Four Countries to Help Trace Century’s Money

Tempo Interactive, Thursday, 31 December, 2009 | 17:23 WIB

TEMPO Interactive, Jakarta:Switzerland, England, Hong Kong, and Singapore will help Indonesia to get back Bank Century’s money. The four countries are reportedly the place where the money was sent. “They said they were ready to do their best to help because the request from the Indonesian government has met the requirements set by the respective country,” the Justice and Human Rights Ministry’s International director-general, Chairijah, said after a press conference yesterday.

According to Chairijah, these countries admitted that some asset were smuggled out of Indonesia since 2004 and may have originated from Bank Century. If the government can provide strong data and proof, the collaborating countries can freeze the account allegedly containing money from Bank Century.

The Indonesian Police chief in charge of Criminal Investigation Division, Ins. Gen. Ito Sumardi, said on a separate occasion that a legal decision was required to confiscate the assets belonging to Bank Century’s suspects. “The court’s order will be the basis, without which a temporary freezing will apply,” he said. An in absentia trial for the suspects, among whom are Hesham al-Waraq and Ravat Ali Rizvi, can be held to produce a permanent legal decision.

Justice for all

The Jakarta Post | Tue, 12/29/2009 8:22 AM

Grandma Minah, a villager living near Purwokerto, Central Java is embraced by actor Butet Kertaredjasa after receiving a cacao seedling from the anticorruption organization Kompak in Jakarta on Monday. The woman, who made newspaper headlines after a local court sentenced her to 45 days in jail for stealing three cacao pods from a plantation company, was named one of Kompak’s People of the Year. JP/Nurhayati

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Woman on trial for allegedly stealing Rp19,000 worth of cookies

RI`s tax receipts reach 92 pct of target

Antara News, Wednesday, December 30, 2009 22:51 WIB

Jakarta (ANTARA News) - Indonesia`s tax receipts have so far this year reached Rp490 trillion, accounting for 92-93 percent of the target of Rp577.3 trillion set in the 2009 state budget, a tax official said.

But the tax receipts were higher than the government had projected earlier, Director General of Taxation Mochamad Tjiptardjo said on Wednesday.

He expressed hope the tax receipts could be raised to at least Rp500 trillion by the end of this year.

The directorate general of taxation was waiting for reports from its 31 regional offices on tax receipts in the regions, he said.

Finance Minister Sri Mulyani Indrawati said earlier the country`s tax receipts this year would likely fall short of the target as a result of the global economic crisis.

She projected the tax receipts this year would only reach 95 percent of the target.

The finance ministry said earlier tax receipts until November 16 reached 75 percent of the target of Rp577.4 trillion for 2009.

The ministry predicted tax receipts including customs revenues until the end of this year would reach Rp623 trillion, accounting for 95.6 percent of the target set in the revised 2009 state budget.

Of the total, tax receipts collected by the directorate general of taxation are expected to reach Rp549.9 trillion, or 95 percent of the target.

Anggito Abimanyu, head of the ministry`s fiscal policy board, said the lower-than-expected tax receipts was the result of sluggish economy.

"But don`t see (the tax receipts) item by item. Overall, the tax receipts are still above the expected average," he said.

Unfair tenders stay as most reported cases: KPPU

The Jakarta Post, Jakarta | Wed, 12/30/2009 10:51 PM

Unfair procurement tenders stay as the most reported cases to the anti-monopoly watchdog this year.

Of the 201 alleged unfair business practice cases across the nation that reported to the Business Competition Supervisory Commission (KPPU) in 2009, 169 or 84 percent were in connection with unfair procurement tenders.

Unfair tenders also topped the 2008 list with 189 cases or 79 percent of the total 230 reported unfair business practices during the year.

However, the KPPU has only investigated 33 cases, of which 13 cases have been finished.

In 2008, the anti-monopoly body investigated more cases, with 68 cases probed, of which 43 had been finished.

Other cases that were reported to the commission included cartels, mergers that lead to monopolies, price fixings, predatory pricings, and other unfair business practices that were prohibited under the 1999 anti-monopoly law.

KPPU spokesman Ahmad Junaidi said the figures showed that people were now no longer afraid to report irregular procurement processes. “Businessmen are now more open to file complains over alleged unfair tenders to KPPU,” he told The Jakarta Post on Wednesday.

Fines that resulted from KPPU verdicts since its establishment in 2000 had also added state non-tax income by Rp 1.01 trillion (US$107.06 million), Junaidi claimed, “while we have used only Rp 139 billion from the state budget.”

In 2010, one of KPPU’s concerns is to monitor abuse of power by authorities in connection with government’s procurement tenders.

“Our observations so far show that many government’s procurements still implement unfair processes for example fixing the winner among the participants.

“Such practices mostly involve intervention from the bidding committee or even by the top officials,” Junaidi said. (bbs)

Last trade

The Jakarta Post, Wed, 12/30/2009 8:06 PM | Business

Stock brokers gather during the last stock trade in Jakarta on Wednesday. Finance Minister Sri Mulyani Indrawati said the Jakarta Stock Exchange was closed at 2,534.356 points, or up by 0.61 percent, making it one of the best in Southeast Asia. (Antara/Andika Wahyu)

KPK Leaders Turn Down Offer of Expensive New Cars From Govt Budget

The Jakarta Globe

The Corruption Eradication Commission (KPK) leaders said they will not accept new cars valued at up to Rp 1.3 billion ($137,800) each that have been provided for state officials because they are “too expensive.”

The commission’s deputy chairman Haryono Umar said that he will keep using his old car. State secretary Sudi Silalahi said on Tuesday that the purchase of the cars had been approved by the House of Representatives as part of the 2010 budget.

“Even though (the cars) are part of the state budget the KPK leaders will not take them,” Haryono said at KPK office on Tuesday evening. Haryono suggested state officials should use Indonesian-made cars such as the Toyota Innova.

Presidential spokesman Julian Adrian Pasha refused to comment on the KPK’s decision to turn down the cars.

“I can’t say anything about it. Ask the state secretary,” Julian said.

On Monday, 150 state officials received a new Toyota Crown Royal Saloon. The state officials included ministers and parliament leaders.

Justices’ oversea trips ‘waste of state money’

Erwida Maulia, The Jakarta Post, Jakarta | Wed, 12/30/2009 8:55 AM

The Supreme Court defended Tuesday its widely criticized decision to send more than 70 judges and their staff on a trip to European and Asian countries using state money.

Critics have alleged that despite its complaints of a shortage of funds to finance its operations, including the establishment of corruption courts throughout the country, the Supreme Court engaged in useless and non-transparent projects that it hid from public scrutiny.

Supreme Court spokesman Hatta Ali, however, said the visits, which Indonesia Corruption Watch (ICW) says cost the state US$ 600,000, were meant to help officials learn about the advanced administrative system and the use of technology in European courts.

“There’s nothing extraordinary about the visits. They helped us expand our knowledge, learn about other systems and compare them with our own system in Indonesia. We’ve learned a lot from the trips,” Hatta argued.

“For example, [we learned about] the process of recruiting and supervising justice candidates. We also learned how to quickly settle cases using technology. We’re really in the dark ages in technology terms and we’re trying to improve.”

He also said the trips did not violate any regulations as they had been approved and were included in the 2009 state budget.

“Each foreign visit was budgeted for, cleared and approved. We never attempted to benefit from so-called excessive funds. The trips were planned for the middle of the year, but due to our tight schedule, we could only travel later in the year,” Hatta added.

Supreme Court deputy chief Abdul Kadir Mappong said the court would hold a plenary session to discuss the results of the visits.

ICW, however, accused the Supreme Court of funding the trips as a means of using up its budget toward year-end.

ICW’s Emerson Yuntho said Monday night that the so-called comparative studies abroad frequently done by Indonesian state officials had never been proven to be of any benefit to the country so far.

“There has been no evaluation on the effectiveness of such comparative studies. This has sparked concerns that state officials or judges taking part in such trips do so merely for sightseeing or shopping,” Emerson said.

ICW reported that in October, 68 Supreme Court officials, including some of the justices, took trips to Italy, Spain, the Netherlands, France, Australia and Japan in separate groups.

This month, 13 other Court officials also went on four-day visits to Thailand and Malaysia.

The corruption watchdog says among those who took part in the trips were justices, their staff and researchers.

“The visits were done toward year-end. This may imply the trips were meant to use up any excess in the Supreme Court’s budget,” Emerson added.

He reminded the court to show transparency and report to the public the results of the visits, saying that they were done “silently” and not mentioned on the Supreme Court’s official website.

“In accordance with existing regulations, the public has the right to secure information from the courts,” Emerson said.

He said the money would have been better used to help the poor get access to legal aid or fund the establishment of a much-needed national corruption court system.

Editorial: Prita’s half-baked justice

The Jakarta Post | Wed, 12/30/2009 9:18 AM | Opinion

There is justice after all. The Tangerang District Court on Tuesday exonerated Prita Mulyasari from all criminal charges of defaming the good name and reputation of Omni International Hospital in the township near Jakarta. It is hard to imagine just how the public would have reacted if the court had ruled the other way.

The public was fast losing its confidence in the judiciary after a series of rulings violated their sense of justice. They included the earlier civil defamation lawsuit between Omni and Prita that went in favor of the hospital. Tuesday’s verdict in a way gives us a sense of hope that justice can prevail, albeit only sometimes.

Prita landed herself in trouble after the hospital filed a complaint with the police about being defamed by the 32-year-old woman who wrote about her horrendous experience at the hospital. She wrote this in an email to a friend, who subsequently forwarded the message to others, and the message eventually found a wider audience on the Internet.

She effectively became the first victim of the new draconian Electronic Information and Transaction Law. The law allows for the detention of any suspect charged with a crime punishable with more than five years. The law sets a maximum punishment of six years for criminal defamation.

Her detention provoked massive public outcry that subsequently led to her release, but Omni hospital had the audacity to ignore public opinion and went ahead with its charges in both the civil and criminal courts against her.

Earlier this month, the hospital won the civil case, with the court awarding Rp 204 million in damages.

This provoked a second public outcry and a massive fundraising campaign to help Prita raise the money. The campaign collected over Rp 800 million, mostly in coins and mostly donated by ordinary people from across the nation, including poor people and children who broke their piggy banks.

How the court could reach two contradictory verdicts in the civil and criminal case is baffling. It tells us there is something very wrong with the way the law is being administered. The Supreme Court is currently hearing the civil case on Prita’s appeal. As the last bastion of justice, let’s hope the court delivers the right decision.

But whatever the judiciary is doing, rest assured the nation is fully behind Prita, not only for her sake, but more importantly, for the sake of justice.

Prita cashes in Rp 615 m in coins: BI

Hasyim Widhiarto, The Jakarta Post, Jakarta | Wed, 12/30/2009 8:35 PM | Jakarta

Bank Indonesia (BI) announced Wednesday that Prita Mulyasari had cashed in Rp 615,562,043 (US$65 249.5766) in a form of coins and small-denomination bills from the public to help her paying fine after losing civil libel suit against Omni International Hospital.

”Today, we have transferred the money to Ibu Prita's Bank Mandiri account,” Edi Siswanto, BI’s money circulation director, told reporters.

It had taken six days, six coin-counting machines and 86 officers – 70 from BI and 16 from Bank Mandiri – to count all the money donated, Irwin Azwir, the BI senior cashier who is in charge of the counting, said.

”We had to manually separate the coins according to their denomination and year of issuance first before counting them using the machine,” he said.

The Coins for Prita movement began early this month after a local court fined Prita Rp 204 million (US$21,600) for defaming Omni International Hospital . A group of Prita's supporters used the social networking site Facebook and set up www.koinkeadilan.com to collect donations from the public.

Despite losing in the civil suit, Prita was acquitted of libel charges on Tuesday in the criminal lawsuit filed by Omni.

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KPK to take on corruption in financial sector

Antara News, Wednesday, December 30, 2009 05:50 WIB

Jakarta (ANTARA News) - The Corruption Eradication Commission (KPK) is to widen the scope of its attention by also handling suspected graft in the financial sector in 2010, a spokesman said.

Speaking at a press conference on the KPK`s year-end report here Tuesday, KPK Deputy Chairman Bibit Samad Rianto said the commission was planning to take on suspected corruption in the financial sector, including the capital market in 2010, in addition to cases in the procurement of goods and services.

"In 2010, we will not only tackle corruption in goods and services procurement but also in the financial sector," he said.

The KPK would also begin collecting information on potential corruption in the sector of public services such as the issuance of motor vehicle documents, immigration, state electricity company PLN, by conducting surprise inspections.

Meanwhile Acting KPK Chairman Tumpak Hatorangan Panggabean said the commission was hoping to be able to improve its overall performance in 2010.

The commission would also work in closer coordination with other law enforcing agencies such as the police and public prosecutor`s office in uncovering and handling corruption cases.

Panggabean said a meeting between KPK, the police and public prosector`s office to lay the basis for closer cooperation was to have taken place earlier this month but had not happened. The meeting would , however, be rescheduled for some time next January.

"There must be synergy between the three law enforcing agencies as called for by the House of Representatives," he said.

Rp 6.7 trillion identity card project under KPK’s monitoring

Irawaty Wardany, The Jakarta Post, Jakarta | Tue, 12/29/2009 8:27 AM

The Home Ministry has asked the Corruption Eradication Commission (KPK) to monitor the disbursement of Rp 6.7 trillion (US$710 million) of state money in the establishment of a single identity number (SIN) for each Indonesian citizen by 2011.

The ministry also asked the KPK to check if the Rp 800 billion spent so far on the project was correctly used, with Home Minister Gamawan Fauzi visiting KPK’s office Monday to discuss.

“We hope the KPK will support us monitoring the implementation of the project throughout Indonesia so that we can avoid violation and corruption,” Home Minister Gamawan Fauzi said.

KPK deputy chairman for prevention M. Jasin said according to the 2006 Law on Demography Administration, the Home Ministry had only five years after the law was enacted to realize the program.

“Considering the tight deadline and huge budget used for the program we need to supervise its process,” Jasin said.

He added as mandated in the 2002 KPK Law, the commission must monitor and evaluate government programs, especially those considered prone to corrupt practice.

During its supervision to the ministry’s demography administration directorate general, demography agencies and civil record offices in regions throughout the nation since January, the KPK found possible fund misuse that could hamper realization of the program, Jasin said.

He said that his office found that some goods had been procured in connection to the programs, but were not used.

The KPK recommended the Home Ministry audit the information technology and system used in the demographic system for the SIN card, while developing connections between the central data base to main data centers in provinces, regencies and cities.

“We hope the ministry also reports on goods procurement so far.”

In 2004, the Home Ministry announced to the public that Indonesia would give each citizen a SIN for use in various administrative system records and documents.

The SIN system was aimed at organizing citizens’ data better, making it more difficult for people to have multiple ID cards (KTP), and to pare down civil registry bureaucracy.

Then home minister Hari Sabarno estimated it would take more than five years to change the current demographic administration system, because most regencies were struggling with power supplies and telephone lines.

Five years have passed, but no significant changes to the civil registry have arisen and preparations for the SIN system in many regions remain unfinished.

The last general elections, many said, exemplified why Indonesia needed to reform its civil registry system. Many citizens had at least two ID cards, while many others could not get voting cards.

Just recently, Jakarta felt the weight of the problem when police revealed that at least one suspected terrorist involved in the JW Marriott bombing had checked into his room using a fake KTP.

The SIN system will provide each citizen with a unique number for documents, including identity cards, passports, driving licenses, insurance policies, land certificates, property ownership documents and tax cards.

Improvement of Micro-credits Channeling

Tempo Interactive, Tuesday, 29 December, 2009 | 15:37 WIB

TEMPO Interactive, Medan:The central bank, Bank Indonesia (BI), has predicted that credit channeling for small- and medium-sized enterprises (SMEs) in North Sumatra this year could reach above 50 percent following improvements in this area’s economic development.

Up until October, micro credit channeling reached 49 percent of bank total credits of Rp68.29 trillion.

“We are optimistic because micro business potential here is quite large,” said BI Medan branch Head Gatot Sugiono.

According to Gatot, up until last October, micro-credit channeling amounted to Rp3.41 trillion, an increase compared to September, which amounted to Rp33.07 trillion.

The credit development is deemed positive because it occurs in the midst of credit channeling general decreases all October.

To increase micro-credits channeling, BI will try to push the banking industry to increase their credit portion for SMEs.

Moreover, this sector has proved to be more resistant to the financial crisis that occurred since the end of last year. “The potential for micro businesses in North Sumatra is still quite good,” he said.

ANT | FAMEGA

Government Appointed 11 Partner Banks

Tempo Interactive, Tuesday, 29 December, 2009 | 15:38 WIB

TEMPO Interactive, Jakarta: Finance Department announced on Tuesday (29/12) the appointment of eight government banks that will support budget distribution in regions and three private banks to support government revenue collection for 2010 – 2012.

The eight banks consist of three national banks - Bank Mandiri, Bank Rakyat Indonesia, Bank Negara Indonesia - and five branches of the Regional Development Bank in North Sumatra, Bengkulu Province, West Kalimantan, South Sulawesi, and Maluku Province.

The three banks appointed to collect government tax and non tax revenues (except export import taxes) are CIMB Niaga, Bank Central Asia, and Citibank.

The finance department estimated around Rp210 billion in state revenue could be collected by the banks during 2010 – 2012 with potential costs of around Rp209 million.

RIEKA RAHADIANA

40,000 ‘illegal’ state accounts closed: BPK

The Jakarta Post, Jakarta | Tue, 12/29/2009 9:48 AM

The government has closed 39,477 unregistered state bank accounts since 2004, the latest Supreme Audit Agency (BPK) report shows.

According to its 2009 first semester audit report, the BPK has found that the government had managed to shut the unregistered accounts belonging to a number of ministries and other state institutions.

Total funds deposited in these accounts amounted to Rp 35.4 trillion (US$3.75 billion), $238 million, and ¤2.9 million ($4.17 million).

“This is a positive performance by the government as part of its efforts to upgrade the state financial system,” BPK’s head of public relation division, Dwita Pradana, said on Monday.

The audit agency has continually monitored unregistered bank accounts owned by government institutions in its annual audits since 2004.

Of all the unregistered accounts found by the BPK, only a small number are now left unclosed, waiting for the Finance Ministry to finish its examination of the details.

“Unregistered accounts may become the centers of graft scandals and therefore should be closed,” Dwita said.

Under the 2004 State Treasury Law, ministries and state institutions are permitted to hold accounts only on condition of approval by the Finance Minister on behalf of the state treasury. All other accounts are deemed illegal.

Aside from its decision to close thousands of unregistered accounts, the team also identified 260 “illegal” bank accounts holding up to Rp 314 billion that potentially involved corrupt practices and in September the BPK reported these accounts to the Corruption Eradication Commission for further investigation.

The accounts belonged to the Supreme Court, the Ministry of Justice and Human Rights, the Home Ministry, the Agriculture Ministry, the Manpower and Transmigration Ministry, and the upstream oil and gas regulator BPMigas.

In another part of its report, the BPK also showed that the government has largely succeeded in improving the budget managements of its ministries and other state bodies at central government level.

Of 83 ministries and state bodies audited by BPK in 2009, only 18 were recorded as receiving “disclaimer” notes, far fewer than the 33 in 2008 and 36 in 2007.

However, the audit agency stated that there were still a number of irregularities in government’s budget management.

BPK reportedly found Rp 38.49 trillion of possible losses as a result of irregular project administration, mismanagement, unfinished business contracts, fictitious transactions or lack of monitoring.

“Of that number, the government had managed to follow up and rectify only Rp 525.32 billion,” Dwita said. (bbs)

ASEAN+3’s $120b swap deal put in place

The Jakarta Post, Jakarta | Tue, 12/29/2009 8:30 AM

Finance Ministers and central bank governors from ASEAN+3 nations have officially signed an agreement to set up a US$120 billion currency swap fund under the Chiang Mai Initiative Multilateralization (CMIM).

Finance Ministry spokesman Harry Z. Soeratin said in a statement that the signing of the agreement was a follow-up to the preliminary deal by 10 Southeast Asian nations plus China, Japan and South Korea during the ASEAN+3 finance ministers’ meeting in Bali, in May.

The ministers then agreed to promote the CMIM to establish a regional financial arrangement to enhance the existing international facilities.

“The CMIM scheme will definitely strengthen economic capacity in the region in order to face a more challenging global economy in the future,” Harry said.

The scheme offers emergency balance support via bilateral swap arrangements (BSAs) for any member country hit by extreme devaluation and capital flight.

“This will address short-term liquidity difficulties in the region and supplement the existing international financial arrangements,” Harry said.

Under this agreement, any of the 13 countries has the right to swap its currency for US dollars up to a certain amount, starting effectively next year.

“The maximum amount of funds that can be swapped by a country is the fund it has contributed multiplied by a purchasing multiple number set for the particular nation,” Harry explained.

For example, Japan, which contributes the most to the CMIM with $38.4 billion or 32 percent of the total funds, gets a 0.5 purchasing multiple.

That means Japan can swap its yen up to only $19.2 billion.

Indonesia, with $4.77 billion of contribution to the CMIM (3.97 percent), gets a purchasing multiple of 2.5, meaning that Indonesia can swap rupiah up to $11.93 billion.

Japan, China and South Korea control 80 percent of the pooled funds while the remaining 20 percent are contributed by ASEAN countries.

Five ASEAN nations — Indonesia, Thailand, Malaysia, Singapore, and the Philippines — each contribute $4.77 billion or 3.97 percent. Vietnam pools $1 billion (0.83 percent), Cambodia $120 million (0.1 percent), Myanmar $60 million (0.05 percent), Brunei and the Lao PDR. $30 million (0.02 percent) each.

Apart from this regional swap agreement, Indonesia already signed arrangements with Japan for bilateral currency swap up to 1.5 trillion yen ($16.39 billion) in June.

Indonesia signed a similar arrangement with China in March amounting to $15 billion. (bbs)

Indonesian president says to cut unemployment to 5%, poverty to 8% in 2014

www.chinaview.cn 2009-12-28 17:54:35

President Susilo Bambang Yudhoyono at the State Palace in Jakarta on Monday. (Antara Photo)

JAKARTA, Dec. 28 (Xinhua) -- Indonesia aimed to reduce its unemployment rate to about 5 percent in 2014, from the current figure of 7.87 percent, on the back of good economic prospects, the country's President Susilo Bambang Yudhoyono said here Monday.

President Yudhoyono, who was re-elected on July 8 for his second term, vowed to decrease poverty rate from 14.5 percent now to over 8 percent at the end of his tenure in 2014.

"We want the unemployment at the end of 2014 to be no more than 5 or 6 percent,..and poverty rate at the range of between 8 to 10 percent," said Yudhoyono at the State Palace.

Indonesia has recovered from the fallout of the global financial routs, which has hit the country's industries and exports, causing massive layoffs.

With strong economic fundamentals, the country has registered high economic growth in the region during the crisis, while the others suffered from strong contraction.

The Southeast Asia's largest economy's exports have started to improve and is predicted to begin to grow at 5 percent next year as the global demands on emerging markets products are predicted to soar along with the global economic recovery.

The global investors appetite on the assets at the emerging market has also recovered, which may push capital inflow.

President Yudhoyono said that the government would attempt to boost exports, consumption, technology, and the government spending would be used accurately.

Besides, the government would keep maintaining stability and expecting the global economic would be still favorable.

"To achieve the targets is not easy, but, If we work hard and the national situation is stable and the world does not have any crisis, we will reach the target," he said.

Indonesia has unveiled massive infrastructure program to support the economic growth.

Commodity Prices Pose Big Risk in 2010: Sri Mulyani Indrawati

Bloomberg

Commentary by Sri Mulyani Indrawati

Dec. 28 (Bloomberg) -- Indonesia can look back at 2009 as a major outperformer, being one of the few countries in the world where gross domestic product expanded over the year.

The structure of the economy, which isn’t overly dependent on exports, clearly helped. The government’s efforts to protect the most vulnerable social groups through its cash handouts and support to businesses through tax measures -- all equivalent to 1.6 percent of GDP -- were key to the success. The timing of the presidential elections in July was fortuitous and the re- election of Susilo Bambang Yudhoyono has resulted in continued stability, allowing the country to weather the global storm.

There are a few things that recent experience has taught us.

First, the world economy is much more integrated today than it was 10 years ago. This implies a greater need for dialogue and coordination between policy authorities to have desired outcomes, as no country lives in isolation. The timing, speed and magnitude of policy support made 2009 mostly a success.

Second, the government needs to be able to undertake counter-cyclical policy measures to support the economy. This means that continued commitment to fiscal consolidation, especially in boom years, is imperative.

Third, the conservatism and prudence in the banking industry that Indonesia adopted after the 1997 Asian crisis allowed our financial system to come out relatively unscathed in the recent turmoil.

Better Footing

We remain committed to strengthening the system -- with the establishment of a financial supervisory agency as mandated by law -- and to following through on bureaucratic reform.

Indonesia enters 2010 with optimism because the global economy is on a better footing and most of our trading partners have come out of recession. It’s not a time to be complacent, but it’s an opportunity to take Indonesia to the next level.

We must also remain vigilant of developments, such as those that recently took place in Dubai. Recent experience has shown that a single event can have strong repercussions on activity and sentiment around the globe.

The big risk for 2010 is rising commodity prices, with food and oil being key, as these have the potential to feed into inflationary expectations at home.

Accelerating inflation eats into disposable incomes, with the poor and the unemployed being affected the most. The government is ready to help the vulnerable groups in society if such a situation were to unfold.

Oil Prices

Higher oil prices will also have an impact on the budget, primarily through the subsidy cost. However, we have some leeway, as there is an emergency fund within the budget that will allow the country to manage subsidies up to an average price of $85 per barrel for oil in 2010.

Over time, we are committed to the idea of gradually moving toward a market-based pricing of oil-related products so as to free up more space in the budget to boost investment spending.

Given the developments of the last two years, we believe that investors are going to be more discerning when deploying capital. This means that Indonesia will be facing stiff competition from others in the region to attract capital.

In this regard, we aim to improve the investment climate in the country by continuing our anti-corruption drive and making it easier to set up a business in Indonesia.

Indonesia has already taken steps to do this. It now takes only 60 days to start a business compared with 105 a few years ago, closing in on the East Asian average of 40 days. More needs to be done, especially on the infrastructure front, which is very important to the current government.

The country also has a goal to gain an investment-grade rating before 2014.

(Sri Mulyani Indrawati is Indonesia’s finance minister. The opinions expressed are her own.)

To contact the writer of this column: Sri Mulyani Indrawati at dkiweb@jakarta.go.id

Eleven Companies Removed From the Stock Market

Tempo Interactive, Monday, 28 December, 2009 | 21:48 WIB

TEMPO Interactive, Jakarta: Eleven public companies have been removed from the stock market this year mostly for failing to meet the market regulation, more than twice the number delisted last year by the bourse authority.

The Indonesia Stock Exchange said seven companies failed to increase the amount of outstanding shares within two years from November 30th 2007. the companies are PT Bukaka Teknik Utama Tbk (BUKK), PT Courts Indonesia Tbk (MACO), PT Jasa Angkasa Semesta Tbk (JASS), PT Sara Lee Body Care Indonesia Tbk (PROD), PT Sekar Bumi Tbk (SKBM), PT Singleterra Tbk (SING), dan PT Tunas Alfin Tbk (TALF).

PT Daya Sakti Unggul Corporindo Tbk a timber company was removed for bancruptcy ruled by the Commercial Court on September 2009.

The ninth delisted company is PT Jaka Inti Realtindo Tbk for failing to report its business recovery to the bourse authority. The tenth company, PT Apexindo Pratama Duta Tbk (APEX), removed for a violation in chain listing regulation with its parent company PT Mitra International Resources Tbk (MIRA).

The last one, PT Infoasia Teknologi Global, is aplantation fiorm to be delisted on Tuesday (29/12) after it ceased operation.

MUH SYAIFULLAH

Rp46 billion in Financial Aid for Small Entrepreneurs Disbursed

Tempo Interactive, Monday, 28 December, 2009 | 17:23 WIB

TEMPO Interactive, Jakarta:The Jakarta Government disbursed Rp46.7 billion in financial aid for micro-scale businesses. “The program is expected to be an economic foundation for Jakarta,” said Jakarta Governor Fauzi Bowo yesterday.

Fauzi explained that the funds came from the local government, not from donations. The people are asked to follow the regulation agreed to.”The funds will not bring any added value if not properly and honestly managed, “he said.

For now, Fauzi said, only 88 cooperatives could channel the funds. The number of cooperatives will be added step by step until it reaches 267 cooperatives starting next year. “So that every district has a source to manage micro funds,” he said.

Fauzi explained that district level channeling was chosen because cooperative members understand more the condition of their residents. “We will also provide training to cooperative administrators. They will be accompanied by experts,” he said.

Head of Cooperatives, Small- and Medium-Sized Businesses Ade Soeharsono added that the persons eligible for the funds are those in non-formal sectors who don’t have business permits.” Like meat ball sellers, small store owners, barbers and other micro business owners,” he said.

They can ask for loans after joining cooperatives in their district. Every application will then be selected by cooperatives administrators based on feasibility analysis.“The loan limit is Rp5 million,” said Ade.

The fund must be returned to the government in form of dividends in two year time.

RIKY FERDIANTO

National Police to Deport Romanian ‘Bernie Madoff’

The Jakarta Globe,

A Romanian convicted in absentia for defrauding more than 100,000 people in his country in a massive Ponzi scheme has been detained in Jakarta and will be deported home, the National Police said on Sunday.

Brig. Gen. Radja Erisman, head of the economic crimes division at National Police headquarters, confirmed that police had contacted the Romanian Embassy and “notified them that we are working toward sending [Nicolae] Popa back to Romania.”

He said they were awaiting further information from the Ministry of Justice and Human Rights before proceeding, adding that Popa was currently being detained at National Police headquarters in South Jakarta.

“Popa has not committed a crime in Indonesia. He was visiting Jakarta as a tourist. We arrested him because of the warrant issued by Interpol at the request of the Romanian Police,” Radja told the Jakarta Globe.

Popa was arrested on Dec. 3, a fact not reported in the Indonesian media. His arrest, however, has been widely reported in Romania since early this month.

Indonesia does not have an extradition treaty with Romania. The 1979 Extradition Law states that the requesting country must make an official extradition request to the Justice Ministry through diplomatic channels, and if no extradition treaty exists between Indonesia and the requesting country, the president can decide on the matter.

Radja said the National Police were waiting for the Ministry of Justice to confer with President Susilo Bambang Yudhoyono.

Popa, according to the Romanian Times newspaper, was sentenced to 15 years in prison by a Bucharest court on charges of fraud in 2006.

A former manager at Romanian financial group Gelsor, Popa was sentenced along with Ioana Maria Vlas over the collapse of the fraudulent National Investment Fund (FNI) in 2000.

More than 100,000 people lost money they had invested in FNI, and the Romanian state, which had guaranteed their investments, was forced to pay out compensation of more than 100 million euros ($144 million).

In a separate extradition case involving a foreigner in Indonesia, New Zealand citizen Robert James McNeice, 43, who was arrested in Aceh in August 2008, has yet to be extradited to Australia to face fraud charges, despite an official request made by the Australian Police, his Indonesian spokesman, Multatuli, told the Globe on Sunday.

An Indonesian court ruled in July that McNeice was eligible for extradition but this is subject to Yudhoyono’s approval. Julian Aldrin Pasha, a presidential spokesman, said Yudhoyono had not yet been briefed on the Popa and McNeice cases.

VP: Only 15 pct of national, regional budgets for investment

Antara News, Saturday, December 26, 2009 22:29 WIB

Banda Aceh (ANTARA News) - Vice President Boediono said the government would only be able to set aside 15 percent of the regional and national budgets for supporting investment to achieve seven percent growth.

"We need seven percent growth a year but the government could maximally provide 15 to 18 percent of the regional and national budgets for investment," he said at a meeting with Aceh regional government officials here on Saturday.

He said around Rp2,000 trillion of investment was needed in the 2009 to 2014 period.

"As the government will only be able to provide a small part of it, the rest should be acquired from outside the regional and national budgets from home and abroad," he said.

He said to achieve high growth and investment local and central governments must keep improving technical and non-technical infrastructure.

He sid the government had to continue improving roads, bridges and air transportation facilities.

He also said if the price of cement in Jakarta is only Rp70,000 per bag in Papua it could reach Rp1.4 million.

"The price is illogical. How could the people in Papua conduct development if the price of cement is more than Rp1 million per bag," he said.

Meanwhile he said there were still many by-laws which ran against the higher laws.

"That is why home affairs minister Gamawan Fauzi is now still busy scrutinizing wrong by-laws although many of them have been revoked," he said.

Regarding development in the region after tsunami disaster in 2004, Boediono called on the people and government officials in the region to safeguard various development programs currently underway in the region.

"We must safeguard the development projects in Aceh so that the people in Aceh will be more prosperous and welfare," he said.

Vice President Boediono came to Aceh for the commemoration of the 5th anniversary of the 2004 tsunami.

AGO claims to have rescued Rp 4.8 trillion worth of state assets

Dicky Christanto, The Jakarta Post, Jakarta | Wed, 12/23/2009 9:10 PM

Deputy Attorney General for special crimes Marwan Effendy said the Attorney General’s Office managed to recover Rp 4.8 trillion (US$ 505 million) of state assets, a significant increase on last year’s Rp 2.5 trillion.

“The assets are in the form of money and valuable goods,” Marwan told a press conference held at the AGO on Wednesday.

However, Marwan did not elaborate on whether the state assets had been returned to the state treasury’s account.

Marwan said prosecutors had managed to try more cases in the courts this year.

This year, he added, the prosecutors had investigated 1,533 graft cases,1,292 of them were brought to the court.

The statistics have shown an 18,5 percent of increase since the prosecutors had only been able to examine 1,348 graft cases, of which 1.114 were brought to the courts.

Febri Diansyah from Indonesia Corruption Watch (ICW) said the AGO should not boast publicly because what he had witnessed was actually the other way around.

“There has been a significant decrease of public trust toward the prosecutors integrity and we fail to believe that the AGO has imposed stricter rules to those prosecutors who have violated the regulations so far,” Febri told The Jakarta Post on Wednesday.

People are disenfranchised with the legal authority that has failed to punish its own prosecutors who have been involved in graft, including Wisnu Nugroho, Abdul Hakim Ritonga, Muhammad Salim and Kemas Yahya Rahman.

Attorney General Hendarman Supandji said he acknowledged that many people were still dissatisfied with the prosecutors’ performances.

Hendarman said that he would accelerate an internal reform program within his institution that was by cutting up to 3,000 positions in all divisions.

RI secures climate supports through bilateral deals in Copenhagen

Erwida Maulia, The Jakarta Post, Jakarta | Wed, 12/23/2009 10:16 PM

The outcome of the Copenhagen climate change summit may be only “morally-binding”, but the Indonesian delegation hasn't come home empty-handed.

Rachmat Witoelar, alternate head of the Indonesian delegation to the summit, told a press conference here Wednesday that Indonesia had successfully secured support from a number of countries and international organizations to help it mitigate climate change.

Rachmat said the pledges of support were secured through bilateral meetings conducted on the sidelines of the summit in Copenhagen.

“[The pledges of support] are very significant; the funds are huge,” the former environment minister said, though stopped short at specifying the figure.

Norway, the US and Britain, for example, have stated their willingness to provide financial support for efforts to reduce emissions from deforestation.

Germany, meanwhile, has agreed to help Indonesia preserve its forests with technical assistance, and New Zealand will develop global partnership in climate change research in the field of agriculture.

Other countries that have inked deals with Indonesia in terms of climate change mitigation cooperation are Australia, Switzerland, the Netherlands and Italy.

Two international organizations following suit are the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO).

The UNEP has agreed to develop its partnership with Indonesia on oceanic issues (blue carbon) and Technology Need Assessments follow-up, while the WMO for the preparations of an intergovernmental meeting in mid January to form the so-called High Level Task Force Team, which will formulate work concept for the Global Framework for Climate Services.

“Prof. Emil Salim has been proposed to be a member of the team,” Rachmat said, referring to another former environment minister.

Rachmat further explained, although the only outcome of the Copenhagen climate summit, which is a document called the “Copenhagen Accord”, was only “morally-binding”, not legally-binding, Indonesia is quite satisfied with the substance.

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State Budget Heading for Recovery

Kompas, Wednesday, 23 December 2009 | 3:37 PM

KOMPAS.com - The year of 2009 is about to end. It's been a tough year for the state finance managers, marked by numerous problems. The problems resulted in new funding alternatives adjusted to the requirements of the State Budget (APBN).

AP/Ahn Young-joon

To anticipate the worsening global economic crisis, the 2009 APBN was adjusted at the beginning of the year. One main cause was the additional Rp. 12.5 trillion fiscal stimulus that brought the total to Rp. 71.3 trillion to suppress the effect of the economic crisis.

The total fiscal stimulus is 1.4 percent of the gross domestic product (PDB). It was considered sufficient to handle the pressure from the global economic crisis as it was supposed to be able to block the rapid unemployment surge in 2009.

Due to the economic crisis, the unemployment rate was estimated to be 8.87 percent of the 107 million work force. However, with the fiscal stimulus, the unemployment rate was suppressed to 8.34 percent thanks to 150,000 new job opportunities.

Lately, the fiscal stimulus hasn't been entirely utilized. For instance, the stimulus to exempt income tax from those whose basic income is Rp. 5 million per month or less. The insentive was not fullly used because it relied on the honesty of employers, who in turn avoid tax audits.

Though the budget requirement is increasing, the government's income isn't. Due to the global crisis, the earning, expenditure, and funding of the APBN must be changed.

From the aspect of income, the tax earning is down by Rp. 58.95 trillion. And the state earning from non-tax sources is also cut by Rp. 73.07 trillion. Both caused the 2009 APBN to drop to Rp. 853.68 trillion from the previous target of Rp. 985.7 trillion.

The state budget will decline due to the subsidy that decreased by Rp. 43.54 trillion, and the regional funding would lose Rp. 16.9 trillion. The main cause is the decline in the price of oil fuel and the fixed pricing for Indonesian crude oil that dropped from USD 80 per barrel to just USD 45 per barrel.

For that reason, the state earning has decreased by Rp. 132 trillion and the state budget cut down by Rp. 53.2 trillion. All these also caused the bank deficit to go up to Rp. 51 trillion, which was 2.5 percent of the PDB or approximately Rp. 132 trillion.

Not easy

So, will it be easy to make up for the 2009 APBN shortage? No. At the start of 2009, the APBN has been stalked with low liquidity that caused a scarcity of low cost funds in the world finance. For this reason the Department of Finance has approached several creditor countries and international finance institutions to strike a deal for ready loans that will only be used if the APBN funding options become increasingly difficult.

The Department of Finance has gathered a USD 5.5 billion ready loan from the World Bank, the Asian Development Bank, and the Japanese and Australian governments. However, so far none of these sources have been tapped because the liquidity of the international money market is gradually recovering.

The government had also had to stop the auction of the state's marketable securities earlier, which was on November 17, 2009. This was done because the return from the obligation market actors were increasing. If forced to continue the government would've suffered loss from an over-high obligation cost. Fortunately, before the market took full advantage of this, the issuing target of securities had been achieved, which was at Rp. 144.549 trillion.

Though the global financial crisis is considered to have abated around the end of 2009, challenges still await in 2010. The state earning will be hard pressed.

One challenge is from the free trade agreement (FTA), both between ASEAN countries and between ASEAN and China. The FTA would cut down the income from customs by Rp. 15 trillion. Aside from that, taxation earning will also decrease since there will be a cut on income tax, from 28 percent to 25 percent.

For those reasons, anticipation for a potential crisis in 2010 must be done. The government anticipates that by keeping budgeting fiscal stimulus. The amount of fiscal stimulus is estimated to be Rp. 59 trillion, which is lower than the one for 2009, which was Rp. 73 trillion. The government considers that the national economy has improved so that the state budget, including for fiscal stimulus, can be lowered.

"The increase for the 2010 state budget is lower than 2009's because the fiscal stimulus is lower. In return, we hope to see growth in the private investment sector to make up for the lowered stimulus, so that the economy can still grow 5.5 percent as targeted," said Department of Finance's fiscal agency chief, Anggito Abimanyu.

The fiscal stimulus target in the 2010 APBN draft is one percent of the PDB. The PDB in the 2010 APBN draft is Rp. 5,981.37 trillion so that the fiscal stimulus for next year is around Rp. 59.81 trillion. This fiscal stimulus value is lower compared to 2009's, which was 1.4 percent of the PDB.

The government expansion through the state expenditure is also lower because the raised salaries for civil servants, the Indonesian armed forces, and the National Police, aren't high, or only 5 percent or equals to next year inflation. Even so, the government will persist with the stimulus in the form of tax borne by the government, as much as Rp. 16.87 trillion.

Next year there will also be a cut on income tax, from 28 percent to 25 percent, plus the insentive of a company entering the stock market, which is 5 percent. This is the most real stimulus for next year.

Warning

Economist Fadhil Hasan reminds that the contribution of the state budget on the economy will be at the minimum if the government cannot solve the slow budget disbursement. Currently, fund disbursement could pile up till the third or fourth quarters, while the economic crisis could hit on the first quarter.

The state budget is continously raised, especially during a crisis, with the additional fiscal stimulus. However, the government still finds difficulties to disburse the fiscal stimulus fund.

"With that condition, the role of the state budget on the effort to stabilize the economic growth can be minimized. In 2009 the dominating expenditure that saved the economic growth was instead from election spending and the tax saving schemes that motivated the people's consumption." (Orin Basuki/C17-09)

Editor: jimbon / Source : Kompas Cetak

ASEAN-China free trade deal: Let’s face the music

The Jakarta Post, Andry Asmoro, Analyst | Wed, 12/23/2009 9:34 AM

In the last few months, domestic business players, industry associations, policy makers and analysts are “suddenly” discussing the potential threat from the zero percent tariff implementation on China’s products under the ASEAN-China Free Trade Agreement (ACFTA) scheme, effective starting Jan. 1, 2010.

Most people would concur the implementation of ACFTA would adversely impact Indonesia’s manufacturing and trade performance.

That 14 industries are asking for a delayed implementation of ACFTA proves this. These include textiles, steel, tires, furniture, cocoa processing, medical equipment, cosmetics, aluminium, electronics, downstream petrochemicals, flat glass, shoes, machine-tools and automotive goods.

Most Indonesians would agree the country needs more time to compete with China’s products and that delaying implementation of free trade would be a good thing.

But, we believe that no matter when the free trade deal is implemented, the result would be the same: Indonesia’s industries would not be ready. It is high time Indonesian companies face the music for being poorly prepared, instead of keeping up the past practice of hiding behind government protection.

China-ASEAN relations started up in 1990 when Qia Qichen, China’s Foreign Minister, attended the opening session of the 24th ASEAN Ministerial Meeting in Kuala Lumpur and expressed China’s interest in cooperating with ASEAN.

In November 2000, China proposed a free trade area with the 10 ASEAN states. In 2002, ASEAN members and China announced the Framework Agreement for ASEAN-China economic cooperation.

The schedule for the tariff cuts for ASEAN 6 countries (i.e. Indonesia, Malaysia, Singapore, Thailand, the Philippines and Brunei) began in 2003 with 60 percent out of 8,626 tariff posts falling to 0 percent. In 2007, 80 percent of total tariff posts fell to 0 percent while in 2010, 100 percent of the total 8,626 tariff posts must be cut to 0 percent.

Indonesia had 7-10 years to prepare its industries to implement ACFTA and is not the only country with a trade deficit with China. So Thailand has one too. Of the ASEAN 4 countries (Indonesia, Malaysia, Singapore, and Thailand), only Singapore and Malaysia have managed trade surpluses with China this year.

The three biggest commodity exports to China have been Mineral Fuels, Oils & Products, Animal or Vegetable Fats and Oils and Machinery or Electrical Equipment (ME).

Mineral fuels and vegetable oils contributed 51.2 percent of China’s total imports from Indonesia. The country is not competitive when it comes to textile products and footwear which only contributed 1.6 percent of its exports to China.

On the flip side, China’s exports to Indonesia have been dominated by Machinery, Electrical Equipment, Base Metals and Articles and Textiles and Textile Articles. These contributed more than 60 percent of China’s exports to Indonesia.

China’s exports to Indonesia are mostly manufacturing products while China’s imports from Indonesia are minerals or natural resources.

From this, we conclude that Indonesia’s domestic industry would suffer from the implementation of ACFTA. But would a delay help?

We believe not. Even with a delay, various Indonesian industries would face the same problems, particularly given that some products from China are state-subsidized.

Based on a World Economic Forum (WEF) report, Indonesia’s Global Competitiveness Index was ranked 55 in 2008-2009, the lowest among its ASEAN peers (i.e. Singapore, Malaysia and Thailand).

To counter this, Indonesia needs to make structural changes impacting upon the country’s manufacturing sectors. These include dealing with mark-ups and inefficiencies, which result in lack of competitiveness for Indonesian products.

From the government side, we also need to see support for the manufacturing sector in the form of infrastructure development such as roads and electricity in order to promote efficiency.

According to the Ministry of Public Works, Indonesia’s total funding requirement for infrastructure development in 2010-14 would amount to Rp 400 trillion, of which 50 percent will be allocated for road development.

Nevertheless, project implementation remains challenging due to lack of government supporting regulations and weak horizontal inter-departmental and vertical coordination.

With such deep-rooted problems facing Indonesian industries, there will be no short-term panacea (read: a delay would not help).

The sooner we face the music and compete against other ASEAN countries and China, the faster competitiveness for Indonesian companies will emerge. It’s time to play catch-up with Malaysia and Singapore. Only through short-term hardships will we pave the way for Indonesia’s improved trade performance in the longer run.

The writer is an economist at PT Bahana Securities

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