Jokowi Returns to Jakarta After S. Korea, Russia Trip

Jakarta Globe, Eko Prasetyo, May 21, 2016

President Joko Widodo welcomed by Vice President Jusuf Kalla at Halim
Perdanakusuma Airport, East Jakarta, Saturday (21/05). After an official visit
to South Korea and Russia, Jokowi has secured partnership agreements
and investment commitments to Indonesia. (State Palace Press Photo/Laily) 

Jakarta. After a week of meetings in South Korea and Russia, President Joko Widodo returned to Jakarta on Saturday (21/05) boasting commitments to bilateral and regional partnerships.

The five day trip resulted in a variety of agreements with South Korean and Russian private business, as well as among Asean.

"In the visit to Korea, there was high enthusiasm from South Korean businessmen. The resulting deals have reached around $18 billion," Foreign Minster Retno Marsudi said in a statement at Halim Perdanakusuma Airport, East Jakarta.

At least seven agreements were signed in South Korea, including in the maritime, creative industry, sports, special economic regions and corruption eradication sectors.

In Russia, Joko met with President Vladimir Putin to enhance partnerships in palm exports, fisheries and investment diversification.

"All the potential will be followed up," Retno said, adding that Russia has also committed to constructing a $13 billion oil refinery. “Also, there were five agreements on defense, fishing, culture, national archive and foreign ministry archives.”

During the Asean-Russia Summit, Joko said partnerships should be focused on energy, small-medium enterprises and connectivity, while maintaining peace and security in the region.

Joko met with the Vietnamese and Singaporean Prime Ministers to discuss the realization of the 2018 $10 billion trade target and continuing maritime delimitations.

President Joko Widodo inaugurated as Seoul's honorary citizen, during his state
visit to the South Korean capital on Tuesday (17/05). (State Palace Press Photo/Intan)

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Basuki Rejects Request to Delay New Minimum Wage

Jakarta Globe, Lenny Tristia Tambun, Jan 05, 2015

Jakarta. Governor Basuki Tjahaja Purnama has rejected a request from 27 South Korean companies that they be exempt from immediately implementing Jakarta’s 2015 minimum wage.

Basuki on Monday said there would be no delay in implementing the new provincial wage of Rp 2.7 million ($219) a month.

“We rejected the motion because I refuse to be ordered around,” the governor said.

He added that if foreign companies did not want to comply with regulations they could move elsewhere.

“They could move to Majalengka [in West Java] the provincial minimum wage is still cheap there.”

Basuki said the companies — who are all garment manufacturers based in Cilincing, North Jakarta — had made similar requests in the past, despite the fact wages were based on the capital’s Decent Living Index, or KHL.

The KHL is used to define the minimum amount needed to sustain a “decent” quality of life in the capital.

The head of Jakarta’s Manpower and Transmigration Agency, Priyono, said all companies that wanted a delay had to go through the correct procedure.

An exemption could only be granted with a recommendation from the wage council, after a review of a company’s finances, he said.

Jokowi Meets N. Korean Foreign Minister and S. Korean Ambassador

Jakarta Globe, SP/Deti Mega Purnamasari, 13 Aug 2014

President-elect Joko Widodo. (Antara photo/Widodo S. Jusuf)

Jakarta. President-elect Joko Widodo held two separate meetings on Monday with senior officials from both North and South Korea to discuss Indonesia’s bilateral ties with the two countries ahead of him assuming the office of president in October.

“North Korean foreign minister, Ri Su-yong, congratulated me for winning the presidential election, it was a direct message from Kim Jong-un,” Joko said on Monday at City Hall.

Ri praised the Jakarta governor, calling him a humble man with an impressive track record as an administrator. Pyongyang had praise for Joko’s efforts to raise living standards, the foreign minster said.

“I hope he can work even harder for his people,” Ri added.

The North Korean minister on Wednesday also met with President Susilo Bambang Yudhoyono and his Indonesian counterpart, Marty Natalegawa.

After meeting Joko, Ri said he hoped for a deepening of bilateral ties between Pyongyang and Jakarta.

“I expect major successes in public services and the country’s development,” he added.

Earlier in the day Joko also met with the South Korean ambassador to Indonesia, Cho Tae-young.

“The discussion was mostly about the economy and culture,” Joko said, adding that Cho had invited him to Korea for a state visit after his October inauguration.

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APEC opens two-day summit in Bali

Deutsche Welle, 7 October 2013

Leaders from Asia-Pacific nations and territories have gathered on the Indonesian island of Bali to attend the APEC summit . Notable by his absence is US President Barack Obama.

 Indonesia's President Susilo Bambang Yudhoyono delivers his speech during
 the opening of the Asia-Pacific Economic Cooperation (APEC) CEO Summit in
 Nusa Dua, Indonesia resort island of Bali October 6, 2013. REUTERS/Beawiharta

The leaders from the 21 members of the Asia-Pacific Economic Cooperation (APEC) were expected to discuss reducing trade and investment barriers and speeding up regional economic integration and infrastructure development.

Opening the summit, which is taking place under high security, Indonesian President Susilo Bambang Yudhoyono on Monday called for closer cooperation in the region.

"We all feel the pain of the crisis," Yudhoyono said. "It is therefore important to develop closer cooperation towards accelerating economic growth and global recovery."

Among the leaders attending are Chinese President Xi Jinping, Japanese Prime Minister Shinzo Abe and new Australian Prime Minister Tony Abbott. Russian President Vladimir Putin was expected to arrive on Monday

Obama cancellation

However, US President Barack Obama, who had hoped to use the summit to iron out issues regarding the free-trade pact he is promoting, the Trans-Pacific Partnership (TPP), cancelled his attendance at the summit because of the current US government shutdown over a Congress budget row. He is being represented at the summit by Secretary of State John Kerry.

Despite Obama's absence, twelve APEC members were expected to continue work on the pact, which the US president sees as underlining a US "pivot" towards Asia as a counterbalance to China's increased influence in the region.

The twelve members involved in the TPP talks on the sidelines of the APEC meeting are the United States, Australia, New Zealand, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Canada, Mexico and Peru.

US Secretary of Commerce Penny Pritzker told reporters in Bali on Sunday that delegates had reached agreement on several thorny issues in the proposed pact. The US hopes to secure a deal on the TPP by the end of the year.

In addition to the countries listed above, other APEC members include China, Hong Kong, Indonesia, South Korea, Papua New Guinea, the Philippines, Russia, Chinese Taipei and Thailand.

tj/hc (dpa, AFP, AP)

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China, South Korea to boost local currency usage under trade pact

Want China Times, Lin Tien-wei and Staff Reporter 2012-12-06

A ad for renminbi services on a street of Hong Kong. (File photo/CNS)

South Korea's central bank said on Dec. 4 that it will enter a 360 billion yuan (US$59 billion) currency swap agreement with its Chinese counterpart in mid-December. This will support trade currency settlements made by local companies in each country by using a yuan-won swap line.

This move is expected to boost bilateral trade between China and South Korea and promote the globalization of the renminbi.

South Korea's Seoul-based Yonhap News Agency reported that the central banks of the two countries will each open an account in the other country's central bank and deposit their local currency into a lending account. The renminbi deposits made by South Korea in China's central bank will be lent to Korean importers through the Bank of Korea for payments due to China's export enterprises. Likewise, Chinese firms can also obtain renminbi-denominated loans when exporting to South Korea.

In other words, under the agreement, South Korean firms will be able to borrow renminbi-denominated funds for trade settlements from local banks, and the BOK will lend renminbi-denominated funds secured under the currency swap line with the People's Bank of China.

If the currency swap agreement is implemented smoothly, it will encourage renminbi and won usage in bilateral trade. "We plan to arrange similar agreements with Japan and other Asian countries after this," a BOK official said.

The report said that South Korea's central bank planned on selecting lending banks to have them sign agreements related to foreign exchange loans. This would also impose restrictions on loan quotas.

To help decrease an over-reliance on the US dollar, China has aggressively promoted cross-border trade settlements using the renminbi and has signed currency swap agreements with several countries to improve the usage volume for the currency, the report said.

It added that the move would also help reduce companies' exposure to currency risks and transaction costs, as well as ease external vulnerability by decreasing a reliance on major reserve currencies.

China is South Korea's largest foreign trade partner. Last year, bilateral trade between the two countries touched US$245.6 billion, which was an 18.5% growth year-on-year. About 25% of South Korea's exports were targeted at China. Amidst growing bilateral trade, only 3% of the transactions were settled using the renminbi or the won, while most were settled using the US dollar. The currency swap agreement was signed in 2011 during a visit to Seoul by China's vice premier Li Keqiang.

While the two countries have agreed to adopt the existing currency swap to boost the use of local currencies in bilateral trade settlements, Taiwan is the only economy among Asia's Four Little Dragons that has not signed a currency swap agreement with China yet. This could mount pricing pressure on Taiwanese companies exporting to China.

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South Korean Firms Eye Indonesia as a Base

Jakarta Globe, SK Zainuddin | July 03, 2011

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As Indonesia’s economic stock rises, more global companies are looking for opportunities in Southeast Asia’s largest economy, including multinational firms from South Korea.

A growing number of Korean companies are looking to move their regional headquarters from Singapore and Kuala Lumpur to Jakarta, said Moon Jae-do, deputy minister for international affairs at Korea’s Ministry of Knowledge Economy.

In an exclusive interview with the Jakarta Globe, he said Korean companies were keen to invest in Indonesia and participate in the government’s new economic master plan, or MP3EI.

“Many large Korean companies are moving their regional headquarters to Jakarta,” he said. “Indonesia is a big market, and it’s growing fast and can become a manufacturing base for Korean companies.”

According to Moon, Korean companies plan to invest $12 billion in Indonesia over the coming years in industries such as steel, retail, finance and infrastructure. This figure includes the funds to be contributed by steelmaker Posco under its $6 billion deal with state-owned Krakatau Steel.

The joint venture to build one of the largest steel plants in the region broke ground in December. The first phase of construction is expected to be completed by the end of 2013.

“Posco is investing in steel plants in order to add value,” said Moon. “Korean companies are looking to bring new technology to Indonesia as they see that Korean technology can complement Indonesia’s natural and human resources.”

In May, Indonesia and South Korea signed a memorandum of understanding on economic cooperation in Bali. The countries agreed to foster partnerships in seven sectors, including industry, energy, agriculture and defense.

The deal was the first concrete action from Seoul following President Lee Myung-bak’s commitment to contribute to the Acceleration and Expansion of Indonesia’s Economic Development 2011-2025 (MP3EI) plan, which involves establishing six economic corridors, each with a specific focus.

With more than 1,300 Korean companies operating in Indonesia, the Korean business community is a significant force on the local business landscape. The vast majority of these companies are small- and medium-sized enterprises but increasingly, the chaebols , or larger conglomerates, are now looking at investing in Indonesia.

Apart from Posco, other chaebols that have announced new investment plans include Lotte Mart, Kiwoon Securities, Samsung C&T, LG International, Korea Western Power, Korea South East Power and the SK Group.

Moon noted that more Korean companies would head to Indonesia if Jakarta provided greater incentives and improved the investment climate. The key challenges, he said, were lack of infrastructure and complicated administrative processes.

“The Indonesian government is moving in the right direction as economic policies are more predictable and systematic.”

Moon stressed that if Indonesia wanted to attract more technologically-oriented investment, the government needed to provide greater incentives. This was Korea’s experience when the country started on its journey from being a poor agriculture-based economy in the 1960s to a modern industrialized nation.

“We try to give as much incentives [as we can], such as tax holidays, land allocation and establishing free economic zones to create a positive investment environment,” he added.

“The Korean economy has a good record in having such master plans since the early 1960s where we were able to mobilize resources systematically,” Moon said.

“With the new master plan, Indonesia can become a manufacturing base for Korean companies in the Asean region.”

SBY to be 'lead speaker' in G-20 development session

Erwida Maulia, The Jakarta Post, Jakarta | Thu, 11/11/2010 4:52 PM

The upcoming G-20 Summit in Seoul will have at least two new items on the agenda: development and maritime environmental security, according to President Susilo Bambang Yudhoyono.

Yudhoyono told a press conference here Thursday before his departure for Seoul that he would be a 'lead speaker' at the summit’s development discussion.

"This year's G-20 Summit will discuss development, which is very important for developing countries such as Indonesia because we don't want the global economy to become unbalanced, unfair or ignorant of the problems faced by developing countries," Yudhoyono said.

"[Development] will be discussed for the first time and thank God Indonesia will be given a role. I will be a lead speaker at the G-20 Summit session tomorrow discussing important development issues."

Yudhoyono said South Korean President Lee Myung-bak had called him on Wednesday evening and asked Yudhoyono to attend the summit and support the interests of developing nations by playing active role in the development session.

The summit will also discuss maritime environmental security, which Yudhoyono said was very relevant to the interests of Indonesia as the world's largest archipelago.

Other subjects to be discussed at the summit include strong, balanced and sustainable economic growth; international financial institution reform; financial system regulation; climate change and trade and investment, Yudhoyono said.

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KPK to collaborate with G20 to eradicate corruption

Antara News, Tuesday, September 28, 2010 21:12 WIB

Jakarta (ANTARA News) - Indonesia`s anti-graft agency KPK in collaboration with representatives from G-20 is designing a working plan on corruption eradication to be presented at the G20 Summit next month in Seoul.

KPK Office, Jakarta

KPK (Corruption Eradication Commission) Deputy Chief Moch Jasin said here on Tuesday at a meeting of the G20 anti-corruption working group, Indonesia and France had been chosen to become the joint chair of the group.

He said he himself had been appointed to be the chairman of the group flanked by Gunadi, who is the deputy chairman of the Financial Transactions Analysis and Reporting Center (PPATK) and Febryan Ruddyard, the foreign ministry`s director of the KIPS.

The main issues discussed at the meeting at the Four Season Hotel were among others efforts to create a strong and effective anti-bribery regime, prevention of coruptors` access to Global Financial System, promoting protection of whistleblowers, recouping corrupted assets, strengthening anti-corruption agencies and agenda to accelerate implementation of UNCAC with a high standard.

The meeting of the G20 anti-corruption working group, he said, is held with a hope to accelerate national and transnational corruption eradication.

Other things discussed in the discussion group are linked to efforts to prevent corruptors` access to global financial transactions including money laundering, protection of whistleblowers, the creation of a system to prevent access for corruptors to go abroad.

It has also been agreed that G20 will create a forum that will develop and implement an initiative that will make the private sector across the globe fight corruption.

The business world will be included as one of the stakeholders of the anti-corruption drive and the committment to anti-corruption is very fundamental.

G20 is a group of 19 big economies plus European Union established in 1999 as a forum that systematically mobilizes advanced and developing economic powers to discuss important world economic issues. Indonesia is the only member of the Association of Southeast Asian Nations (ASEAN) that becomes G20 member.

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President Susilo Bambang Yudhoyono (right) shares a light moment with Corruption Eradication Commission (KPK) leader candidates Busyro Muqoddas (center) and Bambang Widjojanto (left), who were invited to the Presidential Office in Jakarta on Thursday. Yudhoyono has officially proposed Bambang and Busyro to the House of Representatives as candidates for the KPK chairman post, in accordance with the government-led selection result. Antara/Widodo S. Jusuf

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.

Japan Offers $22 Billion Trade Aid, Warns Against Protectionism

Bloomberg, Toko Sekiguchi

April 1 (Bloomberg) -- Japan’s Prime Minister Taro Aso pledged $22 billion in trade assistance before tomorrow’s summit of leaders from the Group of 20 nations.

In a meeting with Indonesian President Bambang Yudhoyono, Aso in addition said the government in Tokyo will also give $20 billion in overseas aid to developing countries in Asia.

U.K. Prime Minister Gordon Brown, who is hosting the talks in London, wants world leaders to agree a $100 billion package to make up for credit lines lost during the turmoil in financial markets. Trade loans finance 90 percent of deliveries worldwide.

“We must send a strong message against protectionism,” Aso said, according to a Japanese government official who was at the meeting. “A recovery in Asian economies is key.”

Southeast Asian exports, which grew 14.7 percent last year, may shrink 10.3 this year, according to a report by the Asian Development Bank. Indonesia has the largest Southeast Asian economy. It’s the only G-20 nation in the 10-member Association of Southeast Asian Nations.

Japan in February pledged to guarantee $1.5 billion of Indonesian yen-dominated bonds, called samurai bonds. Yesterday, the government announced that it will provide a 71 billion-yen ($718 million) loan for Indonesia’s infrastructure projects. Indonesia is the largest recipient of Japan’s overseas aid.

Earlier today, Aso met with South Korean President Lee Myung-bak and won support for Japan’s plans to deploy a system capable of shooting down missiles launched from North Korea. Japan may test the system in early April.

“Japan may take any necessary measures to protect its people,” the Japanese government official quoted Lee as saying at the meeting.

Aso will speak with Brown and Italian President Silvio Berlusconi and before the G-20 meeting tomorrow.

To contact the reporter on this story: Toko Sekiguchi in Tokyo at Tsekiguchi3@bloomberg.net.

Asian economies differ in response to global crisis

Aditya Suharmoko, THE JAKARTA POST, JAKARTA | Tue, 03/24/2009 9:10 AM

The road to economic recovery varies across Asian countries, with Indonesia, China and India perhaps the least affected by the global economic crisis, a seminar heard Monday.

China and India, two of the fastest growing economies in the world, are expected to still post positive economic growth this year, despite slowing from the past few years. Indonesia will also score positive growth, although it may be about 30 percent slower than in 2008.

The International Monetary Fund has said global growth may contract by between 0.5 percent and 1.5 percent this year.

“There is great hope that emerging economies, such as China and India, will launch new Keynesian initiatives leveraging private-sector funds and become the new engines of global growth that will drive the world economy to growth and prosperity once again,” said Naoyuki Yoshino, a professor at Keio University in Tokyo.

He was presenting his paper at a seminar titled “East Asia’s response to the global economic crisis” in Jakarta on Monday.

Yoshino said developed countries would be restricted from issuing government bonds to finance fiscal stimulus measures due to enormous fiscal deficits.

Japan, for instance, has public debts amounting to 180 percent of its GDP.Keynesian policies usually call for financing fiscal stimulus by issuing government bonds during hard times.

But Yoshino said issuing “revenue bonds” could be a way to utilize private sector funds.

With revenue bonds, the government bears a portion of infrastructure costs, with the remaining costs funded by the private sector through the issuance of revenue bonds, he said.

“The private sector will get return based on the expected revenue from the project to be constructed,” Yoshino said.

“In some Asian countries, notably China and India, domestic demand will increase when their economies are revitalized through efficient infrastructure development.”

South Korea, as a trade-dependent country, needs developed countries to aim their economic stimulus package at infrastructure, which may help recover South Korea’s falling exports.

As an example, financial aid to Detroit automakers in the US will affect the competitiveness of South Korea’s automakers.

Meanwhile, Indonesia, whose economy is mainly dependent on domestic demand, has allocated Rp 12.2 trillion (US$1.05 billion) for the development of infrastructure and the rural sector.

University of Indonesia economist M. Chatib Basri said spending on labor-intensive infrastructure projects would have a significant impact on job opportunities and economic growth.

The seminar was also of the opinion that Indonesia was relatively better off than neighboring countries in coping with the global crisis, with Thailand and the Philippines severely hit by the crisis.

“Fiscal policy is the only option left,” Bhanupong Nidhiprabha, an associate professor at Thammasat University, wrote in his paper.

“Unless the government maintains law and order to restore business sentiment and consumer confidence, both monetary and fiscal stimuli will fail miserably.”

Thailand’s political condition is far more unstable compared to Indonesia.

The country has seen chaotic power struggles in the past two years.

The Philippines may be facing an even worse economic situation, as the monetary policy has not been unable to accelerate lending, and with its fiscal policy “constrained by a historically poor ability to raise the tax to GDP ratio”, said Maria Socorro H. Gochoco Bautista, a professor at the University of the Philippines, in her paper.

“The right kind of expenditures needs to be undertaken,” she said.

“These might include direct cash transfers to the poor in exchange for a promise to keep children in school.

“Allowing peso depreciation, assuming enough workers remain employed abroad, will also boost incomes of the poor and middle classes to sustain spending.”

Rupiah Rally to Continue, But Beware of Hot Money

The Jakarta Globe, Ardian Wibisono, March 21, 2009

The rupiah strengthened against the US dollar this week. (Photo: Adek Berry, AFP)

The rupiah changed track and strengthened against the dollar in the past week, an upward movement that the Bank Indonesia chief says may have to do with a likely depreciation in the value of the US dollar.

However, despite a short-term increase in the amount of foreign money coming into the country, with hedge funds now believed to be once again investing here, analysts warn that this recent bout of investor confidence may just be a flash in the pan fuelled by hot money.

The currency continued its upward rally on Friday along with other regional currencies, including the Malaysian ringgit, the Singapore dollar and the Korean won, as foreign investors regained confidence in riskier portfolios that offer higher returns, including Indonesian stocks and bonds.

According to Bloomberg's data, the rupiah rose 1.9 percent this week, its biggest weekly gain of the year, to 11,775 per dollar as of 5:46pm. The won also gained 5 percent this week to 1,412.50 per dollar at the 3 p.m. local close, according to Seoul Money Brokerage Services Ltd. Malaysia’s ringgit rose 1.7 percent to 3.6440. Along with the Singapore dollar, these currencies completed their biggest weekly gains since the five days ended Dec. 19.

Economists here and overseas have for some time predicted that the US dollar would eventually weaken dramatically against other currencies this year, as money supply in that country increases because of President Obama’s stimulus and financial sector rescue packages.

Bank Indonesia Governor Boediono speculated on Friday that a long-term weakening of the dollar may be setting in. He said that the rupiah would continue to strengthen in the medium term against the greenback as the dollar supply increases.

“In the medium term, the US dollar will tend to weaken against other currencies. The recently announced policies [by the US government] have increased the dollar supply, and eventually the dollar will spill back to other countries causing it to weaken,” Boediono said.

Standard Chartered Indonesia also predicted that the rupiah would gradually strengthen to Rp 9,800 per US dollar by the end of the year. However, a Standard Chartered economist, Eric Sugandi, said he believed that increased confidence in the United States, due to recent moves by the US Federal Reserve, was causing a spike in confidence that might not be sustained.

“The Fed policy of buying US T-bills and mortgage securities is sparking positive sentiment with investors. They believe that the move will help the US economy to recover faster,” Eric said on Friday. “Investors are gaining the confidence to buy emerging market stocks, which are more risky yet offer higher yields.”

The yield on Indonesia’s 11.5 percent bond due September 2019 dropped 1.52 percentage points to 12.28 percent, based on Friday closing prices at the Inter Dealer Market Association. The figure indicates bond prices are increasing due to increasing demand.

The Jakarta Composite Index increased by 3.7 percent this week, from 1,312.092 on March 17 to 1,360.889 on March 20. Foreign investor net buys were increasing the gains.

“The main point is Indonesia enjoys positive fundamentals and growth expectations, and this is an advantage for us in attracting investors,” Eric said.

Eric said Indonesia’s stocks presently were underpriced compared to regional stock markets, with very low price-to-earning ratios, which could promise extremely high returns over the long-term.

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Government Eyes 2nd Stimulus Plan

The Jakarta Globe, Dion Bisara & Muhamad Al Azhari, March 18, 2009

The government is considering launching a second fiscal stimulus package as a greater contraction of the global economy is expected to hurt Indonesia’s exports badly, a senior government official said on Tuesday.

The government has set March 18 as the date for the first disbursement of some Rp 12.2 trillion ($1.02 billion) in infrastructure funds as part of the Rp 73.3 trillion fiscal stimulus package endorsed by the House of Representatives on Feb. 24. The government hopes the stimulus package will support household spending — the main driver of national growth — as a slowdown in exports due to faltering global demand is expected to seriously hurt the economy.

But Chatib Basri, a senior advisor to the finance minister, said the initial stimulus package assumed global growth of 2.2 percent. It was now predicted to slow to 0.5 to 1.5 percent, and therefore the stimulus figure needed to be adjusted, he said.

“We will evaluate the appropriateness of the stimulus package in the first quarter,” Chatib said, adding that the country’s exports could no longer support growth as the global economy contracted and capital outflow decreased investment.

“The only hope is on private consumption and government spending. If consumption can grow by 4.5 percent, which usually grows by 5 percent, and government spending grows by 14 percent, we will see growth of 3.6 percent this year. That’s why the stimulus is important,” Chatib said.

Any adjustment to the stimulus figure was not likely to be made until May, he added, refusing to elaborate further.

Late on Monday, Finance Minister Sri Mulyani Indrawati said that Indonesia would likely add to its stimulus package, in line with the G-20’s suggestion that country’s stimulus packages should be at least 2 percent of gross domestic product for at least two years, 2009 and 2010.

Indonesia’s total fiscal stimulus package currently stands at 1.4 percent of GDP.

“If the initial stimulus package is not enough, we will add to it in the revised budget, or APBN-P,” Sri Mulyani said.

The final decision about whether to add funds to the package, the minister added, would also depend on political considerations. Indonesia will hold legislative elections on April 9 and presidential elections in July.

Indonesia’s exports declined from November until January as demand from international markets slowed. The Indonesian economy grew at a weaker-than-expected 5.2 percent in the fourth quarter from a year earlier, but fared better than its Asian neighbors such as Singapore and South Korea, whose economies actually contracted.

Photo: Visitors eye products intended for export at a trade fair in Jakarta late last year. (Safir Makki, JG)

Common interest

The Jakarta Post  |  Sat, 03/07/2009 8:57 PM  
 

 

Acting Coordinating Minister for Economy Sri Mulyani Indrawati (center) shares a laugh with Trade Minister Mari Elka Pangestu (left) and Korea’s Knowledge Economy Minister Lee Youn-Ho (right) and at the signing ceremony of several companies from Indonesia and Korea in Jakarta on Saturday. (JP/J.Adiguna)

RI to maintain exports to S Korea at US $10 billion

Jakarta (ANTARA News) - Indonesia will maintain the value of its exports to South Korea in 2009 at US$10 billion, Trade Minister Mari Pengestu said. 

"Indonesia`s exports to South Korea until November 2008 were recorded at US$9 billion. It may possibly be close to US$10 billion until December," Pangestu said after the opening of "Indonesia-Korea CEO Business Dialogue" here on Saturday. 

She said Indonesia would focus on increasing the volume rather than the value of its exports with regard to the eight memorandums of understanding signed by the two countries that day. 

"With the MoUs we are not talking about increasing export value but how to maintain the export volume," she said. 

She admitted that the growth of trade between Indonesia and South Korea was quite high. However the country`s imports from that country were still twice its exports. 

"Indonesia`s exports to South Korea grew around 30 percent. Its imports however are even higher almost twice the figures," she said. 

She said this happened because South Korean investment was rising. The biggest imports are electronic components and raw materials needed by South Korean companies in the country. 

"So they are not finished products. This should be positive for Indonesia because investment is rising although the exports are not going to Korea but to other countries," she said referring as an example components imports for Samsung and LG electronic products. 

She said the country`s exports to South Korea in 2009 would be more of minerals, gas and coal. 

With regard to farm products she said "we cannot as yet be able to penetrate that country`s market because they impose a standard as high as that imposed by Japan for the products. Hopefully following the cooperation agreement situation will improve," she said.

Indonesia, South Korea vow to step up cooperation in defense, energy, trade

www.chinaview.cn  2009-03-06 21:08:32   
 

Indonesian President Susilo Bambang Yudhoyono (R) and his South Korean counterpart Lee Myung-bak hold a joint press conference at the Merdeka palace in Jakarta, capital of Indonesia, on March 6, 2009. Lee Myung-bak is in Indonesia for a three-day state visit. (Xinhua Photo) Photo Gallery>>>
 

JAKARTA, March 6 (Xinhua) -- Indonesia and South Korea on Friday pledged to boost cooperation in the fields of defense industry, energy, and trade and investment, leaders of the two countries said here Friday. 

Indonesian President Susilo Bambang Yudhoyono and his South Korean counterpart Lee Myung-Bak also discussed the situation in the Korean Peninsula, climate change and global economic crisis. 

After their meeting at the State Palace, both leaders signed several agreements in the fields of defense, alternative energy, labor and tourism. 

The two countries planned to cooperate in the development of jet-fighter projects. 

"We both discussed the issue of defense and industry of defense. In the future the relation of the two countries (on this field) is expected to be more active and strengthened," Lee told a joint press conference after their meeting. 

Indonesia is an archipelago country which needs sophisticated fighter-planes to safeguard its wide territory of over 17,500 islands. Currently, the country only have around seven Sukhoi jet fighters. 

The two countries also vowed to boost investment and trade in the sector of oil and gas, President Susilo said. 

"Exploration and production of oil and gas through joint ventures of the two countries would also be boosted," said Susilo. 

Indonesia and South Korea also intended to increase bilateral trade in the future, President Susilo said. Currently the trade volume of the two countries was 20 billion U.S. dollars in 2008, nearly twice as much as in 2007, said Susilo. 

On the Korean Peninsula nuclear issue, Lee called on the Democratic People's Republic of Korea (DPRK) to respond positively to the international effort to address the problem. 

"I hope DPRK will cooperate through the six-party talks," he said. 

During his three-day visit, Lee is slated to meet with Indonesian Vice President Jusuf Kalla, who is also the chairman of Indonesia's biggest party of Golkar, House Speaker Agung Laksono and Indonesia's businessmen on Saturday, before leaving for his country on Sunday.