Govt Starts Distribution of Social Benefit Cards

Jakarta Globe, Novy Lumanauw, Apr 28, 2015

President Joko Widodo, center, distributes the Indonesia Health Card (KIS) to
workers at a rubber plantation in North Sumatra. (Antara Foto/Septianda Perdana)

Jakarta. Tens of millions of disadvantaged Indonesians will start receiving the government’s much-touted Indonesia Health Card (KIS) and Indonesia Smart Card (KIP) from this week — months after the flagship social benefit programs were officially unveiled.

The government says the cards will improve Indonesians’ access to education and health services, and it aims to distribute them to more than 100 million people.

A total of 88.2 million people will receive the KIS card, which provides the nation’s poor and near-poor with access to healthcare.

Card holders will be entitled to treatment at public primary care clinics (puskesmas) and treatment in third-class hospitals. Benefits provided under the health card will be managed by the Social Security Agency (BPJS) but funded by insurance premiums of Rp 19,225 ($1.60) per person — paid by the Ministry of Health.

Meanwhile, 20.3 million people will be provided with the KIP card, which entitles students from underprivileged families to 12 years’ free education, as well as education resources and free higher education provided they pass university entrance exams.

Workers at a rubber plantation in North Sumatra were the first to get their hands on the KIS cards on April 18, but the government started national distribution on Tuesday.

Distribution of the cards, a campaign promise of President Joko Widodo, was slated for late 2014, but budget wrangling that was only resolved in January pushed the schedule back.

“We’ll start distributing the cards this week,” Joko said on Tuesday after disbursing 3,289 KIS cards to employees of state-owned shipping and dock company, Dok & Perkapalan Kodja Bahari, in North Jakarta.

The cards are similar to the Jakarta Health Card (KJS) and Jakarta Smart Card (JKP) implemented when Joko was governor of the capital,

Related Article:

Jokowi: Revoke Licenses of Private Hospitals That Refuse KIS Patients

IMF Debt Confounds Govt Officials, SBY

Bank Indonesia, the country’s central bank, was forced to release a statement clarifying the status of the debts

Jakarta Globe, Dion Bisara & Ezra Sihite, Apr 28, 2015

Democratic Party chairman Susilo Bambang Yudhoyono, center, accompanied by
 his wife Ani Yudhoyono, right, and Syarif Hasan, left, are seen together after
attending a consolidation meeting of the Democratic Party's Jakarta branch
on Nov. 28, 2014. (Antara Photo/Wahidin)

Jakarta. Bank Indonesia, the country’s central bank, has weighed in on a public debate on Tuesday over Indonesia’s debts to the International Monetary Fund following misunderstanding of international accounting between President Joko Widodo’s aides and political rivals.

A $9.1 billion debt created by Indonesia to the International Monetary Fund (IMF) during the Asian financial crisis in 1998 was paid off by the government in 2006, Bank Indonesia said on its official Twitter account on Tuesday.

Still, the central bank records a liability to the Fund of $2.8 billion in its balance as of the end of April, which reflects an allocation of the country’s special drawing rights (SDR).

“It is a consequence for us being an IMF member,” Bank Indonesia said.

Bank Indonesia drew SDR in early 2009 in order to boost its foreign exchange reserves to shield the country’s financial sector from the global financial crisis. IMF members are entitled to certain allocations of SDR in their reserves based on their economy’s size.

The countries can then trade SDR for hard currency with other members. SDR is not a currency and its value is determined against a basket of key international currencies — the euro, Japanese yen, pound sterling and US dollar. As of Tuesday, 1 SDR is equivalent to $1.39, according to the IMF’s website.

Still, such monetary issues might be difficult to comprehend for some of Indonesia’s politicians, who erupted in debate through national media.

Former president Susilo Bambang Yudhoyono was lambasted for making false claims when he criticized his successor over Indonesia’s debt to the IMF.

In a series of tweets, Yudhoyono criticized Joko’s remarks made during last week’s Asian-African Conference during which the current president called for new global order.

Joko criticized global financial institutions — namely the IMF, Word Bank and the Asian Development Bank — for failing to accommodate the shift in economic power to emerging countries. The speech did not go well with Yudhoyono.

“Bottom line is Jokowi said Indonesia is still borrowing money from the IMF,” Yudhoyono tweeted late on Monday, referring to the president by his popular nickname.

“I must say Jokowi’s statement is false. Indonesia has paid all of its debt to the IMF in 2006,” he continued, crediting his own administration for the payment.

“Since 2006, Indonesia is no longer IMF’s patient. No longer dictated by the IMF. We are free to design our own economic development.”

Some officials and activists, though, dismissed Yudhoyono’s statements, saying that after Indonesia paid off its debt to the IMF in 2006, Yudhoyono’s administration again borrowed $3.09 billion from the same institution in 2009.

Joko’s Cabinet Secretary Minister Andi Widjajanto said on Tuesday that the 2009 loan was to increase Indonesia’s central bank reserves. “It is not a fiscal debt which we can use for development,” he said.

Scenaider Siahaan, a director at Indonesia’s Debt Office Management confirmed that Indonesia still has debt outstanding with the IMF, but added that it was proposed by Bank Indonesia, an independent body not under the auspices of the president.

Finance Minister Bambang Brodjonegoro said the fund is a standby loan that Indonesia never used. “Anytime [Indonesia] wishes to use it we can. But, because the fund originates from the IMF, we call it a loan,” he said, adding that so far Indonesia has yet to pay any interest on the SDR allocation.

A country would only pay interest should its SDR holding be lower than its allocation, according to IMF website. Conversely, the country gains interest from holding SDR higher than its allocation.

In his speech to delegates at the Asian-African Conference in Jakarta, Joko challenged Western-based institutions saying that the notions that only they can solve global economic problems “are obsolete views that need to be discarded.”

Several of the countries that participated in the original Bandung Conference 60 years ago are today among the biggest and fastest-growing economies in the world, including China, India and host Indonesia. But the so-called Bretton Woods global financial institutions set up after World War II continue to be dominated by rich Western countries. The US, for example, holds a 16.5 percent stake in the IMF with veto powers.

GlobeAsia

Indonesia Sets Second Tax Amnesty Program for April 29

Jakarta Globe, Margye J. Waisapy, Apr 24, 2015

The directorate general of tax set to launch the second sunset policy tax program
 by the end of this month as a way to help reach 2015’s tax revenue target.
Antara Photo/Zabur Karuru)

Jakarta. Indonesia’s directorate general of tax is set to launch its second tax amnesty program on April 29, as a way to help reach the government’s tax revenue target of Rp 1,249.3 trillion ($92 billion) for 2015.

This policy allows corporate and individual taxpayers to pay and report back taxes without penalty or interest charges for up to one year from the start of the amnesty date.

President Joko Widodo will set the policy on April 29, a day before the deadline for companies to report taxes. The tax office will start taking in back taxes in May.

This is the second so-called sunset policy — for either voluntary or mandatory program — after the first one in 2008 helped increase tax revenue by about a third to a total of Rp 566 trillion ($44 billion).

“I can’t predict this year’s tax revenue, but there was a 30 percent growth in 2008, and I hope that it can grow by over 30 percent this year,” director general of taxation Sigit Priadi Pramudito said on Thursday.

GlobeAsia

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Business Lobby Urges Tax Amnesty for Reinvestment in Indonesia

Indonesia, Singapore Agree to Step Up Sharing of Tax Information

Beijing encourages more companies to build Indonesia's infrastructure

Want China Times, Xinhua 2015-04-24

Xi Jinping shakes hands with Indonesian finance minister Bambang
Brodjonegoro at Soekarno-Hatta International Airport in Jakarta, April 21.
(Photo/Xinhua)

President Xi Jinping in China said on Wednesday that Beijing will encourage more companies to participate in infrastructure construction and operations in Indonesia.

Xi made the remarks when meeting with Indonesian president Joko Widodo in Jakarta during the two-day Asian-African leaders' meeting held here. He also promised to encourage more Chinese citizens to travel to Indonesia.

Widodo welcomed Xi's proposal to increase investment in Indonesia's infrastructure. The two presidents witnessed the signing of cooperation documents for a high-speed rail project after the meeting

Noting that this year marks the 60th anniversary of the Bandung Conference, Xi said the conference is of epoch-making significance and he is willing to work with Widodo to inherit and carry forward the Bandung Spirit, and strengthen solidarity, friendship and cooperation among developing countries.

Stressing that this year also marks 65th anniversary of the establishment of diplomatic relations between China and Indonesia, Xi said following Widodo's successful visit to China last month, the two countries should work together to translate the consensus reached into tangible results.

China and Indonesia should maintain the good momentum of close communication at all levels to step up the implementation of agreements already reached between the two countries, he said.

He urged the two countries to achieve trade balance through a comprehensive approach and well implemented bilateral currency swap agreement.

China will continue to support the building of ASEAN community, he said, pledging that China will support ASEAN to play a leading role in the regional cooperation of Southeast Asia.

Widodo welcomed Xi to attend the Asian-African summit and the 60th anniversary of the Bandung Conference in Indonesia.

He said Indonesia hopes to expand cooperation with China in various fields and is willing to discuss the opportunities for cooperation brought by China's "21st Century Maritime Silk Road" initiative and Indonesia's new development strategy.

The Asian-African leaders' meeting opened here Wednesday with the aim of carrying on the Bandung Spirit and promoting common development of the two vibrant continents.

Xi arrived in Indonesia late Tuesday for the summit and commemorative activities for the historic 1955 Bandung Conference.

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China Minsheng to Lead Chinese Firms’ Investment of $5b in Indonesia

JakartaGlobe, Muhamad Al Azhari, Apr 21, 2015

A crane at work at Jakarta International Cointainer Terminal (JICT) in Tanjung
Priok, Jakarta, on March 23, 2015. (Antara Photo/Wahyu Putro A.)

Jakarta. Investment fund China Minsheng Investment said on Tuesday that it will lead a group of Chinese private companies to invest $5 billion in Indonesia.

“This investment is a clear demonstration of CMI’s commitment to support China and Indonesia’s existing international agenda on overcoming economic challenges and providing investment for growth,” the company said in a statement to GlobeAsia on Tuesday.

Li Huaizhen, chief executive of CMI, joined the delegation to Indonesia as one of the major representatives of China’s private enterprises to further discuss strategic plans for investment via the Asian-African Business Summit, which started in Jakarta on Tuesday as part of the Asian-African Conference.

CMI said in the statement that it will guide dozens of leading private enterprises to construct industrial parks, which will bring in a variety of industries and sectors to the Indonesian market. That will help companies from China as well as from Indonesia and abroad to establish businesses with interests that include coal, chemicals, iron and steel, power generation, cement, infrastructure, ports and the Internet.

CMI also said in the statement that it will bring its technology, managerial know-how, capital and talent to Indonesia.

GlobeAsia

Indonesia Woos African Business

Jakarta Globe, Arientha Primanita & Leonard Cahyoputra, Apr 21, 2015

Flags from Asian and African countries are hoisted on a main street in Jakarta on
 April 14, 2015 in preparation for the 60th anniversary of the Asian-African Conference
 in Indonesia taking place between April 22-24, 2015, which leaders from Asian and
African countries are attending. (AFP Photo /Bay Ismoyo)

Jakarta. Indonesia has called on countries in Asia and Africa to strengthen economic ties and fulfill the massive trade potential between the two continents.

Franky Sibarani, the chairman of Indonesia’s Investment Coordinating Board (BKPM), said on Tuesday that emerging economies, mostly in Asia and Africa, received more than $700 billion in foreign direct investment last year, or 56 percent of the total global investment, citing data from the United Nations Conference on Trade and Development’s (UNCTAD) 2014 World Investment report.

He said this was a remarkable achievement, given that global investment flows declined 8 percent last year compared to the year before. He also quoted Financial Times data that showed total direct investment among Asia and Africa countries only reached 35 percent of total global investment.

“With this big potential, Asian and African countries can explore available opportunities and create beneficial cooperation,” Franky said at the Asian-African Business Summit in Jakarta, part of the 60th anniversary commemoration of the Asian-African Conference, taking place in Jakarta and Bandung this week.

“Therefore, let us all take advantage of this good momentum to strengthen the economic cooperation in investments between Asian and African countries.”

Some 600 local and foreign business leaders attended Tuesday’s summit, which was hosted by Indonesian Chambers of Commerce and Industry (Kadin).

Investments in Indonesia from Asian and African countries between 2010 and 2014 amounted to $58.58 billion, according to BKPM figures, with Asian countries accounting for $55.56 billion.

The main investments from African countries came in the sectors of food, agriculture, tourism and construction, while investments from Asia included transportation, telecommunications, food, agriculture, metals, machinery and electronics. Most foreign investment in Indonesia was concentrated in Java.

Franky said Indonesia’s government was committed to creating a climate that was conducive to foreign investment. He said the government was exploring ways to get investors to participate in a host of development projects, particularly infrastructure and manufacturing.

“The BKPM is ready to facilitate Asia and Africa investors to realize their investments in Indonesia,” he said.

The government launched in January a “one-stop” platform meant to help investors acquire business permits, and is working on improvements in other sectors to boost investments.

Meanwhile, Kadin chairman Suryo Bambang Sulisto said Tuesday’s summit was also a chance for Indonesian businesses to gain greater knowledge about Africa’s largely untapped market potential.

He said the trade balance between Asia and Africa over the past 20 years had increased 100 times to $200 billion. “We expect it will reach $1 trillion by 2020,” Suryo said, adding that investors would look to do business with African countries that were “free of conflict.”

“There are some stable countries in Africa. Besides South Africa,” — rocked in recent days by violent xenophobic attacks — “other potential countries are Nigeria” — where the militant Islamic group Boko Haram has taken over entire towns and sent the military on the run — “and Egypt,” whose military in 2013 overthrew the democratically elected president in a coup.

GlobeAsia

From Aceh to Papua: Jokowi’s Infrastructure Visions

Jakarta Globe, Yanto Soegiarto, Apr 19, 2015

Cyclists crossing the Kelok 9 flyover in Payakumbuh, West Sumatra on
 July 3, 2013. GlobeAsia Both local and international investors have turned
 their attention to President Joko Widodo’s ambitious plans. (JG Photo/Afriadi Hikmal)

The building of infrastructure in Indonesia is the key to understanding the extent of progress in the country.

During the World Economic Forum on East Asia, a question will be asked: Is Indonesia doing enough to show the public and investors they can trust that infrastructure development is moving ahead toward growth and becoming competitive in the region.

Indonesia, meanwhile, has been given the opportunity to showcase development and attract investment while playing host to the WEF event.

The administration of President Joko Widodo has set an infrastructure target, to be achieved by 2019, in which 24 seaports, 15 airports, power plants with a capacity of 35,000 megawatts and nine million hectares of agriculture land will be developed.

This was reiterated by WEF Indonesia committee member and Trade Minister Rachmat Gobel in a recent briefing to ambassadors and prominent business leaders.

The administration is confident in its programs to build dams, toll roads and railways to boost the local economy and raise the living standards of local communities.

Joko traveled to Aceh in March to inaugurate a number of projects in the area.

In North Aceh, he presided over the groundbreaking of the Keureuto dam — the largest to be built this year and expected to increase agricultural output in the region.

The construction of the dam will allow the irrigation of other regions which are in a deficit of rice production.

The dam is being built by state-owned construction companies Brantas Abipraya, Hutama Karya and Wijaya Karya.

It will hold 167 million cubic meters of water and irrigate 4,768 hectares of agricultural land. The reservoir will also prevent flooding in the downstream region.

Joko then moved on to Sabang, Indonesia’s most western tip, where he jump-started the construction of the Seunara reservoir, which has been stalled for more than nine years due to land clearance issues.

The issue was eventually solved as Joko negotiated with over 200 local residents who had been holding out for a larger compensation package.

“After talking to the residents, they have no problem. We have the budget, what’s important is the reservoir will be completed this year and function,” said Joko, who was accompanied by Aceh Governor Abdullah Zaini and Public Works and Housing Minister Basuki Hadimulyono.

The reservoir will provide water and help the local community boost income through the development of water tourism and aquaculture.

Veteran infrastructure expert Scott Younger says the president’s move to resolve the stalled Seunara project provides encouragement.

“He has quickly recognized the serious issue of lack of water storage across the country and acted on it. It is also positive that he has inaugurated the long-defined Keureuto project.

“With this early action it would seem that the president will certainly be trying to meet the target of 13 dam projects for this year,” Younger said.

But, he says, the longer-term concern is the lack of engineering and construction industry capacity to carry out all the work planned in the administration’s term, not just in water storage but across the infrastructure space as a whole.

Undaunted, the president pressed on to Lhokseumawe, the home of Kertas Kraft Aceh.

The company stopped production years ago, but the president has voiced he would like to see it running again as to contribute to the local economy.

“For more than 15 years I have wanted the company to be in operation again. There is adequate supply of raw materials from the forests which can be managed by the local people.

“We can plant fast-growing sub-tropical trees such as albizia or pine and we don’t have to wait 15, 20 or 30 years,” he said.

The president is no stranger to Aceh. He spent his early working years there and his first child was born in the province.

“Ibu Jokowi and I are very familiar with Aceh,” he said.

In Arun, just north of Lhokseumawe, the president launched the Arun regasification and storage terminal, marking a milestone in the country’s efforts to shift its energy consumption toward gas.

The plant sits on the now-depleted wells of Indonesia’s first natural gas resource, now run by Perta Arun Gas, a subsidiary of state-owned Pertamina Gas.

“The facility will regasify LNG sent from Kilang Tangguh in Papua,” Pertamina Gas president director Hendra Jaya explained, adding that the plant will provide the state electricity company with gas to power its generators in Belawan, Medan.

Joko’s initiative in Aceh marks a significant move in the nation’s infrastructure building, no president before him has had a similar strategy.

Dams and roads

This year, the administration is at work building at least 13 of the projected 49 dams it wants to construct over the next five years. The cost of the 13 dams will be at least Rp 12 trillion ($934 million), excluding land-clearance costs. The projects will be funded by the state budget.

Rising transportation and logistics costs have also won the attention of the government.

Many toll roads are to be constructed and work on the 2,700-kilometer Trans-Sumatra toll road, which will link Aceh and Lampung, is due to start this month.

The government has assigned Hutama Karya to undertake the project, as it is the only large state infrastructure firm not listed on the stock exchange.

Construction of the road has been estimated to cost Rp 300 trillion, with the government asking other state enterprises and local governments to cooperate without reservation.

The first stage of the project is to build 1,300 kilometers of road. Hutama Karya has been given an additional injection of funds by the government to get the job done.

Earlier Hutama Karya and other state enterprises, including banks, were ready to finance the project without relying on the state budget but the government deemed it would create too much of a burden.

During the previous administration of president Susilo Bambang Yudhoyono, the project was also to be managed by Hutama Kaya. The project proved difficult to get started due to financial concerns with investors reluctant to commit to such a long-term project.

The focus then turned to building the Medan-Binjai toll road, but that plan has also changed, with the focus now on the link between Bakaheuni in Lampung and Palembang, the capital of South Sumatra.

The April ground-breaking date was chosen at a limited cabinet session presided over by Joko, Vice President Jusuf Kalla, Public Works Minister Basuki Hadimulyono, State-owned Enterprises Minister Rini M. Soemarno and Finance Minister Bambang Brodjonegoro.

An important part of the decision was the revision of the previous presidential decree number 100/2014 which put an emphasis on land acquisition as a priority.

In a recent development, Rini revealed that four state enterprises — Hutama Karya, Jasa Marga, Waskita Karya and Wijaya Karya — will be tasked to jointly commission the project.

“The project will be done in sections. For instance Waskita Karya will do section 1, Wijaya Karya section 2 and so forth, Part of it will hopefully be completed in 2018,” she said, adding that some sections of the road will be commissioned by local governments involving the private sector.

Railway development

Following Joko’s pledge last year to develop railways in Papua, the Transportation Ministry will allocate at least Rp 105.6 trillion over the next five years to build railway networks beyond Java.

“We have evaluated the budget needs of the Directorate General of Railways at the ministry for the next five years and according to the new master plan pushed by the president, completion of the project is slated for 2019,” Director General for Railways Hermanto Dwiatmoko said.

In business terms, railway development beyond Java can be complex because of feasibility and financing, and as a result funding for railway development has to come either from the state budget or through public-private partnership, he said.

The plan may appear ambitious but Hermanto insisted that the project will begin in 2016.

It will contribute to what will become a total national railway network stretching 3,258 kilometers and be the longest railway project since the Dutch occupation of Indonesia.

Meanwhile, a feasibility study for the construction of the Trans Papua Railway has already begun. The new railway track will span 595 kilometers connecting Sorong and Jayapura.

Home Affairs Minister Tjahjo Kumolo said that development outside Java is one of the president’s priorities.

“There are many regions and border areas which are still untouched by infrastructure development.

“The president is committed to developing the eastern part of Indonesia where infrastructure is less developed.

“We at the Ministry of Home Affairs have reached a consensus with the Ministry of Public Works to support and develop infrastructure mainly in Papua, East Nusa Tenggara and the Kalimantan border areas,” he said.

House Commission V members who have visited Papua to see the prospective railway plan say they back the government’s initiative.

They have also encouraged the people of Papua to support it.

At the local level, regional officials have discussed the railway project with the central government but still have questions about the source of finance.

“We will have certainty on that in one or two months,” said regional secretary Ella Loupatty.

“We think that the project will begin from Sorong in West Papua and connect the Sarmi district in Papua province. If the project is realized, the distribution of goods will be easier and prices will go down in many areas.”

Hermanto added that he had asked regional officials to help in the process of land clearance, which poses one of the major hurdles to any infrastructure project.

He believes it is feasible to complete the Papua railway project within five years.

“We expect the project to be expedited although we note that any infrastructure development in Papua is not easy. But, we can’t delay it,” he said.

Higher commodity prices

Without the development of better infrastructure in the area, the price of cement could go as high as Rp 2 million for a 50 kilogram sack, while basic commodities such as sugar could cost between Rp 15,000 and Rp 50,000 a kilogram, many times over the price for such staples on Java.

Commenting on the rail plans, Younger, the infrastructure expert, says the target dates are highly optimistic.

“While railways must be part of the transportation infrastructure build-out, an emphasis for off-Java railway construction seems difficult to reconcile,” he says.

“There is still much to do in rail in Java and especially around the main urban centers, such as Jakarta and for fast rail links between the major cities. Railways make sense when there are many people and/or a large volume of commodities to transport.

“Java and off-Java highly-populated centers, such as Medan, fill the first criterion and off-Java in certain specific locations for the movement of commodities.”

And, he adds, the public-private partnership concept has been around for more than a decade, but a workable model is still to be found.

More needs to be done to encourage private investment.

Meanwhile, a number of countries in the East Asia region such as Singapore, Japan, and China have expressed interest to invest power plants projects in Indonesia, according to the Investment Coordination Board (BKPM).

The BKPM has received 12 new applications for investment permits from foreign investors to build power plants worth $8.9 billion, or around Rp 116 trillion.

It’s not just foreign investors looking towards Indonesian infrastructure — many domestic investors are interested as well.

BKPM chairman Franky Sibarani said that his office has also received applications for investment permits from 17 local investors.

GlobeAsia and the Jakarta Globe are media partners of the World Economic Forum on East Asia. Parts of this article originally appeared in the April issue of GlobeAsia.

GlobeAsia

Allianz Enjoys Solid Growth in Indonesia Microinsurance Business

Jakarta Globe, Arientha Primanita, Apr 17, 2015

Jakarta. German insurance company Allianz saw the number of its Indonesian micro-insurance clients surge by nearly half last year  as it expands its reach in Southeast Asia’s largest economy.

The Munich-based insurer provides insurance with premiums that start from as low as 1 euro ($1.08) a year for 3.8 million people in Indonesia, up 46 percent from a year earlier, according to the Allianz Group Sustainability Report 2014 published on Friday.

Allianz micro-insurance performance in Indonesia trails India, its biggest growth market with 39.8 million people insured, expanding 75 percent in 2014.

The two countries constitute almost all of Allianz’s $114 million micro-insurance business globally.

The company said that low incomes in developing country are the most vulnerable to risks associated with natural disasters, accidents and illness.

“The review in Indonesia showed that the beneficiaries of credit life insurance payouts were better off than the families of borrowers who left their debt behind uninsured,” Allianz said in the report.

“It also showed that when insuring female microloan borrowers, there was greater social impact when their husbands were also insured, especially since men are still the main breadwinners in Indonesia.”

In a separate statement, head of Emerging Consumers for Allianz Life Indonesia added: “In Indonesia, the high potential of micro-insurance needs  to be managed in a correct, innovative and efficient way.

“Government support for developments in micro-insurance must be balanced with regulations on the field, and  also boost insurance awareness among the Indonesian people.”

Business-wise, even though micro-insurance is not as profitable as conventional insurance products, Allianz believes that it is a preliminary step to introducing insurance products to mass market groups.

While still “immature,” the business is estimated to have a premium potential of $40 billion a year, Allianz said.

Micro-insurance customers have large potential as they can be at some point transferred into conventional insurance in line with the growing middle class.

The product can also help expand formal financial services to more customers. Market research conducted in 2013 covering micro-insurance customers on the Ivory Coast, India and Indonesia showed that it was the first insurance for 75 percent of the them.

“We anticipate that demand will continue to grow and so we are expanding our business in this area,” Allianz  said.

GlobeAsia

‘We Need the KPK and the KPK Needs Us’: New Police Chief Signals Detente

Jakarta Globe, Farouk Arnaz, Apr 17, 2015

President Joko Widodo, center, oversaw the oath-taking ceremony of National
 Police Chief Badrodin Haiti, left, on Friday. (Antara Foto/Widodo S. Jusuf)

Jakarta. The National Police finally had their definitive chief on Friday, for the first time since January, when President Joko Widodo swore in Badrodin Haiti to the post and promoted the former deputy chief to full general.

But Badrodin only has until July next year, when he enters retirement age, to mend police’s image as the country’s most corrupt institution, improve public trust, and fix the severed ties with the Corruption Eradication Commission (KPK).

The Jakarta Globe spoke to Badrodin at his home in Jagakarsa, South Jakarta, on Wednesday night, just hours before the House of Representatives staged a confirmation hearing that eventually concluded with an endorsement of his nomination.

Q: Do you feel you have enough time to accomplish what you want?

A: I never dreamed about becoming the police chief. This is a huge responsibility. I feel I need to do all I can with the opportunity given, otherwise my being police chief will be meaningless. I will continue several [existing] programs while improving the police’s performance and addressing some of the issues the public have complained about, like illegal fees. I cannot allow this to happen and I will do something about this. I will make the most out of the time I have.

Q: How do you feel about the poor public perception of the police?

A: We can’t ignore the fact that the image of the police force is still negative. We’re very much dependent on people’s input and evaluation. We still see corruption [inside the police] occurring all the time. We need a mental revolution inside the force but also better internal and external supervision. But people also need to be more aware of the law and not break it. I have instructed my men to give verbal warnings to traffic violators and only issue a ticket when they won’t admit to breaking the law. This is one example of how the police are looking to stop corruption.

Q: Officers often argue that they take bribes to compensate for the low pay. What’s your take?

A: Our budget is far from sufficient. But that shouldn’t be an excuse to extort or take bribes from the public. I will take strict measures if they do. The government is slowly increasing our budget and we want to use it to the fullest. For example, according to our calculation, our budget is only enough to finance 300 days of patrols a year. But this doesn’t mean that we can go around looking for payoffs the other 65 days. It definitely doesn’t mean we should stop patrolling during these other days. We just need to be creative. If, for example, we use cars to patrol [an area], then maybe we can drop an officer in, say, Blok M [in South Jakarta] and he can patrol on foot. The bottom line is that officers need to be creative.

Q: How are you trying to mend ties with the KPK?

A:We need the KPK and the KPK needs us. For example, because police’s authority is limited, unlike the KPK’s, we spend too much time going back and forth to the prosecutors’ office when investigation a corruption case. But the KPK can act as a referee and determine if the case should go to trial or if [the prosecutors] are just giving us a hard time. We want the KPK to be not only good at enforcement but also prevention. We also want the KPK to involve the police in their investigations. Together, we can attack corruptors. That is what I see as the ideal relationship between the police and the KPK.

House Approves Badrodin as Police Chief

Jakarta Globe, Hizbul Ridho & Hotman Siregar, Apr 16, 2015

Comr. Gen. Badrodin Haiti is Indonesia's new National Police chief.
(Antara Photo/Akbar Nugroho Gumay)

Jakarta. The House of Representatives on Thursday endorsed the nomination of Comr. Gen. Badrodin Haiti as the new National Police chief, citing statements from the Corruption Eradication Commission, known as the KPK, and the Financial Transaction Reports and Analysis Center, or PPATK, that he was clean of graft — squashing speculation to the contrary.

Badrodin’s nomination was unanimously voted on by the 283 lawmakers present at Thursday’s plenary session.

He currently serves as both the deputy police chief and the acting chief.

President Joko Widodo in February sent a letter to the House indicating Badrodin as his sole nominee for police chief.

The president withdrew his previous candidate, Comr. Gen. Budi Gunawan, the month before following bribery allegations and an ensuing public outcry.

The plenary session on Thursday afternoon went smoothly after all 10 parties at the House approved Badrodin’s nomination.

The session took only half of an hour to conclude after the House’s legal affairs commission declared him as having passed the fit-and-proper test held earlier in the day.

“Commission III requests the annulment of the nomination of Budi Gunawan as the National Police chief candidate, and approves Badrodin Haiti as the selected candidate, with hopes that he will truly enhance the image of the National Police, enforce the law and protect the public,” said Aziz Syamsuddin, the head of House Commission III, which oversees legal affairs and human rights.

Legislators did not immediately approve Joko’s mid-March withdrawal of Budi’s nomination, summoning the president to discuss it last week.

Budi was red-flagged by the government’s PPATK in 2010 for suspiciously hefty amounts in his personal bank accounts.

The KPK named him a bribery suspect mid-January, just a few days after Joko submitted his nomination to the House.

The suspect status, though, was later overthrown by the South Jakarta District Court in a controversial ruling after Budi filed a pretrial motion against the KPK over the charges.

Badrodin was implicated in the same “fat accounts” scandal as Budi, which was unearthed in 2010.

PPATK chief M. Yusuf said in a hearing with legislators last week that Badrodin was indeed among a group of police generals that the anti-money-laundering agency reported to the National Police’s detectives’ unit at the time over hefty bank accounts.

He added, though, that the allegation against Badrodin had since been cleared after he was able to sufficiently explain a Rp 3 billion ($233,000) transaction through his bank account.

State-run news agency Antara in a January report cited data from the KPK that said Badrodin’s wealth amounted to nearly $650,000 as of May 2014, when he was appointed the police deputy chief.

Half of the figure came from property assets scattered in Jakarta, Bekasi, Depok, as well as Semarang, Central Java, and Pandeglang, Banten.

Yusuf, though, declared Badrodin clean from corruption.

“We’ve clarified that we’ve found no suspicious transactions involving [Badrodin],” he said during the hearing with Commission III members last week.

Acting KPK chief Taufiequrrahman Ruki also cleared Badrodin of any indication of corruption.

“B.H. [Badrodin] is a person who obediently reports his wealth regularly,” he testified at the same hearing before the House.

“Since the beginning, he has always updated his wealth reports.”

Badrodin, while presenting his platform during the fit-and-proper test on Thursday, called on legislators to create a regulation that would help curb the flow of Indonesian sympathizers of the extremist jihadist group Islamic State to Syria and Iraq.

“The National Police have stated several times that although ISIS is supposed to be banned here there is no regulation for it,” he said, referring to Islamic State by one of its acronyms.

“We cannot simply forbid people from traveling to Syria without clear reasons; because it is not against the law,” he said.

“This whole time we’ve been able to make [IS-related] arrests only when they concern other crimes — such as [passport] forgery and [terrorism] funding.”

Another priority focus will be to secure industrial activities from “thuggery and anarchic labor strikes,” including labor activists’ common practice of forcing other workers to join their strikes, Badrodin said.

“Thuggery by individuals and groups are problems for investment in the country,” he said.

“Forcing or pressuring industries [to do things] can destabilize the investment climate. Therefore, it will be among the National Police’s priorities to protect industrial zones.

“Labor activists may express their opinions, but they cannot force other laborers to join their strikes,” he added.

Badrodin said structural reforms, anti-corruption programs and improving the welfare of police personnel would be among his other priorities during his 15 months in office.

Badrodin, 56, is due to enter retirement in July next year.

Vice President Jusuf Kalla said Badrodin would probably be sworn in as the police chief at an inauguration ceremony at the State Palace in Central Jakarta today.

House Speaker Setya Novanto said the House’s endorsement of Badrodin was expected to ease the work of the police in securing the upcoming 60th anniversary commemorations of the Asian-African Conference in Jakarta and Bandung next week, which more than 30 world leaders and more than 60 foreign delegations are expected to attend.

Badrodin’s appointment will officially end a three-month-long period of a police force without a chief after Joko removed Gen. Sutarman from office on Jan. 16, despite his not being due for retirement until October.

Indonesia Corruption Watch researcher Emerson Yuntho on Thursday expressed concern that the appointment of Badrodin, seen by many to be close to the ousted nominee Budi, would pave the way for the latter to become the deputy police chief — although public resistance to him remains high.

The police chief has the authority to appoint his own deputy, not needing approval from either the president or the House.

If Budi is appointed his deputy, he will be able to assume the position of police chief, again without House vetting, when Badrodin’s term ends.

Global Spotlight on Indonesia at WEF in Jakarta

Two Indonesian business leaders will co-chair the event alongside a representative from the IOM and the Philippines

Jakarta Globe, Margye Waisapy, Albert Nonto & Muhamad Al Azhari, Apr 12, 2015

Participant are seen at the Congress Center during the World Economic
Forum annual meeting on Jan. 21, 2014 in Davos. (AFP Photo/Fabrice Coffrini)

Jakarta. Indonesia’s private sector has welcomed this month’s 24th World Economic Forum as an opportunity to claim a larger voice in the regional and global community.

Underlying Indonesia’s growing influence in the regional economy, Jakarta will host the 24th World Economic Forum on East Asia (WEF-EA) from April 19 to 21 at the Shangri-La Hotel.

Government officials and senior figures from various industries of the private sectors will converge on the city to meet and exchange ideas. This year will be the second time Indonesia has played host to WEF-EA.

“This event will showcase Indonesia as the home of large corporate organizations, supported by many business groups, although government remains the key,” says Bank Mandiri chief economist Destry Damayanti. She has been actively involved in preparations for the event alongside the bank’s chief executive, Budi Sadikin Gunadi, who is also a WEF co-chair.

There are four co-chairs for the forum, including John Riady, executive director of the Lippo Group, one of the biggest conglomerates in Indonesia.

William Lacy Swing, director general of the International Organization for Migration (IOM) from Geneva and Teresita Sy-Coson, vice chairwoman of SM Investment Corporations from the Philippines will also chair the event. Destry says she believes the WEF will act as a stage for Indonesia to make its claim to a bigger voice in the regional and global community.

Large business groups, such as Sinar Mas and the Lippo Group, will not only sponsor the event but also share thoughts on issues as varied as food security and Indonesia’s rising store of talent.

Destry says she believes the WEF will help Indonesia improve what she calls the country’s  image problem. She recalls meeting an executive from an investment bank in Qatar at the Institute of International Finance in Washington.

He was critical of Indonesia’s renewed use of the death penalty and alarmed that some Indonesians had gone to join the Islamic State militant group.

“Indonesia needs a strong spokesperson or institution to help counter these issues, and all parties have to stand hand-in-hand to respond to this situation,” Destry says.

The previous event hosted by Indonesia was supported largely by the government through the Trade Ministry but it is now time to give the private sector more chance to speak out about Indonesia, she says.

“The presence of Bank Mandiri’s chief executive Budi Gunadi Sadikin and John Riady of Lippo Group, for example, as co-chairs of the WEF creates a positive impact for Indonesia,” she says.

The WEF-EA will facilitate dialogue about the region’s trade, tourism, financial inclusion, investment strategy, infrastructure development, health and regional connectivity.

Bachrul Chairi, the director general for international trade cooperation at the Indonesian Trade Ministry, says the government will take the opportunity to introduce new policies.

“There will be 16 ministerial-level officials [from Indonesia] invited to discuss Indonesia’s policies and talks about the opportunities that lie ahead,” Bachrul says.

He adds that President Joko Widodo’s administration needs to work closely with foreign investors to realize the government’s development plans over the next five years.

GlobeAsia is affiliated with the Lippo Group.

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