President announces priorities in facing crisis

The Jakarta Post | Wed, 12/31/2008 8:05 PM  

President Susilo Bambang Yudhoyono on Wednesday announced seven priorities that would guide economic policy making in weathering pressure from the global liquidity in 2009. 

The priorities are: 

1. Protecting the workforce from the impact of the global economic crisis 
   
   
2. Controlling inflation 
   
   
3. Maintaining the growth of the real economy 
   
   
4. Safeguarding the people's purchasing power 
   
   
5. Protecting the poor 
   
   
6. Improving self sufficiency in food and energy
    
   
7. Maintaining economic growth 
   
   

Yudhoyono said he was told by his aids that December had seen a price deflation and that the coming months would likely be better in terms of the relation of price fluctuation with the people's purchasing power. 

To maintain the growth of the real sector, Yudhoyono said that the government would give more fiscal incentives so that businesses would refrain from down sizing their workers as a response to the global economic slow down. 

Meanwhile, he said, the government would raise the salary of civil workers and raise the minimum pay of workers next year. 

"For those that do not have a regular salary, we have other plans in the state budget," he said. 

The President said that he hoped the country's economy would still be able to grow by 4.5 percent next year despite a significant slow down of demand for Indonesia's products by traditional export destinations such as the U.S., Japan and Europe. 

"Four point five percent is a realistic figure. Moreover, if we can work harder, we may be able to reach higher economic growth," he said. (and)

Govt cashing in hefty gains from oil, gas, mining, but wary about next year

Alfian, The Jakarta Post, Jakarta | Wed, 12/31/2008 10:51 AM  

While booking an unprecedented 53.79 percent jump in revenue this year in direct earnings from the energy and mining sectors, the government will prepare for possible economic turbulence next year by lowering revenue expectations for the state coffers. 

A continuing slump in the global prices of oil, gas and mining commodities are the main worrying factors leading government not to expect too much next year. 

Energy and Mineral Resources Ministry, Purnomo Yusgiantoro, said Tuesday the energy and mining sector was forecast to book Rp 346.35 trillion (US$31.20 billion) in revenue for the state by the end of this year, up from Rp 225.21 trillion in 2007.

 

 Revenue forecasts were calculated based on January to November actual performance while estimating results for December.

 

According to Purnomo, the sector had remained the primary contributor to state coffers generating revenue from the sale of oil and gas, and from royalties paid by mining companies. 

"The sector contributes 36 percent to total state revenues this year," Purnomo said, adding the biggest contribution was from oil and gas companies, which contributed Rp 303.07 trillion this year. 

Despite these soaring revenues, the Energy and Mineral Resources Ministry decided to put limits on lower revenue targets for next year. 

According to the ministry's secretary general Waryono Karno, the government was looking at about Rp 271.08 trillion in revenue from the energy and mining sectors for next year. 

Of the total expected revenue, Rp 226.78 trillion would be from oil and gas, Rp 43.15 trillion from mining, and Rp 1.15 trillion from other sources. 

"We are setting lower targets to adjust to the declining prices of oil and mining commodities. We perceive this as a moderate target. However, if the prices plunge further, we may revise the target in the state budget revision," Waryono said. 

Meanwhile, the ministry also announced that investment in the energy and mining sectors jumped by 18.25 percent to $18.63 billion this year from $15.75 billion in 2007. 

This year's investment, however, was still lower than the initial target of $21.74 billion. Realization was 14 percent below target. 

A significant proportion of unrealized investment came from the oil and gas sectors and electricity sectors, according to the ministry. 

Oil and gas companies were initially expected to invest $14.79 billion this year, higher than the $12.21 billion realized, a drop of 17 percent from target to actual. 

The power sector was earlier expected to mobilize and spend $5.40 billion in investment but only managed to realize $4.76 billion, a drop of 12 percent on initial plans. 

Kardaya Warnika, the ministry's advisor for information and communication and former chairman of upstream oil and gas regulator BPMigas, said some investment commitments in the oil and gas sector had to be delayed for various reasons, including problems with land acquisition. 

However, he added the delayed investments would still be carried out next year. 

Director General for Electricity and Energy Consumption J. Purwono voiced similar arguments, saying some power investments would be delayed until next year due to prolonged banking procedures encountered in financing the projects. 

The ministry said Indonesia had received $28.60 billion in investment commitments for the energy and mining sectors in 2009.

'Sunset policy' program extended until February

Aditya Suharmoko, The Jakarta Post,  Jakarta | Wed, 12/31/2008 10:50 AM  

The government will extend its "sunset policy" tax program until February 2009 following requests by businesses which are unable to complete their accounts due to problems related to the global economic downturn. 

"The sunset policy is delayed to February 2009," Finance Minister Sri Mulyani Indrawati said in Tuesday's gathering with investors at the Indonesia Stock Exchange. 

"But I expect businesses will not wait until the deadline (to improve their tax filings or for people to have a tax registration number," she said. 

The initial deadline for the policy was on Dec. 31. 

As a result of a new tax law on general tax procedures late last year, the government has issued rules requiring all taxpayers to register and to honestly report their taxes and comply with the existing regulations. 

Under the new policy, often referred to as the "sunset policy", the government has also given potential taxpayers time to get a tax registration number and start to comply with the regulations. 

The government had originally given one year in which it waived administrative penalties for previous non-compliance in exchange for registration and subsequent accurate tax reporting before starting to impose stiffer sanctions on violators next year. 

Mulyani said this month, particularly in the past few days, that tax offices nationwide had been inundated by thousands of people wanting to register for a tax number, or fix their tax reports. 

"We are now busy handling people who wanted to comply with the policy," she said. 

The extension of the policy will be laid down in the form of a regulation-in-lieu-of-law. 

Mulyani said people had grown more aware of the need to register and become taxpayers, as seen from the growing number of people registering for a tax file number, especially recently. 

People are flocking to the tax registration offices following the government's plan to slap a higher exit tax on travel overseas for those having no tax registration number, forcing most of the country's middle to upper-income people to comply with the requirements for tax registration. 

According to the Directorate General of Taxation, between 50,000 and 100,000 people applied for a tax registration number this month, up from between 7,000 to 8,000 people on average in previous months. 

"It is expected that no one who wants to comply with the sunset policy will be left unserved," Darmin said. 

"On the other hand, the extension (of the policy) will strengthen the base for national taxation," he added. 

The tax office anticipates a decline in tax revenue from the corporate sector, while tax from individuals is forecast to be more stable despite the impact of the global economic slowdown. 

According to the directorate general of taxation, Indonesia only has about 6 million taxpayers, including individuals, companies, and institutions, out of a population of 230 million people. 

Darmin also said that it was estimated that tax revenue for this year, including oil-and-gas tax revenue, would reach Rp 566.2 trillion, or 5.9 percent higher than the Rp 534.5 trillion targeted in the revised 2008 state budget.

JCI up but logs as 7th worst in region

Ika Krismantari, The Jakarta Post, Jakarta | Wed, 12/31/2008 10:51 AM  

After being the third best bourse in the region last year with the index jumping up by 52.08 percent, the Jakarta Composite Index (JCI) has now been designated, by contrast, as the seventh worst performer in the region, though the benchmark gained some strength in its last trading day on Tuesday.  

Data from the Indonesia Stock Exchange shows the index plunged by 49.3 percent during the year to a level of 1,355.89 from 2,745.82 recorded at the 2007 closing. 

However, the decline is considered by many as fairly modest compared to the worst performers -- Shenzen and Shanghai in China, followed by Mumbai Sensex in India, Hangseng in Hongkong, Straits Times in Singapore, and Weighted Taipei in Taiwan. 

The JCI market capitalization also fell 45.8 percent to Rp 1,076 trillion (US$98.99 billion) from Rp 1,988.3 trillion in 2007 following the regional market collapse, which slashed share values in the past three months. 

But the IDX's daily transaction value rose slightly 4.17 percent to Rp 4.45 trillion from Rp 4,27 trillion, a record the Indonesia Stock Exchange (IDX) president director Erry Firmansyah cited as "an extraordinary achievement" in the midst of the financial crisis and global downturn. 

Tuesday's closing prices also gave market players and investors new hopes for a better performance next year, as the main index rose slightly 1.08 percent to 1.355,41. 

Finance Minister Sri Mulyani Indrawati, who attended the closing ceremony, regarded the year of 2008 as a year of major challenges while remaining upbeat on the outlook for the bourse next year as firms were now more prepared to cope with the impact of the global economic slowdown. 

"There will be another consolidation (process but) basic activities (of the economy) will not be disrupted...," she said. 

The government has targeted economic growth for 2009 at between 4.5 and 5.5 percent, lower than the 6.1 percent growth achieved this year. 

For this reason, IDX has set conservative targets for next year, aiming for only 15 companies to go public and for a daily average transaction value in the region of only Rp 2.75 trillion, half than last year's targets. 

This year, 19 companies actually went for an initial public offering (IPO), out of the 25 firms targeted to do so. 

In a bid to shore up confidence and boost transactions, the IDX has decided to shift the auto rejection policy to the old scheme in which an automatic shutdown on share transactions will be based on the share's market capitalization value and whether it is included in the list of bluechips. 

For blue chip companies with big market capitalization value, the caps will be lower than for those which are not on the list. This is to avoid calamitous volatility. 

The market will be opened again on Jan. 5 and President Susilo Bambang Yudhoyono is scheduled to open the first trading of the year. 

Unlike in developed countries, Indonesia's stock index could not be used to help assess the whole economy as the listed companies are considered by analysts as too few in relation to the size of the economy and are not yet very varied in terms of the range of sectors represented. 

The index is also dominated by institutional investors rather than individual investors, with less than 1 million Indonesians investing in stock.

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YEAR OF THE LOSERS 

The Jakarta Post | Wed, 12/31/2008 7:38 AM 

 

Securities dealers throw ribbons and sheets of paper during a ceremony on Tuesday to mark the close of trading for 2008 at the Indonesia Stock Exchange (IDX) in Central Jakarta. The Jakarta Composite Index fell 51 percent since the start of the year, hammered by the global financial meltdown over the past three months. (JP/J. Adiguna)

30 state firms on stream to go private, mostly via IPOs

The Jakarta Post, Wed, 12/31/2008 10:50 AM  

The government plans to sell shares in 30 state owned companies next year, most of them through the initial public offering (IPO) scheme, Deputy State Minister for State Enterprises Muhammad Yasin says. 

"Most of the firms will be privatized via an IPO, except those companies in which the government has only a small proportion of shares," said Yasin. 

The privatization program will include several carried-over programs from this year, including IPOs of steelmaker PT Krakatau Steel, flag carrier Garuda Indonesia and Bank Tabungan Negara. 

Yasin said the government expected to generate close to Rp 10 trillion (US$906 million) from selling around 30 percent of the shares in each of these companies. 

"Before we offer the stake to the market, we will first offer current companies' stakeholders the chance to buy them," he said, adding proceeds from the IPOs would be used to restructure the companies. 

Construction firms PT Pembangunan Perumahan and PT Waskita Karya are currently waiting for House of Representatives approval for their IPOs, according to Yasin. 

The ministry initially planned to privatize 44 companies next year, but decided to postpone several of them due to the recent stock market collapse as a result of the financial crisis following the Wall Street crash in the United States. 

Indonesia has 139 state-owned firms engaged in energy, mining, utilities, telecommunications, banks, services, and commodities. -- JP/(hwa)

Indonesia to announce $1 bln growth package-minister

By Adriana Nina Kusuma and Karima Anjani, Tue Dec 30, 2008 6:06pm IST 

JAKARTA, Dec 30 (Reuters) - Indonesia will announce a 12.5 trillion rupiah ($1.14 billion) package early next year to help Southeast Asia's biggest economy withstand a slowdown in global economic growth, the finance minister said on Tuesday. 

The commodity-producing nation has been hit by the world financial crisis: demand for its commodities, including palm oil and copper, has faltered, the rupiah currency fell to a decade low against the dollar, and the stock exchange was forced to shut for three days in October after stock prices plummeted. 

The finance minister, Sri Mulyani Indrawati, told reporters that economic growth in 2009, an election year in Indonesia, would be 5 percent, the mid-point of the government's previous forecast range. 

That would represent a slowdown from 2007, when the economy expanded at a decade-high 6.3 percent, and from 2008, when the government expects growth of about 6 percent. 

But with parliamentary and presidential elections in 2009, domestic consumption could get a boost, she said. 

Typically, political parties in Indonesia splash out on gifts such as food and clothes for voters, as well as spending on their advertising campaigns. 

"2009 is a political year, and that could be a blessing for us. As the president has said, an election helps economic activity in a way, due to spending by political parties," Indrawati said, adding that the voters would also have more spending power as commodity prices fall, inflationary pressures subside, and interest rates drop. 

Governments worldwide have announced various measures to try to spur economic growth. After several rounds of rate cuts by central banks, governments have announced spending packages to cushion their economies from the worst global downturn in decades. 

Indonesia said earlier this month it would spend about $9 billion on infrastructure projects to boost growth. Analysts have said the economy needs to grow around 6 percent to create new jobs for a rapidly growing population in the world's fourth-most populous country. 

"The threat in 2009 will be lay-offs. So we will see the impact on industries," she said, adding that the government package would take into account ways to "compensate the industries which have been hard-hit by the global crisis." 

She said unemployment was currently around 8.5 percent. 

"Investment activity in various projects will still continue, because there is no reason for a sudden shutdown," said Indrawati, adding that loan growth is "still strong." 

Indrawati said inflation next year would be about 6 percent, at the lower end of the government's forecast range, due to falling commodity prices. ($1=10,975 Rupiah) 

(Writing by Tyagita Silka and Sonya Angraini; Editing by Sara Webb/editing by Tony Austin) 

RI firms strive to retain high performers

The Jakarta Post, Jakarta | Tue, 12/30/2008 11:02 AM  

The current adverse global economic conditions are taking their toll on businesses, with 69 percent of companies operating in Indonesia considering decreasing or having already reduced budgeted salary increases for next year, according to a survey. 

The move was a logical consequence of the fact that less and less companies are optimistic that they would reach their short-term performance targets in the midst of an economic downturn, according to the global consulting company HayGroup. 

Still, the survey says, the percentage of Indonesian firms considering cutting or having already cut salary increase budgets is lower than the averages of 83.4 percent and 88.1 percent in Asia and global, respectively. 

HayGroup carried out the global study, called the Global Employee Pay and Staffing Survey, in November covering 2,589 organizations across 6 continents, with more than a quarter of respondents based in Asia. 

Among the countries and areas surveyed, Africa and the Middle East were the least affected by the global economic downturn, with only 9 percent of African companies and 12 percent of Middle Eastern companies reporting business results significantly below target. 

One piece of good news from the study was that more than two thirds of companies surveyed are not revising their short-term variable payments programs covering incentives, bonuses and profit-sharing, for 2008. 

Nugroho Irawan, reward practice leader for HayGroup Indonesia, said, "Companies are generally wary about cutting incentives and bonuses as this rewards employees for their past performance." 

"As bonuses are already accrued during the year, it was more financially prudent for companies to pay out bonuses than salary increases which would immediately impact next year's bottomline," Nugroho said. 

Moreover, a big percentage of Asian employers surveyed are keeping healthcare, 83 percent, and pension benefits, 94.7 percent, intact. 

Also, employees who have consistently performed well need not worry as more companies in Asia are increasing their investments to retain their high-performing employees, compared to their counterparts in other continents. 

Asian companies are using their salary budget more strategically to reward performance. Indonesian firms surveyed have doled out an average of 25 percent in base salary increases to their high-performers in 2008, which was half the average for Asia. 

"This trend is a reflection on the shortage of highly-skilled talent in Asia," Nugroho. 

The study also showed that globally, retail is one of the hardest-hit sectors, with 63 percent of retail respondents expecting poor business results due to reduced consumer spending and a tightened credit market. 

Other industries, such as oil and gas, have been able to weather the downturn more successfully. About 19 percent of oil and gas respondents expect business results to be better than the previously projected levels.

Gaza under fire: President urges UN to step in

The Jakarta Post, Jakarta | Mon, 12/29/2008 6:17 PM 

GIVE IT UP: President Susilo Bambang Yudhoyono addresses a press conference on Indonesia's stance regarding Israel's air strikes in Gaza. The President announced Monday that the government would send Rp 1 billion (US$90,000) worth of aid, excluding medical aid, to help Palestinian victims. Courtesy of Presidential Office/Abror Rizki

Indonesia has urged the United Nations (UN) to hold a formal meeting for a resolution urging Israel to stop attacking Palestine's Gaza border, President Susilo Bambang Yudhoyono says. 

The President had sent letters to the UN secretary-general Ban Ki-moon and the UN Security Council, demanding firmer actions to stop the attacks, Yudhoyono said as quoted by Antara state news wire on Monday. 

"We expect the council to hold an official gathering to force Israel to stop its offense," Yudhoyono said after a meeting at the Presidential Palace with Defense Minister Juwono Sudarsono,

State Secretary Hatta Radjasa, National Police (TNI) chief Djoko Santosa and Foreign Ministry director general for multilateral affairs Rezlan A. Djanie. 

The council's move to hold an informal meeting and produce a written statement against the attacks was not enough to bring the violence to an end, Yudhoyono said.

"We will send Rp 1 billion (approximately US$ 90,000) worth of aid, excluding medical aid, to help the victims," he said, adding that Indonesia would continue to monitor developments in Israel. (ewd)

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‘Be positive’ in facing the global crisis, SBY says

Desy Nurhayati, The Jakarta Post, Jakarta | Sun, 12/28/2008 8:33 AM  

President Susilo Bambang Yudhoyono called on the nation to stay optimistic in facing the coming impacts of the global economic crisis, while highlighting the importance of promoting harmony among followers of different religions. 

In his speech to mark the national celebration of Christmas at the Jakarta Convention Center on Saturday evening, the President said the nation should remain united in dealing with the economic crisis. 

“We have to be positive that our country will not plunge into crisis if we build togetherness and solidarity,” he told thousands of Christians during the event. 

He added that as well as the economic crisis, the global community has to deal with various problems, such as terrorism, natural disasters and poverty. 

The world should take concerted action to address these issues, he added.  

Yudhoyono reiterated the importance of building religious harmony and tolerance among different groups, taking into account that Indonesia is a plural nation. 

“We should not perpetrate anarchic actions against those with different faiths,” he said. 

At the end of his speech, the President highlighted the government’s commitment to improve religious-based development as a foundation for the country’s advancement. 

He also said how pleased he was over the peaceful celebration of Christmas nationwide on Thursday, saying it proved there was harmony and trust within the nation. 

Among those attending the Christmas celebrations were Vice President Jusuf Kalla and his wife Mufidah Kalla, Cabinet ministers and representatives of neighboring countries. 

On Thursday, Yudhoyono and several members of his Cabinet attended a Christmas celebration in Manado, North Sulawesi.  

Christmas celebrations across the country were marked in a smooth and peaceful manner on Thursday, with tight security measures in place ensuring no major incidents. 

Police said they had worked with church officials to keep the festivities safe.  

President: All national ships must fly Indonesian flag

Gresik, East Java (ANTARA News) - President Susilo Bambang Yudhoyono reiterated the government`s determination here on Wednesday to make all the ships transporting goods between the different parts of the country to fly the Indonesian flag. 

Speaking at the commemoration of the 9th anniversary of Nusantara Day at the Gresik port in East Java, President Yudhoyono said that the government had already issued Presidential Instruction Number 5 of 2005 on improvement of all national ships for their interinsular operations in the country. 

"We wish to restore the glory of our national fleet," he said. 

Although the goal was not yet fully achieved the President said the presidential instruction had been implemented to increase the number of national ships. 

In 2006 the President said Indonesia only had 6,041 ships but the number rose 36.7 percent to 8,256 in 2008. 

"We wish the number will rise again so that only red and white-flagged ships will conduct domestic transportation of goods," he said. 

The President also said that sea transportation service by national fleet also rose in the first quarter of 2008 to 71.4 percent from 65.3 percent in 2007. 

"This is what is right. What is wrong is if more foreign-flagged ships are operating in our territory. Let us become the host for our own country," he said. 

President Yudhoyono in his speech also mentioned the country`s increasing fishery production. He said the country`s fishery production had risen from 6.9 million tons in 2005 to 8.6 million tons in the second quarter this year. 

The rise, he said, demonstrated that the government`s decision to revitalize the fishery sector in 2005 was on the right track. 

President Yudhoyono further called on his cabinet ministers and also leaders of coastal regions to help speed up development in the sector. 

"This is an opportunity to advance coastal regions and their fishermen," he said. 

In view of the vastness of the country`s territory of which three quarters are waters President Yudhoyono said future policy must keep the country`s development in a sound balance between land and marine natural resources.

World Ocean Conference (WOC) preparation
Antara, 26 December 2008

President of Indonesia Susilo Bambang Yudhoyono authenticate four hotels in Manado, North Sulawesi, Friday (Dec.26). The hotels were prepared to hold World Ocean Conference 2009 (WOC) in next May. (ANTARA photo/Basrul Haq)

WOC Website

Indonesian accounting standard reported to IFRS

Jakarta (ANTARA News) - The Indonesian Accountants Association (IAI) reported the Indonesian finance accountancy standards convergence (SAK) to International Financial Reporting Standards (IFRS) at its 51st anniversary. 

An IAI Press release said that the IFRS converged accounting entity controlling treatment would be applied to entities financial reports as of January 1 2012. 

Compliance to IFRS will give benefits to comparable financial reports and transparency enhancement.  Thus, Indonesian company's financial reports would be comparable to other country's reports, to see which company has a better performance. 

In addition, the convergence program is also useful to reduce the expenses, improve global investment and reduce the burden of finance reports.

KEEP UP THE FIGHT

The Jakarta Post, Jakarta | Sat, 12/27/2008 10:26 AM 

University students carry flower wreaths and yellow flags to indicate mourning during a protest rally at the Hotel Indonesia traffic circle Friday, demanding the Corruption Eradication Commission boost its fight against graft in the country. (JP/J. Adiguna)

Crisis-proof SMEs sector will continue to grow despite crunch

Ika Krismantari, The Jakarta Post, Jakarta | Fri, 12/26/2008 11:20 AM  

When bad news seems to dominate the country's business environment, from delays in investment, cuts in production and revenue, to possible layoffs, one sector may again prove its resilience to external shocks -- small and medium-sized enterprises (SMEs). 

The industry, which famously survived the devastating 1997-1998 crisis without a government bailout, is set to grow next year by 8 percent, an official said. 

Fauzi Azis, Industry Ministry director general for medium and small-scale industry, Wednesday said estimated growth -- which emulates the level of growth recorded over the past several years -- was respectable at a time when almost all other industries predicted cuts in production and revenue amid weakening demand. 

"The reason why they can survive is because of their speciality products, which gives them an added value compared to mass products," Fauzi said, using a craft business in Yogyakarta that could weather the crisis as an example. 

Moreover, the government's program on preserving the domestic market by limiting imports of "unnecessary products" will help the industry develop further. 

"We can see that we can at least maintain growth," Fauzi said. 

According to Fauzi, small and medium-sized companies numbered 3.5 million and employ around 7.7 million workers, with this year's export estimated to hit US$10 billion. 

Ansyari Buchori, Industry Ministry director general of metal, machine and miscellaneous industries, said the government planned to issue a presidential decree soon to encourage the consumption of locally made products. 

The regulation is expected to push consumption of national products, he said.

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Six oil and gas firms to use local banks, more to follow, BP Migas says

The Jakarta Post, Jakarta | Fri, 12/26/2008 11:20 AM  

Six oil and gas operators have opened six joint bank accounts at domestic banks to deposit their so-called abandonment and site restoration budgets totaling US$60 million. 

The nation's regulator for oil and gas upstream industry also has access to the account. 

The six contractors are: PT Pertamina EP, Medco Tarakan, Medco Rimau, Kalrez Petroleum, Kangean Energy Indonesia Ltd, and Kondur Petroleum SA, said BPMigas' chairman R. Priyono Wednesday. 

The abandonment and site restoration budget is the amount of funds oil and gas contractors must set aside to uproot their production facilities and restore environmental surroundings after they complete their activities. 

Priyono said the contractors used to place the money in individual accounts, which could be in foreign banks. Now, BPMigas has ordered them to put the money in domestic banks, whose accounts will be jointly held with BPMigas. 

"This joint account mechanism is a sort of control mechanism. By using this joint account, contractors can only withdraw the money with the approval from BPMigas," Priyono said during the signing ceremony with the constructors. 

On Wednesday, Kalrez Petroleum, Kangean Energy Indonesia, Medco Tarakan and Medco Rimau opened joint accounts with BPMigas at BNI, while PT Pertamina EP and Kondur Petroleum opened an account at BRI. 

He said BPMigas ordered contractors to place the money in local banks to help stabilize the balance of payments of the country's domestic banks. 

This regulation forms part of a package of new regulations issued by BPMigas that basically require oil and gas operators to use domestic banks to deposit their funds for their entire business operations within the country. 

In the past, many contractors placed their operational funds in overseas banks, particularly in countries where their headquarters are located. For next year, oil and gas contractors here planned to spend up to $13 billion for their operations. 

However, the joint account mechanism only applies to abandonment and site restoration budgets. 

"Hopefully, these joint accounts will make the management of the abandonment and site restoration more efficient," BNI president director Gatot M Suwondo said. 

Currently, there are 64 contractors operating at the production stage, according to BPMigas data. However, BPMigas's general deputy Hardiono said not all oil and gas contractors would be implicated by the regulation. 

The obligation to set aside the abandonment and site restoration budget only applies to contracts signed after 1994, after Indonesia ratified the UN Convention on Law of the Sea (UNCLOS). 

BPMigas did not set a deadline for oil and gas contractors to move their budgets into joint accounts. 

However, Hardiono said the process might take some time because contractors need to build their trust in domestic banks. -- Alfian

Unregistered taxpayers to pay double for exit tax

Aditya Suharmoko, The Jakarta Post, Jakarta  | Fri, 12/26/2008 9:20 AM  

An bilboard on a Jakarta street encourages Indonesians to register with the tax office. Under the so-called “Sunset Policy” program, which ends on Dec. 31, the tax office said over 10 million people have so far registered for a tax file number (NPWP). (JP/Ricky Yudhistira)

The tax office has officially announced an increase in the much-decried fiskal, or exit tax for travelers going overseas, in part to put to rest widespread speculation over the amount of the increase. 

The exit tax for those aged 21 years and above departing from airports will be raised from Rp 1 million (US$91) to Rp 2.5 million, and for those traveling by sea from Rp 500,000 to Rp 1 million, effective Jan. 1, 2009, to Dec. 31, 2010. 

However, registered taxpayers will not have to pay a single cent; and starting from 2011, the exit tax will be scrapped altogether, according to the Finance Ministry’s directorate general of taxation. 

Director general Darmin Nasution said the increase in exit tax was part of an effort to get more potential taxpayers to register for a tax number (NPWP). 

It is proving a smart ruse, with many middle-to-high-income residents flocking to nearby tax offices to get an NPWP to comply with the office’s Sunset Policy program that ends on Dec. 31. 

The program, under which applicants’ tax obligations in previous years are written off, has seen people rushing to register themselves. 

This month alone, the number of people registering for an NPWP was between 50,000 and 100,000 per day, up from about 7,000 people daily in previous months. 

The exit tax will from now on become an up-front payment for income tax. 

For instance, an employee whose income tax is Rp 20 million per year and who has traveled abroad twice this year — paying Rp 1 million in exit tax each time — will only have to pay Rp 18 million in income tax when filing their tax returns in March 2009. 

For those not yet registered, the new exit tax of Rp 2.5 million could prove very daunting. 

Satria Ramadhan, who will go to Bangkok for holidays in early January, said he was glad to have registered for an NPWP. 

“Otherwise, I would have to pay Rp 2.5 million. I would have definitely canceled my trip if I had to pay such a huge amount.” 

Another traveler, Frederick Tobing, praised the move by the directorate general of taxation.

“It’s a smart move. Most people, including myself, will rush to register at the tax office, just to avoid paying the exit tax.” 

The directorate general of taxation estimates up to 10 million new taxpayers have registered this year, Darmin said. 

“I didn’t expect the number to be this huge. No one expected to tap 10 million new taxpayers,” he said.

To get exemption from paying the exit tax, registered taxpayers must submit a copy of their NPWP, passport and boarding pass to tax officials at airports or ports. 

If the NPWP is declared valid, the officials will put a “free exit tax” sticker on the boarding pass. If it is not valid, travelers will have to pay the exit tax. 

1. Exit tax from airports for people aged 21 years and above raised from Rp 1 million to Rp 2.5 million.
   
   
2. Exit tax from ports for people aged 21 years and above raised from Rp 500,000 to Rp 1 million.
   
   
3. Those automatically exempt from paying the exit tax include: People aged less than 21 years; foreigners staying in Indonesia no more than 183 days within the last 12 months; diplomats; employees of international organizations; Indonesian citizens with official documents from other countries, including students; Haj pilgrims and Indonesian migrant laborers.
   
   
4. Those exempt from paying the exit tax but required to provide documentary proof: Foreign students with letters of recommendation from their universities; foreign researchers; foreign workers in Batam, Bintan and Karimun; disabled or ill people seeking medical treatment abroad paid for by social organizations; people traveling for art, culture, sport and religious missions, and students in a student-exchange program. 

Govt allocates Rp70 trillion for infrastructure in 2009

Jakarta (ANTARA News) - The government has earmarked Rp70 trillion in funds for the development of the infrastructure sector in the country in 2009, a spokesman said. 

"We have set aside at least Rp70 trillion for the development of infrastructure facilities next year," deputy to the chief economic minister for infrastructure and regional affairs, Bambang Susantono said here on Wednesday. 

He said that the funds were enough for the development of infrastructures; and for that purpose, the government was to work out the most efficient funding schemes. 

According to Susantono, amid the global economic meltdown, funds from the private sector would become limited so that development should rely on the state budget, especially development for the infrastructures.

Chinese Vice Premier meets Indonesian President

www.chinaview.cn,  2008-12-23 21:51:57         

JAKARTA, Dec. 23 (Xinhua) -- Visiting Chinese Vice Premier Li Keqiang met with Indonesian President Susilo Bambang Yudhoyono Monday afternoon, calling on the two countries to step up partnership and tackle the international financial crisis. 

Li said that the development of cooperation between China and Indonesia, both as important developing countries in the region, serves to the significant purpose to promote peace and stability in the region and the world. 

 

Visiting Chinese Vice Premier Li Keqiang (L) meets with Indonesian President Susilo Bambang Yudhoyono (R) in Jakarta, Indonesia, Dec. 22, 2008. 
(Xinhua Photo).  Photo Gallery >>>

 

Li highlighted the growth momentum of the bilateral cooperation in infrastructure and energy sectors, citing the Suramadu bridge being constructed by the Chinese company in Surabaya as a symbol of the bilateral cooperation. 

Li said the two nations share huge potential for cooperation, noting that China will support and encourage the Chinese companies to participate in Indonesia's infrastructure construction, share successful experience on domestic economic development. 

Li also called on Indonesia to intensify exchange and dialogue so as to tackle the current international financial crisis. 

 

Visiting Chinese Vice Premier Li Keqiang (L1) meets with Indonesian President Susilo Bambang Yudhoyono (R1) in Jakarta, Indonesia, Dec. 22, 2008.
(Xinhua Photo).  Photo Gallery>>>

 

Susilo welcomed Li's visit and recognized the rapid development of Indonesia-China relations since the two nations forged strategic partnership in 2005. 

He also voiced his appreciation of the success of Beijing Olympic Games, highlighting the sports event as a pride for the Asian people. 

The development of China is not only conducive to the Indonesia-China cooperation, but also of great significance to the common prosperity in the region and world as well, he said. 

The Indonesian president also expressed his gratitude for China's help in the country's economic development, suggesting that the two countries work closer and boost bilateral cooperation. 

The Chinese Vice Premier also addressed a welcoming luncheon hosted by the Indonesian business community on Monday. He told the entrepreneurs from 33 Indonesian provincial districts that the two-way trade is expected to exceed 30 billion U.S. dollars by the end of 2008, an objective previously set to be realized in 2010, and Chinese government is willing to make joint efforts with the Indonesian business community to expand the fields and promote the level of the bilateral cooperation.     

Related Articles: 

Chinese Vice premier meets acting governor of Jawa Timur, visits Suramadu bridge project

RI, China sign Rp 35t deals on energy, mining

Chinese Deputy PM to observe Suramadu bridge project

SBY Calls for Unity in Time of Adversity

The Jakarta Globe, Sally Piri 

President Susilo Bambang Yudhoyono on Tuesday called on all Indonesians to unite and support each other in this time of adversity. 

“I hope all Indonesians take part in improving our social solidarity in facing the current development of conditions in our country and those in the world,” Yudhoyono said at a ceremony to mark National Solidarity Day. 

He said that all contributions, no matter how small, were valuable. 

He reminded his audience that Indonesia was not immune to the global recession. 

“We all know that all nations in the world are feeling the impact of the current food crisis, the oil energy crisis, the financial crisis and the recession of the world economy,” he said. 

Everyone should work to support government programs to improve the welfare of all Indonesians, especially for the poor and the needy, he said. 

“Let us carry out the government’s programs to enhance the prosperity of the people,” he said. 

The central government’s cash and rice aid programs across Indonesia have continually been hampered by bureaucracy, corruption and even security concerns, as people are often injured and sometimes killed in the stampedes that frequently accompany the distribution of aid to the poor. He said that besides providing direct help to the poor in the form of cash and essentials, the government was providing other forms of indirect help. 

“Let’s be more tolerant. We should give and take, share and care,” Yudhoyono said. 

Yudhoyono also reminded Indonesians that the country was prone to natural disasters, urging everyone to be prepared for such events. 

Indonesia sits on the convergence of several continental plates and is therefore prone to earthquakes and volcanic activity. The degradation of the environment in the past few decades has also begun to cause widespread flooding and landslides in the rainy season. 

“God blessed us with rich natural resources, but he also made our country prone to disasters, like earthquakes, volcanic eruptions, tsunamis, floods and landslides,” he said. “Our best attitude is to always be on the ready in case these disasters come.” 

In a separate event, municipal authorities in West Jakarta held a mass wedding for the poor to mark National Solidarity Day. A total of 727 couples were married at the municipal office, Detik.com reported.

Government Aims to Speed Trade Activities, Cut Graft With Updated Online System

The Jakarta Globe, Muhamad Al Azhari 

As parts of its effort to boost international trade efficiency, the government on Tuesday launched the third phase of the “National Single Window” program, or NSW, an online system which may enable traders to submit necessary documents and obtain clearance from a wider array of government agencies. 

“We aim to reduce administrative and bureaucratic difficulties as much as possible, including the time required in obtaining a licence,” Finance Minister Sri Mulyani Indrawati said at the launch of the program. “We want to cut the bureaucracy chain. 

“NSW also aims to reduce the cost of doing business,” she said. “It should ease the burden on companies.” 

The government has been trying to address complaints from investors, who say that dealing with Indonesian bureaucracy is often costly and fraught with corruption. 

Developing an integrated online system for trade activities would help traders bypass much of the complex bureaucracy they have dealt with in the past. 

Import-export activities are one of the top sources of corruption, with graft often occurring in agencies that issue trade permits. 

By implementing the electronic system, the government also hopes to monitor imported goods from other producers. Chinese products are of particular concern, with many industries fearing that they could flood the country during the slowdown in global demand. 

According to a news release issued by the team that prepared the NSW, the system’s latest release will give importers the ability to interact with the government electronically. More than 4,852 priority importers may now use the system — about 25 percent of all importers registered with the Customs and Excise Office — up from 146. 

Among the features added to the NSW during the upgrade are a country-wide import permits, online payment confirmation for import duties and import-related taxes, and an e-notification mechanism for any import rejections that includes an explanation for why items were sent back. 

At the moment, however, the electronic trading assistance system for exporters is still undergoing trials at Tanjung Priok Port. 

“Export documents are much more complicated [than imports],” said Susiwijoyono Moegiarso, chairman of the technical team for NSW implementation. “We don’t want to force the system before it’s ready. If something were to go wrong, it could delay export activity at the time when the government is trying to boost exports because of slowing global demand.” 

Susiwijoyono added that the export-oriented arm of NSW is expected to be implemented in June 2009. 

The third phase of the NSW will also permit importers to obtain documents including customs declarations and permits to import goods issued by 15 government agencies at five ports that process 90 percent of goods entering the country. 

The eligible ports are Soekarno-Hatta International Airport, Jakarta’s Tanjung Priok Port, Tanjung Emas in Semarang, Central Java Province, Tanjung Perak in Surabaya, East Java Province, and Belawan in Medan, North Sumatra Province. 

Previously, NSW only served Tanjung Priok and five agencies: the Directorate General of Customs at the Ministry of Finance; the Food and Drug Monitoring Agency, or BPOM; the Indonesian Agriculture Quarantine Agency at the Ministry of Agriculture; the Indonesian Fisheries Quarantine Agency at the Ministry of Maritime Affairs and Fisheries; and the Directorate General of International Trade at the Ministry of Trade. 

In its latest incarnation, however, the NSW will give importers access to more government agencies from a wider variety of ministries and departments. 

The ministries of industry, forestry, health, defense, communication and information technology, energy and mineral resources now participate in NSW, in addition to the State Ministry for the Environmental and the National Police.

RI, China sign Rp 35t deals on energy, mining

Alfian and Adianto Simamora, Jakarta, The Jakarta Post | Tue, 12/23/2008 10:59 AM  

Indonesia and China signed deals Monday covering cooperation on eight energy and mining projects worth a total of around Rp 35 trillion (US$3.13 billion). 

The cooperation agreements were signed during the third Indonesia-China Energy forum (ICEF), which was attended by Vice President Jusuf Kalla and China's visiting Deputy Prime Minister Li Keqiang. 

"This is in the interest of the two countries. So we will purchase China-made products for the projects to help propel their economy, which will eventually have an impact on us as well," said Kalla. 

"Investment in energy these days is far cheaper, and if we invest today, we will ready when the world economy recovers," he said. 

The eight projects include one oil and gas project, one biodiesel development project, two coal mining projects and four power plant projects. 

The first project is the extension of an oil and gas contract in the Madura Strait, East Java, which is run by China's CNOOC and Canada's Husky. 

Upstream oil and gas regulator BPMigas signed a deal with the two companies to extend their contracts for another 20 years. Initially, the contract would have expired in 2012. 

Four cooperation agreements on electric power production projects are also included, two of them including commitments from the Exim Bank of China to finance two coal-fired power plant projects initiated by the state power company PT PLN. 

The two power plants are located in Pelabuhan Ratu, West Java, and Pacitan, East Java. Pelabuhan Ratu's power plant will have a total capacity of 1,050 megawatts and Pacitan's power plant 630 megawatts. 

Both plants are expected to be in operation by 2010, according to PLN president director Fahmi Mochtar. 

PLN has also signed a power project agreement with China National Technical Import and Export (CNTIE) and Shanghai Electric Group Company Ltd. 

The two companies, together with two other local partners, will construct a power plant in Adipala, Cilacap, Central Java with a total capacity of 660 megawatts. 

Fahmi said PLN was still looking for financing sources to complete the financing for this project. He added the three power plants were part of PLN's 10,000 megawatt coal-fired accelerated power production program. 

PLN also signed a power purchasing agreement for a fourth power plant with a private independent power producer (IPP) PT GH EMM Indonesia, a subsidiary of a China-based power producer currently building a 227 megawatt coal-fired power plant in Simpang Belimbing, Muara Enim, South Sumatra. 

"My hope is these deals will not merely be signed on paper but become reality and be implemented concretely," said China's Keqiang. 

The ICEF also witnessed two coal mining cooperation agreements, including a joint venture between state mining company PT Tambang Batubara Bukit Asam and China's Huadian Corporation. 

A deal to develop biodiesel plants in Jambi and South Sumatra was also signed. 

Purnomo said the financial commitments for the eight projects would not be spent entirely until next year. 

"The projects will take place over several years. Thus, the investments will be spent pro rata with the pace of project development," he said. 

The projects are expected to provide almost 32,000 new job opportunities, he added. 

RI-China deal - Project / Value

1. Oil and gas contract extension in Madura Strait (BP Migas, CNOOC and Husky Madura Ltd) - US$642 million
   
   
2. Power plant financing in Pelabuhan Ratu (The Exim Bank of China and PT PLN) - US$481.94 million
   
   
3. Power plant financing in Pacitan (The Exim Bank of China and PT PLN) - US$293.23 million
   
   
4. Power plant construction in Cilacap - US$605.29 million 
   (PLN, CNTIE and Shanghai Electric) - Rp 2.45 trillion
   
   
5. Power purchase agreement for Muara Enim (PT PLN and PT GH EMM Indonesia) - US$330 million
   
   
6. Coal mining joint venture in Muara Enim (Bukit Asam and Huadian Corp) - US$14.40 million
   
   
7. Biodiesel development in Jambi and South Sumatra (PT Kurnia Selaras and China Development Bank) -   US$255 million
   
   
8. Coal mining cooperation in East Kalimantan (PT Budi Dharma Kencana and Lark Guangdong Power Resources Inc) - US$350 million
   
   

Sources: The third Indonesia-China energy forum 2008