China Says Its High-Speed Railway Package for Indonesia Is ‘More Competitive’ Than Japan’s

Jakarta Globe, Ezra Sihite & Novy Lumanauw, Aug 10, 2015

A high-speed train passes through Shenyang in northeast China in this March 2013
 file photo. China has offered to get Indonesia’s first high-speed rail service up and
running by 2018 if picked over a rival bid by Japan. (EPA Photo)

Jakarta. China says it is offering more “competitive” benefits for the construction of Indonesia’s first high-speed railway – compared to a rival Japanese offer – as the country completes a feasibility study on the project.

Xu Shaoshi, the chairman of China’s National Development and Reform Commission, was in Jakarta on Monday to hand over the results of the study to President Joko Widodo.

“The financial plan that we’re offering is very competitive,” Xu told reporters at the State Palace in Jakarta after his meeting with Joko.

Xu did not disclose China’s final estimated cost for the construction of the railway line, which will connect Jakarta to Bandung.

Earlier reports put China’s offer at a cost of $4 billion, with a lending period of 25 years and an annual interest rate of 2 percent.

Japan, which is competing head-on with China for the same project, has submitted a lower offer. In a meeting with Indonesian Trade Minister Rachmat Gobel in Tokyo last week, Japanese officials said that under their proposal, the project would cost a total of Rp 45 trillion ($3.3 billion).

The Japanese government is also offering a soft loan to cover 75 percent of the funding, with interest of as little as 0.1 percent and a repayment period of 40 years. Under the terms of the soft loan, the Indonesian government will only have to start repaying the debt 11 years after the project has started operation.

Xu said on Monday that China was proposing a joint venture with the Indonesian government, in which Indonesia will hold a 60 percent stake in the project and China the remainder.

Addressing concerns about the safety of a Chinese-built high-speed train, Xu promised that China would do its best work in the construction and management of the project.

He also noted that the majority of high-speed train networks in the world were built by China.

Both China and Japan lay claim to having the most developed high-speed train networks in the world.

Japan, which rolled out its first Shinkasen bullet train in 1964, has a decades-long head start on its regional rival. But, China, which launched its first high-speed train service in 2007, now claims more than half of the world’s 23,000 kilometers of high-speed railway tracks.

“Our high-speed train technology is quite developed,” Xu said.

He added that China projected the opening of 40,000 new jobs with the development of the Jakarta-Bandung line, with economic activity in the areas lying along the proposed line expected to get a boost from new hotels, apartment blocks and residential estates.

Xu said China would help Indonesia form its own expert team to support the construction, management and maintenance of the line.

China is also offering to build a factory in Indonesia that will produce train components – the same offer made by Japan last week.

China is also offering Indonesia a partnership to jointly develop high-speed train projects elsewhere in Asia.

Under the Chinese proposal, there will be eight railway stations along the  150-kilometer Jakarta-Bandung tracks, with each train capable of speeds of 350 kilometers per hour – cutting travel time to as little as 26 minutes.

The Japanese proposal calls for a longer line, at 180 kilometers, and trains with a top speed of 300 kilometers per hour, for a commute of as little as 36 minutes.

China claims its project can be completed by 2018 if it is permitted to start as early as next month.

Japan, meanwhile, has offered to kick off construction early next year. After that, Indonesia’s first bullet train is forecast to have a test run in 2019, with full operation only expected in 2021.

Independent consultant

Sofyan Djalil, Indonesia’s chief economics minister, who was present at the meeting between Xu and Joko, said the government would this week appoint an independent consultant to help it decide which offer to take.

He said 11 consultancies had applied for the job, but the government was planning to hire only one.

“Let’s see which one is more competitive,” Sofyan said, adding that the chosen candidate would be given two to three weeks to study both the Japanese and the Chinese proposals.

In the mean time, the government will study the results of the Chinese feasibility study.

“The Indonesian government has received the results of the feasibility study by the Chinese and will study it and will make a decision as soon as possible,” Sofyan said.

Joko Heads to Japan, China to Make Investment Push

Jakarta Globe, Novy Lumanauw & Carlos Paath, Mar 22, 2015

Indonesia's President Joko Widodo, left, walks with China's President Xi Jinping.
Joko left for a state visit to Japan and China on Sunday. (AFP Photo/ Greg Baker)

Jakarta. President Joko Widodo kicks off a seven-day state visit to Japan and China on Sunday, a trip he hopes will to drum up foreign investment and cement bilateral ties between Indonesia and the two Asian economic giants.

The president, first lady Iriana Widodo, and senior government figures arrive in Tokyo this evening and will stay until March 25, before moving on to Beijing and returning to Jakarta next Saturday.

At a press conference at Halim Perdanakusuma Airport in East Jakarta today, Joko said he hoped the trip would be of benefit to Indonesia.

“The government is committed to developing this country and to run a good, clean administration,” he said. “We want to speed up infrastructure development, stimulate investment and boost the maritime industry.”

Foreign Affairs Ministry spokesperson Arrmanatha Natsir said the main purpose of the visits was to improve economic cooperation and trade with Japan and China.

On top of meeting government representatives, Joko is scheduled to attend business forums in both countries where he will inform business leaders of investment opportunities in Indonesia, the Foreign Affairs Ministry said.

Joko will be accompanied by Foreign Affairs Minister Retno LP Marsudi; Coordinating Economic Minister Sofyan Djalil; Indonesian Armed Forces (TNI) Chief Gen. Moeldoko; Cabinet Secretary Andi Widjajanto; and Chief of the Indonesia Investment Coordinating Board (BKPM), Franky Sibarani.

Indonesia’s imports from Japan rose 17.8 percent to $19.25 billion between 2009 and 2013, according to data from the Trade Ministry. Over the same period Indonesia’s exports to Japan climbed 9.3 percent to $27.1 billion.

Ruling in Favor of Indonesia Against Century Owner

Setting a Decision: ‘Justified’ bailout within the discretion and authority of the government, according to international tribunal

Jakarta Globe, Muhamad Al Azhari, Dec 18, 2014

A closed sign is put in front of the Bank Century office in Jakarta on Nov. 21, 2008.
THe bank now has been renamed Bank Mutiara. (JG Photo/Jurnasyanto Sukarno)

Jakarta. An international tribunal ruled in favor of the government of Indonesia in a case involving the controlled takeover of Bank Century from Saudi businessman Hesham Al Warraq, a law firm representing Indonesia said in a statement on Thursday.

“The Tribunal’s award follows a 2013 decision against Al Warraq’s partner, Rafat Ali Rizvi,” KarimSyah Law Firm said on Thursday.

KarimSyah represented Indonesia in the arbitration in conjunction with the Attorney General’s Office. The law firm also provides outside assisting counseling to Indonesia.

KarimSyah has brought victory for Indonesia in other international cases, including Indonesia one against US mining giant Newmont Mining over divestment of the miner’s Indonesian unit.

The Bank Century case began in November 2008 — at the height of the global financial crisis. Indonesian regulators bailed out the ailing lender through a Rp 6.7 trillion ($536 million) injection in an attempt to prevent systemic banking failure, which could pose risks to the economic stability of the nation.

After the bailout, the government, through Indonesia’s deposit insurance agency, known as LPS, took over the control of Bank Century, which has since been renamed Bank Mutiara.

Indonesian prosecutors brought criminal charges under Indonesia’s anti-corruption and anti-money laundering laws against previous owners Al Warraq and Rizvi, who accused them of draining more than $300 million out of the bank.

Neither investors appeared for the trial, but both were convicted in Indonesian court in absentia.

Al Warraq brought a claim through the Organization of the Islamic Conference Investment Agreement against the government of Indonesia in 2011.

He sought for compensations over what he defined as an expropriation of his shares in Bank Century.

The court favored Indonesia, saying: “It is the view of the Tribunal that the bailout was within the discretion and authority of the government and was completely justified, particularly since Bank Century … could have caused a systemic risk to the entire Indonesian financial system.”

The tribunal also rejected Al Warraq’s claim that he was not afforded fair and equitable treatment in Indonesia.

For the embezzlement charge, the court called for different dispute resolution processes.

Bank Mutiara is now controlled by J Trust, a Tokyo-listed financial institution, which acquired a 99 percent stake in the Indonesian lender from LPS for Rp 4.41 trillion.

Mideast Peace Talks in Focus at Palestinian Development Meet

Jakarta Globe – AFP, March 1, 2014

Indonesian President Susilo Bambang Yudhoyono delivers a speech during
 the second Conference on Cooperation among East Asian Countries for Palestinian
Development (Ceapad) in Jakarta on March 1, 2014. (AFP Photo)

Jakarta. Representatives of 22 nations met in Jakarta on Saturday to discuss Palestinian development, with co-chairs Japan and Indonesia reiterating their support for a two-state solution.

The second Conference on Cooperation among East Asian Countries for Palestinian Development (Ceapad) is aimed at boosting infrastructure and supporting the private sector in the Palestinian Territories.

But a looming deadline for a full Middle East peace deal brokered by US Secretary of State John Kerry is expected to feature prominently in talks.

“We still believe that the two-state vision can be envisaged and realized. And here I must commend the… efforts of Mr John Kerry,” Palestinian prime minister Rami Hamdallah said during the conference’s opening.

Kerry, who coaxed the two sides back to the negotiating table in late July after a three-year hiatus, said Wednesday a full deal would likely slip past the April 29 deadline.

The document has not yet been made public, but Hamdallah said on Friday “all issues actually have been (put) on the table.”

The document is understood to include a non-binding proposal laying out guidelines for negotiating the central issues of the conflict, including such as borders, security, Jerusalem, the settlements and the right of return for Palestinian refugees.

Hamdallah expressed gratitude to donor nations, but said Israeli settlements were “severely” hampering development.

“Sixty-two percent of all our land is still controlled by the Israeli authorities. This impedes any access we have to natural resources, and severely restricts our development,” he said.

“The people of Palestine have been struggling to achieve this dream for more than five decades,” Indonesian President Susilo Bambang Yudhoyono said at the opening.

“Providing them with capacity-building program is critical.”

Yudhoyono said that Indonesia envisaged a Middle East “at peace with itself and the rest of the world” and that peace would also depend on a treaty on nuclear weapons and weapons of mass destruction.

Japanese Foreign Minister Fumio Kishida said that security in the Middle East was “by no means someone else’s problem in a distant region” for Asian nations.

“I firmly believe participating countries share the common determination to assist in a Palestinian state-building that promises to bring about regional peace and stability,” he said in Japanese, according to a statement.

“Such assistance will help achieve a ‘two-state solution’, which would see Palestine and Israel in peaceful coexistence and co-prosperity,” he said.

The Ceapad is jointly chaired by Indonesia, the Palestinian Authority and Japan.

Among attending nations are South Africa, Singapore, Australia, Brunei and Vietnam, while China’s special envoy on the Middle East issue Wu Sike attended.

The conference was initiated by Japan, a major donor to the Palestinian Territories, with the first event held in Tokyo last year.

The conferences are not designed to seek fresh aid pledges, officials said, although several countries have made pledges following last year’s meeting.

Agence France-Presse

Japan, China Ties ‘Critical’ for Asia: Indonesia

Jakarta Globe – AFP, December 13, 2013

Indonesia’s President Susilo Bambang Yudhoyono (L) shakes hands with Japan’s
 Prime Minister Shizo Abe after delivering a speech at his lecture event in Tokyo
 December 13, 2013. Yudhoyono is in Japan to attend summit meetings between
Japanese and Asean leaders. (Reuters Photo/Toru Hanai)

Tokyo. A working relationship between Tokyo and Beijing, embroiled in a bitter territorial row, is “critical” for the region, the president of Southeast Asia’s largest economy said Friday.

Indonesia’s Susilo Bambang Yudhoyono said China needed “an open line of communication to avoid miscalculation” in its various sovereignty disputes, including that with Japan over a chain of islands in the East China Sea.

Speaking in Tokyo, where he is due to attend a special summit hosted by Japan, Yudhoyono said disagreements in Northeast Asia are “pertinent” for the rest of the continent.

“In particular, it must be said that good relations between China and Japan are critical to the future of our region,” he said.

“When the border negotiations are still ongoing, having an open line of communication is crucial to avoid miscalculation that may occur in and around the disputed area,” he added, without naming a specific location.

Japanese Prime Minister Shinzo Abe is meeting leaders of the 10-nation Association of Southeast Asian Nations (Asean) this weekend to mark the 40th anniversary of ties.

The summit is set to be dominated by the parlous state of relations between Japan and China, with Tokyo expected to try to rally support in its dispute with Beijing.

It comes weeks after China’s declaration of an Air Defence Identification Zone (ADIZ) over an area of the East China Sea, including the disputed islands, a move that ratcheted up an already-tense situation.

Beijing said planes entering the zone must obey its orders and provide a flight plan to Chinese authorities, or face unspecified “defensive emergency measures”.

Indonesia, the largest economy in Asean, is not entangled in a territorial dispute with China, but four other members of the bloc have overlapping claims in the South China Sea.

“Indonesia is deeply concerned at the prospect of the disputes erupting into open conflicts, which will have adverse impacts on all countries in the region,” he said, speaking to a policy forum of the Japan Institute of International Affairs.

Some observers have said Beijing’s ADIZ over the East China Sea is a precursor to a similar zone over the South China Sea, which it claims almost in its entirety.

The Philippines, Vietnam, Malaysia and Brunei have competing claims to parts of the sea, and Manila and Hanoi have in recent years repeatedly accused China of becoming more aggressive.

Abe is expected to discuss the border disputes with the Asean leaders.

Agence France-Presse

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SBY’s Japan Visit to Focus on Trade

SBY to Welcome Argentinian President, Japanese PM

Jakarta Globe, Abdul Qowi Bastian, January 15, 2013

President Susilo Bambang Yudhoyono. (Reuters Photo/Beawiharta)  

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President Susilo Bambang Yudhoyono is set to meet with the Argentine and Japanese heads of state this week in order to bolster Indonesia’s bilateral relations with both nations.

Yudhoyono will receive Argentine President Cristina Fernandez de Kirchner on Thursday and Japanese Prime Minister Shinzo Abe the following day at the Merdeka Palace in Jakarta.

“The state visit by the Argentine president and the official visit by the Japanese PM will hopefully strengthen ties between Indonesia and both countries, not only between the government, but also among its people and businessmen,” Presidential spokesman Teuku Faizasyah said in a statement received by the Jakarta Globe on Tuesday.

During the meetings, Yudhoyono and the two leaders will discuss how to develop mutual ties in various areas.

“President SBY and each of his counterparts will focus on reinforcing bilateral relationships, including building partnerships in the economic sector,” Faizasyah said referring to Yudhoyono by his initials.

Argentina is the second-largest importer of Indonesian goods in South America after Brazil. Indonesia, meanwhile, is Argentina’s biggest trading partner in Southeast Asia.

Bilateral trade between Argentina and Indonesia reached $1.94 billion in 2011. As of October of last year, trade between the two countries was measured at $1.67 billion.

“There is still room to develop economic partnerships with each country. Even more, Indonesia should maximize Argentina and South America’s market potential for its products, [especially] amid global economic downturn,” Faizasyah added.

Fernandez’s appearance represents Argentina’s first state visit to Indonesia.

Meanwhile, Yudhoyono’s meeting with Abe will refocus on the Japan-Indonesia Strategic Partnership for Peaceful and Prosperous Future, formed in 2006 during Yudhoyono’s visit to Japan.

Japan is one of Indonesia’s main partners in both the trade and investment sectors. Bilateral trade between both nations in 2011 totaled $53.1 billion, and reached $44.85 billion as of October of last year.

Analysts have said that Abe’s trip to Indonesia and other Southeast Asian countries — namely Thailand and Vietnam — demonstrates that Japan wants to establish closer ties in the region as its relationship with China continues to deteriorate.

Japanese Chief Cabinet Secretary Yoshihide Suga said that Indonesia, Thailand and Vietnam are at the forefront of Asian economic growth. Japan, on the other hand, is mired in deflation and stuck in its fourth recession since 2000.

“It’s important to strengthen the cooperation with the Asean [Association of Southeast Asian Nations] countries to ensure peace and prosperity in the Asia-Pacific region,” Suga said.

Abe’s visit to the archipelago will be his first official trip overseas following his inauguration last month.

China and Japan will start direct currency trading

Deutsche Welle, 29 May 2012

For the first time, China is going to let a major unit other than the dollar swap with its national currency. Beijing and Tokyo have agreed to start direct trading within days, with no bucks involved.

The two Asian economic powerhouses, China and Japan, will begin direct trading of their currencies from June 1, the governments in Beijing and Tokyo confirmed on Tuesday. The US dollar as an intermediary currency will no longer be used in bilateral operations.

"The move is to promote bilateral trade, facilitate the use of the yuan and the yen in international trade settlements and lower the cost of conversion," the China Foreign Exchange Trade System said on Tuesday.

China's central bank said it would support what it viewed as an important step in strengthening bilateral cooperation and developing financial markets. The direct currency trading decision came on the back of preparatory talks between Chinese Premier Wen Jiabao and Japanese Prime Minister Yoshihiko Noda last December.

Hedging against risks

Chinawill set a daily rate based on dealer quotes, with trade allowed to move within a 3.0-percent band above or below that figure. This compares with a 1.0-percent band of variance fixed to yuan-dollar trading. No fixed rates will be set in Tokyo trading, though.

"From June 1, the yen-yuan exchange rate will be constantly indicated in both markets, facilitating full-fledged exchange trading," Japan's Finance Minister Jun Azumi told reporters in Tokyo. "By not using the dollar as an intermediate currency, we can lower transaction costs and reduce settlement risks at financial institutions," Azumi added.

Chinais Japan's largest trading partner, with bilateral trade valued at $345 billion (275 billion euros). At present, an estimated 60 percent of commerce between China and Japan is settled in US dollars.

hg/mll (AFP, dpa, Reuters)

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Japanese National is First Foreigner to Be Detained by KPK

Jakarta Globe, SP/Novianti Setuningsi, May 13, 2012

President Director Shiokawa Toshio, of Onamba Indonesia, was saddled
 with the unenviable distinction of being the first foreigner detained by the
Corruption Eradication Commission on Saturday. Toshio allegedly bribed an
ad-hoc judge for a favorable ruling over the futures of 176 workers on strike
at a Onamba factory. (Antara Photo)

           

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For the first time in its history, the Corruption Eradication Commission has detained a foreigner accused of bribery.

Japanese national Shiokawa Toshio, the president director of Onamba Indonesia, has been named a suspect for bribing Imas Dianasari, a former ad-hoc judge at the Bandung Municipal Court’s industrial relations tribunal.

“For the purposes of our investigation, we have decided to detain S.T., a Japanese citizen, for the next 20 days,” Johan Budi, the spokesman for the antigraft agency known as the KPK, told journalists on Friday.

In January, the Bandung Anti-Corruption Court found Imas guilty of taking bribes from the Japanese-owned Onamba Indonesia, an electrical wire manufacturer, and sentenced her to six years in jail.

She was also ordered to pay Rp 200 million ($22,000) in fines.

Onamba had been sued by a union for laying off 176 striking workers. Imas ruled in favor of the company and allowed it to discontinue the employment of the workers who joined the strike.

Subsequently, the company, through its human resource manager Odih Juanda, paid Rp 200 million to Imas with the understanding that she would help the company bribe a justice at the Supreme Court to rule in its favor during the appeal.

Odih was sentenced to four years in prison in January.

According to Johan, Shiokawa faces a maximum sentence of 15 years in prison and fines of up to Rp 750 million if found guilty of “providing money to the judge.”

Bizarre Claim for $1 Trillion

Courthousenews, By DAN MCCUE, Monday, December 05, 2011

MANHATTAN (CN) - An American expatriate in Bulgaria claims the United Nations, the World Economic Forum, the Office of International Treasury Control and the Italian government conspired with a host of others to steal more than $1.1 trillion in financial instruments intended to support humanitarian purposes

The 111-page federal complaint involves a range of entities common to conspiracy theorists, including the Vatican Illuminati, the Masons, the "Trilateral Trillenium Tripartite Gold Commission," and the U.S. Federal Reserve.

Plaintiff Neil Keenan claims he was entrusted in 2009 with the financial instruments - which included U.S. Federal Reserve notes worth $124.5 billion, two Japanese government bonds with a combined face value of $19 billion, and one U.S. "Kennedy" bond with a face value of $1 billion - by an entity called the Dragon Family, which is a group of several wealthy and secretive Asian families.

"The Dragon family abstains from public view and knowledge, but, upon information and belief, acts for the good and better benefit of the world in constant coordination with higher levels of global financial organizations, in particular, the Federal Reserve System," Keenan claims.

"During the course of its existence over the last century, the Dragon family has accumulated great wealth by having provided the Federal Reserve Bank and the United States Government with asset assignments of gold and silver via certain accounts held in Switzerland, for which it has received consideration in the form of a variety of Notes, Bonds and Certificates such as those described ... that are an obligation of the Federal Reserve System."

Keenan says that with accrued interest the instruments are now worth more than $1 trillion. He says the family designated him as its principal in an effort to select certain registered and authorized Private Placement Investment Programs (PPPs) for the benefit of unspecified global humanitarian efforts.

In his remarkable complaint, Keenan claims that the U.S. government enormous amounts of money - delivered in gold and other precious metals - from the Dragon Family many years ago, and that the money was placed into the Federal Reserve System for the benefit and underwriting support of the dollar, "which was to become and currently remains the global reserve currency".

Keenan claims the conspiracy began with the illegal detention of two Japanese citizens, Akihiko Yamaguchi and Mitsuyoshi Watanabe, and the seizure of $134.5 billion in bonds they were holding in Italy, in June 2009.

Photo released by the Italian media after these bonds

were first seized (June 2009)

Yamaguchi can best be described as Keenan's predecessor in trying to place Dragon Family instruments in legitimate PPPs to advance the group's humanitarian aims, according to the complaint.

Keenan says he came to know both Yamaguchi and the Dragon Family through the Japanese man's efforts on the group's behalf, and that he introduced them to a bank in Cyprus with which they could do business.

Keenan says that in gratitude, Yamaguchi sought and was granted approval to execute a special power of attorney, whereby Keenan would also act on behalf of the Dragon Family to place their assets in PPPs.

It was then, he says, that he took possession of the instruments that are the heart of the lawsuit. For his assistance, Keenan says, he was to receive a profit share amounting to 30 percent of any particular PPP he arranged.

A month after the Japanese men were detained, an man named Leo Zagami, "a self-described 33rd degree Free Mason, who, as of April 2008, had reportedly claimed to be the leader of a breakaway faction of the Knights of Templar and high-level Freemasons centered around the elite of the Masons P2 (propaganda Due) Lodge in Monte Carlo," arrived on the scene, according to the complaint. (Parentheses in complaint.)

Zagami claimed to be a representative of the Vatican Illuminati and other European sect societies and "had been looking to make contact with certain Asian Secret Societies," the complaint states.

During a meeting in Japan, he says, he told a contact that Yamaguchi and Watanabe had been "set up" and that he had inside information about the seized instruments.

Subsequently, he introduced his contact in Japan to defendant Daniele Dal Bosco, a Vatican banker and associate of the P2 Masonic Lodge, who "would be able to 'cash the bonds seized by the Italian Treasury Police,'" according to the complaint.

The complaint alleges a complicated history with many moving parts and scores of internationally known and unknown characters, the sum of which is that Keenan claims he was entrusted with billions of dollars in bonds by the Dragon Family.

He claims that soon, he and Dal Bosco were in daily contact via Skype and they arranged to meet in Italy. During these conversations, Dal Bosco represented that he was not only financial advisor to Zagami, but also to the Vatican, Vatican City, Rome, and the treasurer for the P2 Masonic Lodge.

As a result, Keenan said, although he tried keep personal possession of the financial instruments with which he was entrusted, he nevertheless came to trust Dal Bosco, and turned the bonds over to him for "temporary safekeeping and custodianship".

Dal Bosco absconded with the bonds and sought assistance in selling the instruments "in the global marketplace through stealth, conversion and bribery," Keenan claims.

He claims that as the conspiracy continued to unfold, various high level officials repeatedly offered him a bribe of $100 million to "release" the instruments without disclosing their theft to the Dragon family, and to allow the instruments to be converted to a so-called UN "Sovereign Program" wholly under the auspices, protection and umbrella of the sovereign immunity enjoyed by the defendants.

Other defendants include UN General Secretary Ban Ki-Moon, Former Italian Prime Minister Silvio Berlusconi, Giancarlo Bruno, who is identified as head of the banking industry for the World Economic Forum, Italy's ambassador to the UN Cesare Maria Ragaflini, Ray C. Dam, president of the Office of International Treasury Control, and David A. Sale, the deputy chief of the council for the cabinet of the OITC.

Keenan seeks the return of the stolen instruments, punitive damages and court costs on multiple claims of fraud, breach of contract and violation of international law.

He is represented by William H. Mulligan Jr., with Bleakley, Platt & Schmidt of White Plains, N.Y.

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Panasonic Plans Hub in Indonesia

Jakarta Globe, Camelia Pasandaran | August 25, 2010

Jakarta. In a meeting with President Susilo Bambang Yudhoyono in Jakarta on Wednesday, the head of Japanese consumer electronics giant Panasonic confirmed that it planned to move its production base to Indonesia, senior Indonesian government officials said.

Panasonic plans to relocate factories in China to
Indonesia, citing drastically lower labor costs.
(EPA Photo)

Gita Wirjawan, chairman of the Investment Coordinating Board (BKPM), said Panasonic president Fumio Ohtsubo told Yudhoyono and Vice President Boediono in separate meetings that the company would move its factories from China and Vietnam to Indonesia to take advantage of lower wages and the booming economy, which is driven by consumer spending.

Gita first revealed that Panasonic was considering such a move in March.

Industry Minister MS Hidayat, who was present at Ohtsubo’s meeting with Boediono, said Panasonic was upbeat about the country’s economic prospects, and would close its factories in China and relocate them here. He did not offer a timeframe or investment value for the move.

“They are committed to making Indonesia the production base for exports as well as for the domestic market,” Hidayat said.

This week, the Wall Street Journal reported that the average wage for factory workers in China is about three times more expensive than in Indonesia — $413 versus $129 a month — while wages in Vietnam were $136.

The report cited research by JP Morgan, CEIC and the International Labor Association.

Rachmat Gobel, the chairman of Panasonic Gobel, the electronics firm’s local unit, also declined to cite an investment value for Panasonic’s factory relocations, saying only that the parent company had been continuously investing in Indonesia, and had already brought the total to $400 million.

Panasonic’s three factories in Indonesia — in Jakarta, Surabaya and Batam — make home appliances, personal electronics and batteries.

“Its current annual turnover [in Indonesia] is $850 million,” Gita said, adding that it is expected to surge to $3 billion by 2014, partly because of its recent acquisition of Sanyo.

Yopie Hidayat, a spokesman for Boediono, said Panasonic told the vice president the company may also develop solar panels domestically.

“It plans to turn houses into self-sufficient energy houses with zero emissions,” Yopie said. “They made the prototype in Japan but are considering whether to develop the industry there or in Indonesia considering the skilled-laborers here and the availability of abundant solar energy. The vice president supports the plan to make Indonesia as the production base, not only as the market.”

“They’re still considering the solar panel development here,” he added. “But the LED factories have been here and there’s also plans to extend the battery production factory.”

Boediono encouraged Panasonic to develop solar energy as it could supply remote regions of the country with electricity.

Gita and Hidayat both said Panasonic’s decision was expected to convince other companies to make Indonesia their production base.

Investment falls, as reforms incomplete

Andi Haswidi, The Jakarta Post, Jakarta | Thu, 01/28/2010 10:36 AM | Business

Foreign direct investment, which makes up the bulk of direct investments each year, fell 27.2 percent in value last year as total cumulative investment only stood at Rp 97.38 trillion (US$10.82 billion) by the end of December.

Approximately 40 percent of total foreign investment came from Singapore, followed by the Netherlands with 11 percent, Japan with 6 percent, South Korea with 5.8 percent, the UK with 3.4 percent and the rest from other countries.

The Investment Coordinating Board (BKPM) says the main factor behind this poor performance was the state of the global economy and the time-lag between investment commitment and disbursement, reflecting complicated procedures.

In a bid to simplify and speed up bureaucratic procedures, the board has been given the legal authority to take over official functions from 15 other government departments, for example in the issuing of permits and licenses, targeting to slash the time needed to complete such procedures from 70 days to 40 days.

The administrative reform program to do this is now nearing completion, BKPM chairman Gita Wirjawan said.

“We have completed the process for the delegation of authority from 13 ministries, the last two will be signed on Wednesday,” he said Tuesday night.

The board has launched a so called One Stop Shop (PTSP) for all business licensing procedures at all its regional branches and an electronic licensing and information service (SPIPISE) -- also known as the National Single Window for Investment (NSWi).

“So far, the SPIPISE has only been implemented in Batam. The rest of the regions will soon follow,” Gita said.

The new electronic system, he said, has two benefits: bypassing complicated procedures and document handling for investment procedures while facilitating that investors need not be present in Indonesia to deal with all the licensing process, but can also complete key procedures online.

“This year we expect total investment value to pick up between 10 and 15 percent,” he said.

Sofyan Wanandi, chairman of Indonesia’s Employers Association (Apindo) which also often serves as a point of liaison for foreign investors, praised the progress of the investment reform agenda.

“If the plan goes well, it will be very useful, but we haven’t actually felt the benefit of the electronic system because it’s new,” he commented briefly.

The progress of reform in business licensing services, Gita said, was in line with the momentum of Indonesia’s improving economic fundamentals, which has led to the improvement of the country’s sovereign risk ratings.

Fitch Ratings upgraded Indonesia’s long-term foreign and local currency ratings on Monday to BB+ from BB, one level below investment grade, citing the country’s resilience in the global financial crisis.

Fitch says Indonesian companies are likely to benefit from improved profitability and external debt leveraging following recovery from the Asian financial crisis and favorable relationships between local firms and affiliated parent companies.

Moody’s Investors Service on Jan. 21 maintained its Ba2 rating for Indonesia, while Standard & Poor’s raised the outlook on its BB- rating for the country to BB+ on Oct. 23. S&P’s rating is three levels below investment grade, while Moody’s is two levels below investment grade.

“There is no reason for us not achieving investment grade within the 24 to 36 months ahead, especially if we see the [improved] trajectory of our economic growth,” Gita said.

Wiwig Santoso, head of treasury at Bank DBS Indonesia, said the Fitch Ratings upgrade had been expected by many market participants.

“We expect the pending pipeline of investment projects to materialize, on top of the already projected investments.” Wiwig said.

He added that although the corporate credit spread for Indonesia is still relatively high, the spread on Indonesian assets do offer a lucrative return for investors.

RI, Japan eye economic corridor development

The Jakarta Post, Jakarta | Tue, 01/12/2010 8:42 AM

Indonesia is ready to offer two economic corridors to Japan, which will connect hubs and industries between regions to accelerate infrastructure development, foster foreign investment and spur Indonesia’s economic growth.

Indonesia has identified six economic corridors — Eastern Sumatra-North West Java, Northern Java, Kalimantan, Western Sulawesi, East Java-Bali-East Nusa Tenggara and Papua — which will be prioritized for economic development, Deddy S. Priyatna, deputy to the state minister for national development planning, in charge of infrastructure, said Monday after a meeting with Japanese officials.

“North Java and Sumatra are our priorities,” he said, although he did indicate that priorities could shift following a planned meeting in Japan between Indonesian and Japanese businesses in March.

Each of these corridors has their own focus industries.

The Eastern Sumatra-North West Java corridor, for example, has palm oil, rubber and coal as its focus industries.

The North Java corridor will focus on textiles, food products and transport equipment industries.

“The investment mechanism will be in the form of public-private partnerships,” said Deddy.

Deputy Transportation Minister Bambang Susantono said areas in the economic corridors might eventually be similar to special economic zones, offering incentives for businesses operating there.

Coordinating Economic Minister Hatta Rajasa told a press conference the planned development of the six economic corridors throughout the country would go ahead under the Indonesian Economic Development Corridor (IEDC) project through public-private partnerships.

“Both the Indonesian and Japanese governments have recognized the importance of the IEDC project, which aims for the comprehensive development of industries and infrastructure,” Hatta said.

Indonesia needs almost Rp 2,000 trillion (US$220 billion) in investment between 2010 and 2014 for infrastructure development, with most of those funds expected to come from private investment, according to the National Development Planning Agency.

In 2008, Japan was the third-largest foreign investor in Indonesia, investing $1.37 billion in total for 130 projects, according to the Investment Coordinating Board.

After meeting President Susilo Bambang Yudhoyono at the State Palace Masayuki Naoshima, Japan’s Minister for Economy, Trade and Industry, said Japan would continue to invest in Indonesia.

He said the talks did not discuss specific investment figures.

Businessman Rachmat Gobel said Japan’s support would help bolster Indonesia’s competitiveness amid the current tight competition.

“Now we’re facing the ASEAN-China free trade deal we should map our industries.

“Japan has technology and human resources to strengthen our industries so we can compete with China,” he said.

Potential industries to be improved include the technology, automotive, manufacture and energy industries.

RI gets $425m loan from Japan for green programs

Desy Nurhayati and Ary Hermawan, The Jakarta Post, Nusa Dua, Bali | Fri, 12/11/2009 9:17 AM

Japanese assistance: Indonesian Foreign Minister Marty Natalegawa (right) and Japanese Ambassador to Indonesia Kojiro Shiojiri (left) sign a loan and grant agreement in Nusa Dua, Bali, on Thursday, while Indonesian President Susilo Bambang Yudhoyono (right, standing) and Japanese Prime Minister Yukio Hatoyama (left, standing) look on. In accordance with the agreement, Japan will provide Indonesia a US$425 million loan for climate change programs and a grant of $22.2 million for construction projects in Nias Island and West Nusa Tenggara. JP/Zul Trio Anggono

Indonesia will receive from Japan a loan of US$425 million, to be allocated for climate change programs, and a grant totaling $22.2 million for construction projects in Nias Island and West Nusa Tenggara.

The signing ceremony for the loan and grant took place Thursday during the second Bali Democracy Forum (BDF) underway on the resort island, between President Susilo Bambang Yudhoyono and Japanese Prime Minister Yukio Hatoyama, and between Indonesian Foreign Minister Marty Natalegawa and Japanese Ambassador to Indonesia Kojiro Shiojiri.

The two leaders co-chaired the two-day forum. The loan program is the first concrete case of the so-called “Hatoyama Initiative” to support Indonesia’s measures to tackle the impact of climate change.

“We expect this loan will further facilitate measures related to climate change in Indonesia and will contribute to the country’s continued economic development,” Hatoyama said at a joint press conference with Yudhoyono.

Part of the loan, $317.8 million, will be used to contribute to the mitigation and adaptation efforts against global warming, through carbon absorption and emission controls, as well as to respond to cross-sectoral issues of climate change.

The remaining $107 million will be an “emergency budget support” to further push Indonesia’s efforts on climate change countermeasures.

During the forum, Japan also agreed to grant $17.2 million for the reconstruction of six bridges in Nias Island, which suffered serious damage from earthquakes along the northern Sumatra coast in 2004 and 2005.

“This project will be used to facilitate the transport of goods and contribute to the reconstruction program in Nias by making use of Japan’s earthquake-resistance technology,” said Japanese Foreign Ministry press secretary Kazuo Kodama.

Another grant, of $5 million, will go toward the construction of four bridges in West Nusa Tenggara to improve access for residents in the underdeveloped region.

Yudhoyono and Hatoyama held a bilateral meeting Thursday during which they agreed to strengthen cooperation on a range of issues, including how to work together to make the Copenhagen climate change talks a success.

“We’ve agreed to enhance economic cooperation,” Yudhoyono said, adding Jakarta expected

Tokyo to invest more in Indonesia through the Economic Partnership Agreement (EPA).

Hatoyama said he appreciated Indonesia’s target to cut carbon emissions by 26 percent by 2020, adding Japan was committed to extending assistance to Indonesia in addressing climate change issues.

Yudhoyono said if the assistance was forthcoming, Indonesia would be ready to increase the reduction target to 41 percent by 2020.

The meeting between the two leaders was the third since both were voted into office earlier this year.

The first was in Pittsburgh in September during the G20 meeting, and the second in Thailand in October during the East Asian Summit.

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