Danamon Chief Reflects On Sector’s ‘Dramatic’ Evolution

Jakarta Globe, Janeman Latul, January 31, 2010

Bank Danamon’s Sebastian Paredes will step down in April.

Days after announcing that he would step down in April, Sebastian Paredes, president director of PT Bank Danamon, the fifth-largest commercial bank in Indonesia, talked to the Jakarta Globe about the state of the bank, the sector and the domestic economy after the global financial crisis.

Was 2009 not a good year for Bank Danamon?

You have to remember that we faced the most severe global financial crisis since the Great Depression in the 1930s. The important thing is what the bank has done to help its underlying development. It is not only about the profitability of one year versus the previous year because we faced incredible challenges. You need to focus on the past five years to see what the bank has accomplished. And that’s why I focused more on the value of the franchise.

How do you measure that value?

We have doubled the value of our disbursed loans. In terms of employees, we have gone from 26,000 to 41,000. We are now the second-largest employer in the financial sector in Indonesia. We have raised our customer base from 2 million to 5.2 million. In terms of branches, we had 900 five years ago and now we have nearly 2,000. In terms of revenue, we have increased it by 2.5 times since 2005. This year will be an extraordinary year for Bank Danamon because the crisis is over but the core franchise has continued to grow. This year we are targeting 20 percent loan growth.

Why are you resigning now?

Some people say you should leave when things are going well and not when things are bad. In the past two years we were able to navigate tremendous challenges. Now that the crisis is over, I will leave the franchise in a very good position. Our capital ratio is one of the highest in the country, while our liquidity is very robust. Brand awareness has increased. I’m very confident about Danamon’s future. The board understands that this is a personal decision. They understand the reason I want to move on.

What are you going to do next?

For me, it’s time to try new challenges. I have grown to love this country. I have been a very lucky person. I have met so many nice people. I think Indonesia is a country with many opportunities and my preference is to stay here. I’m evaluating some options but haven’t decided yet.

What do you think about the upgrading of Indonesia’s sovereign debt?

We are now a notch below investment grade and this is very good news for Indonesia. It shows that the macroeconomic stability and the macroeconomic plan that the country has had for several years are beginning to pay off. It’s a recognition of the way the economy has been managed over the past year. This is very important as it relates to the allocation of investment around the world. The minute the country reaches investment grade then the allocation for investment here will increase.

When do you think Indonesia could reach investment grade?

It’s difficult to say when because it depends on many factors. Different rating agencies also have many factors to calculate. But I think we are moving in the right direction and hopefully Indonesia will reach investment grade in the next five years.

Do you see political factors, such as the Bank Century bailout saga, hurting economic stability?

In emerging markets, when we talk about economic stability we talk about political, economic and social stability. It’s important for economic stability to rest on political stability. Any events that derail that are not positive. So we can only hope that all the events are addressed accordingly and maturely.

Let’s discuss the Indonesian banking sector over the past five years?

There has been a dramatic evolution of the banking sector in Indonesia in the past five years. I say it was dramatic because when you look at how many banks have been acquired or merged and the amount of investment, as well as the enhancement of strategy, the transformation was incredible. You have seen players shifting strategy, you have seen very important investment from foreign players, you have seen state banks growing very rapidly and competing fairly with the private sector, which is very refreshing.

What should the government do to encourage credit expansion?

I think a lot has to with stability and economic growth. Stability in the sense that if you have low interest rates for a longer period of time, you will see people becoming comfortable with borrowing and lending and therefore would see a much faster acceleration of credit expansion. Also, when you have the economic growth and you have income per capita growth, you see the middle class developing and benefiting the economy.

Taufik Darusman: The Taxman Cometh

Jakarta Globe, Taufik Darusman, January 31, 2010

If taxes, like death, are an unavoidable uncertainty, so are tax evaders, which in Indonesia covers a wide spectrum that includes listed companies, legislators and large private and state corporations.

No sooner had it named — and shamed — the country’s 100 top tax-dodging companies, the Ministry of Finance then revealed that 113 lawmakers from the House of Representatives and 23 members of the Regional Representatives Council don’t even have tax registration numbers.

To be sure, whether or not legislators have a tax ID number (NPWP), their taxes are automatically deducted from their oversized salaries every month. But the mere fact that about 20 percent of House members have no NPWP says volumes about their personal and professional ethics.

If lawmakers were never role models for the public in the first place, despite their frequent claims to the contrary, they are even less so after the tax office’s revelations last week.

The legislators would have earned much-needed public sympathy by offering apologies and pledges to rectify the situation. Nothing of that sort, though, as Arif Wibowo, a legislator from the opposition Indonesian Democratic Party of Struggle (PDI-P), belittled the issue by blaming the ministry “for not being more proactive and informing the lawmakers directly of their legal obligations.”

Arif, who claims he has an NPWP, added that “many Indonesians are reluctant to pay tax due to inadequate government services.”

Clearly, Arif must think that taxes collected by the government are used solely to please his whims and not to build the bridges and roads that his chauffeured vehicle traverses to bring him to the House complex.

Every Indonesian who earns more than Rp 15.8 million ($1,700) per year is required to submit a tax return and pay income tax.

Legislators, for the record, can earn as much as four times that figure (about Rp 60 million) if one factors in the allowances they earn from taking part in House sessions, committees, regional inspection tours and other somewhat dubious activities inside and outside the House.

Employees in private companies are required to have NPWPs and pay their tax obligations. A completely different scheme applies to companies, private as well as state-owned, which is why many of them may tend to be lax in their fiscal responsibilities.

“As of December 2009, the 100 top tax dodgers owe Rp 17.5 trillion [$1.9 billion] in tax arrears,” Tjiptardjo, the Finance Ministry’s senior official in charge of tax matters, told a hearing last week with House Commission XI, which oversees finance.

Surprisingly enough, foreign companies that are known for their exemplary corporate governance principles, such as Siemens Indonesia, ING International, Mobil Exploration Indonesia and Deutsche Bank, also failed the tax office’s test.

Not so surprisingly, however, were the strong internal reactions, with Muhammad Said Didu, secretary of the State Enterprises Ministry, taking the lead.

Not only did Didu blame the tax office for practicing wrong accounting principles, he also claimed that the Finance Ministry had agreed not to tax unprofitable deadbeats such as PT Merpati Nusantara Airlines, plantation company Perkebunan Nusantara XIV, railway company PT Kereta Api and shipping company Djakarta Lloyd Shipping.

“Televisi Republik Indonesia is not even a state-owned company,” Sidu said in a statement that in a way raises a legal anomaly: If TVRI is neither a state nor a private entity, what is it then?

BNI president director Gatot Suwondo, the brother-in-law of President Susilo Bambang Yudhoyono, chimed in by speculating that the bank’s inclusion on the list might be due to confusion over taxation on a Shariah unit.

If the assertions by Didu and Suwondo are correct, the tax arrears bombshell dropped by the tax office is not only about recalcitrant taxpayers, but also about different interpretations of accounting principles on a national scale. So what will be the tax office’s future course of action?

“Warning letters will be issued, after which we will force them to pay or confiscate their assets, and ultimately freeze their bank accounts,” Tjiptardjo said.

“They must pay,” he added.

Whether that becomes reality in a country where deals and compromises are politically acceptable norms is a very doubtful proposition.

Taufik Darusman is a veteran Jakarta-based journalist.

The tax directorate threatened last year to expose candidates who did not have taxpayer numbers. (JG Photo/Safir Makki)

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President to visit military soldiers

The Jakarta Post, Jakarta | Sat, 01/30/2010 11:56 PM

President Susilo Bambang Yudhoyono is scheduled to visit Army’s Strategic Reserve Command (Kostrad) soldiers and their families in the unit’s first division headquarters in Cilodong, near Bogor in West Java on Sunday.

It will be the President’s second encounter with the military top brass and soldiers within less than two weeks amid the heated political tension resulting from the House of Representatives’ inquiry into the Bank Century debacle. Last week, Yudhoyono, who is retired military general, opened the Indonesian Military leadership meeting at its headquarters in Cilangkap, East Jakarta.

During his visit to Kostrad home base in Cilodong, the President will join a morning exercise, sow fish seedlings and plant trees at the military housing complex, kompas.com reported.

The President will be accompanied only by First Lady Ani Yudhoyono, State Secretary Sudi Silalahi, his private secretary Edywan Prabowo and presidential spokesman Julian Aldrin Pasha.

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Cartoon

The Jakarta Post | Sat, 01/30/2010 9:53 PM | Opinion

JP/Irma Rahmi Damayanti

From the Past to the Future

The Jakarta Post, WEEKENDER | Fri, 01/22/2010 4:02 PM |Profile

A professor of geology and physiology at the University of California, Los Angeles (UCLA), Jared Diamond is best known for his Pulitzer Prize-winning book Guns, Germs and Steel, a scientific analysis of the history of civilization. His other, perhaps more important message is to never forget the lessons of history. Hana Miller interviews him.

“I have often asked myself,” Jared Diamond writes in his book Collapse: How Societies Choose to Fail or Succeed, “What did the Easter Islander who cut down the last palm tree say while he was doing it?”

At a time when the future of the planet and the life it supports has come to the forefront of popular media, Diamond’s message about learning from the mistakes and the choices of past civilizations in his recent Collapse becomes especially pertinent. Referring to the analytical model he uses to examine various different societies and how they adapted to – or ignored – the actualities of their circumstances, Diamond shares with us his thoughts on the factors that put Indonesia’s future most at risk, raising critical points about the direction in which we are knowingly leading ourselves.

Globalization

In my book Collapse, I discuss the successes and failures of past societies at solving their environmental problems – such as the successes of the Japanese, New Guinea highlanders and Tikopia islanders, and the failures of the Polynesians on Easter Island in the Southeast Pacific, the Mayans of Mexico, Guatemala and Honduras, and the Anasazi Indians of the Southwest United States.

In the past, when societies on different continents around the world were largely isolated from each other, the success or failure of one society didn’t affect distant societies. For example, it had no effect whatsoever on Indonesia when the Easter Island society collapsed, or when the Mayan cities collapsed. It also had no effect on Indonesia when Japan in the 1700s solved its forestry problems sustainably.

Today, however, in our globalized world, anything that any country does has the potential to affect any other country. For example, with global warming, greenhouse gases emitted in the United States or China or Russia contribute to global warming that affects Indonesian reefs. Globalization also means that Japan, a populous rich country that’s very good at protecting its own forests, succeeds in doing so by destroying the forests of other countries, such as Indonesia.

International business and the environment

Among the most important relationships for Indonesia are those involving Southeast Asian and worldwide businesses that import raw materials from Indonesia, especially tree products (timber and paper materials), fish and other sea products, oil and minerals.

My impression is that some of these international businesses operate in Indonesia according to standards that are not up to the highest international ones. For instance, much is known about how to manage forests sustainably to extract wood and wood products at a rate no higher than the rate at which new trees grow. Thus the forest can be exploited for the indefinite future. Japan and Germany are examples of densely inhabited countries that have been managing their forests sustainably for around 400 years. Even after centuries of exploitation, visitors to Japan and Germany are stunned to see how large a fraction of the area of those countries is still covered by forests: about 76 percent in the case of Japan!

As a result, there is no ongoing deforestation in Japan and Germany: new forests are planted or grown at a rate at least equal to the rate at which mature forests are cut down, and the extent of forests in Japan is actually increasing. In Indonesia, however, these international standards for sustainable forestry are in many or most cases not followed by international wood and pulp and paper companies. That’s a tragedy and a big economic loss for Indonesia: as things are going now, Indonesia will not continue to enjoy forest income for the indefinite future.

An added tragedy for Indonesia is that much or most forest products are exported in the raw form of unfinished logs. But most of the value of forest products is added after the trees are cut, when the logs are worked into finished timber and paper. This added value is much greater than the value of the unfinished logs. In effect, most of the profits from Indonesia’s timber are not received by Indonesia, but by the countries to which it exports its timber.

Similar problems arise with fisheries. There are well-established international standards for managing fisheries sustainably, so that fish are caught at rates no higher than the rates at which they can spawn and grow to maturity. Sustainably managed fisheries provide an income for the indefinite future. Examples of these include the Australian rock lobster fishery and the American wild salmon fishery. But most fisheries in Indonesia are not managed sustainably. That, again, is a tragedy for Indonesia, which loses a source of income that could continue for the indefinite future – if only it were managed properly.

It is entirely within the power of the Indonesian government to obtain a good economic deal with regard to foreign exploitation of its raw products. Other countries already insist on getting a good deal for their raw products. All that the Indonesian government would have to do is license only foreign companies that meet accepted international standards for managing fisheries and forests, and insist that most of the added value of Indonesian forest products be added in Indonesia rather than in Japan or China or Taiwan or Malaysia. Sadly for Indonesia, this is not happening at present.

The Five-Point Framework

In assessing whether a country is succeeding or failing at solving its major problems, I go through a checklist of five sets of factors: human impacts on environmental resources; climate change; effects of friendly trade partners; effects of hostile neighbors, and a country’s social, political and economic conditions that either help or hurt the country in recognizing and solving its problems.

Of these five factors, it seems four are critical for Indonesia. The one that is not critical – at least at present – is hostile neighbors. Although Indonesia has had problems with other countries in the past, that’s not the case today.

But the other factors all apply to Indonesia. With regard to the first factor, I mentioned above the overexploitation and decline of Indonesia’s rich forests and fisheries. Climate change affects Indonesia, especially through the harmful effects of global warming on the country’s rich reefs and through the increased frequency of extreme climate events such as cyclones, droughts and floods.

Friendly trade partners are another problem: Indonesia has friendly relations with Japan, China, Taiwan and Malaysia, but those countries are now partly the cause of the problems in Indonesia’s fisheries and forests.

Finally, as regards the fifth factor, political considerations in Indonesia are important for understanding why the economy and the people enjoy only a small fraction of the benefits they would otherwise receive from the country’s fisheries and forests.

Societal Response

My experience is of conflicts of interest, of two types. One set of conflicts involves those I mentioned above, between international interests – which make money by exploiting Indonesian resources unsustainably and add most of the value outside the country – and Indonesia’s own interest.

The other set of conflicts is between short-term and long-term interests within Indonesia itself: many Indonesians, just like many other people around the world, pursue short-term interests to the detriment of long-term ones. An extreme example is the use of dynamite fishing in coral reefs. This yields more fish for sale in the short run, but destroys the reef and hence reduces potential fishery income in the long run.

Factors for hope

At least four sets of factors make me hopeful. One was the serious discussion of climate change that took place in Copenhagen and is expected to continue elsewhere. The second is the role of big businesses, not all of which are destructive: some international corporations have been major forces for hope for the world’s future, by managing resources sustainably.

A third factor for hope is the recent change in attitudes about environmental issues in my country, the United States, which under the Bush administration pursued shamefully ignorant and destructive environmental policies. It’s also a promising sign that the Chinese government is taking some, but not all, environmental problems seriously.

Finally, a factor for hope is exemplified by The Jakarta Post – by which I mean not just the Post itself, but world media in general. Thanks to the Post and other media, including newspapers, TV, radio and the Internet, people in one part of the world can quickly learn about what is happening in other parts.

I shall never forget being at a small, remote airport in the Indonesian province of Maluku, where passengers could watch TV while waiting for their plane. And playing on the screen while I was there was a Michael Jackson video! While the late Michael Jackson is enjoyable, there are other things one can see on TV may be more important for understanding what is going on in the rest of the world.

As a result of the Post and other media, Indonesians now have the means to understand what’s going on in other countries. Some of those things are good and admirable, and some are terrible and destructive. Through the Post and other media, you have the opportunity to watch and learn from and imitate the policies of other countries that you believe promote long-term economic success, and you also have the opportunity to see destructive things that other countries are doing and you can avoid repeating those same mistakes in Indonesia.

Pertamina Believes Transparency Will Attract Investors, Allay Public Concerns

Jakarta Globe, Yessar Rosendar & Janeman Latul, January 29, 2010

In a bid to boost transparency and attract new investors, state oil and gas company PT Pertamina is set to begin following the Indonesia Stock Exchange’s disclosure guidelines even though it is not a listed company.

The company, long criticized for inefficiency and inept management, hopes to implement the new disclosure regime in the first half of this year, according to the State-Owned Enterprises Ministry on Friday.

Under the new regime, Pertamina, which was named as one of the nation’s top tax-dodgers by the Finance Ministry, will issue quarterly financial results and an annual report. The government will continue to maintain full ownership of the company.

“We expect [the plan] to be finished by the first half of this year,” Mustafa Abubakar, the state-owned enterprises minister, told reporters. “I expect the government regulation to be finished in February and the 2009 financial audit for Pertamina will be finished in April.”

Mustafa said the decision to make Pertamina a “non-listed public company” would help fight off erroneous allegations about corruption at the country’s biggest state-owned enterprise.

“This action will not require any approval from the House of Representatives, unlike other plans to list SOEs on the stock exchange,” added Mustafa.

Gita Wirjawan, the chairman of the Investment Coordinating Board (BKPM) and a former Pertamina commissioner, said that the move will help Pertamina to attract new investors.

“By disclosing its financial reports to the bourse, Pertamina is opening a new frontier for capital investment,” said Gita.

Pertamina said previously that it plans to issue $1 billion in dollar-denominated debt and Rp 1 trillion ($106 million) in rupiah bonds in April to fund its capital spending this year.

“The people of Indonesia will now be able to find out about the company’s financial performance and the transactions and contracts it enters into with third parties, as Pertamina will be obliged to submit its accounts to the bourse for scrutiny,” said Muhammad Said Didu, secretary at the SOE ministry.

Didu declined to say whether the move was a first step on the road to an eventual partial privatization of the company.

Established in 1968 through the merger of a number of existing state oil firms, themselves the successors of Dutch colonial-era companies, Pertamina is the subject of frequent criticism for its perceived inefficiency and inability to develop into a global player.

It is often compared unfavorably to neighboring Malaysia’s state oil firm, Petroliam Nasional (Petronas), which has become a major international force despite limited hydrocarbon resources in its home country.

While Pertamina’s revenue in 2008 totaled $55.42 billion, compared with $77 billion for Petronas, its net profit in the same year came in at only $3.03 billion, compared with Petronas’s $15 billion.

The temptation to preserve the status quo has been strong as Pertamina represents the biggest cash cow for the government in terms of dividends and critics claim that it has bankrolled the country’s ruling elite for years.

President: Revitalized must be further developed

Antara News, Saturday, January 30, 2010 05:32 WIB

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono said after Indonesia`s agricultural, plantation and fisheries sectors had been successfully revitalized, they needed to be further developed to reach a higher performance level.

"The first revitalization wave in agriculture five years ago has been accomplished. We acknowledge it has been successful but we will not stop at this point. We will carry out a second revitalization program over the next five years," the President said in Jakarta on Friday.

The second wave of agriculture, plantation and fisheries revitalization would be done to enhance self-sufficient and sustainable food security and can come to be reserves or food supplies for the world, he said.

To achieve the goals the President mentioned eight keys of success, which are devising a strategy and adopting the right policies, such as selecting qualified commodities which are given priority development.

The 15 commodities selected by the Chamber of Commerce and also used by the government consisted of four strategic commoditiesm, namely rice, corn, sugar and soybeans, and six superior export commodities such as palm, coffee, tea, cocoa, tuna fish and shrimps.

There are other two commodities to support public health consisting of cows and chickens meat, also three other popular commodities of mangoes, bananas and oranges.

"These 15 commodities are very important, but we still have to maintain rice and corn self-sufficiency and surplus, immediately fill the sugar self-sufficiency, reduce dependence on soybean imports, and increase the adequacy of cows meat supply," he said.

The President also called for improved research and technology development, by seeking new production enhancement innovations without opening a new field.

Keeping the environment is also mandated by the president, to run the agriculture, plantation and fishery development are environmentally friendly.

"Indonesia`s spatial must be done correctly. Businessmen and farmers should not only pursue profits. I expect the field fire to be stopped. We`ll help the local communities not to easily burn their field to farm," he said.

The President also reminded to continue to improve the farmers, planters and fishermen welfare and not to make them only as a production factor, because they are the state`s assets, owner and the national economy.

Beside production increasing, the President also expected the basic food commodities prices remain affordable to the people.

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Indonesia Seeks to Build Food Security

VoaNews, Sara Schonhardt | Jakarta 29 January 2010

Indonesian farmers work in a rice field during a harvest in Tabanan, resort island of Bali, Indonesia (Photo: AP photo)

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Indonesia is home to nearly 240 million people, making it Southeast Asia's most populous country. But fertile farmland is limited in this island nation and shortages of major commodities such as rice and sugar are common.

The main hall of Jakarta's convention center teems with rice, noodles and meatballs. Bananas and mangos in every variety stand on display. The exhibition's tagline "Feed the World," acknowledges Indonesia's responsibility to help countries struggling with food production.

But Franciscus Welirang, chairman of the Committee on Food Security at the Indonesian Chamber of Commerce and Industry, says the government also realizes it must first help the people of Indonesia.

"Food is for everybody," said Welirang. "The basic idea is how to feed our nation first, but we are not alone in this world, and we also should participate based on our best competitive product."

The Chamber of Commerce, which organized the two-day expo, targets six commodities for export - tea, coffee, cacao, tuna, prawns and palm oil. It is also working to expand production of beef and chicken.

But rice and sugar are the country's main crops.

"We want our people to diversify, but still rice is very important," he said. "We are sufficient on it We hope we can withstand our continuity on that, and if possible, that we have an excess of rice, then we can export rice."

The Chamber of Commerce wants to see increased food production through infrastructure development, improved agricultural policies and financial support for small farmers. Welirang says that requires micro-loans and specialized agricultural lenders.

"There must be an agricultural bank, because to finance agriculture is totally different than with industrial, the risk is different; that's number one," he said.

The government has implemented a fertilizer subsidy to reduce farm costs and it provides seeds to improve harvests. On larger farms, the government partners with big businesses on land cultivation.

A free trade agreement for the Association of Southeast Asian Nations means Indonesian could increase farm exports. But when it comes to food, regional tastes can be fickle. So, Welirang says, maybe it is better to say: "Feed Indonesia, then feed the world."

Indonesia ready to facilitate reconciliation in Afghanistan

Antara News, Friday, January 29, 2010 17:01 WIB

London (ANTARA News) - Indonesian Foreign Minister Marty Natalegawa said Jakarta was ready to act as a facilitator of reconciliation among the warring parties in Afghanistan if requested.

Speaking to ANTARA after attending an international conference on Afghanistan here Thursday, he said Indonesia would share its considerable experience in solving domestic conflicts.

What needed to be prioritized in efforts to help Afghanistan was a development program and a political strategy to bring about reconciliation among the waring factions, he said.

Co-hosted by British Prime Minister Gordon Brown and Afghan President Hamid Karzai, the London conference was aimed at supporting the transfer of responsibility for security matters to Kabul.

Natalegawa said he had told more than 70 foreign ministers at the conference that Indonesia was ready to share its experience in handling domestic conflicts, and facilitate reconciliation if all the factions there so wished.

Indonesia and UN Secretary General Ban Ki-moon attended the conference at the invitation of the British government.

"Of course, we have been invited to see what role Indonesia can play in bridging the differences among the various parties in Afghanistan," he said.

Marty said Indonesia had special qualities that would enable it to play a role amid the fact that Afghanistan itself was not a country with less attention.

He also reconfirmed Indonesia`s commitment to supporting the South Asian country`s institutional capacity building process through such programs as education, health, and agriculture.

The process had taken place since 2003, he said.

The international community should listen to what Afghanistan did need to get rid of the unexpected or unwanted aids, he said.

Compared to two years ago, Western countries remained reluctant to help Afghanistan but this time more countries wanted to assist the country, he said.

Indonesia`s participation in the London conference had given it chances to directly hear the current situation and real condition of Afghanistan from its government.

Therefore, Indonesia could identify the country`s real needs. The conference itself produced a joint communique which underlined the importance of national unity and the people`s sense of ownership in Afghanistan`s development processes, he said.

On the sidelines of the London conference, Minister Marty Natalegawa said he had bilateral meetings with some of his counterparts, including US Foreign Secretary Hillary Clinton.

Meanwhile, Australian Foreign Minister Stephen Smith told newsmen that the London conference`s participants had renewed their commitment to "staring down international terrorism in Afghanistan".

"We have seen the resolve of the international community reflected by 70 of my colleagues, renewing a commitment to staring down international terrorism in Afghanistan," he said.

Minister Smith said a commitment to see the transfer of responsibility for security matters and development assistance and governance to the Afghanistan Government was one of the "very important aspects" of the London conference.

"We`ve also seen commitments from the Afghanistan Government through President Karzai on those issues where the international community needs to see progress."

"Not just security, but anti-corruption, anti-narcotics, provision of services to all of the people of Afghanistan, including and in particular, women and girls, and also a commitment to electoral reform," he said.

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President to form National Economic Committee

Antara News, Friday, January 29, 2010 16:40 WIB

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono in the near future will form a National Economic Committee to help the government prepare for and address economic issues.

"In the near future, I will set up a National Economic Committee which will help the government. So We won`t be busy only when facing a crisis, but even in normal conditions we could establish partnership, and we could give appropriate responses when there are crises or problems," the President said here on Friday when opening the National Food Seminar organized by Kadin (Indonesian Chamber of Commerce and Industry) here on Friday.

The committee would be aimed at continuing the successful partnership among the government, businessmen and economists in dealing with the global financial crisis 2008-2009.

When the global financial crisis started to hit in 2008, the president set up an integrated team involving the government, businessmen, and economists to minimize the impacts of the crisis on the national economy, Yudhoyono said.

On the National Food Seminar, the head of state expressed his hope that there would be ideas to boost the country`s food sufficiency and even to produce more for exports.

"We hope that we are not only produce adequate food for Indonesia`s 230 million population, but even supply food to other countries as part of our responsibility and commitment to guarding the world`s food resilience," President Yudhoyono said.

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More Than 100 Lawmakers Have Not Registered to Pay Taxes: Ministry

Jakarta Globe, January 29, 2010

The tax directorate threatened last year to expose candidates who did not have taxpayer numbers. (JG Photo/Safir Makki)

The Finance Ministry says 113 members of the House of Representatives (DPR) and 23 members of Regional Representative Council (DPD) are not registered for tax IDs.

The ministry's tax chief, Tjiptarjo, told Metro TV he would cooperate with both bodies to ensure the lawmakers get registered for the tax numbers, known as NPWPs.

While tax enforcement has been lax in the past, the Finance Ministry launched a major campaign in 2008 to sign citizens up for NPWPs. Last year, then-tax chief Darmin Nasution vowed to expose people running for office who did not possess them.

“We will investigate candidates running for the nation’s legislatures and for executive office to determine whether they are paying their taxes. Don’t blame us if we identify you or damage your reputation,” he said at the time.

By law, individuals who earn more than Rp 15.8 million per year are required to submit tax returns and pay income tax.

JG

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Editorial: Goodbye, people power

The Jakarta Post | Fri, 01/29/2010 10:35 AM | Opinion

Many say democracy is so costly that political leaders lose trust in it, give it no room to flourish or just kill it.

Needless to say, the country’s hard-won democracy is too high a price to sacrifice. But the noise, traffic congestions and perhaps anxiety resulting from Thursday’s mass rallies to mark the first 100 days of President Susilo Bambang Yudhoyono’s second term should give us a lot of cause for concern.

Jakarta sans demonstrations is already tormenting for millions of people who have to waste hours commuting from home to work and back, because of the maddening traffic jams. One urban expert put the financial losses from the city’s traffic congestions at Rp 28 trillion (US$3 billion) a year or Rp 7.6 billion a day for the fuel and productive time wasted – potential revenue lost and health problems caused. This estimate does not include the budget for security arrangements.

The figure for the losses is debatable, but nobody would dare argue about the impacts of a huge rally on the public at large. More people must endure longer commutes as the police reroute traffic away from the protest points, many business negotiations have to be delayed, and schoolchildren may have to return home earlier or perhaps stay at home for fear of possible violence.

Demonstrations have been part of democratic life in the country since the historic people power movement toppled Soeharto in May 1998. Unlike in the past, students, NGOs, civil society groups and people from all walks of life are given an equal opportunity to express their wishes and defend their causes on the street, provided they notify the police beforehand.

But with democracy in the country gradually maturing, we may need to contemplate whether demonstrations can lead to the changes to which we aspire. Demonstrating is only one of many ways to send a message, if not to mount pressure.

Several past demonstration have ended in tragedy, as in Medan last year, when an angry mob disrupted a plenary meeting of the North Sumatra Legislative Council to demand the formation of a new province. They assaulted the council speaker, who died a few hours later. This could have been avoided if the protest had not turned ugly. The rally not only caused the loss of a life, but also failed to get the message across to the policymakers.

Demonstrations will only amount to a waste of time and energy for those involved if nothing happens.

They will be reduced to a mere show of force that may exacerbate a dispute and keep opposing parties from settlement.

In stark contrast, a public movement that does not involve the mobilization of the masses can effectively reach its goals, thanks to the power of technology. The case of Prita Mulyasari and the Corruption Eradication Commission (KPK) saga are just a few examples.

Widespread public support through the Internet social networking site Facebook not only gave Prita – on trial for emailing complaints about a hospital – a morale boost, but also confidence that she had not done anything wrong, regardless of the charges. She eventually won the legal fight, but people power was the real winner without having to involve boisterous rallies.

KPK deputy chairmen Bibit Samad Rianto and Chandra M. Hamzah owe a debt of gratitude to more than 1 million people who expressed support for them through Facebook, which was more than enough to prompt a move to investigate an alleged plot to frame them.

Nobody should mistake the power of demonstrating on the Internet as virtual. It is real.

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Shoe Factory in China Moves to Indonesia

Tempo Interactive, Thursday, 28 January, 2010 | 14:55 WIB

TEMPO Interactive, Tangerang:Trade Minister Mari Elka Pangestu said there seems to be a tendency for shoe manufacturers in China to relocate to Indonesia. The strengthening Chinese yuan can be one reason for this, along with the increasing cost of manpower and its regulations in China. “This is a permanent trend,” Mari said yesterday in Tangerang, Banten.

Major shoe producers like Nike, Adidas, and New Balance, have relocated their shoe purchases from China to Vietnam and Indonesia. Such a trend, Mari said, has been going on since 2005. For the last four years, the resulting value of these moves to Indonesia have resulted in US$ 1,8 billion. "Buyers are coming in large numbers,” she said.

The relocation, Mari continued, will improve production and investment in the country, especially when Indonesian shoes are now capable of competing with Chinese and Vietnamese products. The Indonesia Shoe Association board chairman, Harijanto, said with top shoe brands coming to Indonesia, the national shoe industry will make efficiencies and restructure the production system. “But the government must ensure that electricity supply is reliable and that infrastructure, like roads are repaired,” she said during the visit. She also cited the example of the Panarub factory in Pabuaran, Tangerang, which can only reach Tanjung Priok Port through the Tomang toll road which is often congested.

Harijanto also asked for more efficiency in arranging investment permits, especially in the provinces. Mari promised to reduce the bureaucracy, including the time to process the licenses. She said New Balance investors admitted that the cost and production of Indonesian manpower is competitive and the staff turnover is stable, as is the national political situation. “Then there is the infrastructure that need to be repaired,” she said. PT Panarub Dwikarya CEO, Hendrik Sasmito, said the local shoe industry will remain competitive with China and Vietnam, as long as it can keep down the cost of production. “So long as there is no out-pricing, it can still go on,” he said.

Panarub currently produces four shoe brands; Adidas, New Balance, Mizuno, and Specs. A pair of New Balance shoes is sold at US$ 12 to 16. Panarub has two factories and will open a new one in Cikupa, Tangerang. Panarub has exported 1 million pairs of shoes. Until the end of 2010, an additional 500.000 pairs per month will be produced.

IQBAL MUHTAROM

Officials Name The 100 Worst Tax-Dodgers

Jakarta Globe, Dion Bisara, Janeman Latul & Ardian Wibisono, January 29, 2010

Indonesia’s 100 worst tax-dodgers, including a slew of state-owned enterprises and some well-known private and listed companies, owe the state nearly $1.9 billion in back taxes, the Finance Ministry revealed on Thursday.

“As of December 2009, the 100 top tax-dodgers [owed] Rp 17.5 trillion,” Tjiptardjo, the ministry’s tax chief, told a hearing with the House of Representatives’ Commission XI, which oversees finance.

“First we will send a warning letter, then we will force them to pay or we will confiscate their assets. Lastly we will freeze their bank accounts. The point is they have to pay,” he said.

Tjiptardjo revealed that state-owned enterprises on the list owed Rp 7.6 trillion in unpaid taxes at the end of last year. “In 2009, the total balance of taxes owed by state-owned companies was Rp 8.1 trillion. There were also new tax arrears of Rp 2.3 trillion. They paid Rp 2.8 trillion in 2009, so there is still an outstanding balance of Rp 7.6 trillion,” he said.

A Tax Directorate General document distributed to lawmakers showed state oil and gas company PT Pertamina sitting at the top of the list, followed by its subsidiary, Karaha Bodas Co., private pulp and paper firm PT Industri Pulp Lestari and the defunct Indonesian Banking Restructuring Agency.

Also on the list were state lender PT Bank Negara Indonesia, shrimp producer PT Central Proteinaprima (CP Prima), state train operator PT Kereta Api Indonesia, plantation company PT Sampoerna Agro, miner PT Kaltim Prima Coal, cement company PT Holcim Indonesia and flagship air carrier PT Garuda Indonesia.

The document did not reveal how much tax each company owed, nor did it confirm that the ranking was based on the amount owed.

Muhammad Said Didu, secretary for the State-Owned Enterprises Ministry, questioned the figure, saying similar claims were made last year but that the amounts owed turned out to be smaller.

“We need to meet the tax office first to clarify their numbers,” Didu told the Globe. “They tend to miscalculate, [mixing up] the numbers of unpaid taxes with disputed taxes.”

He said the Finance Ministry had agreed not to levy tax on some unprofitable SOEs undergoing restructuring, such as PT Merpati Nusantara Airlines, until they return to profitability.

In response, CP Prima’s corporate communications manager said he was surprised by his company’s presence on list and had no knowledge of it. Garuda Indonesia president director Emirsyah Satar claimed Garuda “never has any tax arrears.”

BNI president director Gatot Suwondo speculated that the bank’s inclusion on the list might be due to confusion over taxation on a Shariah unit.

Bank Bukopin director Tri Joko Prihanto echoed Gatot.

“Bukopin is a good tax payer, and the tax we paid is huge,” he said.

A September 2009 revision of the law on the value-added tax prevented a double-taxing of murabahah , Islamic trade-finance transactions involving a purchase and deferred-payment resale. But the law’s retroactive effects may have confused tax officials when calculating the tax owed, Tri said.

Melchias Markus Mekeng, a Commission XI deputy chairman, said the House would form a working committee to scrutinize how the tax office recorded such huge tax arrears and “how far it has dealt with it.”

The 100 Offenders

The top 100 companies avoiding tax, as listed by the Finance Ministry's Tax Office:

1. Pertamina (Persero)
2. Karaha Bodas Company LLC
3. Industri Pulp Lestari
4. Badan Penyehatan Perbankan Nasional
5. Kalimanis Plywood Industries
6. Siemens Indonesia
7. Angkasa Pura II (Persero)
8. Bentala Kartika Abadi
9. Daya Guna Samudera Tbk
10. Direct Vision
11. Hyaat International-Asiapacific Limited
12. Djarma Aru
13. Televisi Republik Indonesia
14. Likpin LLC
15. Multi Kontrol Indonesia
16. Kereta Api Indonesia (Persero)
17. Bank BNI
18. TH Indo Platations
19. Ing International
20. Surya Dumai Industri Tbk
21. DSM Kaltim Melamine
22. Cosa International Group Limited
23. Bank Bukopin
24. Pasifik Satelit
25. PT Bukit Makmur Mandiri Utama
26. Bank Global International
27. DP3KK
28. Gandhi Memorial International School
29. Sarana Niaga Perdana
30. PT Perdana Karya Perkasa Tbk
31. PT Sampoerna AGro Tbk
32. Seaunion Energy (Limau) LTD
33. Agoda Rimba Irian
34. Total E & P Indonesia
35. Avera Pratama
36. PT Steady Safe Tbk
37. Toyota Tsusho Indonesia
38. Kaltim Prima Coal
39. Jakarta Llyod Kantor Pusat
40. Universal Foodwear Utama Indonesia
41. Sumalindo Lestari Jaya Tbk
42. General Food Industries
43. Inti Indosawit Subur
44. Holcim Indonesia Tbk
45. Kinantan Senaputra
46. Pembangunan Sarana Jaya
47. Planet Electrindo
48. Mobil Exploration Indonesia
49. Textra Amspin
50. Semen Tonasa
51. Kaltim Methanol Industri
52. Eka Manunggal Lestari
53. Perkebunan Nusantara XIV
54. Toyo Denso Indonesia
55. Pertamina Unit Pembekalan
56. Salim Ivomas Pratama
57. Gajah Tunggal Mulia
58. Intimutiara Kimindo
59. Perkebunan Hasil Musi Lestari
60. Petro Oxo Nusantara
61. Dwi Satya Utama
62. Jamsostek (pusat)
63. Wira Insani
64. Ragam Logam
65. PT Catur Gatra Eka Perkasa
66. Persero Perkebunan
67. Pakerin
68. PT Central Proteinaprima Tbk
69. Daesung Eltec Indonesia
70. Merpati Nusantara Arlines
71. Madya Semarang
72. Hyundai Indonesia Motor
73. Aspirasi Luhur
74. Istaka Karya
75. Dongfang Electric Corporation Indonesia Project
76. Cakrawala Mega Indah
77. Gapura ANgkasa
78. Sun Hope Investment
79. Texmaco Taman Synthetics
80. Singgar Mulia
81. Pulau Sambu
82. Il Jin Sun Garment
83. LKBN Antara
84. Pabrik Kertas Tjiwi Kimia
85. Astina Putera
86. Pindo Deli Pulp And Papermills
87. Sragen Abadi Textile Industri
88. Kaltim Parna Industri
89. Korina Semarang
90. Tiga Ombak
91. Menara Tiga Diesel
92. Valu Trada Indonesia
93. Asrigita Prasarana
94. Ivo Mas Tunggal
95. Sinar Kencana Inti Perkasa
96. Mandiri Eka Mandiri
97. Deutsche Bank AG
98. Wirakarya Sakti
99. Gunung Bayan Pratamacoal
100. Garuda Indonesia

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