Indonesia's palm oil export ban heats up vegetable oil market

Yahoo – AFP, Thomas URBAIN, with Manel MENGUELTI in Paris, 30 April 2022 

Indonesia's decision to suspend palm oil exports is designed to bring down prices
and limit shortages domestically, but it comes amid skyrocketing prices of edible
oils and global supply shortages (AFP/Azwar Ipank) (Azwar Ipank)

Indonesia's decision to suspend palm oil exports in the face of domestic shortages has pushed vegetable oil prices to new highs, further tightening a market already on edge due to the war in Ukraine and global warming. 

The prices of palm, soybean, European rapeseed and even its Canadian GMO counterpart, canola oil, have reached historic highs following Indonesia's announcement on Wednesday. 

"We already had problems with soybeans in South America, with canola in Canada," said Philippe Chalmin, an economics professor at Paris-Dauphine University in France, stating that both crops had been severely affected by extended droughts. 

Then came devastation for the "sunflowers in Ukraine" due to Russia's destructive invasion, he added. 

Palm oil is the most consumed vegetable oil in the world, and Indonesia accounts for 35 percent of global exports, according to James Fry, chairman of LMC consulting firm. 

Indonesia's export ban is designed to bring down prices in the country and limit shortages, according to authorities. 

But Chalmin said the move "comes at the worst time." 

"The rise in prices dates back to last year already and it is exacerbated by the Ukrainian conflict," he explained. 

Rich Nelson of the agricultural market research and trading firm Allendale said "the industry believes it'll last maybe for one month, perhaps two." 

But in the meantime, prices are skyrocketing in a market that was "already accelerated," he said. 

Unlike other oilseeds, palm fruit does not keep once picked and has to be processed immediately, Fry said. 

Indonesia's palm oil storage system, which was already holding substantial reserves, is now under further stress, Fry said. 

Vicious cycle 

Even though the price of vegetable oil, in addition to multiple other agricultural commodities, has been rising for months, demand has yet to slow. 

"It's difficult to ration demand for food commodities with higher prices," said Arlan Suderman, chief commodities economist at StoneX Financial. 

Palm oil, which is used heavily in processed food such as instant noodles and baked goods, is also present in other consumer products, such as personal care items and cosmetics. 

"Eventually it will trickle down," said Paul Desert-Cazenave of consulting firm Grainbow, "but it's still too early to measure price increases to consumers." 

In the short term, the only oilseed that might be able to provide some relief on the vegetable oil market is the soybean. 

The United States and Brazil, the world's two top soybean exporters, still have available stock, even though more shipments from the countries would only have a marginal impact on edible oil prices. 

The United States Department of Agriculture (USDA) announced last month that it expects soybean acreage to increase more than 4 percent from last year, while corn would shrink by a comparable amount. 

The world's top rapeseed exporter, Canada, meanwhile said Tuesday that it expected a seven percent decline in acreage devoted to the GMO rapeseeds used in canola oil. 

Analysts and economists say they see a need for public policy concerning the food crisis, since in addition to food, vegetable oils are also widely used in biofuels. 

Based on the current crisis "we're going to see more pressure on countries to reduce their biodiesel blending mandates, and renewable diesel mandates," Suderman said. 

"That's going to take time," he warned, "but that's ultimately where you're going to get your biggest demand destruction." 

Europe passed a directive in 2018 excluding palm oil from renewable energy targets by 2030. Some of the bloc's countries, including France, have already stopped using it. 

Despite the current turmoil, Indonesia and Malaysia, the world's second-largest exporter, have maintained their respective programs blending palm oil in their biofuels. 

To make matters worse, many of the major palm oil importers, mainly Egypt, Bangladesh and Pakistan, have seen their currencies depreciate significantly in recent months, said Michael Zuzolo, president of Global Commodity Analytics and Consulting. 

Some major oilseed exporters such as the United States and Brazil have, meanwhile, experienced the opposite, with the dollar reaching multi-year highs. 

"This is kind of the worst-case scenario starting to develop," said Zuzolo. 

Putting importers in a "negative feedback loop where they're going to have more and more difficulty keeping supplies ample, that's the potential tragedy we're walking ourselves into."

Top brands including H&M, Zara to boycott Bangladesh garment summit

Yahoo - AFP, February 22, 2017

H&M, C&A, Tchibo and Inditex which owns Zara -- all top clients of Bangladesh's
$30-billion garment industry -- have pulled out of the Dhaka Apparel Summit

Leading fashion brands including H&M and Zara will boycott a key industry conference in Bangladesh in support of garment workers who have been sacked, hunted or jailed for participating in wage strikes, the companies said Wednesday.

H&M, C&A, Tchibo and Inditex which owns Zara -- all top clients of Bangladesh's $30-billion garment industry -- have pulled out of the Dhaka Apparel Summit, the signature annual event in the global textile hub, scheduled for Saturday.

The move follows strikes in December when tens of thousands of garment workers in the industrial town of Ashualia staged mass protests demanding a three-fold hike in pay, which can run as low as $68 a month.

Dutch clothing brand C&A said, "C&A together with other apparel brands, including H&M and Inditex decided not to participate in the BGMEA Dhaka Apparel Summit."

"We strongly encourage the Government of Bangladesh to take immediate steps to ensure the protection of the workers' rights, with special attention to the legitimate representatives of the workers who have been arrested," C&A spokesman Thorsten Rolfes told AFP.

A spokesman for Swedish apparel giant H&M confirmed the boycott.

"H&M believes that attending the Dhaka Apparel Summit would create confusion and send the wrong signals regarding our commitment to freedom of association and that the ongoing situation must be peacefully resolved," spokesman Iñigo Sáenz Maestre said.

The strike, which lasted for a little over two weeks, was squashed, with some 1,600 employees sacked and 34 arrested, while cases alleging burglary, arson, vandalism and extortion, among other charges, were filed against more than 1,500 workers.

Last week union leaders said the workers were "living in constant fear of being arrested as the police hunt those who were involved in the strikes".

The summit is hosted by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), an industry body that represents the country's 4,500 clothing factories, and features Prime Minister Sheikh Hasina as its keynote speaker.

BGMEA president Siddiqur Rahman told AFP that they "did not get any communication from any brand not attending the summit".

International rights group Clean Clothes Campaign welcomed the brands' decision to withdraw participation and said it would be "a major embarrassment" for the government and the organisers.

CCC spokeswoman Mirjam van Heugten said, "Unless all detainees are released, unsubstantiated charges are dropped, and other acts of intimidation and harassment of trade unions are stopped... (the brands) cannot credibly participate in a summit on "sustainable growth" of the industry."

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Indonesian Poor to Receive Rp 14 Trillion in Aid Ahead of Fuel Hike

No Mercy for Shady Tax Consultants: Finance Minister

Jakarta Globe, December 29, 2016

Finance Minister Sri Mulyani Indrawati and the director general of taxation, Ken
 Dwijugiasteadi, in conversation during the minister's impromptu visit to the
tax office in Jakarta on Wednesday (28/12). (JG Photo/Tabita)

Jakarta. Finance Minister Sri Mulyani Indrawati said she will clamp down on tax consultants involved in tax evasion, as they are currently inundated by clients seeking their assistance to join the government's tax amnesty program.

"I've asked Mr. Ken [Dwijugiasteadi, the director general of taxes] to check out the tax identification numbers a many consultants," she told reporters on Wednesday (28/12).

"The consultants are cashing in big from the tax amnesty program. I've seen one who reported up to 30 asset declaration letters," she said.

Sri Mulyani made the comment during an impromptu visit to the headquarters of the Directorate General of Taxation in Jakarta, where she found employees from several tax consultancies submitting their clients' wealth reports.

"It's common practice in industrial countries; even individual taxpayers there use the services of tax consultants," she said. "But please don't try to lower [the value of taxpayers' assets] so they can receive the 0.5 percent tariff."

The government offers a 3 percent tariff for taxpayers who come clean on previously unreported assets abroad and agree to repatriate them. The government also offers a 0.5 percent tariff for small and medium enterprises with less that Rp 10 billion ($742,000) in total assets.

More than 170,000 taxpayers have joined the second part of the tax amnesty program and around 70 percent of them are small and medium enterprises, according to Hestu Yoga Saksama, director of counseling, service and public relations at the tax office.

The number of participants in the tax amnesty program, which started in July this year, has reached 563,000 by Thursday.

Tax director general Ken Dwijugiasteadi reported to the minister during her visit that the amnesty process is "under control" and that no emergency measures will be taken to address the lower-than-expected number of participants.

"Most of the high-wealth [individuals] have joined the first part of the tax amnesty, so the additional state revenue from the program will not be as high," Sri Mulyani said.

Despite the slower progress, the minister said she still "hopes for the best" and that each regional tax office has already prepared a plan to start the third part of the tax amnesty program in a bid to achieve a steady result.

So far, the government has collected Rp 106 trillion in total tax amnesty-related penalties – which include the 2 percent and 3 percent tariffs, payments of preliminary evidence from tax investigations and tax due payments – according to tax office data.

Taxpayers have also declared Rp 4,193.1 trillion in previously unreported assets and repatriated Rp 141.3 trillion so far.

The government has set a target of Rp 4,000 trillion in declared assets, Rp 1,000 trillion in repatriated assets and Rp 165 trillion in additional tax revenue.

"If the results at the end of the second part have not met our expectations, then I will step up the campaign in the last part," the minister said.

The tax office will not only focus on tax consultants in the last part of the tax amnesty program, which starts in January, Sri Mulyani said. Notaries, doctors, tax consultants, lawyers, architects, accountants, governors and executives of state-owned companies will be targeted next.

Indonesia's Richest One Percent Controls Nearly Half of Nation's Wealth: Report

Jakarta Globe, Tabita Diela, December 01, 2016

A housewife in the slum area of Kapuk Teko in Jakarta drying her laundry in
 the sun. Many people in living in Indonesia capital live in poverty. (Antara
Photo/Rivan Awal Lingga)

Jakarta. A recent report on global wealth distribution showed that the top 1 percent of Indonesians remain in control of half of the country's wealth despite a dent from weak global commodity prices, reflecting a wide wealth disparity that is unlikely to narrow anytime soon.

The seventh Global Wealth Report by Credit Suisse Research Institute shows that the richest 1 percent of Indonesia's adult population of 164 million own 49.3 percent of the country's $1.8 trillion wealth by June this year, a drop from last year's 53.5 percent.

Indonesia is also the world's fourth most unequal country, according to the study. Russia's wealthiest 1 percent owns 74.5 percent assets in the country while in India 58.4 percent and in Thailand 58 percent.

"These numbers showed that social justice in Indonesia is yet to be seen," Eric Alexander Sugandi, an economist with the Jakarta-based think tank Kenta Institute, said. The report found Indonesia is also home to 30 million of the so-called bottom billion, who own less than $248 worth of assets.

Despite the drop this year, the share of the top 1 percent wealth to the overall population is still trending upward, as they keep accumulating wealth through inheritance and investments, Eric said.

"Indonesia does not have inheritance tax like Japan. So the one percent's wealth would be multiplied and unlikely to be caught up by the rest of the population," he said.

Lana Soelistianingsih, an economist from Samuel Assets Management said, the top one percent could have suffered from weak prices of global commodities, mainly coal and palm oil, which made up most of the country's billionaire's assets.

Indonesian coal benchmark price was $51.8 per metric ton in June this year, down 13 percent from $59.6 in June last year. Malaysia Palm Oil Futures was up just 2 percent to $618 per metric ton over the period.

Rupiah depreciation against the US dollar — which the report noted totaling 46 percent drop since 2011 — has also caused wealth decline per adult, the report said.

Still, the report also showed that the remaining of Indonesian population saw some increase in their wealth, which serves as a "source of finance for future consumption, particularly for retirement, and for reducing vulnerability to shocks such as unemployment, ill health, or natural disasters."

The median for wealth in Indonesia is $1,966 for every adult, up 22 percent from last year, the report shows. Indonesia's total household wealth grew by 6.4 percent in 2016 to reach $1.8 trillion this year with 88 percent of it in form of real assets like property and land, and the remainder was in financial assets like time deposits, bonds and stocks.

The number is projected to increase about 44 percent to $2.6 trillion over the next five years.

Indonesia added 13,000 new dollar millionaires in a year, which added up to 112,000 millionaires who owned a total wealth of $500 billion by mid-year 2016. The report defined wealth as the value of financial assets and housing minus the debts owed by households.

The report estimates that the number of dollar millionaires in the country will increase by 55 percent to 173,000 over the next five years.

About 84 percent of the adult population in the country owns less than $10,000, falling into the "frontier wealth" category — in which an adult's wealth is ranging from $5,000 to $25,000 — along with other countries like Ecuador, Egypt, Malaysia, Thailand and Tunisia, the report says.

Overall, the global wealth increased by 1.4 percent to $256 trillion, with Japan in the lead with a 19 percent wealth increase due to rate appreciation.

L'Oréal Campaigns for Gender Equality in Science With #ChangeTheNumbers

Jakarta Globe, Devina Halim & Ratri M. Siniwi, October 08, 2016

In view of the fact that only 30 percent of researchers in the world are women,
 international beauty care company L'Oréal launched a global campaign titled
#ChangeTheNumbers in an effort to address the issue. (JG Photo/ Megan Herndon)

Jakarta. International beauty care company L'Oréal has launched a global campaign titled #ChangeTheNumbers in an effort to remedy the fact that only 30 percent of scientific researchers in the world are women.

The campaign manifesto lists several points considered essential in empowering younger women to develop careers in science and ensuring that there is equal opportunity and exposure for them in the field.

"L'Oréal believes the world needs science and science needs women. The purpose of this global campaign is to change the public perspective of women in science and to attract more women to choose becoming researchers," L'Oréal Indonesia head of communications Melanie Masriel said on Thursday (06/10).

Two inspiring Indonesian female researchers were invited to speak during a discussion about the lack of women in science, hosted by the company.

Ines Atmosukarto, chief executive and managing director of Australian vaccine research and development firm Lipotek Canberra, and Fenny M. Dwivany, associate professor in molecular biology at the Bandung Institute of Technology (ITB), both mothers and recipients of the L'Oréal-Unesco for Women in Science International Fellowship in 2004 and 2007, respectively.

The two women said being a researcher is not for the weak, but that the hard work pays off with great rewards.

"We want to open the eyes of the younger generation to show that there are lots of rewards for being a researcher, so it's not only about the challenges," Ines said.

One of the rewards, she added, was the opportunity to see the world and being exposed to different cultures while studying or attending forums, and the ability of also providing that to her children.

"We can open the minds of our next generation to see the world and question everything and become more curious and creative," Ines said.

By doing so, she believes future generations would be able to help Indonesia move towards its goal of becoming a developed manufacturing country.

In terms of challenges, Fenny said researchers in Indonesia mostly face problems in infrastructure and funding.

"Indonesia is such a biodiverse country and as a biologist, it's sad to see these problems. But if we're not the ones researching this, then who will?" the associate professor said.

According to Fenny, being a researcher helps women to become more perseverant, detail-oriented and tough, especially with the ability to multitask as mothers and researchers.

"We have an advantage of having a different point of view from a male perspective, which could help fill the gap," she added.

While society still judges them against the norm of women having to be stay-at-home mothers, they accredit their support systems for being understanding and helping them break through that barrier while accomplishing their goals.

"I think we were both fortunate enough to have support systems that encouraged us to further our research and education. And I believe that having a support system is essential for researchers," Ines said.

Other than having great support systems, both women said the key to being successful in this field is to be constantly curios, while satisfaction is something dangerous in research.

"To be a scientist you must have fire in your belly, because research is all about working with failures and that should be the fuel to keep you going," Ines said.

The women believe that despite the difficulties, Indonesian girls should not be afraid of pursuing their dreams of becoming scientists.

"There is a culture in our society that makes us afraid of challenges. The potential in Indonesia is high, but there are not enough opportunities," Fenny said.

According to her, there are many Indonesian researchers studying abroad, but coming home is the challenge.

"When we as researchers return to Indonesia, we don't have fields to work in. We can't go home because there are not enough job opportunities," she added.

Ines, on the other hand, suggested that the government must provide incentives for businesses to develop research and development units to support innovation in the country, and in turn, create more job opportunities.

All parties involved must work together in order to increase the number of female researchers and promote gender equality in science across the globe.

"What we have now, our lifestyle, is the result of research done before. The regeneration [of science] is important to create innovations for the sake of posterity," Ines said.

She also believes that Indonesia needs to move away from a male-focused perspective, which should be taught to children from a young age.

"We need to empower young girls to make them believe that they are just as capable as boys – we have to break through the glass ceiling," she said.

Another way this could be changed, Fenny added, is through celebrating the accomplishments of what female scientists have achieved, rather than the constant focus on celebrities.

Related Article:

L’Oreal Sorority in Science Awards 10 Scholarships for Future Female Scientists

Tommy Suharto Urges His Family to Join Tax Amnesty Program

Jakarta Globe, Tabita Diela & Yosi Winosa, September 16, 2016

Tommy Suharto, right, symbolically hands over his tax report to Ken Dwijugiasteadi,
director general for taxation at the Ministry of Finance, on Thursday (15/09). (SP
 Photo/Joanito De Saojoao)

Jakarta. Former President Suharto's youngest son said his family will likely join the government's tax amnesty program.

"I haven't talked to [my family about it], but they should make the best use of this program," Hutomo Mandala Putra, better known as Tommy Suharto, told reporters on Thursday (15/09).

Tommy, who owns the Humpuss Group, symbolically handed over his tax report to Ken Dwijugiasteadi, director general for taxation at the Ministry of Finance. Usually, tax reports of big taxpayers are submitted to the head of the Directorate General of Taxes.

President Suharto's children are involved in various domestic and international businesses.

"I urge Indonesians to join this program without hesitation. I take this opportunity to make things easier for my future projects," Tommy said.

He declined to reveal the value of the assets he reported, or the amount of tax he paid. He said he reported stocks, account receivables and other assets, most of which are located abroad.

Tommy is currently involved in the property sector with his Mangkuluhur City office tower development.

The tax office hopes high-net-worth Indonesians will join the program soon as the deadline for the lowest tax rate is the end of this month.

Indonesian Chambers of Commerce and Industry (Kadin) chairman Rosan P. Roeslani told the Jakarta Globe that many members of the business lobby will join the program next Tuesday.

Indonesia punishes firms over deadly forest fires

Yahoo – AFP, December 22, 2015

Indonesia is punishing more than 20 companies in an unprecedented move for
starting deadly forest fires that killed 19 people (AFP Photo/Adek Berry)

Jakarta (AFP) - Indonesia is punishing more than 20 companies in an unprecedented move for starting deadly forest fires that killed 19 people, a government official said Tuesday.

Three companies have been shut down permanently after having their licences revoked over their role in the blazes that choked vast expanses of southeast Asia with acrid haze and cost Indonesia $16 billion.

It is the first time the government has revoked company licences over forest fires, an annual occurrence caused by slash-and-burn land clearance.

The environment ministry also froze the operations of 14 companies and said they face closure if they do not meet the government’s demands over fire prevention.

Several other companies have been given a strong warning and will be put under close supervision.

"We have sanctioned 23 companies in total, ranging from administrative sanctions to license revocation, while 33 others are still in the process, they could have their licenses revoked too if they are found guilty," environment ministry official Kemal Amas told AFP.

The ministry has been investigating 276 companies in total since the fires broke out in September.

Three companies have been shut down permanently by Indonesia after having

 their licences revoked over their role in the blazes that choked vast expanses of 

southeast Asia with acrid haze (AFP Photo/Adek Berry)

"We need firmer law enforcement so that this catastrophe does not repeat itself, it’s been going on for 18 years but nobody has learnt their lesson," Amas said.

Amas said the ministry was also working hard to restore the forests and farmland destroyed in the fires.

Activists welcomed the government’s new commitment to punish firms.

The Indonesian Forum for Environment said it was unheard of for the government to revoke licences, as many companies previously avoided facing trial.

"The minister has the courage to not only freeze the companies' operation but also chase the owners in a civil case, this is great and this must be guarded carefully," Kurniawan told AFP.

"In the past some people were named suspects, but for them to actually lose their licenses, this is the first time," he said.

More than half a million people suffered acute respiratory infections in Indonesia because of the haze, while many in neighbouring Singapore and Malaysia also fell ill.

Singapore banks urged to curtail loans to haze-linked firms

Yahoo – AFP, Martin Abbugao, 9 Oct 2015

A worker waters a field as downtown buildings are shrouded in smog in
Singapore on October 5, 2015 (AFP Photo/Roslan Rahman)

Singapore (AFP) - An umbrella group of local and foreign banks in smog-hit Singapore has urged members to make "sustainable development" part of their lending requirements, stepping up pressure on companies linked to land-clearing fires in Indonesia.

The 158-member Association of Banks in Singapore (ABS) on Thursday issued guidelines for the inclusion of greenhouse gas emissions, deforestation, forest degradation and biodiversity loss among the criteria for approving commercial loans.

The move came in the wake of fires illegally started to clear land for plantations on Sumatra island and the Indonesian part of Borneo, which have shrouded Singapore and Malaysia in acrid smoke since early September.

"The banking sector in Singapore wants to play a bigger role in driving responsible business and long-term sustainable development," ABS director Ong-Ang Ai Boon said in a statement.

The smoky haze has also reached the popular Thai holiday islands of Phuket and Samui, forcing several planes packed with beach-bound tourists to turn back.

Palm oil and pulp and paper companies are believed to be the main culprits behind the use of burning to clear massive tracts of land for their plantations, but prosecution by Indonesian authorities has been rare, prompting affected countries like Singapore to resort to economic pressure.

Singapore's biggest supermarket chain, NTUC Fairprice, this week withdrew from its shelves all paper products sourced from Indonesian-owned Asia Pulp & Paper (APP), which has corporate offices in the city-state.

The company's suppliers are suspected of starting forest fires in Indonesia.

The Fullerton Hotel is blanketed in thick haze, in Singapore, on September 24,

2015 (AFP Photo/Roslan Rahman)

Related Articles:

Singapore moves against Indonesian firms over haze
Malaysia shuts schools as choking smog worsens

SBY Honored, Along With Companies, for Green Growth

Jakarta Globe, Feb 26, 2015

Susilo Bambang Yudhoyono when he was still president of Indonesia. (EPA
Photo/Bagus Indahono).

Jakarta. Susilo Bambang Yudhoyono was among a diverse group of winners of awards for sustainable business practices whose names were announced on Wednesday evening, with the former Indonesian president receiving praise for “his achievements in developing green growth in Indonesia and his commitments to action on climate change globally.”

A Special Award for Leadership in Green Growth and Development was presented to Yudhoyono at the Shangri La Hotel Jakarta, during a ceremony attended by Vice President Jusuf Kalla, Coordinating Minister for the Economy Sofyan Djalil and other ministers, as well as CEOs, heads of international agencies and media.

“Development and growth is something that needs to be planned carefully. It needs to ensure social inclusiveness. It needs to protect the environment, it needs to correspond to climate challenge, it needs to go on for the long term,” Yudhoyono said at the award ceremony.

The 2014 Sustainable Business Awards Indonesia were organized by Global Initiatives in cooperation with PricewaterhouseCoopers (PwC), the Indonesian Chamber of Commerce and Industry (Kadin) and the Indonesia Business Council for Sustainable Development.

The organizers said in a press release that cement company Holcim Indonesia emerged the overall winner, but companies such as Bank BNI, Astra International, Bukit Asam, Nestle Indonesia, Bumi Serpong Damai and Unilever also won in various categories.

Tony Gourlay, CEO of Global Initiatives, said in the press release: “For the third year in a row, we are pleased to showcase companies in Indonesia who have embedded sustainability in their corporate mission and whose leadership shares this vision. We encourage other companies to follow their lead and communicate their sustainability efforts more widely.”

The complete list of SBA winners

MAIN AWARDS

Overall Winner: Holcim Indonesia

1. Strategy and vision: Unilever Indonesia

2. Workforce: Holcim Indonesia

3. Community: Astra International

4. Energy management: Holcim Indonesia

5. Water management: Bukit Asam

6. Waste & material productivity: Danone Aqua Group

7. Climate Change: Holcim Indonesia

8. Supply Chain: Nestle Indonesia

9. Land Use, Biodiversity and the Environment: Monsanto Indonesia (Branita Sandini)

10. Business Responsibility and Ethics: Unilever Indonesia

* Environmental Disclosure: Dupont Agriculture Products Indonesia

SPECIAL RECOGNITION AWARDS

1. Pioneer in Green Finance in Indonesia: Bank Negara Indonesia

2. Outstanding leadership in sustainable agriculture: Great Giant Pineapple

3. SME placing sustainability at the core of its business: Pulau Nikoi

4. Outstanding Energy Management in the mining sector: Vale Indonesia

5. Outstanding Water Management in the property sector: Bumi Serpong Damai

Special Award for Green Growth & Leadership: Susilo Bambang Yudhoyono

Govt to ‘Help’ Lapindo With Mudflow Compensation, Offers to Buy Assets

Jakarta Globe, Ezra Sihite, Dec 08, 2014

Children play on swings on the embankment of the Lapindo mudflow. Victims
 are still waiting for full compensation from the company accused of triggering
the disaster. (JG Photo/Arief Priyono)

Jakarta. Victims of the Lapindo mudflow disaster in Sidoarjo, East Java, are one step closer to being compensated for losses — eight years after dozens of villages and hundreds of hectares of farmland were swamped.

The government announced on Monday that it would buy assets from the company accused of triggering the disaster, Lapindo Brantas, which could then use the proceeds to pay out Rp 781 billion ($62 million) due to victims this year.

Minister of Public Works Basuki Hadimuljono said the government would buy about 20 percent of the company’s assets, which was mostly land, in affected areas.

The announcement comes just days after President Joko Widodo — through cabinet secretary Andi Widjajanto — ordered Lapindo Brantas to wrap up payments to victims of the mud volcano. On top of the Rp 781 billion owed to residents, the company, which is affiliated with the family of Golkar Party chairman Aburizal Bakrie, must pay Rp 500 billion to affected businesses in 2015.

“They still have around Rp 1.4 trillion to pay,” Andi said. “We’re waiting for it.”

The government’s decision to buy assets from Lapindo Brantas is bound to raise questions about why money from the state budget was essentially being used to compensate a mistake made by the company.

The government is already required to pay Rp 300 billion compensation to victims whose land is located outside the map of affected areas. A 2012 judicial review which sought to have the company cover all compensation costs in areas affected by the mudflow was rejected by the Constitutional Court.

Andi said buying the company’s assets was part of the government’s effort to “help” Lapindo Brantas fulfill its responsibilities.

Lapindo Brantas was conducting gas exploration in the Sidoarjo area in 2006 when one of its natural gas wells blew out, causing a mud flow which destroyed hundreds of homes, swamped 720 hectares of land and displaced thousands of people.

Scientists blame drilling activities by the company for triggering the eruption, but the government at the time decreed it a natural disaster.

Related Articles:

Taxpayers Still Footing the Bill For Sidoarjo Mud

Residents hope govt will fulfil Lapindo compensation promise

Boediono Wants Lapindo Disaster Area for 'Nature Recreation'

Lapindo Told to Shell Out For Mudflow Before Drilling Again

Lapindo Disaster Caused By Human Error: Study

Indonesia's mud volcano flows on

Satellite picture received from Ikonos Satellite Image on May 29, 2008 shows

the mud volcano and its surrounding area in Sidoarjo, East Java. (AFP/Ikonos

Satellite Image)

More pictures ....

VP Kalla Tells Business Owners to Behave

Jakarta Globe, Novianti Setuningsih, Dec 08, 2014

Vice President Jusuf Kalla, left, talking with Trade Minister Rachmet Gobel at
 the leadership meeting of the Indonesian Chamber of Commerce and Industry
(Kadin) on Monday. (Antara Photo/Muhammad Adimaja)

Jakarta. Vice President Jusuf Kalla in a speech for the Indonesian Chamber of Commerce and Industry (Kadin) on Monday urged the nation’s entrepreneurs to stop ruining the environment and pay their taxes.

“In the wood-trading era, in the 1960s and 70s, a lot of trees were cut down, causing floods that we still have to deal with until now,” said Kalla, himself a successful businessman.

The vice president also told the hundreds of entrepreneurs attending Kadin’s national leadership meeting that the government was going to improve its natural resources management.

“The mining sector was profiting while our environment was wasted. The [new] regulation is made to protect our natural resources,” Kalla said.

He added that business should also pay all taxes and royalties they owe, and that owners could be banned from traveling abroad if they fail to do so.

Kalla explained that the government needed the income from taxes and royalties to help fund its program to improve the nation’s infrastructure.

Related Article:

Jokowi’s Call for Ecological Reform Reaches Palm Oil Firms

Big four accountants under fire in Holland for poor audit work

DutchNews.nl, Thursday 25 September 2014

(NOS/ANP)

Finance minister Jeroen Dijsselbloem has pledged to get tough on the big four accountancy firms after a damning report from the financial services regulator.

The AFM said on Thursday that all four firms - KPMG, Deloitte, PwC and EY - have done little to improve the quality of their annual report audits since the last inspection in 2010.

The problems are structural and require 'fundamental reforms and a cultural shift,' the AFM said.

In a reaction, Dijsselbloem said 'the checks which accountants are required to carry out by law should be above reproach... It is unacceptable that the quality is not up to standard.'

Measures

In an effort to force the firms to improve, the AFM is planning a series of reforms. Accountancy groups will be required by law to have a supervisory board. Senior officials will have to be vetted by the AFM and the supervision of semi-public bodies such as hospitals and housing corporations will be stepped up.

According to the NRC, KPMG is the worst performer of the big four in the Netherlands. Of the 10 audits which the AFM looked at, seven were branded 'insufficient' - which means the books were signed off without the accountant being certain they were accurate.

Four out of 10 PwC and Deloitte audits failed to make the grade as did three carried out by EY.

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