Japan extending yen 200 million grant to boost RI food production

Jakarta (ANTARA News) - The Japanese governemnt is extendng a Yen 200 million (Rp15.86 billion or US$ 1.72 million) grant to Indonesia in support of efforts to increase food production and alleviate poverty in the agricultural sector.

Diplomatic notes on the grant were exchanged and signed here Monday by Japanese Ambassador to Indonesia Shin Ebihara and Director General for Asia-Pacific and Africa at the Foreign Ministry Primo Alui Joelianto.

A statement fom the Japanse Embasssy said the grant in aid was intended for indigent farmers and given under the "Second Kennedy Round (2KR)".

The Indonesian government had asked the Japanese government for 2KR aid to buy potassium chloride fertilizer (MOP) that is not available in Indonesia.

The Indonesian government would sell the fertilizer at a low price to farmers in Nanggroe Aceh Darussalam (NAD) living in areas where the poverty rate is still high as a consequence of the Dec 2004 earthquake and tsunami.

The proceeds from the fertilizer sales would be used to support small-scale farmers and alleviate poverty.

Poverty alleviation is one of the main pillars of Japan`s strategy in providing ODA (Official Development Assistance) to Indonesia.

As one of Indonesia`s main development cooperation partners, the Japanese governemnt was committed to cooperating closely with the Indonesian government to achieve certain poverty alleviation targets, the embassy said in its statement.

Dutch Ambassador to visit quake-hit West Sumatra

The Jakarta Post

JAKARTA (Antara): Dutch Ambassador to Indonesia Nikolaos van Dam will visit West Sumatra on Wednesday to see condition of the areas which were devastated by earthquake last week.

The Dutch envoy during the visit would also present assistance to the earthquake's victims, information from the Dutch embassy said Tuesday.

The Dutch Government has provided relief aid amounting to 1.5 million Euros or equivalent to Rp 18.1 billion for the disaster victims.

The emergency assistance was handed over through the Indonesian Red Cross and the International Organization for Migration (IOM). The aid consisted of among other things medicines, medical equipment and logistics for hundreds of earthquake victims.

On March 6, a 6.3-magnitude earthquake struck about 50 kilometers from Padang, the capital of West Sumatra province.

According to news reports, tens of people died in the disaster and thousands were displaced.

Delayed Sumatra-West Java gas pipeline comes onstream

Ika Krismantari, The Jakarta Post, Palembang

After nearly four months of delay, state-owned gas distributor PT Perusahaan Gas Negara's (PGN) US$1.1 billion pipeline linking South Sumatra and West Java finally came onstream Sunday.

The pipeline will initially deliver 30 million cubic feet per day from a Pertamina gas field in Pagardewa, South Sumatra, to industrial areas in Cilegon, West Java.

"We will gradually increase the gas distribution to about 250 million cubic feet per day in 2008," PGN president director Sutikno said during a ceremony to inaugurate the operation of the South Sumatra and West Java (SSWJ) gas pipeline.

State Minister for State-owned Enterprises Sugiharto and Energy and Mineral Resources Minister Purnomo Yusgiantoro also attended the ceremony.

The 375-kilometer pipeline is the first part of the company's 1,101-kilometer gas pipeline network connecting South Sumatra and West Java.

The second and final pipeline in the network is still being completed and will distribute gas from ConocoPhillips's gas field in Grissik, South Sumatra through Pagardewa and Labuhan Meringgai to Muara Bekasi and Rawa Maju in Bekasi, West Java. The pipeline is expected to go on stream in the fourth quarter of this year and will distribute up to 400 million cubic feet per day.

PGN's shares slumped by more than 20 percent from Rp 9,650 ($1.06) on Jan. 12 after PGN unveiled that the SSWJ gas pipeline project would be delayed.

Sutikno estimated that the company's soon to be announced 2006 profit will reach Rp 2 trillion (about $222 million), exceeding the government's target of Rp 1.89 trillion.

In 2005, PGN's total revenue rose by 22 percent from Rp 4.4 trillion in 2004 to Rp 5.4 trillion in 2005. Its operating profit over that period rose by 82 percent to Rp 862 billion.

With the operation of the new pipelines, the company expects its gas distribution volume to increase from 338 million cubic feet per day last year to 555 million cubic feet per day this year.By 2008, gas volume is expected to reach 919 million cubic feet per day.

Under the existing contracts, PGN will distribute a total of 3.3 trillion cubic feet of gas for 12 years from Pertamina's Pagardewa field and for 17 years from ConocoPhillips' Grissik field.

Starting this March, a power plant owned by Indonesia's biggest steelmaker PT Krakatau Steel in Cilegon will start receiving 30 million cubic feet per day from the pipeline. The volume will be increased to 40 million cubic feet per day in May. PGN is also planning to build 509-kilometer pipeline from Duri, Riau to Medan, North Sumatra with an initial capacity of 350 cubic feet per day. The construction of the project requires approximately $537 in investment.

Significant increase in Jambi`s oil, gas exports

Jambi (ANTARA News) - Jambi`s exports of gas and crude palm oil in 2006 significantly increased by about 143.13 percent in volume and 127 percent in value, head of the Provincial Industry and Trade Office`s Foreign Trade Office Zainal Abidin said here Saturday.

Zaenal said Jambi`s export volume of gas in 2005 reached 110.842 tons valued at US$60.174 million in 2005, while the volume increased to 601.946 tons valued at US$246.8 million.

Meanwhile, the export value of crude palm oil was recorded at 309.586 tons worth US$95 million in 2005, and the volume was up to 354.032 tons worth US$133.5 million in 2006, he said.

The total volume of the two commodities in 2005 reached 420,428 tons worth US$155.171 million and the volume went up to 955,976 tons valued at US$380,367 million in 2006, Zainal said.

The biggest volume of gas was produced by Petrocina and Conoco Philips and the biggest volume of crude palm oil was produced by PT Inti Indosawit and state plantation company PTPN VI in Jambi, he said.

Jambi`s main export destinations for its natural gas and crude palm oil are Europe and Asia, he said.

Victoria to take over Bank Swaguna

The Jakarta Post

JAKARTA: Indonesian-based PT Bank Victoria International Tbk. is currently conducting due diligence with a view to acquiring a 99.8 percent stake in Bank Swaguna shares.

"After the acquisition, we will transform Swaguna into a sharia-based bank," Victoria director Tamunan Kiting was quoted as saying Friday by Business Indonesia.

As of the end of October 2006, there were only three full sharia banks and 19 conventional banks with special units providing sharia banking services in Indonesia.

Tamunan said Victoria wanted to increase Swaguna's capital to Rp 80 billion (US$8.8 million) by the end of this year to meet the central bank's capital requirements.

As of September 2006, Swaguna's assets stood at Rp 70.4 billion, including capital of Rp 21.63 billion.

Deal is inked linking MidAmerica, Indonesia

BY MIKE FITZGERALD

News-Democrat

The "air bridge" between MidAmerica St. Louis Airport and Hang Nading International Airport, in Indonesia, is a reality.

Mark Kern, the St. Clair County Board chairman, has signed the memorandum of understanding with the industrial authority of Batam, an island known for scores of electronics factories 12 miles off the coast of Singapore. The pact clears the way for direct cargo flights to begin between the two airports -- the only agreement of its kind between Indonesia and a U.S. airport -- though no flights have yet been scheduled.

Kern inked the deal during a meeting at the Indonesian Trade Ministry in Jakarta, late Friday morning Indonesian time, or 10:30 p.m. CST Thursday.

The pact's provisions includes incentives aimed at marketing to the air cargo community, promoting air commerce between the two airports and security needs.

Also signing the deal were representatives of Evergreen International Airlines, an Oregon-based operator of wide-bodied freight haulers, and Cardig International, a Jakarta-based provider of aviation services, logistics, catering and security.

Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 239-2533.

Center for Promoting Trade to Be Opened in Milan and Shanghai

Friday, 09 March, 2007 | 15:54 WIB

TEMPO Interactive, Jakarta: The government will open two international trade promotion centers (ITPC) in Milan, Italy, and Shanghai, China, this year. It is expected that the ITPC will increase the volume of trade between the countries.

“As for Shanghai, we are awaiting a decision and we are still awaiting the decision of the Milan local government,” said Secretary of theNational Export Development Agency Hesti Indah Kresnarini yesterday (03/08).

She stated that last year, two ITPCs have been opened in Hamburg, Germany, and Sydney, Australia, so as to ease penetrating the market for Indonesian exported products. In addition, she said, the promotion program was carried out through a partnership with modern retail (in-store promotion) in various countries.

“Not only in our common destination countries of export, but also potential countries such as Middle East countries and South Africa,” she said.

Within the in-store promotion, three modern retail stores were involved: Carrefour, DelHeiz and Harvey's Nickle. In the future, the government will try to cooperate with modern retail stores in Japan and the US.

Some products that will be included in the in-store promotion are spices, coffee, leather, batik, handcrafts and food.

RR ARIYANI

Indonesia a dumping ground, says minister

Ridwan Max Sijabat, The Jakarta Post, Denpasar

Being an agrarian country does not guarantee that local produce will dominate the market.

This has been evident for some time in Indonesia, where Thai oranges, durians and bananas are to be found in abundance, despite being costlier than the home-grown versions.

Another indicator of Indonesia's dependence on foreign products is the influx of Chinese consumer goods and high-tech devices from South Korea, Singapore, Malaysia and other developed countries.

But while consumers might be kept happy by the constant flood of foreign goods, Manpower and Transmigration Minister Erman Suparano raised his eyebrows when asked to comment on national productivity and the competitiveness of Indonesian products on the local and international markets.

"Indonesia is not only a big market for foreign products but is also a dumping ground for scrapped goods from other developing countries," he said at the Asian Workshop on National Productivity being held here on Tuesday.

He said that the country's dependence on foreign products had a lot to do with the low levels of national productivity caused by poor human resources and a lack of mastery of both simple and high technology.

More than 200 participants from Asian countries, including Japan, Iran, India, Singapore, Malaysia and Vietnam are attending the workshop, which will end Friday.

"Not only the weakening nationalism among the people, but also the failure to master science and technology and to improve the quality of human resources, have caused the nation to lag behind neighboring countries," he said, referring to a recent Asian economic survey which put Indonesia 136th out of 137 developing countries in terms of national productivity.

He said the revitalization of the agricultural sector could begin by providing training for farmers and encouraging farming experts and the businesspeople to make the country self-sufficient in agricultural products, including rice.

The minister also challenged the nation to implement a merit system in the national remuneration system in the private and state sectors, saying Indonesia could no longer depend on the current minimum wage policy and should reform the bureaucracy in order to improve the quality of human resources and national productivity.

Meanwhile, delegates at the workshop hailed the meeting as an annual forum for member countries to share their experiences in training programs and mastering technology to improve national productivity.

Secretary to the Thai Minister of Labor Relations and Foreign Employment Phanit Laosirirat said Thai success in producing superior agricultural products laid in a research and development program to create a variety of agricultural products, the diversification of its markets and the strengthening of farming institutions.

"Our main target is to achieve self-sufficiency in agricultural products and accelerate exports to improve our competitiveness in the global market," he said, adding that Thailand has diversified the foreign markets of its agricultural products not only in ASEAN but also in developed countries.

He said his country has reached self sufficiency in stockpiles and tropical agricultural products, leaving no space for foreign products despite the free market.

Chairman of Japanese Productivity Center Tsuneaki Taniguchi said that in dealing with the issue of decreasing population, Japan was directing its human resources development to spur up the service industries to maintain its prosperous economy in the future.

"Nationalism is a prerequisite. All stakeholders, including the government, businessmen, labor unions and the civil society are challenged to develop what is called a "mindset of innovation" for ourselves, the innovation of business leaders, of the government and of the public sector. We are pursuing to enhance a sustainable economic development together with other Asian countries," he said, adding that Japan was also promoting the improvement of management quality as a regional movement in Asia.

In Japan, 80 percent of the GDP comes from non-manufacturing sectors, with a particular concentration on service industries, which is regarded as the engine for its economic growth in the future.

Bank Indonesia Applies National Clearing System

Arief Ardiansyah, TEMPO Interactive - 2007-03-05 09:58

Palembang, 02 March, 2007 (TEMPO Interactive) -: Bank indonesia will apply the national clearing system all over indonesia by the end of 2007. “Funds transfer that people perform can be completed on the same day,” said Deputy Governor of Bank Indonesia. Budi Rochadi in Palembang.

During the authentication of the clearing system in Palembang yesterday, Budi said that Bank Indonesia has recorded a clearing transaction of Rp4.7 trillion during early 2007. Of the amount, Rp4.5 trillion was processed through the national clearing system of Bank Indonesia.

Bank Indonesia has inaugurated clearing areas at six offices of Bank Indonesia: Palembang, Bandar Lampung, Bengkulu, Jambi, Palangkaraya and Lhokseumawe.

Indonesia, Netherlands tailoring taut bilateral relations

The Jakarta Post

After decades of relatively strained bilateral ties, Indonesia and its former colonial master the Netherlands are currently engaged in a hallmark relationship marked by a profound intention between the two nations to cast away the wounds of the past.

It is understandable that with Asia set to become a major political and economic hub, the Dutch government has recently been stepping up efforts to mend its centuries-old relationship with Indonesia.

To further explore the nature of relations between the two countries, The Jakarta Post's Rendi Akhmad Witular interviewed newly appointed Indonesian Ambassador to the Netherlands, Junus Effendi Habibie -- a retired Dutch-educated public servant and a former legislator from the Democratic Party.

Question: How would you describe the current bilateral relations between Indonesia and the Netherlands?

Answer: Since our independence in 1945 there have always been stumbling blocks in the relations between the two countries, such as issues related to the Dutch refusal to recognize our independence day on Aug. 17, 1945 (the Dutch government initially claimed Indonesia had not gained independence until Dec. 27, 1949).

But since 2005, when the Dutch government officially acknowledged Indonesia's self-proclaimed freedom in 1945, all the pebbles in our shoes that were straining relations have gradually been thrown away.

There is now a great effort between the two countries to enhance the relationship. This is evident by the recent signing of a letter of intent (LoI) on a comprehensive partnership mechanism (for dialog and cooperation) by the foreign ministers of the two nations. This LoI is a follow up to the Dutch intention to enhance cooperation in various sectors in the future.

But the LoI will become fully effective when President Susilo Bambang Yudhoyono visits the Netherlands in the coming months and signs the agreement with Queen Beatrix.

With this partnership, we will cooperate under a framework of equality and mutual benefit. I have always said, including to President Yudhoyono, that we should see the Netherlands as a gate to the European Union. I also often ask Dutch businessmen to come to Indonesia because it is a big country with a big market, and is also a gateway to Southeast Asia.

Why were efforts to improve relations not initiated a long time ago?

Well, better late than never. As a country which once invaded and ruled Indonesia, there are still a lot of conservative people (in the Netherlands) who dream of the glory of the colonial era.

However, these kind of people are gradually disappearing now, thanks to the efforts of (Dutch foreign minister) Bernard Bot.

When the Dutch government still only acknowledged the 1949 independence, it also meant that they indirectly refused to recognize the integration of Papua into Indonesia. That is why there is some figures in the OPM (Free Papua Movement) rebel group living (in the Netherlands).

When Sukarno proclaimed independence, the area known as Indonesia included areas from Sabang (in Aceh) to Merauke (in Papua). By recognizing the 1945 independence, the Dutch government has automatically and clearly rejected any kind of separatism.

Now that there are no longer any obstacles in our way, coupled with legal paths to cooperate, I say we should work the iron while it is still hot.

Let us hold hands and look to the future. We should learn from the past. We take the good and throw away the bad. If we are always looking back we will never progress. The Netherlands has shown its serious (attitude toward) enhancing relations. And now it is our turn to take advantage in order to gain mutual benefits.

How serious is the threat issues related to the OPM and RMS (Republic of South Maluku) rebel groups could potentially strain relations between Indonesia and the Netherlands? (Some key members of the groups live in the Netherlands and support the movements from a distance.)

They are our people. If they stage a demonstration here that is fine. But in any part of the world, separatism cannot be accepted. I accept these people as my brothers and sisters. In a family there is always a disagreement, but still we are family. I have told them that my house is also theirs. They can come to my house at any time, but as family.

I have also told them to be good citizens here in the Netherlands. These old people are victims of the past. They were brought here (by the Dutch government). I will be more than happy to bring them home to Indonesia, but under the condition that the do not engage in separatist movements.

As for the younger generation, I advise them to also become good citizens, and to never forget that they should help their families back in Maluku and Papua.

The Dutch government said in 2005 that they would not support any kind of separatist movement in Indonesia.

What kind of issues were raised during your meeting with Queen Beatrix when you presented your credentials?

The Queen is really interested in Indonesia. She asked how the situation in Aceh was. I explained to her that Aceh is peaceful now after the signing of the peace accord between the Aceh rebel group and the government. Now there is a directly-elected governor in the province.

The Queen also expects relations between the two nations to become closer.

She also raised questions about Papua. I've explained to her that the situation in the province is extremely better than it was before. However, any giant leap in the development of the province is still not possible because of the low quality of human resources there. You can imagine that there are still tribal wars between villages.

The Papuans want local figure to be their regent or governor. But what happens is that one of the regents in that province has spent 1.5 months of his time in Surabaya (the East Java capital) to have some fun. The Queen seemed to be shocked to hear that.

For sure, the Queen is very concerned with the prosperity of the Papuans. There seems to be a moral obligation for her, and that is obvious. Culturally, we are closer to the Dutch than to the British.

One of your main tasks is to lure more Dutch investors to Indonesia. How are you going to do that?

I have always told Dutch businessmen that corruption in Indonesia can not be entirely stamped out in a day. What we are doing now is building a good system to prevent it. It's not something instant.

Issues related to legal uncertainty, security and labor problems are still being worked out by the government. We are not in paradise yet, but we are heading to it in the right way. These kinds of problems have existed since long ago, and it will take time to fix them.

Indonesia warned of global slowdown

Urip Hudiono, The Jakarta Post, Jakarta

Indonesia must seek alternative markets for its exports and promote local consumption to secure growth amid a slowdown this year in the world's economy, global financial services firm UBS said.

Current policies to ease inflation and cut interest rates are on the right track for reviving domestic spending, UBS global economist Paul Donovan said, while at the same time not disrupting the appeal of Indonesia's financial markets in the eyes of global investors.

UBS sees world economic growth slowing down to 3.5 percent this year from 4.5 percent last year on a downturn in spending in the U.S.

The economies of Japan and Europe will pick up, but this will be unlikely to be strong enough to offset the effects of the global decline.

For Indonesia, Donovan said this could well translate into lower global demand for the country's main export commodities.

"Indonesia needs to think carefully about how this plays out, and look for alternative markets for its exports," he said during a media briefing Friday on UBS's latest economic outlook.

"Indonesian companies should also think about how to manage this, and, with the right strategies, they will be able to continue growing."

Donovan ruled out a total collapse of Indonesia's exports, as global commodity prices were likely to remain strong. But some sectors were likely to suffer from lower demand, meaning they would grow more slowly. He pointed to Indonesia's furniture sector -- which has quite a significant market in the U.S.-- as possibly being the most likely to be affected.

The U.S. -- the world's biggest importer -- is currently Indonesia's third largest export destination after Japan and Europe, with the value of non-oil-and-gas exports alone amounting to US$10.66 billion last year. Indonesia is also a significant raw materials supplier to China, which is, in turn, a major exporter to the U.S. Indonesia's other major export markets include the rest of Asia and Australia.

Indonesia's exports have started off the year well, amounting to US$8.35 billion in January, up 10 percent from the same month last year, though down 12 percent from December.

Exports grew 17 percent to $100.69 billion last year, with the government expecting that figure to increase by another 20 percent this year. Exports, along with spending, allowed Indonesia's economy to grow by 5.5 percent last year.

Donovan suggested that Indonesia act to encourage domestic spending against a backdrop of easing inflation.

"Bank Indonesia will further accommodate this through more rate cuts, to encourage credit growth," said Donovan, who sees at least three more rate cuts over the course of the year.

The central bank has slashed its key rate to 9.25 percent at present from 12.75 percent last year, as inflation slowed to 6.3 percent from 17 percent.

Regarding world financial markets, UBS says that the latest developments in the global economy will result in the U.S. cutting rates by as much as 1 percent this year, while Japan and Europe may see slight rate increases.

This will lead to the U.S. dollar weakening further against the Japanese yen to 108 yen per dollar, and the euro to 1.4 dollars per euro. UBS sees the rupiah averaging Rp 9,200 per dollar this year.

"Global markets will see a temporary period of risk aversion, with higher market volatility in the next couple of weeks, but markets will fundamentally still be on a fair value," Donovan said.

Markets in Asia were rocked by a slide in the Chinese bourse earlier this week, with many analysts saying this was a market correction in response to China's overheating economy.

Donovan said that BI's rate cuts would be seen as positive by Indonesia's local capital markets, with plans by both the government and local corporate sector to issue more bonds posing no problems given current macroeconomic stability.

"When bonds are issued in a stable financial environment, this it is good," he said. "It will improve the sophistication of the market."

Jakarta seeks to boost bilateral trade with Thailand

UMESH PANDEY, The Bangkok Post

Indonesia, which was one of the worst affected countries by the 1997-98 Asian financial crisis, has emerged as one of the strongest in the region with robust economic growth, one of the world's best-performing stock markets and now with a plan to become among the most attractive investment destinations.

"We want more Thai companies to look at opportunities in Indonesia, we want to see trade flows between the two countries increase far more than what we currently have," said Ibrahim Yusuf, the Indonesian ambassador to Thailand.

Yusuf: "Let us work hand in hand"

"Let us work hand in hand to turn the vast economic potential of both countries into reality," he said at a recent seminar in Bangkok.

Indonesia has seen two-way trade with Thailand grow at a rapid pace, although both sides believe that more can be achieved.

Bilateral trade in the first 11 months of 2206 was $6.12 billion, against $7.13 billion for all of 2005, $5.53 billion in 2004 and $4.02 billion in 2003.

"Observing the upward trend of trade volume in the past four years, I believe that we could optimistically set the projection that in 2010 the volume of trade could reach $10 billion," Mr Yusuf said.

But he said that to achieve that figure in such a short time, the government and private sector would need to work hard and in close collaboration.

A joint trade subcommittee is being considered to help both countries plot strategy and growth projections.

Mr Yusuf said that apart from trade, investments from Thailand have shown tremendous growth - to $123.9 million as of October last year, the highest level since the economic crisis.

"However, I believe that the existing amount of investment has not fully reflected the real economic potential of both countries," he said.

"There is still plenty of room available to be developed for investment, for instance in the fishery sector."

Thailand, which has strengths in fisheries, could help Indonesia develop the industry across the Indonesian archipelago of 17,000 island.

"Indonesia is an archipelagic country with abundant marine fisheries resources, while Thailand has great potential in capital, technology and human resources in this sector," Mr Yusuf said.

He added that joint ventures in integrated fishing and processing activities in Indonesia had potential to yield high returns.

Further industry co-operation is also possible in marketing, training, aquaculture and fish processing and canning based on the complementary skills of the two countries, he said.

Indonesia's population of 240 million can also offer huge potential for Thai companies looking to sell to the domestic market, he said, as the purchasing power and eating habits of local people would change as the middle class expands.

Inflation, exports in good shape: BPS

Urip Hudiono, The Jakarta Post, Jakarta

Inflation in February turned out to be lower than expected at an on-year level of 6.3 percent -- unchanged from January -- despite concerns that severe flooding in many parts of the country last month may have pushed consumer prices up.

On a monthly basis, inflation was even lower at 0.62 percent, the Central Statistics Agency (BPS) reported Thursday, compared to a 1.04 percent rise in consumer prices in January.

Only 31 of the 45 major cities that the BPS surveys saw an increase in the rate of monthly inflation. In calculating inflation, the BPS surveys the prices of some 300 goods and services.

Despite the fall in on-month inflation, prices continued to rise, BPS deputy chief Pietojo said, with the prices of food and household utilities making the biggest contributions to February's overall inflation.

Prices of foodstuffs -- including rice, the national staple -- rose by 0.84 percent, accounting for 0.2 percent of last month's inflation, while the prices of processed foods increased by 0.65 percent, accounting for 0.12 percent of the rise in prices.

Consumers also had to pay 0.8 percent more for housing, water, electricity and fuel, which contributed 0.12 percent to February's monthly inflation, while clothing and healthcare prices rose by 0.64 percent and 0.56 percent, respectively.

Core inflation, which excludes volatile food prices and administered fuel prices, stood at a monthly 0.56 percent, and an on-year 5.98 percent.

Commenting on February's better-than-expected inflation figures, Finance Minister Sri Mulyani Indrawati said she expected consumer prices to rise by no more than 6 percent over the course of the year, lower than the government's budget assumption of 6.5 percent.

Bank Indonesia Governor Burhanuddin Abdullah said the latest inflation figures should provide room for further cuts in BI's key rate from the current level of 9.25 percent, although he added that the central bank would have to keep an eye on global rate trends.

The recent flooding from torrential monsoonal rains affected not only Greater Jakarta -- which accounts for almost a third of the nation's gross domestic product (GDP)-- but also many of the country's most important rice-growing areas, resulting in a surge in the staple's prices over the course of last month.

Inflation in February 2002, which saw similar widespread flooding, came in at a monthly 1.5 percent and an on-year 15.13 percent, compared to 1.99 percent and 14.42 percent, respectively, in January of the same year.

However, Peitojo noted that February's higher rice prices could still have a knock-on effect on inflation ahead, with the staple's retail price having risen by 8.45 percent to Rp 6,444 (71 U.S. cents) per kilogram during February.

In another report, the BPS said that Indonesia's exports had started off the year strongly at US$8.35 billion in January, 10 percent higher than the same month last year.

With imports for the same month amounting to $5.24 billion, Indonesia enjoyed a trade surplus of $3.11 billion.

Vice President Jusuf Kalla had earlier quoted the government's target of a 20 percent increase in exports for the year, although the Trade Ministry has said exports will probably grow by about 14 percent.

Indonesia's total exports surged to $100.69 billion last year on strong global demand and high prices for the country's main export commodities -- rubber, palm oil, coal and metal ores.

Govt to oil works for CPO producers

Ary Hermawan, The Jakarta Post, Jakarta

The government looks likely to provide incentives to crude palm oil (CPO) producers to encourage them to supply the domestic market, instead of forcing them to do so by imposing higher export duties.

"I think we have all agreed to use incentives, rather than taxing exports, as the primary instrument to encourage the downstream processing of CPO by local industry," the Trade Ministry's director general for research and development, Erwidodo, said Thursday.

"We're now exploring the possible forms this instrument could take," he said. One possibility would be to scrap value-added tax (VAT) on CPO producers that supplied their production to the domestic market.

A government interdepartmental team is currently discussing ways to enhance domestic downstream processing of CPO. Indonesia currently exports more than 70 percent of its CPO production.

Earlier reports suggested that the government was planning to hike the export duty on CPO from 1.5 to 7 percent. However, the possibility of such a move has been strongly resisted by growers and CPO producers, which argue that higher duty would hurt the industry.

M. Fadhil Hasan of the Institute for Development of Economics and Finance (INDEF) said the imposition of higher duty would have a long-term impact on the competitiveness of Indonesia's CPO industry in the international market.

"Should the export duty be raised by 1 percent, the market share of Indonesia's CPO industry would drop by 0.8 percent in the first month and up to 1.1 percent in the second month," he said.

Director General Erwidodo acknowledged that higher export duty was not the only instrument available to accelerate the development of the local downstream CPO industry.

He said that long-term instruments, such as improving infrastructure and overhauling the investment climate, were also crucial for the development of the downstream industry.

"Malaysia has done this. They already have ports and roads to support the industry," he said.

Indonesia produced 16 million tons of CPO last year, surpassing Malaysia's production and making it the world's largest CPO producer.

However, it exported 14 million tons, leaving only 4 million for domestic consumption.

The Agriculture Ministry hopes that it can increase the area of the nation's oil-palm plantations from 5.5 million hectares to 8 million hectares in 2010, with CPO production expected to reach 21 million tons as a result.

The ministry's director general for plantations, Mukti Sarjono, said a plantation revitalization scheme had been designed to achieve the target, which would include the provision of a 10 percent bank-interest subsidy to CPO planters.

"The subsidy will be provided until the plantation starts producing. The maximum limit under the program will be five years," he said, adding that the ministry had signed an agreement for the operation of the scheme with a number of banks, including Bank Mandiri, BNI and Bank Bukopin.

Malaysia The Biggest Investor In Indonesia In 2006

BERNAMA - 2007-03-01 14:32:20

KUALA LUMPUR, March 01, 2007 (Bernama) -- Malaysia has emerged as the biggest investor in Indonesia last year, beating Japan, South Korea and UK, with a total investment of US$2.2 billion (US$1=RM3.47).

Investments from Malaysia increased by 20 percent compared with Indonesia's investments in the country in 2005, Indonesia Embassy Charge d'Affaires, Abdurrahman Muhammad Fachir, said here Thursday.

He said Malaysian investments were in sectors ranging from agriculture to information technology, with agriculture being the biggest benefactor.

"There is still room for both of us (Malaysia and Indonesia) to explore. At the moment, we are working hard to make Indonesia an investment-friendly environment," he told reporters after the soft launch of the 9th Jakarta International Handicraft Trade Fair 2007 (Inacraft 2007) here today.

Last year, Malaysia was Indonesia's seventh largest trading partner after Japan, the European Union, the US, Singapore, China and South Korea, with total bilateral trade at US$9.72 billion.

Malaysia's exports to Indonesia were worth US$4.38 billion in 2006 while imports from Indonesia stood at US$5.34 billion.

For the last five years, total bilateral trade between Malaysia and Indonesia had recorded a positive trend of 21.8 percent.

Abdurrahman said Inacraft 2007, which would be held from Apr 18-22 in Jakarta, would pave the way for Malaysian and Indonesian handicraft manufacturers and entrepreneurs to seal more collaborations to boost the industry.

"Last year, Indonesia exported handicraft products worth US$500 million to the US, UK, Japan and Asian countries.

"We can use Malaysia as a platform to export our handicraft products to other countries.

"In conjunction with the Visit Malaysia 2007, we expect more tourists from Middle East, Australia and Europe to come here. This will also benefit our tourism industry as well," Abdurrahman said.

He said Felda Travel Sdn Bhd, a subsidiary of Felda Holdings Bhd, has been appointed as the Malaysian agent for the exhibition, which was expected to attract about 1,700 participants from 65 countries.

Meanwhile, Felda Travel's chief executive officer, Rusini Yusoff, said last year's Inacraft attracted 876 buyers and raked in retail sales worth 59 billion rupiah (100 rupiah = RM0.036) and trade contracts worth US$6 billion.

"The five-day trade fair will feature makers and distributors of gift items, housewares, home and garden decoration, toys, games, jewellery, batik, fashion garments and embroidery," she said.

January’s Exports Down by 12 Percent

Friday, 02 March, 2007 | 15:01 WIB

TEMPO Interactive, Jakarta: Export performance during January 2007 decreased 12.04 percent compared to December, 2006. The export decline was caused by the fall of oil and gas exports.

Indonesia’s exports in January was US$8.35 billion, declined from December 2006’s of US$9.49 billion. The export decrease is especially because of the plummeting of oil and gas exports, which was only US$1.48 billion in January that decreased 20.63 percent to US$1.87 billion. Non-oil and gas exports also decreased, which was US$6.87 billion, down 9.92 percent from December 2006’s US$7.62 billion.

Deputy for Economic Statistics at the Central Statistics Bureau (BPS) said that the decrease of January exports is more because a number of export projects that have not yet been realized. “It’s the beginning of year, so usually there are still export agreements that haven’t been recognized,” said Pietoko yesterday (1/3). However, he refused to name the details causing the decrease of Indonesia’s exports .

The export increase in January for rubber and rubber products, amounted to US$69.5 million. Rubber and non-rubber products contributed 6.22 percent of the non-oil and gas exports total. Export decreases in fat and animal/vegetable oil totaled US$378 million. Fat and animal/vegetable oil’s role in the total amount of exports is 4.7 percent. The biggest non-oil and gas export destinations are Japan (US$1.1 billion), United States (US$884.7 million) and Singapore (US$679.6 million).

As for imports throughout January, they increased compared to imports in December 2006. The amount of imports in January experienced a 6.25 percent increase from the end of 2006 to US$5.2 billion from US$4.93 billion.

Pietojo said that the highest import value is non-oil and gas imports, US$0.28 billion which rose 8.01 percent from US$3.88 billion in December 2006, US$3.59 billion. Oil and gas imports only rose slightly to US$1.36 billion or by 1.54 percent from the end of year’s US$1.34 billion.

Agoeng Wijaya

India, China, Indonesia to become world's leading economies

IRNA

New Delhi, Feb 5, 2007 , (IRNA) - "India, China and Indonesia could become the leading economies of the world," said the vice-president of Indonesia at a business meeting in Mumbai Monday.

"I am confident that in the near future China, India and Indonesia could be the leading economies of the world, and Asia the development hub," said M Jusuf Kalla, vice-president of Indonesia, while speaking at an interactive meeting of a high-powered business delegation from Indonesia organized by Federation of Indian Chamber of Commerce and Industry (FICCI) in India's business capital Mumbai.

He said both India and Indonesia not only competed but also complemented each other based on their respective strengths.

He said that Indonesia was strong in export of commodities such as coal, metallic ores and scrap and that there were many areas like palm oil, LNG and gas, computer software and transmission towers in which the two countries could synergize.

Kalla said that both India and Indonesia could be very competitive in the world if they use their respective strengths in technology and resources effectively.

Earlier, FICCI President Habil Khorakiwala, in his welcome address, said "Indonesia is India's second largest export partner in ASEAN after Singapore."

"We look forward to Indian investments not only as two wheelers but also as countries coming together in building sophisticated things like ships, helicopters, planes, power stations, steel industries, etc."

He emphasized the need for the two countries to work together in the power, education, IT, pharmaceutical and technology sectors, where he saw great scope for progress.

He further said that so far Indo-Indonesian relationship has been in traditional areas.

S P Lohia, leader of the Indian-Indonesian business delegation, in his address said that the "Indo-Indonesian relationship goes back centuries, starting from the time when trade between Sumatra and Gujarat flourished. Today the time has come to take our bilateral trade to greater heights in the current global trading scenario." Indonesian Minister of Industry Fahmi Idris and Foreign Investment Board Director Muhammad Lutfi clarified various queries raised by captains of Indian industries present at the meeting.

They assured them they would look into issues which required urgent attention like differential tariffs, issuance of multiple visas, strengthening of the Indonesia-India Friendship Society, etc.

They also gave an overview of incentives and benefits that could be availed of by prospective Indian investors in Indonesia in the different sectors and regions of the country.

BKPM to be separated from trade ministry

JAKARTA, March 1, 2007 (Antara): The government and the House ofRepresentatives' working committee (Panja) on drafting capital investment law have agreed to separate the Capital Investment Coordinating Board (BKPM) from the Trade Ministry and to make itfully responsible to the president.

"That is indeed the agreement reached in the meeting between the Panja and the government several days ago," Panja member Zukiflimansyah said on Wednesday.

In the latest meeting of the Panja, all factions have also agreed to upgrade the position of BKPM chief to the level equivalent to that of a minister, he said.

"This will be discussed in the meeting between the Panja and the trade minister," he said.

According to him, the promotion of the BKPM's status was intended to ensure the maximum coordination of government agencies in dealing with investment affairs.

"Whether or not the BKPM chief will be made a minister it will be up to the president to decide. We will not interfere in it," he said.

He expressed hope that the idea would be made into a decision by Panja, later by Pansus (special committee) and finally by the plenary of the House of Representatives.

"Hopefully, it could be realized immediately before a recess," he said.

Western Union Launches D2b Service To Indonesia

By Sonia K, Bruneidirect.com

Bandar Seri Begawan - The Western Union Company, a worldwide leader in money transfer services, yesterday announced the launch of the Western Union Direct to Bank (D2B) service to Indonesia at Sheraton Utama Hotel.

D2B allows senders to remit money directly to the recipient's account at designated banks in Indonesia.

Customers can enjoy the new service by simply visiting any Western Union locations at Baiduri Bank and filling up the Direct to Bank form.

Money will then be deposited to accounts with any of the participating banks in Indonesia, which include Bank Mandiri, Bank BII, Bank Niaga, Bank BNI, Bank BCA, Bank Lippo, Bank Danamon, Bank Permata, BRI and BRI Unit.

"The launch of D2B service in Brunei is in response to the growing market demand for such service," said Mr Sunil Balagopal, regional vice president, Western Union, Southeast Asia.

"Many migrants in the country want to send their hardearned money home. The new service is yet another option Western Union is providing its customers in transferring money, simple and fast."

Present as the guest of honour to launch the event was the Ambassador of the Republic of Indonesia to Brunei Darussalam, Mr Herijanto Soeprapto.

There are a total of 80,000 migrants in Brunei, of which approximately 35,000 are Indonesians. They are primarily professionals, construction and factory workers or domestic helpers.

Meanwhile, Mr Pierre Imhof, General Manager of Baiduri Bank, said: "Baiduri Bank became part of a global network by offering money transfer services to Western Union customers. This cooperation has allowed us to better address the needs of the migrant community in Brunei. With this latest offering, we are providing customers with even more choices and control in terms of sending and receiving money."

From now until March 31, customers can enjoy the service at a discount of B$3 off the regular fees. The first 500 customers to use the D2B service will also receive a free gift during the promotional period. To enjoy the offer, customers must quote "DTOBOFFER" while sending money.

In addition, Western Union Gold Card holders can earn five points by sending money from Brunei. These points can be accumulated to redeem free gifts such as luggage bags, radio clocks, disposable cameras and electric torchlights. Customers can apply for a Gold Card free of charge at any Baiduri Bank branch. Western Union has offered money transfers in Brunei since 2001 with the launch of Money I Minutes service, through which recipients can pick up the money within minutes after it is sent. Western Union began its collaboration with Baiduri Bank in 2005. Its services are available at all 10 branches in Kiarong, Kiulap, Kuala Belait, Serusop, Seria, Sengkurong, Supa Save Gadong, The Mall, Tutong and Yayasan.

The Mall and Supa Save Gadong branches are open seven days a weeks from loam to 10pm for added convenience to customers. -- Courtesy of Borneo Bulletin

PT Telkom plans to lower Internet Speedy access rate

Nusa Dua, Bali (ANTARA News) - State telecommunications firm PT Telkom is trying to reduce the rate of Internet broadband access called Speedy by 30 percent in 2007 and by another 20 to 30 percent in 2008, the company`s director Arwin Rasyid said here.

"The plan is part of efforts to participate in the provision of national Internet Protocol (IP) and in the development of local network," Arwin said on the sidelines of the Asia Pacific Regional Internet Conference Operation Technologies (APRICOT) 2007.

By doing so, he said, Internet access rate which is provided by Speedy will be equal to the rates offered by regional operators, he said.

"Cheap Internet access will give many positive impacts and great contribution to the economic and educational sectors," he said.

The role of telecommunications in the national implementation of information and communications technology (ICT) will create effective and efficient IP-based infrastructure through broadband wireline and broadband wireless, he said.

PT Telkom, he said, will take part in the development of broadband wireless-3G service program and Palapa Ring consortium project which is aimed to improve accessibility in the eastern parts of Indonesia.

PT Telkom is committed to the development of the e-business, e-education and e-government application services, he said.

"The objectives of the scheme is to create an acknowledgeable Indonesian community as well as to support telecommunications network development in 43,000 villages, 31,173 junior and senior high schools, 2,428 universities and 28,504 health centers in Indonesia by 2025," he said.

Beyond The Green Corporation

Imagine a world in which eco-friendly and socially responsible practices actually help a company's bottom line. It's closer than you think

Businessweek Online

Under conventional notions of how to run a conglomerate like Unilever, CEO Patrick Cescau should wake up each morning with a laserlike focus: how to sell more soap and shampoo than Procter & Gamble Co. (PG ) But ask Cescau about the $52 billion Dutch-British giant's biggest strategic challenges for the 21st century, and the conversation roams from water-deprived villages in Africa to the planet's warming climate.

The world is Unilever's laboratory. In Brazil, the company operates a free community laundry in a São Paulo slum, provides financing to help tomato growers convert to eco-friendly "drip" irrigation, and recycles 17 tons of waste annually at a toothpaste factory. Unilever funds a floating hospital that offers free medical care in Bangladesh, a nation with just 20 doctors for every 10,000 people. In Ghana, it teaches palm oil producers to reuse plant waste while providing potable water to deprived communities. In India, Unilever staff help thousands of women in remote villages start micro-enterprises. And responding to green activists, the company discloses how much carbon dioxide and hazardous waste its factories spew out around the world.

Read More ....

Outgoing WB rep in Jakarta says alternatives to CGI would be useful

The Jakarta Post, Jakarta

While supporting the winding up of the Consultative Group on Indonesia (CGI), outgoing World Bank country director Andrew Steer said dialog and discussions with the international donor community will continue to be useful for the nation's development programs.

"I think it would be a pity if there is not some kind of a forum to discuss important issues. I mean, Indonesia does need to think about how to bring in trade, investment, ideas and technology," he said Friday on the sidelines of a farewell meeting with The Jakarta Post.

"It would be useful if it is replaced by something, not necessarily one big forum. It could be thematic forums on infrastructure, on education, on health," he explained.

He said that while ministers had made it very clear that dialog will continue, "down below in the bureaucracy, there is a bit of confusion."

The government has said it has no plans to set up any kind of formal or regular forum as a substitute for the CGI, though it has stressed that it will continue to engage in dialog with international lenders and donors.

"No, we consider it unnecessary to establish another forum. But we may hold informal discussion forums, like seminars," said Mahendra Siregar, the deputy for international economic cooperation at the Coordinating Ministry for the Economy, during a discussion Tuesday on the future of Indonesian government financing after the CGI.

In farewell remarks on Indonesia, Steer said he was optimistic about the nation's economy, saying it was on the right track to fully recover from the 1997 Asian financial crisis.

"When I first came here about 4.5 years ago, the No. 1 item on the budget was interest (payments on foreign debts)," he said. "Indonesia had to allocate more than 25 percent of the budget to pay interest. Now, it only allocates 10 percent," he said.

Steer also praised Indonesia's achievements in reducing the debt-to-GDP ratio from 100 percent in 1999 to the current figure of 38 percent.

"It is also a remarkable fact that Indonesia has now launched what may be the biggest educational reform in the world," he said, adding that the government had doubled spending on education over the last few years. "If it goes ahead, it could have a remarkable impact."

However, Steer said Indonesia must be able to speed up the building of roads, rail links, ports and power plants to attract investment and boost growth. "It would actually be very interesting to know why education spending has rapidly increased whereas infrastructure spending has not," he said.

Association makes green pledge

The Jakarta Post

JAKARTA: The Indonesian Real Estate Association (REI) has pledged to reduce the environmental impacts of its business to decrease the chance of flooding in the city.

"The construction of green buildings will not be bad for business," association chairman Lukman Purnomosis said Friday as quoted by Antara.

Developers are also ready to build percolation pits to harvest rainwater in housing complexes in Jakarta, Bogor, Depok, Tangerang and Bekasi, he said.

"We will set aside more green areas in the housing complexes we establish."

Environmentalists have said developers who fail to preserve green space and tree cover are partly to blame for the increased flood risk in the city.

Lukman said the government needed to issue a policy on environmentally and pedestrian friendly design.

Walhi backs police fight against logging

The Jakarta Post, Jakarta

A leading environmental organization has praised police action against a company accused of illegal logging, but says it wants the authorities to take a harder line against the crime in the future.

The Indonesian Environmental Forum (Walhi) said the organization supported National Police chief Gen. Sutanto in setting up a police line around the production area of PT Riau Andalan Pulp and Paper (RAPP) after the company was suspected of illegal logging practices.

"This is what we have been waiting for. PT Riau Andalan Pulp and Paper has been exploiting the natural forest in Riau," Chalid Muhammad, the national executive director of Walhi, told reporters Friday.

"We hope the police will follow up this move by charging the company's directors as suspects," Chalid said, adding that the police chief should be consistent and not be afraid of officials who might be backing the company.

Troy Pantouw, PT RAPP's public relations manager, declined to comment on Walhi's accusations.

But he said that PT RAPP had always been careful in conducting its business and had always obeyed the government's regulations, including those on logging.

"Our company will be cooperative with the police and the authorities regarding the matter," Troy said when asked about the police's move to restrict the company's activities in Riau.

A coalition from the police's head office and the directorate general of forestry banned operations at the factory area of the company in Pangkalan Kerinci, Pelalawan regency in Riau on Thursday last week, Detik.com news portal reported.

PT Riau Pulp and Paper is a subsidiary of the Asia Pacific Resources International Holdings group, owned by Sukanto Tanoto, who is listed as Indonesia's wealthiest man by Forbes magazine.

Johny S. Mundung, Walhi executive director in Riau, also said that the police had made a big move against PT RAPP, one of the biggest pulp and paper players in the country.

He added that it was nothing new for the pulp and paper industry to use illegal logs from the country's forests.

According to Walhi, the pulp and paper industry in the country needs up to 27.71 million cubic meters of wood per year, some 80 percent of which comes from forests instead of industrial plantations.

UNESCO to assist Palembang puppeteers

Khairul Saleh, The Jakarta Post, Palembang

The United Nations' cultural organization is working with Palembang puppeteers to save their art and bring it to a global audience.

Two researchers from UNESCO, Karen Smith of Australia and Yuji Shimizu of Japan, were recently in the South Sumatra city to visit puppet theaters and document Palembang's rich culture, including puppet shows.

The results of the visit are scheduled to be displayed from April to June in Paris.

"The pictures and writings we get while we're in Palembang will be presented to the world, taking Palembang's puppet tradition international," Shimizu said.

During the trip, the two researchers visited the Sri Wayang Palembang theater, accompanied by Sumari, chairman of the Senawangi Foundation for puppetry and Eko Cipto, chairman of the Indonesian Puppet Masters Association.

Shimizu said they were interested in doing research on Palembang puppetry because it was such a rich cultural tradition that should be preserved.

"There is more to a puppet performance, there are so many things to learn from it," said the Japanese researcher, who lives in Paris.

Smith raised her concerns over problems faced by Palembang puppet shows, including a lack of teachers and singers.

"The Palembang puppet show is in desperate need of attention from the government and people. I'll deliver our report to UNESCO to ensure continued assistance for its development," she said.

During their visit to the puppet theater, the researchers were regaled with a show by puppet master Wirawan Rusdi, a son of one of Palembang's most noted puppet masters, the late Rusdi Rasyid.

Wirawan said he was grateful for UNESCO's assistance, since it offered a fresh chance for the struggling traditional art form.

He said he fell in love with puppet shows as a child. While his father did not specifically train him, he said recordings of his father's shows continued to provide inspiration.

Eko said he welcomed UNESCO's assistance to ensure that Palembang's puppet tradition continued to survive. He said few younger people were interested in becoming puppet masters.

"Currently, there are 15 theaters under the supervision of UNESCO," he said. Each theater receives financial assistance of Rp 500,000 (US$54) a month to help them survive.

Basically, Palembang puppet shows differ little from the more popular Javanese variety, including their gamelan instruments.

According to Ki Agus Amiruddin, the 65-year-old leader of the Sri Wayang Palembang theater, Palembang puppetry is a local adaptation of Javanese puppet shows.

The tradition is thought to have developed around the 19th century when Arya Damar, who was influenced by Javanese culture, ruled Palembang and helped develop a local puppetry tradition.

Just like Javanese puppet shows, Palembang puppet shows take their storylines from the epics Mahabharata and Ramayana.

The difference is that the shows are staged in the Palembang language and there are no strict rules on instruments and characters. The shows are usually given local touches, including stories about the Blambangan and Banter Angin kingdoms.

"There was even a green Hanoman who was born out of leaves, but now the character has gone," said Ki Agus, referring to a hero from the Ramayana.