could however be endorsed after delegates agreed a non-binding emission cutting targets until 2012 and a binding target for the cutting of gas emissions until 2050.

After all, the Americans backed down after delegates criticized the US stand. "I think we have come a long way here," said Paula Dobriansky, head of the US delegation.

Witoelar said that developed countries would take the lead in reducing pollution and cutting carbon emissions. In this case, the efforts to mitigate climate change would not be made by developing countries alone.

"Indonesia for example, will continue to reduce gas emissions, plant trees and protect forests so that they would serve as carbon sinks," the COP president said.

In the meantime, Indonesian chief negotiator to the conference said that although talks in Saturday`s session were marked by tough debates, they finally resulted in a developed countries` agreement to take part in carbon emission mitigation efforts.

"It was evident that the US delegation has accepted the commitment and agreement as a result of the conference, so the developed countries will just adhere to what the cnference decides," Emil said on the sidelines of the conference.

Earlier, UNFCCC Executive Secretary Yvo de Boer suddenly walked out of a plenary session of the Conference of Parties (COP) chaired by Rachmat Witoelar.

After uttering a few words, de Boer left the conference room at the Bali International Convention Center (BICC), the venue of the meeting, to the applause of the audience.

He left the room only moments after UN Secretary General Ban Ki-moon and President Susilo Bambang Yudhoyono had made their exit after addressing the session.

Conference sources said de Boer had walked out because he was upset that certain delegations had held a `secret meeting` without his consent as UNFCCC executive secretary. There was no information on which delegations had held the secret meeting.

Ban Ki-moon and Yudhoyono spoke at the plenary meeting in an effort to give a moral boost to negotiators of the UN climate change conference so that they could finish their talks that had been extended for 24 hours.

Ban Ki-moon called on the plenary session to take an important and ambitious decision. The UN chief asked delegates to take a decision that was beneficial for all. He said scientists had evidence on the importance of taking actions soon and mobilizing all efforts to face the impact of climate change.

"We appreciate all of you who have worked hard day and night to produce success, though you still have to make more progress in the future," the UN chief said.

He admitted that a decision of a negotiation should benefit and satisfy all parties while at the same time it should also be flexible.

In the meantime, President Susilo Bambang Yudohoyono who delivered his address earlier, said all delegates had spent a lot of time, energy and money in the last 12 days.

"Both developed and developing nations should move in the right direction. Without an effective road map that is accepted by all, there will be no goal that can be achieved," he said.

He said a road map for common commitment and interest should be flexible. Therefore, he urged delegates to continuously discuss the road map in 2008 and finish it in 2009.

Morgan Stanley Asia chairman says US heading to recession

Sydney (ANTARA News) - The US is heading for a recession and the rest of the world would be "dead wrong" to think this will not impact on growing Asian economies, Morgan Stanley senior executive Stephen Roach said Sunday.

In an interview with Sky News in Australia, Roach said the US Federal Reserve Bank would "most assuredly" cut interest rates again soon to boost the economy, following last week's 25 basis points reduction.

"The US is going into recession," he told AFP.

"They (the Federal Reserve) have a lot more work to do. They could cut their policy short-term interest rate by one to one-and-a-half percentage points over the next nine to 12 months."

Roach, who is chairman of the investment bank and trading firm's Asian arm, said it was wrong to think that the rapidly developing economies of China and India could fully compensate for a US recession.

"What is interesting, and potentially disturbing, is that the rest of the world just doesn't think this is a big deal any more," he said of the potential of a US recession.

"There is a view that the world is somehow decoupled from the American growth engine.

"I think that view will turn out to be dead wrong, and this is a global event with consequences for Asia and Australia."

Roach, in Australia for a business roundtable, said economies outside of the US needed to determine how their internal consumer demand compared with demand from American consumers in terms of keeping their economies booming.

"My conclusion is: not nearly as much as you would like," Roach said.

Growth in Asia was export led, with the American consumer often the "end game" of the Asian growth machine, he said.

"The US is a 9.5 trillion US dollar consumer. China is a 1.0 trillion US dollar consumer. India's a 650 billion US dollar consumer," he said.

"Mathematically, it is almost impossible for the young dynamic consumers of China and India to fill the void that would be left by what is likely to be a significant shortfall of US consumer demand."

Global warming pact set for 2009

Abdul Khalik, The Jakarta Post, Nusa Dua, Bali

Bali gave birth Saturday to a landmark road map to create a new deal to fight global climate change, but only after nerve-wracking negotiations -- and persistent challenges from the United States.

Under heavy pressure from the rest of the delegates and possible international isolation, the U.S. dropped its last-ditch objections and joined the consensus hammered out at the conclusion of the two-week UN climate conference. "We want to be part of the road map ... and let me say to you that we will go forward and join the consensus," U.S. head of delegation Paula Dobriansky said, to cheers and a standing ovation from delegates representing some 190 countries.

President Susilo Bambang Yudhoyono and UN Secretary-General Ban Ki-moon had both appealed to the participants to come up with an agreed conclusion as the negotiations were earlier plunged into stalemate. "The magic moment came after both President Yudhoyono and the UN secretary-general delivered their incredible speeches, which changed the mood of the conference," UN Framework Convention on Climate Change (UNFCCC) executive secretary Yvo de Boer said.

Although some still pointed to the failure of the conference to include any specific carbon emission reduction targets in the road map so as to accommodate the U.S.'s concerns, many immediately praised the agreement as it managed to combine the interests of developing and developed countries.

The road map sets out a clear agenda for key issues to be negotiated up to 2009, including action for adapting to the negative consequences of climate change, such as droughts and floods, ways to reduce greenhouse gas emissions, and ways to widely promote climate-friendly technologies and financing for both adaptation and mitigation measures.

Concluding the negotiations in 2009 will ensure that the new deal can come into force by 2013, following the expiry of the first phase of the Kyoto Protocol. "This is a real breakthrough, a real opportunity for the international community to successfully fight climate change.

Parties have recognized the urgency for action on climate change and have now provided the political response to what scientists have been telling us is needed," said conference president Rachmat Witoelar, who is the Indonesian environment minister. However, non-governmental organizations (NGOs), including WWF, Greenpeace and Friends of the Earth, were quick to express their disappointment at the exclusion of clear carbon emission cut targets of 25 to 40 percent as mandated by the latest report of the Intergovernmental Panel on Climate Change (IPCC) to keep the earth's temperature rise below 2 degree Celsius.

The agreed long-term cooperative action recognizes the IPCC's findings and only stipulates that deep cuts in global emissions will be required to achieve the ultimate objective of the Convention. The absence of targets was apparently aimed at persuading the U.S. to get on board.

Indonesian Foreign Minister Hassan Wirayuda had insisted from the beginning that the negotiations should be inclusive. "We want to include the U.S. in the negotiations to make the international efforts to respond to climate change work. I met Paula (Dobriansky), and tried to understand the U.S. concerns. I think the key words are patience, compromise and flexibility," Hassan said at the conclusion of the conference.

Apart from Hassan, Indonesian negotiators, including former foreign minister Ali Alatas, former Indonesian Ambassador to Japan Soemadi Brotodiningrat, and Director General for Multilateral Affairs Reslan Izhar Djenie, Director for Economic and Environmental Affairs Salman Al Farisi, and Ngurah Swajaya, the director for political affairs at ASEAN, had worked around the clock to persuade others to come on board.

They managed to bridge the gap between the EU and developing countries that insisted that the inclusion of carbon-emission-cut targets for developed countries were crucial to guiding the next two rounds of negotiations in Poland in 2008 and Denmark in 2009, in which future commitments will be concluded, and the U.S., which feared it would be economically disadvantaged by the rise of China and India should it commit to fixed targets.

RI must protect forestry industry, logging interests

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Indonesia must protect its forestry industry despite mounting world demands to stop logging and the rampant illegal logging problems here, legislators said Tuesday.

Azis Sjamsuddin, chairman of the illegal logging committee at the House of Representatives, denounced such demands as more political and economic than environmental.

"It's impossible for Indonesia to stop exploring its natural resources, including its forests, because it would (harm) the millions of people making their livelihoods from the forestry industry," he said in a discussion on illegal logging.

"The forest resources must be well-managed to improve the people's welfare and increase Indonesia's foreign exchange."

Ganjar Pranowo, a member of the House's forestry and agriculture commission, agreed while accusing other pulp and paper and palm oil producers such as China, Brazil and Malaysia of using the UN climate change conference in Bali as a forum to criticize Indonesia and weaken the pulp and palm oil industry here.

He said China and Brazil were Indonesia's two main competitors in the world pulp and paper market and Malaysia was its only competitor in the palm oil industry.

"But internally the government must reassess the actual condition of its forests to maintain a balance between ecological and economic interests," Ganjar said.

"Authorities must enforce the law consistently and take harsh action against all parties involved in illegal logging."

Data from the Indonesian Forestry Industry Association indicate Indonesia received US$3.9 billion in foreign exchange from the annual export of six million tons of pulp and 10 million tons of paper.

Director-executive of Greenomics Indonesia, Elfian Effendi, said Indonesia should continue with the forestry and palm oil industries which have contributed only 18 percent to global warming and climate change.

"Giant industrial countries such as the United States, China, India and European countries should reduce their carbon production, which makes up 82 percent (of the pollutants causing) climate change," he said.

"China, India and the U.S, which declined to sign the Kyoto Protocol, have also imported illegal logs from Indonesia."

Elfian and Ganjar both said the government had not yet shown a strong political commitment to environmental interests in carrying out the national development program.

"This has been shown by the overlapping of rainforests and industrial forests in Sumatra, Kalimantan, Sulawesi and Papua as well as the weak commitment to enforcing the 1999 forestry law and the 1997 law on the environment and Criminal Codes," Ganjar said.

"Pulp and paper mills involved in illegal logging should be punished."

He said the enforcement of the 2007 law on spatial zoning would help Indonesia protect national parks and protected forests from illegal logging.

Elfian called on the central government to have stronger coordination with regional administrations to avoid the issuance of overlapping ordinances in the forestry sector.

"Regional heads giving industrial concessions in rainforests, protected forests and national parks should be brought to court," he said.

Indonesia GDP May Top Target on India, China Demand

By Arijit Ghosh and Aloysius Unditu

Dec. 11 (Bloomberg) -- Indonesia expects economic growth to surpass its target for 2008 as rising demand from India and China shields the Southeast Asian nation and its neighbors from a U.S. slowdown.

``We are aiming for higher than 6.8 percent,'' Finance Minister Sri Mulyani Indrawati said in an interview in Jakarta, referring to the government's forecast for next year's expansion. ``India and China will be quite strong in actually pulling growth in the region.''

Indonesia's economy, Southeast Asia's largest, is expanding at the fastest pace since a regional financial crisis of 1997-98 amid soaring prices for palm oil, coal and other commodities demanded by India and China. Exports to China are growing four times quicker than Indonesian sales in the U.S.

``We have seen that trend,'' said Aldian Taloputra, an economist at PT Mandiri Sekuritas. ``Indonesia's exports to other countries in the region, especially China, are increasing, which will reduce the impact of a recession in the U.S.''

India and China, the world's two largest buyers of palm oil, have helped push up prices and earnings of Indonesian producers of the vegetable oil.

Third-quarter profit at PT Astra Agro Lestari, Indonesia's biggest publicly traded agriculture company, almost tripled to a record 603.34 billion rupiah ($65 million) on higher palm oil prices. The company sold 46 percent of its palm oil to India in the first 10 months of the year.

Power Plants

China, the world's largest user and producer of coal, will be a net importer of 18 million metric tons in 2008, UBS AG said in a report on Dec. 6, pushing up prices of the energy and helping miners in Indonesia, which is the biggest exporter of coal used in power plants.

Still, the U.S. is Indonesia's second-largest export market. Companies in the world's biggest economy have purchased $9.4 billion of Indonesian non-oil products in 2007. China has bought $5.43 billion.

Japan, which purchased $11.3 billion of Indonesian products and is the Southeast Asian nation's No. 1 market, is being affected by slowing U.S. demand.

Japan's third-quarter expansion was slower than the government initially reported, the latest evidence that growth is losing steam because of a slump in domestic housing construction and waning U.S. demand.

U.S. Slowdown

U.S. President George W. Bush's economic advisers on Nov. 29 reduced their outlook for U.S. economic growth in 2008 to 2.7 percent from the 3.1 percent they forecast in June, reflecting turmoil in the credit markets and housing.

``There is definitely going to be some effect,'' said Prakriti Sofat, an economist at HSBC Holdings Plc in Singapore, who expects Indonesia's growth to slow to 5.5 percent next year. ``It depends on the makeup of the country's GDP basket.''

Indonesia's gross domestic product expanded 6.5 percent in the third quarter from a year earlier, the fastest pace since 1997, spurred by bumper harvests and rising sales of cars, motorcycles and homes. Growth in 2006 was 5.5 percent.

Sri Mulyani in the Dec. 7 interview said Indonesia will need to be ``vigilant'' in the second half of 2008 as the effect of a U.S. slowdown may spread. The government will attempt to boost growth by spending on public work projects and easing rules to attract investment.

Roads, Ports

Indonesia's government, which plans to spend 100 trillion rupiah ($10.8 billion) on building roads, ports and other infrastructure projects, expects local consumption to also help boost growth. The government forecasts private consumption to accelerate to about 7 percent next year from 5.3 percent in the third quarter.

Rising oil prices may also affect growth in Indonesia, which caps gasoline prices for consumers. Oil prices are up 45 percent from a year ago. The record was $99.29 on Nov. 21. The government expects to spend more than 100 trillion rupiah in subsidizing fuel in 2008.

Designing an appropriate fuel-subsidy policy ``is a struggle,'' Sri Mulyani said. ``It's prone to the ups and down of the oil price which is not within our control.''

(*) Above Picture: Sri Mulyani Indrawati, Indonesia's minister of finance, speaks during an interview in Jakarta, Dec. 7, 2007. Photographer: Dimas Ardian/Bloomberg News

To contact the reporters on this story: Arijit Ghosh in Jakarta at aghosh@bloomberg.net ; Aloysius Unditu in Jakarta at aunditu@bloomberg.net

Internet keeps news agencies alive

Alfian, The Jakarta Post, Jakarta

News agencies, having adapted to the hunger for new types of media, are thriving amid information globalization instead of competing with the Internet, a media expert said here Monday.

Prof. Oliver Boyd-Barret of Bowling Green State University, Ohio, in the United States, said the Internet was initially considered a threat rather than opportunity for news agencies. "It reduced the costs of market-entry for news gathering and distribution," said Olivier.

However, the assumption has proven wrong. All major news agencies that operate news Websites now benefit from the Internet.

"The Internet has greatly expanded the number of potential clients for agency services, increased agency flexibility in generating novel information, and reduced the costs of distribution so that a greater proportion of expenditure could be dedicated to content and service quality," Oliver told a colloquium dubbed "The Future of News Agencies in Media Convergence Era".

The seminar was part of the 13th general assembly of the Organization of Asia-Pacific News Agencies and was attended by 39 agencies from 32 countries. The assembly takes place in Jakarta from December 9 to 14.

At the seminar, Prof. Alwi Dahlan, a communication expert from University of Indonesia and a former Indonesian information minister, discussed the role of the Internet in ushering in the "media convergence era".

He explained that printed, audio and visual features converged in the new medium of the Internet.

He said the Internet provided an opportunity for personal media to become a source of information for the public. He gave the example of now-famous tsunami footage captured by Cut Putri, a woman from Aceh, which was relayed by many TV stations.

The question in the convergence era, Alwi said, is who are the real (news) players? "Will the news agencies lose their power as information brokers?"

Oliver said that while the emergence of web-logs (`blogs') had considerable influence on news agencies, it didn't threaten their existence.

Few news sites or blogs had the resources to compete with major agencies and most depended heavily -- directly or indirectly -- on news agencies," he said, adding that research strongly suggested that established news agencies continue to have a strong presence on the web.

News agencies in general experienced a better period this year, Oliver said; however Western agencies were dominant.

Indeed, Reuters has been acquired by Thompson Corporation from Canada. Thus, the four biggest news agencies, Reuters, AP, Bloomberg, and Dow Jones, are controlled by businesses based in North America," said Oliver.

He added, however, that the most profound challenges facing news agencies were related to the news itself. Describing the work of news providers as a "public service", he said "greater transparency and sharper articulation" in selecting and presenting the news were in order, in view of "the severity of multiple crises around the world."

Market forces can help change climate for us to live better

The Jakarta Post

Debnath Guharoy, Analyst

Some 10,000 delegates from all over Planet Earth are still in Bali, trying to negotiate an acceptable plan to help save it.

For the vocal minority who are entitled to remain climate-change skeptics forever, the overwhelming majority has a simple message. Poor air quality cannot be good for our health. Fossil fuels are the biggest contributors to self-inflicted pollution. Less of it would help us all to live better, perhaps longer. That's not up for discussion.

Business can help shape change, like it has so often. It has impacted life in innumerable ways, whether by electricity or cellular services, railways or retroviral drugs. But when was the last time we stopped to think about all the plastic we mindlessly consume, the lights that stay on all night unnecessarily or the short trip by car that could have been walked with cardio-vascular gains instead?

Rich or poor, East or West, there is a common desire among most human beings to do the right thing. For themselves, for their fellow man, for this tiny but fragile planet. Two neighbors with two differing cultures, Indonesia and Australia confirm that view. Almost 80 percent of Indonesians and almost 70 percent of Australians think that "at heart I'm an environmentalist". Sixty-one percent of Indonesians and 78 percent of Australians believe the threat to the environment is real, not "exaggerated".

In any democratic society, in any free and fair election anywhere, these results would be described as sweeping mandates and landslide victories. This consciousness is on the increase. It is not a view likely to change in the decades to come.

For businesses big and small, consumer awareness of a planet in peril represents an opportunity that will last for years. It is an opportunity to ride a popular wave for commercial gain, a wave that can positively impact the bottom line while winning hearts and minds. Not often do we come across an invitation from the consumer to take her money and win her heart as well.

The obvious examples are out there already, not as vigorously promoted as they could be, perhaps. Fuel-efficient engines. Energy-saving light bulbs. Bulk packaging with less wrapping. No free plastic bags. There is no limit to the good the human mind can do if it gets down to business. There can be no better time for business to get going down that path.

Everybody can pitch in to raise awareness and make money while doing it. Look at what else the consumer is saying. "I try to recycle everything I can," say 54 percent of Indonesians and 87 percent of Australians. Ironically, Australians bear the shame of being the world's worst polluters per capita while Indonesians are among the lowest.

The key commonality is the desire. Australia voted with its feet recently and climate change was one of the reasons a long-standing prime minister was unceremoniously ejected. Kevin Rudd's first act was to reiterate he will sign the Kyoto protocol, moving the country from pariah status to instant popularity in the eyes of the world.

President Susilo Bambang Yudhoyono has stated Indonesia's position on the issue by hosting this mammoth meeting of global minds. Now, both leaders need to go beyond symbols and gestures.

It is time too for business to make climate change a part of the culture in the workplace as well as the marketplace.

48 per cent of Indonesians and 65 percent of Australians also say that "environmentally-friendly products are overpriced". Scale is vitally important in business. If this is the reason businesses price these products higher than the less eco-friendly options, isn't it time to reverse the logic and have one brand subsidize the other? Simplistic as it sounds, there can be no shorter path to achieving those all-important economies of scale.

Whatever may be the appropriate course of action for each business and each brand, consumers will respond with their wallets, as all indications reveal they are keen to do the right thing.

Big business can take the lead to nudge consumers in the right direction. It is not too late for managers to put their thinking caps on, from the perspective of individual brands. And that's not just windmills or solar heaters.

These observations are based on Roy Morgan Single Source, the country's largest syndicated survey with over 27,000 Indonesian respondents annually, projected to reflect 90 percent of the population over the age of 14. That is a universe of 140 million people. The results are updated every 90 days and used by more marketers, media and creative agencies than any other syndicated survey.

Good things happen to good people, or so I read somewhere recently. Shareholders, like CEOs, are people after all. They also have hearts and minds, families and friends. And pride in doing the right thing can be as good a feeling as making money.

Well, almost perhaps. Richard Branson says he will plant enough trees to neutralize the carbon emissions from his aircraft. Who wouldn't want to fly his airline? What do you think his wife really thinks of him? Real change in social behavior will only occur when people stop measuring "nett worth" in monetary terms alone.

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