Indonesia eyes moving capital from congested Jakarta

Yahoo – AFP, April 29, 2019

Jakarta is home to some 30 million people and is also one of the world's fastest
sinking cities due to excessive groundwater extraction (AFP Photo/ADEK BERRY)

Jakarta (AFP) - Indonesia is considering a plan to move its capital away from sprawling megalopolis Jakarta, officials said Monday, but any jump to a new city could still be years away.

The idea of moving Indonesia's seat of government from an urban conglomeration of nearly 30 million people with some of the world's worst traffic jams has stretched on for decades.

Low-lying Jakarta is also prone to annual flooding and is one of the world's fastest sinking cities due to excessive groundwater extraction.

On Monday, urban planning minister Bambang Brodjonegoro said the long-stalled relocation plan won approval from President Joko Widodo who favoured moving the capital away from Indonesia's most populous Java island.

Jakarta, which suffers billions of dollars in annual congestion-and-flood linked economic losses, would remain the country's financial hub.

"(Widodo) decided on ... the option to relocate the capital," Brodjonegoro said after a cabinet meeting.

In a statement before the meeting, Widodo expressed support for the idea, but he did not give an alternate location or a timeline for any move.

"In the future, would Jakarta be able to carry the double burden of being both the centre of government and its business centre?" he asked in the statement.

"If we prepare well from the very beginning, this great (relocation) idea could be realised," he added.

During his re-election campaign, Widodo pledged to spread economic growth more evenly in the nation of 260 million.

He won a second term this month, according to unofficial poll results.

Local media have reported that a possible new capital would be Palangkaraya city on the island of Borneo.

Muslim Indonesia's capital to vote in tolerance test

Yahoo – AFP, Sam Reeves, February 13, 2017

Jakarta's Christian governor Basuki Tjahaja Purnama could win another term in
office despite standing trial for blasphemy

Jakarta's Christian governor will fight to cling on to his job at polls this week despite standing trial for blasphemy, in a saga that has fuelled concerns about religious intolerance in the Muslim-majority nation.

Basuki Tjahaja Purnama will Wednesday face two prominent Muslim candidates in the race to lead the Indonesian capital, a megacity of 10 million, as local elections take place across the country.

But the Jakarta ballot has become about much more than whether the city's first non-Muslim governor for half a century, and its first ever ethnic Chinese leader, will continue in his job.

The run-up has been overshadowed by anger at claims Purnama insulted the Koran, that sparked huge protests by Islamic hardliners and led to the governor being put on trial in a case criticised as unfair and politically motivated.

Purnama has not been barred from running but his lead in opinion polls has shrunk, and the vote is now seen as a test of whether much vaunted pluralism and a tolerant brand of Islam in the world's most populous Muslim-majority country are being eroded.

"This is going to be a litmus test of Indonesian Islam -- are we tolerant or intolerant?" said Tobias Basuki, a political analyst from Jakarta think-tank the Centre for Strategic and International Studies.

Although Muslims dominate Indonesian politics, Christian and ethnic Chinese politicians have risen to become government ministers, but very few have been both Chinese and Christian, like Purnama.

Religious and ethnic tensions have made for a dirty race with "fake news" flooding social media, and 27,000 security forces will be deployed in Jakarta on election day.

The "fake news" has mainly targeted Purnama, and included claims that a free vaccination programme he backed was a bid to make girls infertile and reduce the population. His supporters have hit back online, defending his record in office.

Tensions were still running high days before the vote, with tens of thousands descending on Jakarta's national mosque on Saturday to urge voters to back a Muslim.

"I am here driven by my faith, because I also felt insulted when Ahok insulted my religion," 25-year-old Mochamad Ramzie told AFP, referring to Purnama by his nickname.

Jakarta's Christian governor Basuki Tjahaja Purnama has won fans with his 

regeneration of parts of the city but he has met opposition to slum clearance

programmes

Popular leader

The governor's opponents are Agus Yudhoyono, the son of a former president, and ex-education minister Anies Baswedan, backed by former general Prabowo Subianto who heads a powerful political party and ran against President Joko Widodo in 2014.

About 100 other local elections will take place on Wednesday but the stakes are highest in the capital, with the top job in Jakarta seen as a stepping stone to victory in the 2019 presidential polls.

Purnama's troubles began in September when he said in a speech that his rivals were tricking people into voting against him using a Koranic verse, which some interpret as meaning Muslims should only choose Muslim leaders.

An edited video of his comments went viral online, sparking widespread public anger.

The controversy is a high-profile example of the religious intolerance that has become more common in Indonesia in recent years, with a surge of attacks on minorities as hardliners battle for influence.

About 90 percent of Indonesia's 255 million inhabitants are Muslim but most practise a moderate form of Islam and have lived largely harmoniously alongside Christian, Buddhist and Hindu minorities.

Purnama won popularity in Jakarta for making serious efforts to improve the overcrowded and chaotic city.

The leader has cleaned up the once-filthy rivers, demolished red-light districts, and created more green spaces, although he has sparked some opposition with controversial slum clearances.

His support slipped after the blasphemy controversy erupted but has bounced back and most recent polls show him in the lead, although if the vote goes to a run-off in April he is seen as likely to lose.

The election for the governorship of Jakarta has been overshadowed by

anger at claims the incumbent Basuki Tjahaja Purnama insulted the Koran

If he does win the vote and is convicted of blasphemy, which could see him sentenced to up to five years in prison, he would not automatically be barred from holding office and could avoid jail for a long time by filing successive appeals, analysts say.

His trial is not expected to finish until at least April.

Despite the challenges facing him, many of Jakarta's 7.1 million voters -- most of them Muslims -- see Purnama as the only hope for the city.

"There's a very simple reason why I'm voting Ahok," Eleonora Natasya, a 21-year-old engineering student, told AFP.

"I actually see something changing when he is in charge."

President: Let's consider moving RI's capital

The Jakarta Post, Jakarta | Thu, 12/03/2009 10:50 AM

President Susilo Bambang Yudhoyono has said the idea of relocating of the national administration center from Jakarta should be considered.

Speaking to governors from across the archipelago at a gathering in Palangkaraya, Central Kalimantan, on Wednesday evening, Yudhoyono said Jakarta was far too crowded to be the center of the national administration.

"Fifteen years ago there was a proposal to move the national administration center to Jonggol in West Java, but since the [1998] monetary crisis, ideas on relocating were no longer heard," he said as quoted by Antara state news agency.

Commenting on an idea to relocate the country’s capital to the Central Kalimantan city of Palangkaraya, Yudhoyono said it would not be practical because the city was too far from Jakarta.

But considering seeing the vast area of Palangkaraya, Yudhoyono said it was natural that its residents wanted to develop it into a better and bigger city.

He added it also made sense to develop Palangkaraya, because unlike other areas in the country, Kalimatan was relatively free of natural disasters such as earthquakes and tsunamis.

Yudhoyono and his entourage are in the city for a two-day visit to open the Indonesian Provincial Administrations Association (APPSI) national conference on Thursday.

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Tax office for the haves to be launched

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Fri, 03/13/2009 10:50 AM  

The creme de la creme of Indonesian earners will soon have a special place to hand over their money, exclusively designed and built by the government: a new tax office for the haves. 

Expected to be launched in April, the new branch office in Gambir, Central Jakarta, is designed to serve high-wealth individual taxpayers, tax office chief Darmin Nasution said late Wednesday. 

The office will be next door to the existing large taxpayers' office (LTO), which serves the country's more than 200 top corporate taxpayers. 

"We've listed 1,200 individual taxpayers [the selection of which is taken] from a combination of news, papers, and other documents," Darmin said. 

He added the tax office listed the 1,200 taxpayers based on their assets, and not their income, because the latter category was not really representative. 

"[From the point of] income, they may not be categorized as high-wealth individuals. But their assets are everywhere," he said. 

Darmin added the tax office for the time being only listed high-wealth individuals living in Jakarta, simply because most of the haves lived in the country's capital. 

"All of them are businesspeople," he added. 

Indonesian cigarette baron Michael Hartono and his brother R. Budi Hartono, along with paper tycoon Sukanto Tanoto, palm oil magnate Martua Sitorus and telecoms and retail king Peter Sondakh will likely be among the people targeted by the tax office to be listed in the new office. 

The five men were named among the richest people in the world in 2009 by Forbes magazine. 

The Hartono brothers, who own cigarette company PT Djarum, each have assets worth US$1.7 billion. Sukanto, the owner of Raja Garuda Mas International — a holding company with activities ranging from paper, palm oil, construction and energy — has assets worth $1.6 billion. 

Darmin said the tax office would check the names of rich people as reported in the media. 

He added that despite having billions in assets, many rich people often evaded paying taxes. 

"Most of them don't comply with our [regulations]. We want to fix this, so that they pay the right amount of taxes," Darmin said. 

The tax office is now shifting its attention to increasing the amount of tax paid by individual taxpayers. Prior to this, corporate tax revenue far outweighed individual tax revenue, he added. 

"During a crisis, if corporate taxpayers go broke, they can't pay taxes," Darmin said. 

"But individual taxpayers will keep paying taxes as long as they have an income." 

To provide better services for these high-wealth individual taxpayers, the tax office is pre-paring selected tax employees to be placed at the new office, said tax office spokesman Djoko Slamet Surjoputro. 

"We're mapping our employees, based on exams, key performance index, recommendations from their superordinates, educational background and track records," he said. 

"The scoring will be clear." 

Indonesia has 12.7 million registered taxpayers, about 8 million of them corporate.

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IDX to introduce new trading system

The Jakarta Post, Thu, 02/12/2009 2:33 PM  

JAKARTA: After two delays, the Indonesia Stock Exchange (IDX) will next month run a new trading system that will enable it to record more transactions in a day. 

IDX director for information technology Bastian Purnama said Wednesday the new system, called Jakarta Automatic Trading System (JATS) - Next Generation, would be launched on March 2. The launch was initially planned for Dec. 1 last year and then for Feb. 16 this year. 

The new system, he said, would have the capability to receive up to 1 million transactions per day, four times more than the existing equipment. It is also equipped with stronger infrastructure back up so it would provide greater protection in the event of any disruption . 

In August last year, the IDX system hit problems due to internal connection errors, forcing the stock market to stop trading for more than one hour. 

Bastian said that IDX spent Rp 45 billion (US$ 3.8 milion) on the installation of the new system.

First-Day Trading

Antara, Mon January 5, 2009, Jakarta 

President Susilo Bambang Yudhoyono (left) accompanied by Finance Minister Sri Mulyani (right) gives his speech after opening share trading at the Indonesian Stock Exchange (BEI) building in Jakarta, Monday (1/5). The composite index was closed 60.170 points higher at midday to 1,415.578. (ANTARA/Widodo S. Jusuf)

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Bapepam to revise IPO rules to protect companies

Foreign investors dominate Indonesia stock market

Bapepam to revise IPO rules to protect companies

Ika Krismantari, The Jakarta Post, Jakarta | Sat, 01/03/2009 10:33 AM  

The Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) plans revision of the regulations on its initial public offering (IPO) scheme to ensure that firms wanting to go public are better protected from negative impacts of the global economic downturn. 

The revised regulation is expected to be issued in the first quarter of 2009, Bapepam chairman Fuad Rachmany said recently. 

Under the proposed regulation, companies planning to offer their shares to the public for the first time will be given a period of three months after securing Bapepam's approval to implement their plan. 

This is aimed at providing more time for reviewing the feasibility of their IPO, and to give time for reassurance that market conditions would be favorable for generating the expected proceeds despite the uncertainties in the global equity market. 

"We don't want that the market fails to absorb the shares due to unfavorable market conditions once the companies execute their plan for the IPO," Fuad said. 

Under the existing regulation, companies holding Bappepam's IPO approval are required to offer their shares to the public as soon as possible. 

The proposed regulation is a response to the October stock market collapse, in which several companies had to unexpectedly drop their IPO plans over concerns that the sales of their shares could not be fully absorbed by investors. 

While targeting some 25 companies to go public last year, the Indonesia Stock Exchange (IDX) only completed IPO procedures for 19 of them by the end of 2008. 

IDX president director Erry Firmansyah said earlier that 15 companies were planning to launch an IPO during 2009, with 11 of them already in the pipeline, including integrated oil and gas service provider PT Prime Petroservices and telecommunication network service provider PT Power Telecom. 

The stock market has yet to become a fully alternative financing option for the corporate sector in Indonesia, as the role of the banking sector is still considered predominant. 

Around 70 percent of funding for the corporate sector is still therefore being supplied by the banks, with the rest coming from the stock market and bonds. 

The revised IPO regulation will also require firms to get approval from the Bapepam before issuing a full public disclosure on their IPO plan, known also as the prospectus. 

The watchdog will examine the prospectus for any legal and future problems which may potentially cause losses to investors. 

Under the existing regulation, companies can distribute their prospectus to Bapepam and the public at the same time. 

"We don't want a case like PT Adaro Energy to reoccur, in which the public (has) already read the prospectus while Bapepam is still checking it, creating pressures on us later to grant the IPO approval," Fuad said. 

Bapepam drew criticism from analysts over its decision to give approval for the Adaro IPO, which was made in July last year. 

Although the IPO was a success for Adaro, gaining proceeds of Rp 12.3 trillion (US$1.08 billion), some investors thought the company did not merit the permit as it was still involved in a number of unresolved legal disputes. 

Bapepam will also shorten the selling period from a minimum of five days to only one day to make the IPO process more effective and efficient.

JCI up but logs as 7th worst in region

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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YEAR OF THE LOSERS 

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

 

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

City sets Marunda as industrial zone, port

Tifa Asrianti, The Jakarta Post, Jakarta | Sat, 12/20/2008 9:38 AM  

The city administration is preparing the Marunda industrial zone in North Jakarta to become a special economic zone with an international port. 

City assistant secretary for economy affairs, Mara Oloan Siregar, said the administration wanted to develop Marunda into a special economic zone (SEZ), in which it would have high-tech, high-knowledge and high-value-added industries. 

“It won’t be labor intensive, but it will be technology and capital intensive. It will be a high-ranking project,” he said. 

The Marunda SEZ project, he said, needs to wait for the completion of the law on SEZ, which was expected to be completed by July next year. 

He said the administration submitted the proposal to the central government. 

“As soon as the law is completed, we will discuss the proposal with the SEZ national board, chaired by the coordinating minister for people’s welfare,” he said. 

“We will consider special incentives to be given to the investors, such as customs, immigration, a cut in revenue tax, easy land permits, and all that will be in accordance with the law.” 

Economic expert Dorodjatun Kuncoro Jakti said the new SEZ concept would not be similar to the existing one because Jakarta, as a tertiary education center, could develop a technology-based SEZ that could be a national pilot project. 

“Jakarta is a center of tertiary education, a service city and a financial center. If we combine these potentials with high-value-added industries, it will shift us from labor-intensive to resource-intensive industries,” he said. 

Therefore, he added, not only would the SEZ have manufacturing industries, but it would have microscopes, medical equipment, computer and software factories. 

He said Jakarta should establish the SEZ quickly because Singapore, Malaysia and Vietnam had already started similar projects. 

To support SEZ activity at the 1,500-hectare Marunda, Mara said, the city administration would build a port called Ali Sadikin International Seaport, which would compete with Tanjung Priok Port. 

He said the administration chose Marunda as an SEZ, because it had good access through the future international port, tollroad network and East Flood Canal — which can function as a waterway.

“We also want to integrate the tollroad with the railway network,” he said. 

The city administration will start the Marunda development project by investing in PT Kawasan Berikat Nusantara (PT KBN). 

In the 2009 budget, the city administration has allocated Rp 100 billion to raise ownership from 11.3 percent to 51 percent. 

Of the City Council’s seven factions, four have questioned the SEV development plan — the Democratic Party, the United Development Party (PPP), the National Mandate Party (PAN) and the Golkar Party. 

Most of the factions demand that the city administration postpone the project because it has not yet held a feasibility study.

Unilever builds new plant

The Jakarta Post, Jakarta | Fri, 12/05/2008 11:39 AM  

PT Unilever Indonesia, the local subsidiary of the London-Rotterdam-based consumer goods giant, has announced the start-up of Asia's biggest plant for skin care products in Cikarang, representing an investment of Rp 500 billion (US$42.5 million). 

While many local industries are cutting output, with layoffs following suit in some cases, Unilever's announcement should provide some respite amid a gloomy global economic outlook as it plans to hire 1,000 new workers to run the new plant. 

The factory has a total production capacity of 53,000 tons of skin care products per year and occupies 10 hectares of land with 22,500 square meters of buildings, president director Maurits Lalisang said in a statement Thursday. 

"The plant was expected to help the company in meeting the growing demands for national and export markets," Maurits said. 

The plant would help the company in not only fulfilling local market demand, which has been growing at an average of 10 percent annually, but also will help meet overseas demand including for markets in Singapore, Thailand, Malaysia, the Philippines, India and Vietnam. 

"It proves that Indonesia is still an interesting investment location with good potential. It is expected that the new factory can help project a positive view of the Indonesian investment climate in this global economic downturn," Maurits said. 

The new factory pushes the total number of company plants operating in the country up to eight. 

The new plant will produce Unilever's popular skin care branded products, such as Citra, Vaseline, Pond's, Dove, Lux and Lifebouy. 

Unilever is also the producer of other market-leading brands both locally and regionally including Pepsodent, Sunsilk, Rexona, Rinso, Molto, Blue Band and others. 

The company's net profit rose 29.7 percent to Rp 2.05 trillion in the first nine months of this year from Rp 1.58 trillion in the same period last year on the back of higher sales. 

Its sales went up 22 percent to Rp 11.76 trillion during that period. 

The company started operation here in 1933.

Attorney general inaugurates anti-corruption school

Jakarta,  (ANTARA News) - Attorney General Hendarman Supandji on Thursday inaugurated a school dedicated to the fight against corruption, named Diponegoro Anti-Corruption School, at the SMAN-3 (State Senior High-school 3) in South Jakarta. 

In his address on the occasion, Supandji said the school was intended to help form a younger generation that was honest in character and aware that corruption is an evil. 

"The objective of the anti-corruption school is to contribute to the making of an honest nation," Supandji said at the ceremony which was also attended by the rector of Diponegoro University (Undip). 

He said corruption needed to be combated in a way that combined repression, prevention, and education. "This Anti-Corruption School is part of the educational element in the fight against corruption," he said. 

Supandji said the number of corruption cases handled by the Attorney General`s Office, the National Police, and the Corruption Eradication Commission (KPU) was increasing every year. 

"Corruption has become a transnational crime," he said, adding that the anti-corruption school was named after Diponegoro because he was a figure in the nation`s history known for his firm attitude, honesty, and simplicity. 

Meanwhile, the chairman of the Indonesian Neighborhood Youth Association (Karang Taruna Indonesia), Dody Susanto, said the anti-corruption school was intended to create young people who had an honest attitude. 

"The presence of this school is a good momentum for the younger generation to have legal awareness in the community," Dody Susanto said. 

In addition, he said , the school was expected to build solidarity among young people in their cultural movement to wage war on corruption.

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Economy grows despite financial crisis

Olivia Dameria, The Jakarta Post, Jakarta | Tue, 11/18/2008 12:36 PM  

Although the city's gross regional product (GRP) continued to grow in the third quarter, Jakarta should maintain economic growth over the last quarter to reach this year's target, Jakarta Statistics Agency reported Monday. 

Djamal, the agency's head, said Jakarta experienced a growth of 6.15 percent in the third quarter compared to the same period last year. 

"Almost every field showed significant growth with the transportation and communication sector leading with 14.80 percent, followed by construction (7.79 percent), and the electricity, gas and clean water sector (7.28 percent)," Djamal said. 

The city's year-on-year growth was recorded at 6.19 percent. The administration has set a target of 6.2 percent growth for 2008. 

Dody Rudyanto, the agency's head of the regional balance report and statistical analysis, said that despite the growth, the city should maintain economic growth at between 6.22 and 6.24 percent in the last quarter to reach its 2008 target. 

This year, over the third quarter, the Jakarta economy generated Rp 17.4 trillion, with the biggest expenditure components being household consumption at 55.58 percent and investment at 35.50 percent, with net exports only contributing 0.34 percent. 

"We are optimistic about reaching the target so long as the global crisis does not have a stronger impact," Djamal said. 

Furthermore, he said banks, which fortunately were not collapsing, were the reason for sustained economic growth. 

"People trust banks. There has been no rush to withdraw savings," he said. 

However, total exports until September this year slumped to Rp 60.6 trillion from the Rp 61.1 trillion that was recorded in September last year. 

"The decrease was the result of the global financial crisis, which led to the slowing down of demand in the international market," Dody said. 

Exports have declined since May 2008, when exports to America, Australia and Africa dropped from 22.06 percent to 16.82 percent, 7.03 percent to 5.26 percent and 5.14 percent to 5.10 percent, respectively.

Morgan Stanley remains upbeat on RI, opens local branch

Ika Krismantari, The Jakarta Post, Jakarta 

Against the backdrop of the global financial crisis, the United States financial giant Morgan Stanley has officially opened its doors in Indonesia in a decision which reflects investor confidence toward the country's economy in general. 

Morgan Stanley Asia Indonesia president director Inghie Kwik announced Monday the opening of the company's local branch after it had secured licenses from the country's stock market regulator (Bapepam) in July. 

"This (decision to open a branch) is a long term investment for us...compared with Thailand, the Philippines, and Vietnam Indonesia is a very big country, its population and its associated industries, such as retail, consumer goods and telecommunications are examples that the country's potentials remain promising despite the global financial crisis," Inghie said. 

The decision, he said was also part of the company's long term strategy in expanding its operation in Southeast Asia's emerging markets. 

The Jakarta office is the fifth Morgan Stanley branch operating in the Southeast Asia region. 

Morgan Stanley's presence in Indonesia dates back to the 1990s, when the company supported local companies in international fund raising and in advising on merger and acquisition plans. 

As its confidence grew on the economy, the company established a supporting office in 2005 and it then sought a brokerage and underwriting license from the regulator. 

Inghie said the Jakarta office would focus on providing services related to capital market businesses, including bond issuance and initial public offerings (IPOs) and also on mergers and acquisitions. 

"We believe the stock market will be normal again, but we don't know yet if the recovery curve is going to take an L shape, a U or a V," he said when asked his view on the local bourse, which has felt the impact of the global financial crisis. 

Next year, Morgan Stanley has been given a mandate to underwrite four IPOs worth about U$600 million in total, Inghie said. 

The company, whose largest shareholder is now Japan's Mitsubishi UFJ Financial Group, was the financial advisor to the country's second largest IPO, that of Adaro Energy worth $1.3 billion in July. 

It was also the sole financial advisor for the selling of the local bank Buana to Singaporean UOB and the merger of Lippo Bank and Bank Niaga. 

Aside from capital market services, the company will remain open to opportunities for expanding its business to other sectors such as commodities or real estate, the two sectors where Morgan Stanley has enough experience consider expansion. 

The company will host a reception in Jakarta next week to market the formal opening of Morgan Stanley's office in Indonesia. 

Morgan Stanley, with 600 offices in 35 countries, had $736 billion of assets under management worldwide as of Aug. 31 this year.

Inacraft eyes global buyers

The Jakarta Post, Thu, 04/24/2008 12:26 PM 

President Susilo Bambang Yudhoyono officially opened Wednesday the 10th Jakarta International Handicraft Trade Fair (Inacraft), the biggest annual handicraft expo in the country.

BUYERS WELCOME: (JP/J. Adiguna)

Inacraft, which is organized by the Indonesian Handicraft Producers and Exporters (ASEPHI), will run until April 27 at the Jakarta Convention Center. 

This year, the fair involves 1,700 domestic and foreign participants offering a wide range of handicrafts, including jewelry, textiles, accessories and traditional decorations. 

In 2007, Inacraft involved 1,650 participants generating Rp 67.14 billion in retail sales and $6.43 million in business contracts. 

Yudhoyono said the handicraft industry contributed Rp 105 trillion to gross domestic product (GDP) last year and created five million new jobs. Handicraft exports, valued at $620 million, grew by 19.5 percent on 2006. 

"Although export is important, don't focus only on exporting. Promote and offer the products to Indonesians who are able to buy them." 

He said the domestic market was still strong and would get stronger if people's purchasing power increased. 

The President also encouraged handicraft workers to keep increasing production and quality in line with increasing demand. -- JP/Novia D. Rulistia

City to cut red tape in foreign investment

Mustaqim Adamrah, The Jakarta Post, Jakarta | Thu, 04/10/2008 11:25 PM

The Jakarta administration and the private arm of the World Bank have joined forces to find ways to attract foreign investors to the city.

The International Finance Corporation (IFC) and the city administration signed an agreement Wednesday at the office of the Jakarta Bureau of Capital Investment and Regional Monetary Management.

The agreement secures for the administration the two-year appointment of an advisory assistant from the IFC to make recommendations on improving the city's business climate.

The IFC consultant will make recommendations on how to reduce the processes required for issuing business permits.

An IFC survey showed red tape in obtaining licenses discouraged foreign investors from doing business in the capital.

Because of conditions in Jakarta, Indonesia was ranked 123 out of 178 countries in the survey in terms of business climate.

"We hope with this assistance, investors will only have to wait 38 days to receive a permit -- considerably less than the 169 days it takes currently -- and will only have to process eight permit applications, more than halving the current number of 19," said bureau head Sukri Bey.

"Consequently, it will cost less for investors to register their businesses here."

IFC associate operations officer Farida Lasida Adji said the first step would be to conduct field studies to determine the actual time and money businesses spend for every permit required.

"Later, we'll work out which steps need to be eliminated to expedite business-related license applications and find ways to improve efficiencies," she said.

She said the IFC's assistance in Denpasar and Tabanan in Bali, and in Tulungagung in East Java, enabled the administrations to cut costs incurred processing business permits by 70 percent.

Sukri said he did not expect foreign investment to increase significantly this year, despite the two institutions' ultimate goal of attracting more investors through the bureaucratic reforms.

"We can only hope foreign investment this year will increase by 65 percent on the Rp 44 trillion posted last year," he said, adding that amount would not be sufficient to keep the city's economic growth at 6.3 percent.

He said it would require Rp 112 trillion (US$12.19 billion) in foreign investment alone to reach the growth rate this year.

The bureau is expecting 400 projects run by foreign investors this year, compared to 365 last year, he said.

Last year, the city's economy grew by 6.4 percent, with a total regional domestic output of Rp 332.7 trillion.

The administration initiated a single-window business registration system early this year in an attempt to lure foreign investors.

The system's effectiveness has yet to be proven.

New regulation restricts modern retail expansion

Andi Haswidi, The Jakarta Post, Jakarta

The government has issued a regulation to restrict the expansion of modern retailers including supermarkets, hypermarkets and convenience stores, which have been widely criticized for edging out traditional retailers.

During an impromptu encounter with reporters Friday, Trade Minister Mari Elka Pangestu confirmed that the President had already signed the regulation and that it had taken effect beginning Thursday.

"The main point is the zoning issue, how to better regulate the location of traditional markets and modern retailers," she said, adding that local governments would be responsible for the implementation of zoning laws.

According to Trade Ministry director for market development and distribution Gunaryo, the presidential regulation only serves as a guide, which will be supplemented by a more detailed ministerial-level regulation to be issued shortly.

He said the central government gave the authority to manage the location of modern retailers to the local governments down to the level of regencies so as to give a more accurate and context-based assessment of the zoning issue.

Aside from proximity, the ministerial regulation will take into account other variables such as regional economic growth, population and local consumers' purchasing power.

Taking Jakarta as an example, he said that hypermarkets could only be opened on the outskirts of the city.

On the issue of trading terms, which cover the crucial listing fees that have to be paid by suppliers to hypermarket operators, the presidential regulation does not impose restrictions, but demands transparency so as to avoid excessive charges and ensure fairness.

"Retailers do have expenses such as in sanitary and power maintenance, which should be shared with suppliers. However, they must be transparent in charging the listing fees," he said.

Last but not least, he said, the presidential regulation demanded local governments empower traditional markets through various programs that could be funded by the regional budget, the state budget or through cooperation with the private sector, particularly with modern retailers.

According to a study by AC Nielsen, the total value of the Indonesian grocery trade stood at Rp 63.5 trillion (about US$7 billion) in 2006, which was 14.3 percent higher than in 2005. Of this total, the value of groceries sold through traditional outlets grew by 9.6 percent, while the value of those sold through modern outlets increased by 23.8 percent.

However, the study also found that 99 percent of Indonesian people still do their shopping in traditional markets, and that the market share of modern markets in revenue terms stands at about only 16 percent.

Three firms get Bapepam penalties

The Jakarta Post, Jakarta

Three publicly listed companies and three public accountants have been subjected to penalties and fines by the country's capital market watchdog for violating the regulations.

The Capital Market and Financial Institutions Supervisory Agency (Bapepam) said Friday in Jakarta that the three firms were PT Teijin Indonesia Fiber Corporation Tbk (TFCO), PT Arona Binasejati Tbk (ARTI) and PT Mobil Sukses Internasional Tbk (IMAS).

The agency said that PT Teijin was fined Rp 370 million (about US$3,9785) for a delay in submitting its accounts for the first half of 2004. The company had also failed to publish its accounts.

Meanwhile, PT Arona was found guilty of making a mistake in the comments on its accounts. For this, the company received a written warning from Bapepam.

Indomobil was fined Rp 500 million for not following the required procedures when it extending a loan to an affiliate.

Bapepam also said that it had imposed penalties on three public accountants for violating the capital market public accounting regulation.

The agency said that the three accountants were Yahya Santosa, Jonnardi and Bambang Sudaryono.

Yahya breached the regulation prohibiting a public accountant from auditing the same listed company for three years consecutively. Jonnardi also audited the same company for more than three years, consercutively.

For these violations, Bapepam suspended the two accountants' practice licenses for 12 months.

The other accountant, Bambang, was given a written warning for the mistake in PT Arona's accounts, which he audited.

"Two of the accountants have been barred from performing audits for a year, while the other one was given a written warning," the head of Bapepam's legal division, Robinson Simbolon, said in a written statement.

The watchdog has also issued a written warning to PT Pusako Tarinka for hiring Yahya for more than three consecutive years to audit its books. (dic)

Governor to empower subdistrict offices

The Jakarta Post, Jakarta

Governor Fauzi Bowo said Sunday he would consider working at the 267 subdistrict administration offices spread around the city.

"I wouldn't hesitate to receive a guest in subdistrict offices because they're government offices too," he said during a visit to Pisangan Timur subdistrict office in East Jakarta.

He said it would allow him to be closer to the city's residents and help improve the performance of the offices.

During the meeting with residents, some asked Fauzi to promise to improve community unit facilities and increase the Family Welfare Education (PKK) budget.

"I'm asking for the governor's promise to pay attention to our operational budget," said a woman who is a member of the PKK.

Fauzi said he was concerned with the issues but could not make any promise that would realize all of their requests.

"I thank you all for delivering your requests. However, I can't promise that I will fulfill all of them, especially for those who asked for money," he said.

The governor said he would not provide more facilities to community unit offices as they belonged to the residents, not the city.

"If the city administration provides too many facilities for a community unit, I'm afraid it will suffer the same bureaucratic disease.

"On the other hand, if a neighborhood unit and a community unit can be responsible in using their operational budgets, I might reconsider increasing the budgets," he said.

"I can make a contract-based package between a subdistrict office and a neighborhood unit. A neighborhood unit will have its rights, but it must fulfill its duties -- otherwise it will be sanctioned," added Fauzi.

On Friday, Fauzi assessed the work performance of each unit in the city administration, in accordance with the 100-day work program.

He asked every unit head to sign a performance agreement that will be used to evaluate the performance of each unit.

"There will be a sanction for a unit head whose work quality is below the performance agreement.

"The performance agreement signing will push the city administration's work in five years, in accordance with good governance," he said, as quoted by the city administration's official Web site Berita Jakarta.

Commenting on ongoing infrastructure projects in the city, Fauzi said the construction of the three new busway corridors was going according to the city administration's plan.

"The building of East Flood Canal is important to mitigate possible annual flooding, however, it is a bit delayed.

"We need to coordinate with the National Land Agency about the land acquisition and land compensation," he said. (adt)

Housewife's microfinance powerhouse an 'inspiration'

Adisti Sukma Sawitri, The Jakarta Post, Jakarta

Meet Cholilah Sabar, a 58-year-old housewife who lives in a modest home in Pluit Dalam, North Jakarta.

Her home is cramped among other buildings in the densely populated area and it seems an unlikely place to have been the office of a microfinance powerhouse that has a revolving fund of Rp 2.3 billion (approximately US$247,000).

Sumber Rejeki members who benefit from the fund are not only residents of Cholilah's neighborhood. They also come from Muara Angke and Tangerang in Banten.

Just like owning a credit card for wealthier people, the cooperative has helped its members get through their highs and lows, including lending money to pay for urgent medical bills or for family wedding ceremonies.

Pegging interest payable on its loans at 3 percent per month, Sumber Rejeki is a winning alternative for its members, who would otherwise have to borrow from loan sharks who charge up to 20 percent in interest per month.

Karni, who owns a nearby food stall, said she would never have fulfilled her dreams without the cooperation's help. Since her husband lost his job 10 years ago, Karni has found it increasingly difficult to make ends meet.

However, with the help of the cooperation, Karni has been able to keep her business running and send her children to university.

"In emergency situations I borrow money from the cooperation. And Bu Cholilah is there to assist us whenever we have problems," she told The Jakarta Post.

Cholilah and two friends started the microfinance cooperation with a few million rupiah donated by the Australian Embassy almost 15 years ago.

While Cholilah welcomes anyone who wants to borrow money, she is strict about the prompt payment of installments and is like an eagle catching its prey when members try to avoid making repayments.

From Tangerang, Banten, to as far away as Jatisrono in Central Java, Cholilah has hunted down debtors who have ran away without paying the cooperation back.

Her hard work and determination have paid off. Sumber Rejeki was recognized as the city's best microfinance institution in 2006, after which the administration awarded the cooperation legal status.

Having legal status allows the cooperation to obtain larger loans from commercial banks.

Economic empowerment activist Tri Endang Sulistyowati from the Center for Women's Resources Development (PPSW) said Cholilah's strong leadership had helped the cooperation become what it is today.

"Cholilah is a firm and respected leader of the community. Her qualities promote discipline among the community, which is important for such an institution," she said.

Tri said most of Jakarta's microfinance institutions failed in the early stages because board members misused money or could not push debtors to pay.

Cholilah said she doesn't consider herself a leader. The grandmother of five said every day she focuses on doing the two things she loves most - sewing and hanging out with her neighbors.

She moved to Jakarta from Semarang in Central Java 34 years ago when her husband was employed as a construction worker in the capital. Cholilah worked as a seamstress to help her husband make ends meet for the family.

The vibrant and energetic woman quickly got involved in neighborhood activities. She also has the capacity to charm anyone who knows her.

"I am the kind of person who cannot sit around doing nothing. People say I'm a rolling ball that refuses to stop," she said.

Last year, the cooperation finally purchased a building to become its new office to replace Cholilah's home.

The building, which is also located in the neighborhood, is big enough to continue housing the cooperation if it eventually expands.

Although Sumber Rejeki has successfully managed a large revolving fund, there are no plans for future expansion at this stage.

Tri said it would be hard for Sumber Rejeki to develop as a commercial business as its funds were continually reinvested back into the cooperation.

"This means microfinance institutions such as Sumber Rejeki cannot develop as fast the Grameen Bank for example," she said.

Grameen Bank in Bangladesh started off as a microfinance system and became so large that it has expanded into commercial businesses such as telecommunications and garment production.

Despite the fact business expansion is yet to be a priority, Sumber Rejeki and Cholilah are still heroes in the hearts of the cooperative's members.

Resident Puput Bayuti, a Sumber Rejeki member who has established a microfinance community of her own, said Cholilah was her inspiration.

"At first I was afraid of her, but the more I got to know her the more I wanted to be like her," she said.