Indonesia to Propose 4 Projects For AIIB Financing

Jakarta Globe, January 23, 2016

The government has listed four infrastructure projects to be proposed for $1 billion
 loan from Asia Infrastructure Investment Bank this year, a senior official said on
Friday. (Reuters Photo/Kim Kyung-Hoon)

Jakarta. The government has listed four infrastructure projects to submit this year for a $1 billion loan from the Asia Infrastructure Investment Bank, a senior official announced on Friday.

The government will request AIIB loans for highway construction in East and North Kalimantan, budgeted at a total of $250 million, along with another $292 million for expansion of the country's railway networks, according to Wismana Adi Subrata, Deputy for Development Financing at the Development Planning Agency (Bappenas).

Other projects include a potable water project estimated at $50 million, and a television station transmission upgrading project costing $411 million, Wismana added.

"We are still working on determining appropriate loan schemes from AIIB for each project," he explained.

The China-led AIIB began operations in its Beijing headquarters in January 16, and is expected to start disbursing loans during the second quarter of this year.

Based on its current capital capacity, the lender can reportedly manage loans of up to an annual $15 billion over the next six years.

Indonesia is a founding member of the AIIB, and is already committed to acquire $672 million of the lender's capital.

Asean Establishes Landmark Economic and Security Bloc

Jakarta Globe, Trinna Leong, November 22, 2015

Asean leaders joined China's Premier Li Keqiang at the summit in Kuala Lumpur,
Malaysia. (AFP Photo/Fred Dufour)

Kuala Lumpur. Southeast Asian nations on Sunday established a formal community that attempts to create freer movement of trade and capital in an area of 625 million people with a combined economic output of $2.6 trillion.

The community declaration was signed by leaders of the 10- member Association of Southeast Asian Nations (Asean) in Kuala Lumpur, this year's host of the group's annual summit.

Twelve years in the making, the Asean community is a landmark in the 48-year history of a group founded at the height of the Cold War as an anti-communist bulwark.

The Asean Community includes a political, security and socio-cultural dimension in a region with governments ranging from communist in Vietnam and quasi-military in Myanmar to the kingdom of Brunei and the boisterous democracy of the Philippines.

But it is the economic community that offers the most concrete opportunities for integration in a region whose combined gross domestic product (GDP) would make it the world's seventh-largest economy.

In practice, Asean has already virtually eliminated tariff barriers among the 10 countries, said Malaysian Prime Minister Najib Razak, the summit host, at the signing ceremony. "We now have to ensure that we create a truly single market and production base, with freer movement of goods and services."

At the closing news conference, however, he said Asean had no specific deadline for achieving zero tariffs, but would aim for "meaningful deliverables that can be done every year when we meet at the Asean summit."

The combined GDP of the Asean economies is expected to grow from $2.6 trillion to $4.7 trillion by 2020, Najib said, and could become the world's fourth-largest economy as a bloc as early as 2030.

The countries aim to harmonize economic strategies, recognize each other's professional qualifications and consult more closely on macroeconomic and financial policies.

They have also agreed to enhance the connectivity of their transportation infrastructure and communications, better facilitate electronic transactions, integrate industries to promote regional sourcing, and enhance private-sector involvement in the economy.

Eight groups of professionals will be able to work more easily throughout the region: engineers, architects, nurses, doctors, dentists, accountants, surveyors and tourism professionals.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Reuters

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"Message for South America" - Nov 16, 2015 (Kryon Channelling by Lee Carroll) - New


"The End of History" -  Nov 20, 2010 (Kryon channelled by Lee Carroll)

" ... South America and the New Energy

South America is starting to consider the same thing. My partner was just there and I allowed him to see the energy of the potential future in that land.

I would like to paint history for you regarding South America. There was a time when every single country had a dictator. Less than 15 years ago, they had failing economies and currencies that were worthless. Trouble and strife and killings were the norm. Marauding drug lords openly killed in the streets and corruption was everywhere. Even the politicians created fear and many disappeared overnight, never to be seen again. Today it isn't that way. Today, there is an ongoing stability as one country after another brings a new, positive, stable energy to their cultures. So, without a concentrated effort by any kind of multi-national leadership or direction, how could this have changed in only 15 years?

Within the entire continent, there's only one dictator left. What's happening? If you think that's amazing, there is a move afoot that you're not going to hear about yet. But they're discussing it right now, so let me tell you what they're thinking. "What would happen if we took these countries and eliminated the borders?" Sound familiar? They're talking about it. In back rooms where nobody is reporting it, they're saying, "What about a plan of eventually having one currency from the top of Columbia to the bottom of Chile? And we would be strong and we would be unified." And dear ones, I'm here to tell you, that it's going to work, and it might not take 50 years. Soon the one dictator will be gone, and the unification can begin.

There's a shift happening on this planet ...."

Yudhoyono to Joko: Don’t Force Indonesia to Enter TPP

Jakarta Globe, Hayat Indriyatno, October 31, 2015

Yudhoyono, whose foreign policy mantra was 'A thousand friends, zero enemies,'
has cautioned Joko to look at the geopolitical consequences of signing up to the
 TPP, which conspicuously leaves out China but includes US ally Japan.
(Antara Photo/Prasetyo Utomo)

Jakarta. Former president Susilo Bambang Yudhoyono has cautioned his successor against signing up to the Trans-Pacific Partnership, insisting the justifications he gave for refusing to join the trade pact while in office are still valid today.

In a series of tweets sent on Friday, Yudhoyono said President Joko Widodo had every right to commit Indonesia to the US-initiated pact, but warned that “If Indonesia is not ready and is forced to enter the TPP, then our nation will suffer. Such is the ‘law of globalization.’”

The essence of the TPP, he wrote, “is trade and investment liberalization.”

“The TPP is actually a good thing, if all the member states are ready, their interests are accommodated and there are real benefits all parties,” he said.

“But if we’re not ready for it, our market will be flooded with goods and services from other countries, while our exports will fail to be competitive abroad.”

Yudhoyono said his reasons for refusing to sign up to the TPP when he was in office included the fact that Indonesia was preparing for a similar agreement on a Southeast Asian scale: the Asean Economic Community, which comes into force at the end of this year.

He added that Indonesia also needed time to see the benefits from another trade pact, the Asean-China Free Trade Agreement, which saw Jakarta’s trade deficit with China doubling within a year of coming into full force in 2010.

Yudhoyono also pointed out that the three other Asean countries that had signed up to the TPP – Malaysia, Singapore and Vietnam – had fundamentally different economic models from Indonesia. “The economies of Singapore, Malaysia and Vietnam […] are ‘export-oriented.’ Indonesia is not. We have a large domestic market,” he tweeted.

He said that in order to protect its interests, Indonesia would have to be “tough” in its negotiations – but that the current TPP members had concluded their negotiations on Oct. 5.

Yudhoyono, whose foreign policy mantra was “A thousand friends, zero enemies,” also cautioned Joko to look at the geopolitical consequences of signing up to the TPP, which conspicuously leaves out China but includes US ally Japan.

“Let us ensure that we remain friendly with all our partners, including America, China and Japan,” he wrote. “Let us maintain a free and active foreign policy […] an all-directions foreign policy. Avoid allying with one country and distancing others.

“Let us also ensure that, whichever side we partner with, Indonesia’s national interests will be prioritized above all else.”

He then called on the Indonesian people to help Joko reach an “appropriate and clear decision for the interests of the people and the nation.”

Pastikan Indonesia mendapatkan keuntungan nyata ~ dlm pertumbuhan ekonomi, lapangan kerja & pengurangan kemiskinan. *SBY*

— S. B. Yudhoyono (@SBYudhoyono) October 30, 2015

Joko’s announcement, following a visit to the White House on Monday, that he was committed to signing Indonesia to the TPP has met with concern from the business community and the political establishment alike.

Yudhoyono’s own statements follow his Democratic Party’s warning that Indonesia is not yet ready to face the competition that joining the pact would entail, citing inadequate infrastructure and low public awareness about the TPP and its costs and benefits.

“Are Indonesians and the national economy really ready for this?” asked Edhie Baskoro Yudhoyono, the former president’s son and a senior member of the Democratic Party.

“How about our domestic infrastructure? Has the government asked for the public’s opinion, especially those involved in the national economy, about the possible impact of the TPP on Indonesia in the future?”

Wrong step

The Great Indonesia Movement Party (Gerindra), chaired by Joko’s rival in last year’s presidential election, Prabowo Subianto, has also criticized the president’s stance on the TPP.

Fadli Zon, a Gerindra deputy chairman and deputy speaker of the House of Representatives, said the TPP would only benefit Indonesia “if we had competitive businesses.”

Without adequate infrastructure and strong supporting education, welfare and legal systems, he warned, Indonesia would only be a “passive player” in the trade agreement.

“It would be a wrong step to join the TPP,” Fadli said on Wednesday.

Economist Lana Soelistianingsih of the University of Indonesia said separately that “Countries with manufacturing-based exports will be able to perform better in this partnership.”

“Our exports are mainly raw materials like oil and gas. If we can we get our commodities into a market like Chile” – which has signed up to the TPP – “can we compete with Brazil, which is much closer to Chile than Indonesia is? That’s the concern,” Lana said on Wednesday.

“How can we improve our manufacturing sector without electricity? It’s not that we should refrain from entering the partnership, but we need a clear blueprint on what products we want to sell, which raw materials we need to manufacture the products, and what kind of infrastructure we need,” she said.

The TPP, forged by the United States and other 11 countries around the Pacific Rim, including Australia and Canada, has a stated goal to “to promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections.”

In practice, the biggest impact will be the lowering of trade barriers, including tariffs.

The #TPP - a 12-nation free trade agreement pic.twitter.com/1h82wFRF68

— Agence France-Presse (@AFP) November 5, 2015

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Joko Calls on British Businesses to Diversify in Indonesia as He Meets With PM Cameron

Jakarta Globe, Ezra Sihite & Novy Lumanauw, Jul 27, 2015

British Prime Minister David Cameron, left, with Indonesian President Joko Widodo
 meet at the Presidential Palace, Jakarta, on Monday. (Reuters Photo/Darren Whiteside)

Jakarta. President Joko Widodo asked Britain to diversify its businesses in Indonesia and lower import duties for Indonesian products entering the United Kingdom during his bilateral meeting with British Prime Minister David Cameron in Jakarta on Monday.

Joko told Cameron he welcomed Britain’s increased investments in Indonesia, which rose 34 percent last year, but added he wished Indonesia’s fifth largest foreign investor to diversify its range of businesses in the archipelago.

“I want to encourage Britain to diversify its investment in infrastructure development, including [for the construction] of sea ports, toll roads, railways, power plants and the maritime industry. Britain has vast experiences,” said Joko, who has repeatedly invited foreign nations to invest more in Indonesia to support his ambitious infrastructure development projects — including in the maritime sector.

“I also hope that Britain will impose lower import duties for Indonesian products, such as timber, clothing, coffee and fishery products,” he added.

Joko said Indonesia was committed to continually improving its economic partnership with Britain.

The Indonesian president also expressed his wish that Britain would reciprocate Indonesia’s visa-free policy applicable to British visitors.

“We hope that there will be a visa-free facility for Indonesian citizens [going to] Britain. This issue has been discussed during limited meetings,” Joko said.

Cameron in an e-mail interview with the Jakarta Globe on Sunday said his government would offer £1 billion ($1.55 billion) of credit financing for infrastructure projects in Indonesia.

A press statement from the British Embassy in Jakarta said the fund would be made available through Britain’s export guarantee scheme.

“This financing could pave the way for growth of £200 million worth of exports to UK,” the statement says.

It adds that projects “up for grabs” include a sewage treatment system in Jakarta worth £400 million and geothermal power projects worth £66 million.

Moazzam Malik, the British Ambassador for Indonesia, the Association of Southeast Asian Nations (Asean) and Timor Leste, on Sunday said that Britain was keen to offer Indonesia its vast expertise in a number of areas — specifically in maritime infrastructure development and maritime defense, satellite technology and public-private partnerships to finance infrastructure projects.

Cameron himself told the Globe in the e-mail interview: “The UK shares a common history as a maritime nation and while we may only have hundreds of islands compared to 17,000 here, we do understand the challenges that this presents and we want to share our experience and expertise to help develop this vital sector.”

“We have a wealth of experience in using advanced technology to monitor and manage our national waters and we are also a world leader in developing marine energy.”

The British prime minister is accompanied by a delegation of leaders of 30 prominent British brands in his two-day visit to Jakarta.

Among them are Airbus Group UK president Paul Kahn, Lloyd’s of London chairman John Nelson, Rolls-Royce international director Ann Cormack, Surrey Satellite Technology group executive chairman Martin Sweeting and UK Higher Educational Unit director Vivienne Stern.

Cameron is slated to attend a business forum with the Indonesian business community in Jakarta on Tuesday.

Jakarta is the prime minister’s first stop in his four-day tour of Southeast Asia which will include Singapore, Vietnam and Malaysia. Cameron had visited Indonesia once before, in 2012 where he met with then president Susilo Bambang Yudhoyono.

The Southeast Asian tour is Cameron’s first foreign visit outside Europe after his re-election in May.

The British Embassy says the tour is part of the British government’s efforts to increase the country’s exports to £1 trillion a year and to get 100,000 more British companies exporting by 2020.

“The prime minister is taking the first trade mission of the new parliament to a region [Southeast Asia] forecast to grow at 5 percent this year and with potential to unlock huge opportunities for jobs and growth in the UK,” the embassy says in the statement.

It adds that while the focus of the trip is about “opening doors” to future trade, deals worth over £750 million are expected to be sealed by the end of the trip.

On EU-Asean free trade

Aside from boosting bilateral trade, Cameron will also put his weight behind an European Union-Asean deal. He will call for the EU and Asean to jump start negotiations talks on a free trade agreement during his scheduled visit to the Asean secretariat in Jakarta on Monday evening, after the meeting with Joko.

A deal between these two trading blocs has the potential to benefit the British economy by £3 billion every year — nearly £120 per household — “by creating one of the biggest free trade areas in the world with combined GDP of over $20 trillion,” the press statement says.

Speaking ahead of the Southeast Asian tour, Cameron said Britain could open up more markets for its businesses by leveraging the power of the EU’s single market with 500 million consumers to secure “bold, ambitious trade deals with these fastest, growing economies.”

“The EU has shown this can be done with the trade agreement with Singapore and the recent breakthrough in talks with Vietnam but an EU-Asean trade deal would really turbo charge growth across the single market,” the prime minister was quoted as saying in the statement.

He added he would make the case in discussions with Asean Secretary General Le Luong Minh.

Cameron’s call comes as Asean countries prepare to establish an economic community by the end of this year.

The statement from the British Embassy notes that Australia, Japan and China “are already ahead of the game,” having implemented free trade deals with the Southeast Asian bloc.

“As the largest foreign investor in Asean, the EU should seize on this position to secure a new trade deal,”  it says.

To support Britain’s objectives in the region, Cameron has appointed a trade envoy specifically for the Asean Economic Community, Richard Graham.

Graham, who will join the prime minister for talks with Le, will take on the role alongside his existing role as trade envoy to Indonesia.

Joko on his part said Indonesia would restart this year its talks with the EU concerning Indonesia-EU comprehensive economic partnership agreement.

Indonesia to Be Eighth-Largest AIIB Shareholder With $672 Million Stake

Jakarta Globe, Gayatri Suroyo & Fransiska Nangoy, Jun 28, 2015

Finance Minister Bambang Brodjonegoro, second left, is heading to Beijing on
 Monday to represent Indonesia as a founding member of AIIB. (Antara
Foto/Akbar Nugroho Gumay)

Jakarta. Indonesia will sign up as a founding member of the China-backed Asian Infrastructure Investment Bank, or AIIB, with an investment of $672.1 million paid over five years, the Finance Ministry said in a statement on Sunday.

Indonesia will be the eighth-largest shareholder in the AIIB, the statement said, without detailing what percentage its share would represent. Finance Minister Bambang Brodjonegoro is scheduled to travel to Beijing to sign the agreement on Monday.

The AIIB will begin with authorized capital of $50 billion, eventually to be raised to $100 billion.

Reuters

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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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

ASEAN has pivotal role in Beijing's regional integration plans

Want China Times, Staff Reporter 2015-03-29

Xi Jinping, right, meets President Joko Widodo of Indonesia at the Great
Hall of the People in Beijing, March 26. (Photo/Xinhua)

The 2015 Boao Forum for Asia, currently underway in China's southern island province of Hainan under the theme "Asia's New Future: Towards a Community of Common Destiny," has revealed a good deal about China's continuing role in forming this community and the basis on which it can be established, according to Duowei News, an outlet run by overseas Chinese.

The sub-forums held at the forum laid out China's blueprint for the community, according to the website.

There have been six main topics of discussion at this year's forum, including macroeconomic policy, regional cooperation, industrial transformation, political security and social welfare, with 77 formal discussion sessions. There has also been much talk of China's Asia Infrastructure Investment Bank (AIIB) initiative, as well as the New Silk Road Economic Belt, the 21st Century Maritime Silk Road plans, East Asian economic integration and the much touted "new normal" for China's economy.

This year's Boao Forum has coincided with the end of the two sessions in China–the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference–and the deadline for application to be a founding member of the AIIB on March 31. China has taken advantage of this convenient timing to discuss these concepts at length. In the middle of all the discussion centered on China however, the forum also played host to a discussion session entitled "ASEAN Community: A New Starting Point for Integration" at which foreign minister Wang Yi gave a speech. This has led many to speculate on Beijing's reasons for lending such importance to this session.

Quiet changes at the Boao Forum

That China was willing to give the floor to this session, during such a high-profile diplomatic event for the country, suggests that ASEAN integration is key to China's interests in the region and to its own trade initiatives.

Asia accounts for 60% of the world's population and according to an estimate by the Asian Development Bank, by 2050, Asia will make up 51% of the global GDP. However, it is not yet clear how regional integration will play out through this time frame. In recent decades Asia has witnessed unprecedented economic growth, increased regional trade and direct investment as well as economic and social exchanges between countries. This is not just on the economic front, but also in terms of security, in dealing with terrorism and pirates. Political and military cooperation is also starting to make headway, according to Duowei.

Compared with Europe, Africa or South America, however, Asia has traditionally been held back by geographical issues, which have prevented institutionalized cooperation, with only informal meetings between leaders and ministerial-level summits. There is also a need for an effective negotiation mechanism in Asia. Beijing clearly hopes that its new initiatives can resolve this.

At the national level, the ten countries that make up ASEAN have undergone different paths of political, cultural and economic development, but as an organization, they make up a collective of 600 million people, linked by river ways as well as maritime and overland routes, stretching through Eurasia to the Pacific. This is of strategic importance for China's planned "Belt and Road" initiative, as ASEAN countries serve as the gateway to the 21st Century Maritime Silk Road. ASEAN countries were also among the earliest initiators of economic integration in Asia, setting out first from preferential trade conditions, to free trade agreements, until they eventually formed an economic community.

This is not the first time Beijing has dedicated a platform to talks between ASEAN countries. Beijing sees ASEAN as a testing ground for its ambitions to implement its strategic entry into Eurasia and so has played a key role in facilitating integration within the organization. From 1991 onward, after then foreign minister Qian Qichen visited the 24th ASEAN leaders' summit as a guest at the invite of host country Malaysia, China's cooperative relationship with the organization began in earnest. This led to regional economic cooperation initiatives surrounding the Mekong river and the Gulf of Tonkin and China subsequently played a role in facilitating negotiations over the ASEAN Regional Comprehensive Economic Partnership (RCEP) and its predecessor.

President Xi Jinping invited the Indonesian president, Joko Widodo, on a state visit on the eve of the forum from March 25-28. On March 26 the two leaders issued a joint statement announcing that they would strengthen the strategic partnership between their countries. The joint statement also reaffirmed Beijing's support for ASEAN's role in regional integration as well as for the ASEAN+3 mechanism - talks between ASEAN countries, South Korea, China and Japan. As Indonesia is often perceived as the major driver behind ASEAN, the move is likely another sign of the importance Beijing is placing on the organization.

The idea of a "Community of Destiny" was first mentioned in a report from the 18th CPC National Congress in November 2012. The concept also featured in Xi's speech at the 2013 Boao Forum, held in April of that year. Xi also mentioned the concept while meeting with Laotian president Choummaly Sayasone in August of 2013 and in a speech at the Indonesian congress in September of the same year. On each occasion he stressed the importance of ASEAN to this community of destiny.

Li Keqiang, right, meets Joko Widodo at the Great Hall of the

People in Beijing, March 27. (Photo/Xinhua)

Related Article:

Indonesia and China eye further infrastructure cooperation

Indonesia and China eye further infrastructure cooperation

Want China Times, Xinhua 2015-03-29

Li Keqiang, right, meets Joko Widodo at the Great Hall of the People
in Beijing, March 27. (Photo/Xinhua)

China and Indonesia pledged more infrastructure construction and investment cooperation during a meeting between Premier Li Keqiang of China and President Joko Widodo of Indonesia on Friday.

The Chinese government will encourage more reputable companies to invest in Indonesia and participate in the construction of high-speed railway, metro rail and port industrial parks, Li said.

He called on the two countries to conduct production capacity cooperation, through which China will help Indonesia turn its abundant resources into the material for industrialization development, and to increase two-way trade and investment.

Joko echoed Li, saying Indonesia hopes to strengthen cooperation with China in areas including energy, maritime industry, agriculture, aviation and tourism.

He welcomed Chinese investment and voiced support for the establishment of the Asian Infrastructure Investment Bank (AIIB), saying he hoped the AIIB could contribute to the region's economic development.

Indonesia officially joined the China-proposed AIIB in November 2014, making it a founding member.

With regards to China-Association of Southeast Asian Nations (ASEAN) relations, Li hailed the positive role played by Indonesia in promoting the sound development of ties.

Li said China was ready to work with ASEAN to maintain the peace, development and prosperity of east Asia.

After meeting at the Great Hall of the People in Beijing, Li and Joko also attended a bilateral economic cooperation forum, on the sidelines of which companies from the two countries signed around 30 deals worth US$40 billion, according to Suryo Bambang Sulisto, president of the Indonesian Chamber of Commerce and Industry.

Sulisto told the forum that China's investment in Indonesia's mining and maritime industry would bring good benefit to the country and Indonesia hoped to take advantage of China's economic growth.

Li said the two countries both had big populations, which means huge markets. They are complementary in terms of different industrialization processes. The two sides should combine China's advantage of technology and capital with Indonesia's advantage of market and resources to promote a coordinated upstream and downstream development.

The premier also pledged to encourage Chinese companies to increase investment to Indonesia.

Joko said Indonesia had demand for high-speed railway, port, airport, power plant and industrial parks. Indonesia will provide a good investment environment for Chinese companies.

Joko was invited by President Xi Jinping for a state visit. He will also go to Boao, in south China's Hainan province, to attend the annual Boao Forum for Asia conference.

Joko also met with Xi and top legislator Zhang Dejiang.