Banks to help debtors affected by floods

Jakarta (ANTARA News) - Banks will help debtors affected by recent floods in Jakarta that have paralyzed production in some industries.

"We have already coordinated with Bank Indonesia (the central bank) about it. In principle we all will help them," the general chairman of the National Banking Association (Perbanas), Sigit Pramono, said here on Sunday.

He said that he had already written to Perbanas members to make an inventory of, verify and identify the debtors` problems to determine the form of assistance for them.

"We hope we could report the result of the inventory to Bank Indonesia within a week for the bank to decide the assistance," he said.

He said the assistance could be extension of grace period or an interest cut or even writing off of interest.

"We still need some time to determine the form of assistance," he said, adding that debtors now were still unable to tell how much they had lost," he said.

He said the national banks had actually had an experience in such a case namely when they helped debtors in disaster-hit Aceh and Yogyakarta so the pattern for it was actually already available.

Bank Indonesia spokesman Budi Mulya said based on central bank regulations debtors in regions hit by disasters were entitled to getting special treatment and therefore they would receive relief assistance.

State-owned companies to help small businesses affected by flood

Jakarta (ANTARA News) - State Minister for State-owned Companies Sugiharto said here Sunday he would formulate working capital assistance for small businesses that had been affected by recent floods in Jakarta, Bogor, Depok, Tangerang and Bekasi.

"We will formulate working capital assistance which could be given in the form of subsidy or without a colateral," he said on the sideline of a clean-up operation by state-owned companies.

He said priority would be given to small businessmen that could not continue their business activities after the recent floods.

The funds for it would be taken from the Environment and Partnership Program (PKBL) funds state-owned companies had so far allocated as part of their corporate social responsibility.

"Every state-owned company every year sets aside three percent of its profit for the PKBL. The funds are indeed for helping people like after recent floods and they will be given in the form of a grant," he said.

He said the capital assistance would be coupled with bank credits for small-scale businesses.

"In principles the state-owned companies have already had funds for those who need to rehabilitate their businesses," he said.

Asked how much that had been collected for the PKBL in 2006 the minister said it reached around Rp1 trillion because the state-owned companies` profit that year reached more than Rp42 trillion.

"I did not say that the Rp1 trillion would be for Jakarta and its environs only. We are now still counting the number of small businessmen that have been affected by the floods," he said.

Asked when the capital would be distributed he said he hoped it could be realized within a week or two weeks.

"The meeting on it happened only on Friday while the working day would only begin on Monday so we could only start formulating it that day. We think in two weeks` time people will start needing the money as now they are still busy cleaning up their residences," he said.

40 Indonesian SMEs meet German counterparts

Jakarta (ANTARA News) - Some 40 Indonesian small-and medium-scale entrepreneurs (SMEs) met with 26 German counterparts in a forum organized by the Agency for Assessment and Application of Technology (BPPT) here Friday, an official said.

"The meeting is an activity under the Small Project Facility (SPF) or a grant project from the European Union to help Indonesian SMEs apply technology in their businesses," the head of BPPT`s Business Technology Center (BTC), Bambang S Pujantiyo, said on the sidelines of the gathering which was held at the BPPT building.

The meeting was aimed at facilitating the transfer of technology from European countries to Indonesia, he said adding that the gathering was promoted by the Indonesian Network for Technology-Industry Matching (InTIM).

Bambang said the partnership between the Indonesian and German entrepreneurs will be materialized in the form of technology licenses, intellectual property rights, joint production, assembling, marketing and capitalization.

Germany will help modernize Indonesian businessmen`s machineries that are already worn out, he said.

The business gathering discussed issues in five areas, namely marine resources, aquaculture, energy, electronics and health as well as information technology, manufacturing and agro-industry.

Meanwhile, State Minister for Cooperatives and SME expert staff member for Technology Usage I Wayan Dipta said the business gathering will hopefully increase the number of technology and knowledge-based Indonesian entrepreneurs.

Quoting a study conducted by the Pacific Economic Corporation Council in 2002, I Wayan said Indonesia should raise the number of its technology- and knowledge-based entrepreneurs to 20 million until 2020 if it wants to have a competitive edge.

"Data of the Central Bureau of Statistics (BPS) in 2005 showed that Indonesia only had 3 million technology- and knowledge-based entrepreneurs while the accepted norm was that a country should have one technology- and knowledge-based entrepreneur in every 20 people," he said.

"If in 2005 Indonesia had a population of about 220 million, it should already have 11 million technology- and knowledge-based entrepreneurs by now," he said.

I Wayan also said the business gathering would not abandon Indonesian technology.

Indonesia, Switzerland agree to avoid double taxation

Jakarta (ANTARA News)- Indonesia and Switzerland agreed here to avoid double taxation by signing an amendement of the document on protocol for avoiding double taxation.

"This agreement is an important step to increase economic relations between the two countries especially to create a more conducive atmosphere for investment in Indonesia," Swiss ambassador to Indonesia, Bernadino Regazzoni, said.

He said today was also historic for the two countries following the arrival of Swiss Confederation President Micheline Calmy-Rey for the first time in the country on Wednesday for a three-day visit.

He said this was the right time to increase the two countries` bilateral relations in the political as well as economic fields.

The Indonesian foreign ministry`s director for West European Affairs, Ramli Sa`ud, meanwhile said that the amendment was done to adapt with the current situation.

"In principle, goods already taxed in Indonesia may not be taxed again in Switzerland and vice versa," he said.

Ramli said that the question of additional cost that had caused difficulties for businessmen to advance would also be addressed in addition to other problems by the ministry of trade which had the competence in the field.

He said Switzerland was one of the three big countries in Europe that had invested in Indonesia. Its investment in the country reaches three billion US dollars, he said adding there were now 75 Swiss companies operating in the country.

"Our bilateral relations have always been good. Switzerland is an advanced as well as neutral country," he said.

He said Switzerland had been interested to increase its economic relations with Indonesia in view of the country`s market potential. He said Indonesia had seen it as a good opportunity for increasing foreign investment in the country.

He said "there have been positive changes in Indonesia in the past two years."

Canada, Spain and Azerbaijan provide aid to flood victims

Abdul Khalik, The Jakarta Post, Jakarta

Canada, Spain and Azerbaijan announced Thursday their contributions to the overseas aid effort to assist the victims of Jakarta's floods.

The Canadian ambassador to Indonesia, John Holmes, said his country would donate Rp 382 million in aid, to be channeled through the Canadian International Development Agency, the Indonesian Red Cross (PMI) and the Circle of Women's Alternative Education (Kapal Perempuan), to provide urgently needed food and emergency supplies.

"On behalf of all Canadians I wish to extend our sympathies to the families and friends of those who lost their lives, and to those communities affected by the flooding," Holmes said in a statement.

He added that Canada would consider providing further assistance should the situation worsen and the Indonesian government issue a request for international assistance.

"Canada is committed to helping Indonesia in times of crisis as we did in the aftermath of the tsunami in Aceh and the earthquake in Yogyakarta," Holmes said.

The Canadian Embassy said that the Rp 229 million contribution to PMI would allow the organization to distribute hygiene kits to some 2,200 families across the city while the Rp 153 million aid to Kapal Perempuan would be used to provide food and other relief to households in Klender, East Jakarta, and Kalibata, South Jakarta.

Spain also announced Thursday it would contribute 100,000 euros (around US$129,000), mainly for drinking water and sanitation, to be distributed through PMI.

Spain's Queen Sofia, along with the country's State Minister of International Cooperation, Leire Paj¡n, announced the aid after inspecting flood damage in the capital.

Meanwhile, Azerbaijan's embassy in Jakarta announced it handed over food parcels, drinking water and medicine to flood victims directly through the PMI on Thursday.

The Azerbaijani Embassy offered its condolences to the Indonesian government and people affected by the Jakarta floods, and said it would quickly send emergency relief to the victims.

Scores of countries have so far contributed to the flood relief effort.

On Wednesday, the European Union announced that it would contribute Rp 6.6 billion while Germany said it would donate Rp 2.9 billion (not Rp 2.9 million as reported in our story on Thursday on Page 12).

On Tuesday, the Netherlands, Japan and Switzerland donated US$1.29 million, Rp 1.1 billion and US$50,000 respectively while on Monday, Australia and the U.S. contributed over Rp 1 billion and US$100,000 respectively.

The Netherlands embassy announced that Ambassador Nikolaos van Dam would hand over the first 20 boats on Friday to Jakarta police as part of its aid to the flood victims.

RI, Japan to meet in Tokyo this month to finalize EPA deal

Andi Haswidi, The Jakarta Post - 2007-02-09 11:20

Jakarta, February 9, 2007 - Negotiators representing Indonesia and Japan will hold a meeting in Tokyo later this month to finalize an economic partnership agreement (EPA) between the two countries, says a senior Indonesian trade official.

"There will be a meeting of expert groups from both countries in Tokyo this month to finalize the proposed cooperation arrangements in the energy and mineral sector, one of the top-priority chapters in the partnership agreement," Indonesia's chief negotiator Sumadi Brotodiningrat told The Jakarta Post by phone Thursday.

Since President Susilo Bambang Yudhoyono and Japanese Prime Minister Shin-zo Abe agreed on key elements of the EPA, nine chapters have been finalized so far, leaving chapters on energy and mineral resources, trade in goods, rule of origin and technical cooperation still on the negotiating table.

"In terms of quantity, I can say that- we have finished about 90 percent of the content. But regarding quality, the* remaining 10 percent is of much greater significance," Sumadi said.

The Energy and Mineral Resources Ministry's planning and bilateral cooperation director, Thamrin Sihite, who is also a member of the expert group, said that the next meeting would discuss requests from Japan, such as for Indonesia to report the adoption of all policies in the energy and mineral resources field.

"They want to have prior notice of every policy concerning energy and mineral resources. We cannot accept this. We can only offer the information in due course," he said.

Initially, Japan wanted to include a clause in the chapter stating that Indonesia would ensure a stable supply of energy to Japan.

Japan is dependent on Indonesia for 27.6 percent of its liquefied natural gas (LNG) and 3.5 percent of its crude oil imports.

The Indonesian government also declined this request, saying it was in no position to guarantee stable energy supplies to any nation, except those that already had contracts.

Instead, Indonesia agreed that the two nations should engage in close coordination to promote and facilitate investment in the energy sector, and to contribute to enhancing the security of energy and mineral-resources supplies for both countries through capacity-building projects and developing alternative sources of energy.

Another issue that will be discussed during the upcoming meeting is Japan's request for a clause to be included in the EPA annex that would ensure there would be no geographical restrictions on its energy investment in Indonesia.

"We will grant them this as long as it doesn't go against our laws. And we will also request the same treatment, for us to be able to invest anywhere in Japan," he said.

Upon the completion of the EPA negotiations, which is scheduled for March 31, Japan will drop more than 90 percent of its tariffs on Indonesian products, while Indonesia will remove around 35 percent of its tariffs on goods imported from Japan immediately, and the rest over a period of between three and 15 years.

Foreign Aid Flows In

Thursday, 08 February, 2007 | 17:24 WIB

TEMPO Interactive, Jakarta: Foreign aid for victims of the flooding in Jakarta, Bekasi, Tangerang and Depok has started to flow in.

The total number of evacuees due to the flooding during the last few days has reached 432,583 people.

Countries including Germany, the Netherlands and the United States of America, as well as world organizations, are committed to distributing aid for the flood victims.

In a press statement yesterday (7/2), the Netherlands announced that it was providing one million Euros (Rp11.7 billion) of aid.

“We have conveyed the aid commitment to Foreign Affairs Minister Hassan Wirajuda,” said Agnes van Ardenne, the Netherlands' Minister for Development Cooperation.

According to her, the aid will be distributed via the Netherlands Red Cross and the Indonesian Red Cross (PMI).

Around Rp5.85 billion will be used for providing food, clean water, medicines, clothes and blankets.

The remainder will be distributed via the International Organization for Migration for purchasing rubber boats.

The US will donate US$100,000 that will be distributed via the Bureau of Foreign Aid for Natural Disaster under the US Agency for International Development (USAID).

The German Foreign Affairs Ministry, in the press statement on Tuesday stated that it would provide aid amounting to US$250,000 (Rp2.9 billion), while New Zealand will provide NZ$100 million (around Rp640 billion).

World organizations that are also providing aid include the World Food Program.

This organization is to provide aid in the form of food for flood victims in Jakarta, and as initial aid, there are 526 boxes of noodles and 702 packs of biscuits.

In addition, the European Commission (EC) has allocated 600,000 Euros, or around Rp6.6 billion, in aid.

ENI SAENI | YUDHA SETIAWAN | RUDY PRASETYO

German Aid of Rp20 Billion for Solo

Thursday, 08 February, 2007 | 17:09 WIB

TEMPO Interactive, Solo: The municipal government of Solo, Central Java, is to receive aid amounting to Rp20 billion from the Germany Institute.

This organization of German donor representatives for Indonesia will provide equipment and machinery for the Solo Techno Park that is currently being prepared by the municipal government.

“The grant will be handed over in two stages. This year, equipment and machinery for automotives and garments will be provided. The remainder will be given next year,” said Masrinhadi, the Solo City Head of the Industry, Trade and Investment Service, this afternoon (8/2).

The 28-hectare Solo Techno Park is an integrated area for industrial, trade and service activities, and also contains educational facilities.

Solo Techno Park is designed to produce around 2,000 automotive experts and 15,000 garment graduates who will be ready to work.

Even though it has not yet been realized, the Solo Municipal Government is generating cooperation with many parties, such as automotive entrepreneurs and the Indonesian Textile Association (API).

The Indonesian Oil and Gas Association is even interested to train experts in drilling.

Imron Rosyid

Manufacturing 'needs Rp 30.9f in investment to create 1.5m jobs

The Jakarta Post - 2007-02-08 12:37

Jakarta, February 8, 2007 - Indonesia's manufacturing industry will need at least Rp 30.9 trillion (US$3.3 billion) in new investment to absorb 1.5 million workers in the coming three years.

"According to the Central Bureau of Statistics, the manufacturing industry will need total investment of Rp 8.6 trillion in 2007, Rp 10.4 trillion in 2008 and Rp 11.8 trillion in 2009 if it is supposed to employ 500,000 new workers per annum," Industry Minister Fahmi Idris was quoted Wednesday by Antara as saying.

He said that large scale manufacturing companies operating with fiscal facilities from the government could absorb 300,000 new workers per annum, while other companies, including small-scale enterprises, could absorb another 200.000.

Those figures are different from that issued by the Capital Investment Coordinating Board, the government agency coordinating fiscal facilities for investors. According to the agency, the number of workers employed by domestic and foreign investment companies, which received fiscal facilities reached 264,000 per annum, and that by non-facility industries and small enterprises more than 300,000.

According to the minister, several sectors in the manufacturing industry need large investments. Producers of machinery and transportation equipment, for example, need total investments of Rp 4.3 trillion, food, beverages and tobacco Rp 1.7 trillion and fertilizer, chemicals and rubber Rp 1.2 trillion.

"If we can fulfill the investments required by those sectors, I think the industry will give significant contribution to employment," said Fahmi.

Singapore Red Cross donates $50,000 towards rescue efforts in Jakarta

By Hoe Yeen Nie, Channel NewsAsia | Posted: 07 February 2007 1638 hrs

SINGAPORE : The Singapore Red Cross has donated $50,000 to its sister organisation, Palang Merah Indonesia (PMI), towards its rescue and evacuation efforts in Jakarta.

More than 350,000 people have been left homeless since massive flooding plagued the Indonesian capital due to torrential rains.

Through "Rapid Response Teams", PMI has set up temporary shelters and field kitchens which provide meals to over 35,000 people in affected areas daily.

Other relief items include tents, life jackets, rice and instant noodles.

Plans are also underway to implement a system of distributing drinking water.

The Singapore Red Cross says the money will go towards supporting these rescue efforts.

Depending on PMI assessment, the SRC says a second phase of assistance, including vaccination programmes and distribution of medicine, is possible. - CNA /ls

Batam authority to cooperate with BNI on port transactions

Fadli, The Jakarta Post - 2007-02-07 15:54:22

Batam, February 05, 2007 (The Jakarta Post) - The Batam Industrial and Development Authority has announced it will cooperate with Bank Negara Indonesia (BNI) to provide banking services based on its electronic data capture (EDC) system.

Port service transactions, which will now be conducted online, in Batam amount to Rp 450 billion (US$48,13 million) each year with an average of 100,000 ships docking in Batam annually.

The merger was marked by the signing of a memorandum of understanding between BIDA and BNI at the Sumatra Promotion Center in Batam, Riau Islands, on Wednesday.BIDA chairman Mustofa Wijaya said the cooperation was part of the one-roof service program in Batam, declared a special economic zone by the government.

"We wish to facilitate investors' activities in Batam. As an initial step, we will use the E-payment system in order to avoid meetings between officers and businessmen, thus a step to create good governance," said Mustofa.

Mustofa said that BIDA would also pursue the possibility for other sectors to be served by the electronic banking service so as to facilitate foreign and local investors' business ventures in Batam.

"We will not only do this with BNI, but chances are also open for other banks. But, technically, the human resources at BNI are quite ready for the partnership," said Mustofa.<>

"The figure could increase each year, depending on how BIDA draws foreign and domestic investors to do business here. As for BNI, the partnership is very essential, because no other banking service providers have come forth so far. Despite that, we don't wish to monopolize this sector," said Gatot.

Gatot said that besides working with BIDA in handling the online port information management system in Batam, BNI will also collaborate in promoting Batam as an investment destination in Indonesia.

BNI will promote Batam through its five overseas branches in London, Tokyo, Singapore, Hongkong and New York, which can be used as information centers by BIDA to sell its special qualities to potential investors.

Hungry? Order double as everything is getting smaller!

Helmi Arman, Economist, The Jakarta Post

A number of statistical indicators appear to suggest that purchasing power is improving, but in Indonesia purchasing power can be a tricky thing to gauge. What does the anecdotal evidence say? Is household purchasing power really recovering?

As interest rates decline and bank lending grows stronger, many economists have been referring to the statistical data to show that purchasing power is indeed improving. A number of leading indicators have been cited as evidence of this.

Some frequently highlighted trends are: 1) the rising growth rate of real M1 -- an inflation-adjusted measure of a money-supply aggregate consisting of currency in circulation and demand deposits; 2) the rebound of the 12-month moving averages of car and motorcycle sales; 3) the strong upward trend in Bank Indonesia's monthly consumer confidence surveys, and 4) the increasing level of remittances from Indonesian workers overseas.

Nevertheless, Indonesia seems just too big and too complicated to accurately depict using economic data alone. Data often provides partial pictures of partial segments of the economy.

For example, car and motorcycle sales represent spending by households in the middle and upper segments of the income scale. Meanwhile, monthly surveys, although random, are based on a sample of only several thousand out of a total of over 50 million Indonesian households!

When it comes to this country, sometimes one has to look at the anecdotal evidence to find the missing pieces of the puzzle. In this respect, the behavior of businesses in the food and consumer product industries is interesting to observe. Food and consumer products are among the basic things that households spend their money on.

So, if businesses in these industries are doing well, it should be a safe bet to say that household purchasing power is doing well too.

Unfortunately the situation on the ground does not exactly provide much cause for jubilation. So, let us look at a number of observations that appear to contradict what the data is showing.

One interesting phenomenon in the food industry is the tendency for some businesses -- in the face of rising costs -- to get their customers to buy things that aren't really what they seem.

Such experiences are common in restaurants and fast-food chains, be they local or Western, in Jakarta and other cities. A classic example is the apparently intentional use of excessive amounts of flour -- flour being the cheaper ingredient -- on batter-coated products.

A chicken fillet served in a restaurant may look to be of customary size, but the actual chicken meat contained in it is getting smaller over time as the meat gets coated with ever more layers of flour. Meanwhile, a pizza may look big, but the width of the area covered by toppings has been dwindling.

Another interesting trick involves the substitution of cheese melt with some yellow mixture of what appears to be flour and mustard, with, of course some real cheese put in to keep the aroma. The mixture looks a lot like cheese and even smells like cheese, so consumers often do not realize they're being served "fake cheese", or keju oplosan as it is known here.

Similar tricks are also prevalent in the packaged food industry. Over time, it's getting harder and harder to find the essence of the food product that one is buying. Purchase a pack of chocolate-chip cookies and you'll find yourself saying, "I see the cookie, but where are the chocolate chips?"

Some businesses seem to be making the most of digital zoom technology by portraying advertised products as vastly inflated versions of the real thing.

One who's lived long enough in Indonesia will notice that while the pictures of food products in adverts are gigantic, the actual products have shrunk in size to only a fraction of what they used to be several years ago. This goes as well for a number of brands selling candy bars and potato chips. Despite rising prices, the products are actually becoming smaller in size over time.

At worst these practices are deceptive; at best they are a desperate attempt to maintain company margins. In the face of increasing costs, businesses appear to have little room to raise prices for fear of hitting their sales figures.

The question economists should ask themselves is: Would all this be happening if purchasing power is really recovering?

Of course, how widespread these underhand practices are is still debatable as no data is readily available. But in spite of that, the signals provided by the anecdotal evidence should not be ignored.

If these practices are truly prevalent, it could be that conventional statistical indicators are only portraying part of the picture, while the big picture is still that of a rapidly growing population with limited job opportunities.

Does such an environment provide solid ground for a recovery in purchasing power? Only time will tell.

More foreign aid pours flood victims

JAKARTA (Agencies): More foreign countries have expressed their commitments to help flood victims in the capital and its surrounding, whose houses and properties have been inundated since last Friday.

The Dutch government said it is sending US$1.3 million to Indonesia to help bring relief to millions of people hit by deadly flooding in the capital, Jakarta.

Overseas Development Aid Minister Agnes van Ardenne said half the money would be used to buy food, medicine, clothes and blankets for victims. The other half would buy rubber boats to ferry them around the inundated city."As good friends, it goes without saying that we would help Indonesia now that 75 percent of Jakarta is underwater," Van Ardenne was quoted by AP news agency as saying.

Meanwhile, the European Union said Tuesday it would give US$777,300 to help flood victims in Jakarta.

The U.S. Australia, and Japan have previously also expressed their commitments to help flood victims.

Govt to hold tender for home solar-power units

JAKARTA (JP):The government, pressing ahead with its program to electrify underdeveloped regions across the nation, will next month hold a tender for the procurement of 30,000 home solar-power units.

One home solar unit can generate between 50 and 80 watts of electricity.

J. Purwono, director general for electricity and energy use at the Energy and Mineral Resources Ministry, said Tuesday that the government had allocated Rp 247 billion (US$27.4 million) for the project.

"We have opted for solar energy as it will be cheaper than building power plants," Purwono said. "With an estimated price of Rp 8 million for each unit, it will definitely be much more economical."

Currently, out of Indonesia's total population of 260 million, about 100 million people living outside Java and Bali islands do not have access to electricity.

Based on 2006 figures, state electricity firm PT Perusahaan Listrik Negara (PLN) can only light up 54 percent of Indonesia's villages given that its power plants have a total generating capacity of only 25,000 megawatts.

The solar-power program, to be jointly run by the Energy Ministry and State Ministry for Disadvantaged Regions, aims to provide 30,000 solar units with capacities ranging from 50 watts to 80 watts per unit.(ika)

ADB and Germany Launch Initiative to Address Asia's Urban Challenges

MANILA, PHILIPPINES - ADB and the German Government today launched a joint initiative that will help improve the lives of up to 200 million people in Asia's growing cities.

The new Cities Development Initiative for Asia (CDIA), announced at the end of a conference on Investing in Asia's Urban Future, will support local governments in implementing their urban development efforts. Partnering ADB in holding the meeting was the German Federal Ministry for Economic Cooperation and Development (BMZ).

At the conference, more than 100 representatives of municipal, local, provincial and national agencies dealing with cities joined donors in finding new ways to improve the living conditions of the 1.6 billion people in Asia’s cities. Among the clear messages to donors was the need for more flexibility in their approach to assisting city development and tailoring their investments to the needs of local communities.

“Our goal is to bring about lasting improvements in the living conditions of the urban poor, to limit negative environmental consequences of urban growth, and to make use of cities' potential for national development,” Karin Kortmann, Parliamentary State Secretary at the German Federal Ministry for Economic Cooperation and Development and ADB Governor for Germany, told the conference.

Hailing the move as an important step forward, ADB Vice-President Ursula Schaefer-Preuss said CDIA would prove an innovative way to build new investments of up to $10 billion in Asia's cities in sanitation, urban transport, waste management and other urban infrastructure.

“We believe that a well-coordinated, multi donor initiative can contribute significantly toward improving the living conditions of people in Asian cities,” she said.

“The long-term outcomes for the CDIA will be improved incomes and a better quality of life for Asia's urban citizens. The CDIA will also reduce the impact of city growth on the global environment.”

CDIA will focus on supporting cities for better urban management through support of national urban strategies, fostering the role of cities in sustainable development, assist in the implementation of city development strategies, structuring and preparing investment projects and building local capacity for more effective implementation. The initiative will also cooperate with existing networks for sharing and adopting best practices.

Klemens van de Sand, Commissioner for Asia at the German Federal Ministry for Economic Cooperation and Development, summarized: “The idea of the initiative is broader than to facilitate investments: CDIA should develop into a center of excellence based on common goals and contributions by all actors involved.”

About ADB

United Nations to help Jakarta floods victims

NEW YORK (Antara): The United Nations' humanitarian bodies would send relief aid for flood victims in Jakarta and suburban areas.

The UN's Office for the Coordination of Humanitarian Affairs (OCHA) has identified goods and emergency tools needed such as food, clean water, clothes, blankets, medicines, and search and rescue (SAR) equipment and teams, a press statement from the UN said on Monday.

Official of the UN's Emergency Relief Coordinator Margareta Wahsltrom said that the United Nations in cooperation with a number of non-governmental organizations (NGOs) and countries, who were going to provide assistance for flood-hit Indonesia,were currently monitoring the situation in the flood aftermath.

The UN relief aid would involve the United Nations Development Program (UNDP), UNICEF, the World Food Program (WFP), and the World Health Organization (WHO).

Information from the Jakarta Police on Tuesday morning said that the death toll in five days of floods in Jakarta and environs climbed to 36, consisting of 26 in Jakarta, 6 in Tangerang and 4 in Bekasi.

Several areas of Jakarta have been inundated following days of torrential rains which caused some of the rivers and canals whichcriss-cross the city to burst their banks.

The floods since Thursday have forced around 300,000 to take refuge to safer areas.

Australia's contribution of A$150,000 (US$117,000) would provide thousands of emergency food parcels and hygiene kits to be distributed by the Indonesian Red Cross, Ambassador Bill Farmer said in a statement.

The US embassy said it would give $100,000 in emergency assistance through the Red Cross and other organizations to provide emergency supplies and items such as plastic sheets, cooking utensils and sleeping mats.

President Susilo Bambang Yudhoyono and his wife, Ani Yudhoyono, visited flood-affected areas in Kampung Melayu, East Jakarta, on Friday and talked with flood victims sheltered in the Santa Maria school compound in Jatinegara Barat.

Govt lifts VAT from primary products

The Jakarta Post, Jakarta

In order to boost the farm sector, the government has lifted value-added tax (VAT) on a variety of goods and commodities, including agricultural machinery and primary agricultural products.

Under a new government regulation, there are six categories of goods that will be exempted from VAT.

These include capital goods, such as engines, factory machines and machine tools, both in knocked-down or built-up form, and feeds and feed ingredients for livestock, fowl and farmed fish.

Also exempted from VAT are farm produce, seeds for agriculture and market gardening, fish and livestock seed, clean water distributed through pipes, and electricity, except for domestic use, where the power supply is higher than 6,600 watts.

The new regulation provides that agricultural produce, including that produced by enterprises operating in the agricultural, market-gardening and forestry sectors, will also be exempted form VAT.

Bank Indonesia cuts benchmark interest rate by 25 bps

Jakarta (ANTARA News) - Bank Indonesia has cut its benchmark interest rate by 25 basis points (bps) to 9.25 pct on expectations that its inflation target for this year and next are obtainable, BI public relations director Budi Mulya told reporters.

"But room for further cuts is getting narrower," he said.

The central bank's inflation target for this year is 5-7 pct and 4-6 pct in 2008.

Asian Urbanization Global Priority, ADB Vice President Tells Manila Conference

MANILA, PHILIPPINES - Asian urbanization is a global problem that should be at the forefront of donors' agendas, an ADB Vice-President told the opening of a conference today.

Speaking at the conference on Investing in Asia's Urban Future, Vice-President Ursula Schaefer-Preuss said given that serious and growing problems have overwhelmed urban managers, the response cannot simply be business-as-usual.

"We need to develop new modes for engagement in this sector, reflecting new roles and types of clients," she said. "Today’s responses must address the factors key to a sustainable future: economic, environmental and social."

In the next 20 years, another 1.1 billion people will live in Asia's already congested cities, she pointed out. "Without effective urban management, this growth will only exacerbate the existing problems of pollution, lack of potable water, slums and traffic congestion, among others," said the Vice-President, responsible for ADB's knowledge management and sustainable development operations.

The conference, partnered by the German Federal Ministry for Economic Cooperation and Development (BMZ), will identify the priorities to be tackled in the face of the massive demographic and social changes taking place on Asia's urban landscape.

In her address to the conference opening, Karin Kortmann, ADB Governor for Germany and German Vice Minister for Economic Cooperation and Development, said that to make the complex process of urbanization sustainable and viable, action needs to be taken at all levels of society.

"Urban development is a shared task - nations, country groupings and multilateral organizations must take action, as well as civil society, the private sector, and municipalities," she said.

"The Asian Development Bank and German development cooperation pursue similar integrated urban development strategies. Our goal is to bring about lasting improvements in the living conditions of the urban poor, to limit the negative environmental consequences of urban growth, and to make use of cities' potential for national development."

Giving the keynote address at the conference, M. Ramachandran, Secretary of the Ministry of Urban Development of India, made the point that Asia faces urban challenges that are unprecedented in history.

"Globalization and decentralization are exerting pressures on cities whose implications are just getting to be understood," he said.

"They are creating demands of very large proportions in the spheres of investments, institutions, and capacity building. Most Asian economies suffer from infrastructure deficits which have to be met not in a long-run perspective, but over the next 5-10 years or so."

Taking part in the conference are about 170 participants from national and local governments, civil society, private sector, academia, international organizations, and established networks.

At the conclusion tomorrow, representatives of the German Government and ADB, together with other interested parties, are expected to set out how they intend to collaborate to address the social and environmental challenges of Asia’s urban development.

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RI waits for investors to exploit gas deposits

Ika Krismantari, The Jakarta Post, Nusa Dua, Bali

With total reserves of 453 trillion cubic feet (TCF), or about 81.5 billion barrels of oil equivalent, Indonesia has the largest coal-bed methane (CBM) deposits in the world after China.

CBM -- natural gas formed by the activity of microbes during the coal-forming process, and trapped amid coal beds -- could be a godsend for Indonesia as it struggles to cope with the depletion of its oil reserves and rising demand.

Under its new energy policy, the government has decided to gradually decrease the country's dependence on oil, and increase the use of other energy alternatives, such as gas and coal, to meet future energy demands.

By 2025, Indonesia's energy mix is expected to consist of 30 percent gas, 33 percent coal, 20 percent oil and 17 percent renewable energy. At present, oil accounts for 51.66 percent of total energy use, followed by gas at 28.57 percent, coal at 15.34 percent and renewable energy at 4.5 percent.

The potential to develop CBM is there, but it will be difficult for investors to take advantage of the opportunities due to the lack of clear regulations governing the exploitation of the costly gas deposits.

The government has already issued a ministerial decree in an effort to address the energy shortfall. But, potential investors still regard the regulation as being far from enough as it has nothing to say about much-needed incentives to help with the high cost of exploiting CBM deposits, or support in overcoming possible conflicts with coal miners.

The Energy and Mineral Resources' oil and gas director general, Luluk Sumiarso, said the regulation places a high priority on the production of CBM.

"We are all aware of the gas evaporation problem, so the operators will be urged to exploit the gas first, and then the coal," Luluk told reporters during a recent workshop on CBM exploration and production in Nusa Dua, Bali.

However, many investors have expressed doubts about the policy, arguing that the regulation does not specifically refer to a production-sharing scheme for CBM production.

In response, Upstream Oil and Gas Regulatory Agency (BP Migas) chairman Kardaya Warnika said that the government was considering offering a split of 70 percent to 30 percent in favor of the investor.

This would be much more favorable than the split in the case of regular gas production, which is 35 percent for the investor and 65 percent for the government.

Regarding the government's mooted 70:30 split, Kun Kurnely, the president director of Pertamina's exploration and production subsidiary, Pertamina EP, said it would not be enough unless the government also offered tax incentives to potential investors.

"In addition, the government should also give investors a kind of tax holiday of up to 10 years, as is the case in Australia," said Kun.

While many investors are still awaiting further clarity before becoming involved in CBM, others have progressed to the feasibility-study stage.

PT Pertamina, local company Ephindo, and Shell have all been conducting feasibility studies on CBM production in South Sumatra, Jambi and Sangatta since late 2006.

Pertamina, together with Indonesia's third biggest oil and gas producer, PT Medco EP and the government's oil and gas research and development center (Lemigas) signed a memorandum of understanding Jan. 25 for a CBM pilot project, also in South Sumatra, which has potential reserves of 183 tcf.

"We started the original pilot project on a small scale back in 2003 in one of Medco's fields, Lapangan Rambutan, to convince investors that the potential is there," Lemigas director Hadi Purnomo told the Post.

The government has also drawn up a detailed plan for CBM exploitation, setting out a production target of 1 billion standard cubic feet per day (BCF), or about 0.18 million barrels of oil equivalent, by 2025.

In the nearer term, the government hopes to attract up to US$2.5 billion in investment to develop 90 wells and produce 100 million cubic feet per day (MMSCFD) by 2014.

But before that, the government hopes that initial production of 10 MMSCFD will come onstream by 2011, based on an investment of $600 million.

Hadi said there are currently 10 investors that have expressed an interest in the sector, including U.S.-based oil major Chevron, local firm Ephindo, and Philippines-based Trans-Asia Oil and Energy Development Corporation.

"We are still waiting for the business model that will be applied by the government, not to mention clarification of the production-sharing contract mechanism," Chevron Pacific Indonesia president director Suwito Anggoro told the Post.

Indonesia lags far behind other countries, including Australia, in exploiting CBM. The neighboring country commenced commercial CBM production in 1996 in Queensland, which has reserves of 250 TCF.

Giving the stance adopted by the government to date, potential investors will likely have to adopt a wait-and-see approach, meaning that it will probably be a long time before Indonesia can benefit from its vast CBM resources.

Telkom’s Market Capitalization Amounts to US$22.3 Billion

Monday, 05 February, 2007, 15:46 WIB

TEMPO Interactive, Jakarta: PT Telekomunikasi Indonesia Tbk (Telkom) managed to book US$22.3 billion in market capitalization as of December 28, 2006.

“This is significant progress,” said Harsya Denny Surya, Telkom’s Secretary, in an explanation to the Jakarta Stock Exchange.

He explained that Telkom’s Managing Director Arwin Rasyid was given the responsibility by the company’s shareholders of increasing market capitalization to US$30 billion by 2010.

Telkom, said Harsya, still had many opportunities in the future.

He explained the main focus this year was an increase in the company’s performance and consumer services for all product and service segments.

Padjar

U.S., Australia express commitments to help flood victims

JAKARTA (JP): Several countries including the U.S. and Australia have expressed their commitments to convey assistance for hundreds of thousands of flood victims, whose houses in Jakarta and its surroundings, have been inundated since last Friday.

The U.S. government will provide US$100,000 of emergency relief assistance for displaced people, according to a press release from the U.S. embassy in Jakarta Monday.

The embassy said that the assistance will be channeled through the International Federation of Red Cross (IFRC) and its local partner -- the Indonesian Red Cross--, CARE, Mercy Corps, and World Vision.

Meanwhile, the Australian embassy in Jakarta also said that his country will also provide 150,000 Australian dollar (US$116,243) to support the Indonesian government to help flood victims.

Australian Ambassador to Indonesia Bill Farmer said in his statement that the assistance include 5,000 food packages and 5,000 hygienic stuffs.

At least 25 people have been killed, with some 340,000 others forced from their homes, most staying in mosques, schools or with friends. Electricity and water supplies were cut in many districts, and floods blocked off scores of roads.

Developers blamed for fatal Jakarta floods

Stephen Fitzpatrick, Jakarta correspondent

The Australian, February 05, 2007

UNCHECKED urban development since the post-1998 economic crisis has been blamed for devastating floods in Jakarta that have killed at least nine people and left hundreds of thousands homeless.

Residents of the Indonesian capital began returning to their badly damaged houses yesterday as the polluted brown waters that had engulfed most of the city began receding in a few areas.

Parts of Jakarta, built on low-lying swampland by Dutch colonists, had been under three metres of water for days after sustained downpours. Meteorologists warned that further heavy rains in the coming week could make the situation worse.

The city's 10 million residents, already facing water shortages from the unusually long dry season, will now have to cope with an unusable groundwater supply due to contamination with household pollutants.

Many Jakarta areas -- including upmarket residential districts -- take their water supplies directly from wells, now rendered unusable by inadequate household sewage disposal mixed with the floodwater influx.

The weather bureau registered 235mm of rain daily at its central Jakarta office since the middle of last week. During the last major flooding in 2002, the agency said, daily rainfall peaked at 109mm.

Jakarta Governor Sutiyoso has been criticised for declaring the current crisis not as bad as that in 2002, when more than 100,000 people were forced to flee their homes, tens of thousands were affected by a diarrhoea epidemic and the repair bill was estimated at $57 million.

Environment Minister Rachmat Witoelar blamed excessive construction on flood-prone natural drainage areas for the disaster. In particular, Mr Witoelar said, there were too many shopping malls in the city.

Yudhoyono tells Greater Jakarta to mitigate annual flooding

JAKARTA (Antara): President Susilo Bambang Yudhoyono ordered authorities in the Greater Jakarta to design a concrete program to mitigate annual floods in the region, which often killed many people and damaged houses, properties and infrastructures.

"We need a joint serious effort to mitigate floods," he was quoted by Antara news agency as saying in sideline of his visit to flood victims in Bekasi municipality Sunday.

This year flooding killed at least 20 people across the Greater Jakarta -- Jakarta, Bogor, Depok, Bekasi, and Tangerang -- and displaced about 200,000 others. Water also inundated railway tracks and damaged other infrastructures.

Massive flooding in the capital is frequently also sparked by heavy rains in the upper areas -- Depok and Bogor -- as water from the areas flowed to the city through Ciliwung River.

The president told the local administrations in the Greater Jakarta to immediately draft the plan and to calculate the cost of flood infrastructure.

Regional autonomy is blamed for the difficulty to design integrated flood mitigation projects because each administration in the Greater Jakarta has its own plan.

The Jakarta city administration often blamed authorities in upper areas for excessive use of lands in their territories for housings and other facilities, which cause serious damage of green areas, needed to be maintained for water conservation.

Meanwhile, authorities in the upper areas said Jakarta has to give compensation for lands in their respected territories, which should be maintained for water conservation.

So far, there has been no institution in the central administration, which has power and wish to mediate their disputes.

Jakarta business executives prefer staying at hotel during floods

Jakarta (ANTARA News) - Business executives in flood-hit Jakarta at the end of their working day now prefer to retire to hotels closest to their offices rather than risk being trapped in flood-related traffic jams or other obstacles on their way to their own homes.

The risk of running into inconvenience, difficulty or trouble in Jakarta's streets has considerably increased since incessant rains over the past three days causing flooding in many parts of the Indonesian capital.

"Our hotel's occupancy rate has increased following the heavy rains and floods during the past two days. Businesss executives are reluctant to brave the rains and floods. So, after work hours, they check in at hotels," Sahid Jaya hotel public relations manager Megasari Rustianty said here.

She said more than 70 percent of Sahid Jaya's 670 rooms were booked during the past two days while previously occupancy only averaged 60 percent.

The business executives who actually live in Kelapa Gading, Kemang, Kwitang, Setiabudi, Mampang, Pesanggrahan, and Kampung Melayu areas checked in at the hotel without making reservations, she said

Other hotels in Central Jakarta's business districts also saw an increase in their occupancy rates.

"The same thing happened two years ago when wide areas of the capital's territory were inundated," Megasari said.

It was reported from Surabaya on Friday subscribers of state telecommunication company PT Telkom and its cellular telephone provider Telkomsel could not contact phone numbers in Jakarta on Friday when most parts of the capital city were inundated by floods.

East Java Telkom's communication manager Djadi Soegiarto blamed the telecommunication disruption on the Jakarta floods.

Vital telecommunication installations in the Semanggi area in Central Jakarta were submerged in flood waters so they could not function properly.

Meanwhile, a political observer at Gajah Mada University in Yogyakarta, Cornelays, suggested that the center of the Indonesian government be moved from Jakarta to a location that could not be severely affected by annual floods.

"Perhaps we should pursue the late president Soekarno's idea to move the center of the government from Jakarta to either Palangkaraya (Central Kalimantan) or Palu (Central Sulawesi) or former president Soeharto's plan to relocate the central government to the Jonggol area in West Java," he told ANTARA News from Yogyakarta.

But in Cornelays' own view, the center of Indonesia's administration should be moved to Banten province where Jakarta's Soekarno-Hatta International airport is located.

PGN facing fine of Rp 500m over disclosure breach

Andi Haswidi, The Jakarta Post, Jakarta

After two weeks of investigation, the Capital Market Supervisory Agency (Bapepam) has found state-owned gas company PT Perusahaan Gas Negara (PGN) guilty of violating disclosure regulations, and may fine it up to Rp 500 million (about US$55,000).

"PGN has violated the administrative procedures. The sanction for such violations is a fine. According to the regulations, an administrative sanction can amount to up to Rp 500 million," the head of the Bapepam legal department, Robinson Simbolon, said in Jakarta as quoted Friday by Detik.com.

The investigation into PGN started after its shares slumped by 23.3 percent from Rp 9,650 to Rp 7,400 on Jan. 12 following an admission by PGN that its South Sumatra-West Java (SSWJ) pipeline project would be delayed.

The admission not only knocked PGN's shares for six, but also affected the shares of other state-owned companies, which in turn precipitated a sharp drop in the Jakarta Stock Exchange (JSX) Composite Index.

The assumption that PGN officials had failed to report the delay to the public was apparently true, Robinson said, indicating that the Bapepam investigating committee had concluded that PGN management had been aware of the possible delay since Jan. 3.

According to capital market regulations, a public company has to report any occurrence that could affect the price of the company's shares to the capital market regulator no later than two days after it takes place.

Bapepam chairman A. Fuad Rahmany said in a press release received by The Jakarta Post on Feb. 1 that the conclusion had been reached after a review of the relevant documents and the interviewing of PGN directors, accountants and SSWJ project managers.

"We have gathered enough evidence to prove that PGN violated regulation number X.K.1 on public disclosure," Fuad said.

He also said that further probes were being carried out as the investigators had found prima facie evidence of other violations, besides the disclosure violation.

Previously, PGN director Sutikno denied that the company had violated the disclosure regulation.

"There was no time lag in reporting the information. We became aware of the possibility of a delay on Dec. 16, 2006. We needed to look into the details further before we could say that the project would definitely be delayed, and inform the public to this effect," he argued.

A PGN official said the firm had yet to receive a notification from Bapepam about the capital market watchdog's decision.

"As of today, we have yet to receive an official notification from Bapepam on the results of the investigation," PGN corporate secretary Widyatmoko Wapang said Friday as quoted by Antara.

President calls for concerted efforts to overcome obstacles to investment

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono has called on government institutions, lawmakers, law enforcers, business people and the people at large to join hands in overcoming the various problems impeding the flow of investment into the country.

In a state-of-the-nation address marking the start of 2007 at the presidential palace here on Wednesday night, Yudhoyono admitted investment in the country over the past two years had been relatively low because of a number of serious problems.

"Together, we, the government as well as the House of Representatives (DPR)), law enforcers, business people and even the people at large, have to overcome these serious problems that hamper investment in the country," the president said.

On the occasion, the head of state was accompanied by his special aides Dino Patti Djalal, Andi Malarangeng, Heru Lelono and Cabinet Secretary Sudi Silalahi.

The president said there were at least seven factors that were inhibiting the entry of foreign investors into the country.

The seven factors were the exorbitant bank interest rates, limited access to bank credit, unfavorable taxation policies, inefficient licensing procedures, illegal levies, lack of legal certainty, security problems, political instability, and sluggish infrastructure development.

Referring to investment security in Indonesia, Yudhoyono said it was getting better but investors were constantly comparing it with that in other countries such as Singapore, Malaysia, Vietnam, China and India.

"Taking their cue from their own calculations of business risks in a given number of countries, investors will always prefer to do business in countries they think are really safe," Yudhoyono said.

On infrastructure development, the president said it should be done continuously across the country in order to attract investors.

"Infrastructure development we have carried out so far consisted of the building of roads, irrigation systems, airports, seaports, facilities for supply of clean water and energy ," the president said.

House Supports Indosat Buy-Back

Thursday, 01 February, 2007 | 16:58 WIB

TEMPO Interactive, Jakarta: The House Budget Commission has said it considers that the shares ownership domination by Singapore Technologies Telemedia Pte. Ltd (STT) is too large.

Telecom’s involvement in PT Indonesian Satellite Corporation Tbk. (Indosat) has made international Internet network tariff in Indonesia more expensive.

The result of this is that internet growth has been very low.

Therefore, the House Budget Commission supports the government’s buying back of Indosat shares.

This support was included in the conclusion of a hearing between the House Budget Commission and Indosat at the Parliament Complex, on Tuesday (31/1).

Drajad Wibowo, a member of the Budget Commission, said that dominant foreign ownership in the telecommunication industry was regarded as a dangerous issue from a national security point of view.

“Secret communication between Indonesia’s officials can be monitored by Singapore,” said Drajad in Jakarta, on Tuesday.

According to him, STT Telecom’s dominant ownership of Indosat’s shares has caused this subsidiary of Temasek Holding that belongs to the Singaporean government to control 80 percent of the national communication flow.

Drajad said that Temasek made Indosat’s shares price always high on purpose with a price cartel between STT Telecom at Indosat and Singtel at Telkomsel.

As a result, he said Temasek’s existence is very dominant in the national telecommunication industry.

As previously reported, the government sold 41.94 percent of its Indosat shares in January, 2002, and the sale was won by STT Telecom, Temasek Holding’s subsidiary.

So now the government only owns 14.96 percent of Indosat shares with the other remaining shares being owned by members the general public.

Eko Nopiansyah

Both sides of Suramadu bridge set for SEZs

Ary Hermawan, The Jakarta Post, Jakarta

The government plans to set up special economic zones (SEZ) in the areas to be linked by the Surabaya-Madura bridge, with the zones expected to cover some 600 hectares in total.

The SEZs on both sides of the bridge will be established upon the completion of the bridge, which is scheduled for 2008, according to National Development Planning Minister Paskah Suzetta.

"The bridge must be turned into more than just a link between Surabaya and Madura. We must also improve economic conditions in the surrounding areas," Paskah said Wednesday.

Accordingly, Paskah said the government had decided to set up a special agency to speed up the bridge's construction, and to prepare blueprints for the development of the proposed economic zones.

"The agency will focus primarily on land acquisition and the construction of infrastructure, including ports and residential areas to support the zones," he said, adding that the new agency would be headed by Coordinating Minister for the Economy Boediono and include local government officials as members.

Subsequently, Paskah said, the government would invite private firms to submit bids to run the zones as part of a public-private partnership.

"All companies. foreign and domestic, will be invited to invest in and develop the zones," he said.

Better known by its Indonesian acronym as the Suramadu bridge, the new link, which is still under construction, will connect Surabaya on the island of Java and Bangkalan on the island of Madura. It will be the longest bridge in the country at 5.4 kilometers in length.

China has provided US$400 million for the project, while the government has allocated Rp 1.4 trillion (Rp 147.3 million) from the 2007 and 2008 budgets.

Batam, Bintan and Karimun islands in Riau Islands province made up the first SEZ in the country. It has been deemed a success by the government, which now plans to create similar zones in other provinces.

In addition to the proposed SEZs in East Java, the government has said it will establish other ones in North Sumatra, South Sulawesi and Bojonegara in Banten, where a Rp 7 trillion international port is under construction.

The Coordinating Ministry for the Economy is currently preparing a government regulation in lieu of law as a legal basis in the hope that this will save time and accelerate the establishment of more investment-boosting SEZs around the country.

Issues pertaining to the SEZs will also be covered by the proposed new taxation and customs laws.