Govt spends Rp 51t to create 1.5 m jobs

SUMENEP, East Java (Jakarta Post): The government has spent a total of Rp 51 trillion (US$5.5 billion) to finance the National Movement for Unemployment Reduction (GNPP) to generate almost 1.5 million job opportunities this year.

Manpower Minister Erman Suparno said the money was disbursed to 318 regencies and municipalities in all 33 provinces, with four main programs on small-scale businesses, resettlement, employment and training and apprenticeships.

"Recipients form small groups to run small businesses, each with three to 10 workers, or open their own businesses in new resettlement areas. Another group of recipients joined the training and apprenticeship programs at state training centers and major companies before they were employed," he told a ceremony to conclude the 2007 GNPP here Saturday.

Despite the 1.5 million new job opportunities, he said, the unemployment rate remained high, reaching 10.5 million early this year, while the number of poor families has reached almost 40 million.

"This data is not from the Manpower and Transmigration Ministry but is based on the latest survey conducted by the Central Statistics Agency," he added.-- JP

Growth to accelerate despite global slowdow

The Jakarta Post, Jakarta

Although many economists are worried that the global economic slowdown will cast a shadow over the country's economy next year, Coordinating Minister for the Economy Boediono says he is confident the economy will actually accelerate.

"I've always been optimistic about Indonesia's economy. I believe that economic growth will be higher than this year," Boediono told reporters Saturday.

He said that the government's target of achieving economic growth of 6.8 percent next year was still feasible, even though many economists estimate that the global economic slowdown will drag down the pace of growth.

The government's growth target is higher than the 6.4 percent predicted by the World Bank, which says that the global economic slowdown resulting from high oil prices and the United States' subprime mortgage crisis will also affect Indonesia.

The country recorded 6.2 percent growth in the first nine months of 2007. The central bank has predicted 6.4 percent growth for the fourth quarter of this year, which will bring full-year growth to 6.2 percent, slightly below the government's target of 6.3 percent.

However, a number of senior economists, such as Faisal Basri and Mohamad Ikhsan Mojo, have forecast a gloomier outlook for the country's economy.

Faisal, for example, said that the increases in fuel prices would further raise production costs for the industrial sector, which has been held back by high economic costs resulting from inefficiency and red tape.

He said that given these circumstances, it would be impossible for the country to achieve the sort of economic growth targeted by the government.

Boediono said that with higher economic growth, the number of people living in poverty would be reduced.

"We're expecting the number to fall by about 15 percent next year," he said.

The World Bank has said that Indonesia has an opportunity in 2008 to reduce the number of people living on under US$2 per day by 4.6 million, from 105.3 million to 100.7 million, out of a total population of 236.4 million.

Boediono said that if the government could stabilize rice prices, it would be able to reduce the poverty rate by more than 15 percent as poor people spend about 30 percent of their incomes on rice.

Meanwhile, an expert advisor to the minister, Jannes Hutagalung, said the government was currently promoting a number of schemes to improve the investment climate, including the introduction of "one-roof" licensing procedures.

According to the International Finance Corporation (IFC), Indonesia ranks 123rd out of 178 countries in the ease-of-doing-business ratings.

"If we could simplify the process for obtaining business licenses, Indonesia's ranking would climb to around the 70 mark," Jannes said.

The government will need to act fast if it wishes Indonesia to continue to be able to compete with its neighbors, such as Thailand and Malaysia, he added.

In September, the University of Indonesia's Economic and Social Research Institute reported that investors needed up to 86 days before they could commence their businesses in Indonesia.

Economist Didik Rachbini told the discussion that the lack of coordination between government institutions made the business climate uncertain.

"It's hard to find a government institution that engages with a specific sector. There's always a tangle between ministries," he said.

Didik added that the government should focus on improving infrastructure, the financial sector, investment climate and SME sector. (adt)

Three firms get Bapepam penalties

The Jakarta Post, Jakarta

Three publicly listed companies and three public accountants have been subjected to penalties and fines by the country's capital market watchdog for violating the regulations.

The Capital Market and Financial Institutions Supervisory Agency (Bapepam) said Friday in Jakarta that the three firms were PT Teijin Indonesia Fiber Corporation Tbk (TFCO), PT Arona Binasejati Tbk (ARTI) and PT Mobil Sukses Internasional Tbk (IMAS).

The agency said that PT Teijin was fined Rp 370 million (about US$3,9785) for a delay in submitting its accounts for the first half of 2004. The company had also failed to publish its accounts.

Meanwhile, PT Arona was found guilty of making a mistake in the comments on its accounts. For this, the company received a written warning from Bapepam.

Indomobil was fined Rp 500 million for not following the required procedures when it extending a loan to an affiliate.

Bapepam also said that it had imposed penalties on three public accountants for violating the capital market public accounting regulation.

The agency said that the three accountants were Yahya Santosa, Jonnardi and Bambang Sudaryono.

Yahya breached the regulation prohibiting a public accountant from auditing the same listed company for three years consecutively. Jonnardi also audited the same company for more than three years, consercutively.

For these violations, Bapepam suspended the two accountants' practice licenses for 12 months.

The other accountant, Bambang, was given a written warning for the mistake in PT Arona's accounts, which he audited.

"Two of the accountants have been barred from performing audits for a year, while the other one was given a written warning," the head of Bapepam's legal division, Robinson Simbolon, said in a written statement.

The watchdog has also issued a written warning to PT Pusako Tarinka for hiring Yahya for more than three consecutive years to audit its books. (dic)

Indonesia loses Rp 5.71t through unused lands

Sri Wahyuni, The Jakarta Post, Yogyakarta

Indonesia loses a potential Rp 5.71 trillion (US$630.40 million) annually from 7.15 million hectares of unused land across the country, or an area 110 times the size of Singapore, an official says.

"That (the potential loss) is equal to our GDP or our production value for the whole year, including that produced by foreign companies operating here," head of the National Land Agency (BPN), Joyo Winoto, said here Wednesday.

Winoto made the remarks at a three-day seminar and congress of the Association of Indonesian Soil Sciences (HITI), which he officially opened at UPN Veteran University in Yogyakarta.

Some 500 scientists attended the event, which was held under the theme: Solution to the mismanagement of lands and water to help improve people's welfare.

Winoto said the estimated loss was based on a rough calculation of the existing use of lands across the country.

Winoto said unused land was often unable to be utilized or managed for productive activities as it was usually owned by either individuals or companies.

He attributed this to a lack of adequate regulations, saying Law No 5/1960, that should function as the basis for agrarian affairs in the country, was not effective.

Another regulation -- Law No 56/1960 -- he said, dealt only with restrictions on land ownership for agricultural purposes for individuals.

"A regulation (on land ownership) for individuals for non-agricultural purposes does not exist yet ... neither does one for companies dealing with both agricultural and non-agricultural industries," Winoto said.

"What we have now is only a regulation set by the BPN head. And this is not enough. We are dealing with concession issuance. It's a state policy. So, a comprehensive law is required."

He said the concentration of private control over resources was unhealthy, especially over land and the economic and political resources of a nation.

"It's really very worrying to learn there is a holding company here in control of more than 400,000 hectares of land. That is seven times (the size of) Singapore," he added.

He said 56 percent of Indonesia's strategic national assets were under the control of only 0.2 percent of the total population of the country, creating gaps in social, economic and political matters.

The problem, according to Winoto, gets more complicated when it is related to the problem of poverty.

Some 39 million of Indonesia's population, he said, were economically poor, including 66 percent that lived in rural areas and 56 percent of which depended on agriculture for a living.

"It's quite interesting to learn that, in this independent country, 90 percent of the economically poor people are hard workers. They work hard but they are poor. Why?" Winoto said.

"I had a team look into this. It discovered that most poor people did not have access to economic and political resources, including land, capital and technology," he added.

Winoto expressed hope the HITI seminar and the congress would go beyond discussions on soil fertility and would also contribute to agrarian reform.

Many govt officials reluctant to support business world, president says

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono expressed regret over the stance of many government officials either at central or regional level for their reluctance to support the business world, and they even tended to hamper development.

"I hear that parts of the prevailing bureaucracy at central or regional level are still unfriendly to issue licences. They even show a tendency to obstruct the normal issuance of licences. This happens at government institutions and state-owned companies," the president said at the state palace Friday when addressing an award presentation function on product quality and productivity.

These officials have really hampered the implementation of programs of the government which is currently trying to develop the real sector in a bid to providing jobs and lowering the poverty rate, he said.

"Perhaps such officials were seeking money illegally. I have been warning in the last three years that this action should not happen. While the situation has been improved, I am still not satisfied with the eradication of the obstacles," Yudhoyono said.

On the occasion the president asked any businesspeople facing such a problem to report it to the postal box specially made available for that purpose.

The president also hoped that all elements of the people give full support to what they wish to build.

The awards had been presented among others to "UD Kamasan Denpasar" (Bali), "UD Karya Bersama" Gresik, East Java, and "Suka Senang", banana chip producer.

BEI to become export credit agency: Minister

The Jakarta Post, Jakarta

The government says it will convert the state-owned export bank, Indonesian Export Bank (BEI), into a fully fledged export credit agency, to improve financing for the country's exports.

The Indonesian Export Bank (BEI) will be transformed into the Indonesian Export Financing Agency (LPEI), and operate under a new law drawn up specifically to regulate its function.

A draft of the law has been submitted by the government to legislators for deliberation, Finance Minister Sri Mulyani Indrawati said Thursday.

As a financing company, the government says the new agency will be able to move more freely in disbursing export-related loans. By comparison, the BEI as a commercial bank has been constrained by strict banking industry regulations.

These regulations include limits on maximum lending, as well as prohibitions on export-related insurance schemes and loans to foreign-based importers.

"Such constraints left the BEI unable to fully play its role like the export credit agencies and export-import banks in other countries," Sri Mulyani was quoted as saying by Antara at a discussion.

"BEI has operated as an ordinary commercial bank, when it has specific functions to finance export activities, so that's why it has to be upgraded."

With its new role under a new law, the LPEI is expected to be able to provide services the BEI could not, including consultancy services for exporters.

Sri Mulyani promised the new financing agency would maintain best practices of prudence, transparency and accountability.

BEI president Arifin Indra said the lender's transformation would oblige it to seek other funds from the public besides savings and time deposits.

The LPEI's initial seed capital will be provided from the state budget, he said. More funds will be raised from a bond issue and loans from bilateral and multilateral financial institutions.

"The LPEI will be a new fiscal instrument for the government to support more exports," he said.

Mideast bizmen keen to invest in Indonesia, banker says

Jakarta (ANTARA News) - Middle Eastern businessmen are keen to invest in Indonesia without any hidden agenda, the chairman of the Indonesian Syaria Bank Association (Asbisindo), M Riawan Amin, said here Thursday.

"With their huge funds, they will leave the US and the European Union, and are ready to enter Asia, including Indonesia, for business without any political agenda," Riawan told ANTARA.

As the world`s largest Muslim country with the same cultural background Indonesia should take the opportunity, he added.

Citing an example, he said the Islamic Development Bank (IDB) had provided US$10 billion in funds for poverty eradication through payment of tithes.

IDB is a stakeholder in Bank Muamalat Indonesia (BMI).

However, the Middle Eastern businessman`s plan to invest in Indonesia could not be realized soon due to the absence of a law on Sukuk (obligation in Islamic law), rampant corruption and double taxation risks.

"We will have to do many things to attract them. Moreover, syariah banking has yet to become a national agenda," Riawan said.

Some Asian countries such as Malaysia, Singapore and Hong Kong had become main competitors to Indonesia in attracting investment from the Middle East, he noted.

Singapore and Hong Kong which had different cultural background with the Middle East, are planning to be centers for syariah banking.

Malaysia had offered facilities, including tax incentives, to lure Middle Eastern investors.

To date, Indonesian investment in the Middle East is made through third parties such as Singapore.

Riawan , who is also president director of Bank Muamalat Indonesia (BMI), said the bank`s presence was expected to lessen investors` doubts about Indonesia`s business potentials and prospects.

The bank`s customers had increased from 1.2 million in 2006 to 1.7 million in 2007.

Individuals` savings at the bank increased from Rp6.8 trillion to Rp8.2 trillion during the same period.

Indonesia central bank cuts key rate to 8 pct

Jakarta (ANTARA News) - Indonesia's central bank unexpectedly cut its main interest rate by 25 basis points on Thursday to 8 percent, delivering its 14th cut since last year following lower-than-expected inflation last month.

The central bank has cut its key BI target rate from a peak of 12.75 percent early last year as the country recovered from an inflation shock late in 2005.

Ten of 15 analysts surveyed by Reuters this week had forecast the central bank would keep the benchmark BI rate on hold at 8.25 percent.

Five had predicted a quarter-point cut.

Indonesia's consumer price index (CPI) in November rose 6.71 percent from a year earlier, slowing from October's 6.88 percent gain.

Indonesia is great regional power, Russian air force chief says

Jakarta (ANTARA News) - Indonesia is one of the great powers in the Asian region, said Colonel General Alexander Zelin, commander-in-chief of the Russian Air Force, who has just ended his working visit to Indonesia.

In an interview with RIA Novosti he made a reference to President Vladimir Putin`s historic visit to Indonesia in September. "That visit gave a fresh impetus to cooperation between Russia and Indonesia in many areas, including military-technical cooperation," he said.

Also a year ago, on December 29 - November 1, the Indonesian president Susilo Bambang Yudhoyono visited Russia, he added.

"The Russian and Indonesian governments share a common political perspective on the realities we currently live in, he emphasized. We, the military, welcome cooperation between Russia and Indonesia in military technologies, but the two nations should not limit themselves to that".

Zelin believes the two countries have many opportunities for expanding their purely military cooperation (in addition to military technologies), including organizing joint exercises, exchanging delegations, and cooperating in personnel training.

The Russian Air Force commander is convinced that "Indonesia is one of the great powers in the region, in terms of population, the position it holds and its economic growth rate".

Talking about some of the goals of his visit, he said he had come to meet with top Indonesian military commanders and establish personal relationships with them. "When people meet and discuss things together, all issues are settled quickly," the general said.

He also mentioned that the expansion of military cooperation between the two nations will certainly strengthen mutual trust and understanding and promote more active cooperation in other spheres.

In addition, during his visit he introduced some new Russian weapons and military hardware to his Indonesian colleagues, and discussed options for the export of these products. "I am a military professional and am competent in this type of situation, so I could best explain it," he said.

Also, Russia already has commitments to Indonesia to supply weapons and military hardware under earlier export contracts.

Finally, the Air Force commander had discussed with his Indonesian colleagues bilateral cooperation in other spheres, including the fight against terrorism.

"At meetings with the Indonesian military chiefs, we recalled the times when there was a very close military cooperation between Indonesia and the former Soviet Union," Zelin stressed.

"The warm atmosphere of these meetings shows the mutual interest in military cooperation and restoration of the former friendly relations," he stated.

In conclusion, Zelin talked about the use of old MiG fighters as memorials in some Indonesian cities. "A memorial is a sign of respect, not just to this aircraft, but to the nation that created it," he said.

Gubernatorial forum agrees to construct Sunda Strait Bridge

Batam (ANTARA News) - The Sumatra gubernatorial forum at a meeting here agreed to materialize the infrasturcture building among others the Sunda Strait bridge construction, which will connect Java and Sumatra islands.

The forum, during a coordination meeting here on Friday and Saturday, said it will seek construction funds from the national budget, domestic and foreign private companies, the Islamic Development Bank (IDB), World Bank and Asian Development Bank (ADB).

The infrasturture construction which should be immediately materialized were the Trans Sumatra railway, Trans Sumatra Toll Road and the national main road in Riau Island and Bangka Belitung.

The forum also agreed to urge the central government to immediately solve the energy crisis in Sumatra by means of deregulation to terminate the monopoly of the State Electricty Company.

The forum also said deregulation would make it easier for private businessmen to engage in power production to overcome the electricity problem in Sumatra.

Indonesia's local governments doing little to boost investment climate

2007-12-01 13:25:22

JAKARTA, Dec. 1 (Xinhua) -- Many regency and municipality administrations in Indonesia have done nothing to improve the investment climate in their regions, according to local media on Saturday.

A survey, conducted by the Regional Autonomy Monitoring Committee (KPPOD), a body established by Indonesian Chamber of Commerce and Industry, recently showed that 31 percent of the 2,000 ordinances reviewed have done nothing in improving the investment climate, the Jakarta Post said.

The 2,000 ordinances are only a small portion of the 7,000 ordinances issued by regency and city administrations since the enactment of the Local Autonomy Law in 2001, which gave local administrations more power to manage their own economic affairs.

"Some ordinances have even resulted in the double taxation of investors," executive director of the committee Agung Pambudhi quoted by the Jakarta Post as saying.

Ordinances introduced in Tangerang and Serang, both in Banten, for example, require companies to provide full-protection insurance for employees both during and outside work hours, he said.

He also said that the long and costly bureaucratic procedures for obtaining business licenses needed to be replaced with one-stop services in every locality in the country.

Agung said that this year, a total of only 180 regions had established one-stop services out of the country's 460 regions.

Unfortunately, there were no sanctions that could be imposed on local governments that had not complied with the decree, despite the urgent need to improve the country's investment climate, Agung added.

Defense Ministry, graft body ink deal

The Jakarta Post, Jakarta

The Defense Ministry agreed Thursday to work with the Corruption Eradication Commission (KPK) on corruption investigations, particularly those relating to the procurement of defense equipment.

"The signing of the (memorandum of understanding) is active proof that we are serious about supporting the government's policy to wipe out corruption in order to achieve clean and good governance," Defense Minister Juwono Sudarsono said at the MOU signing at the Defense Ministry.

Juwono said the main elements of good governance were transparency and accountability, especially in equipment procurement.

"We need to straighten up accounts in the Defense Ministry," he said.

He said his ministry must serve the public, which means that it must be transparent and apply good governance.

"Corruption is not just a crime, but an extraordinary crime. We shouldn't see corruption as a case, but a problem," said KPK chairman Taufiequrrahman Ruki.

"Corruption destroys a nation's morality, taints the justice system and also disturbs the country's development because it is no longer mass-oriented," Ruki added.

With the signing of the agreement, the ministry will coordinate with the anticorruption body to share information and data related to procurement.

Ruki added that the military should also be allowed to have representatives at the anticorruption body.

"During this time, the military is only allowed to work in 10 state institutions, including the Defense Ministry. We want to struggle for the revision of the law to let them be able to work in the anticorruption body to help investigate military-related cases," Ruki said.

"We also expect to get support in terms of training or using their facilities," he added. (rff)

12 small entrepreneurs receive Citi Micro awards

The Jakarta Post, Jakarta

Twelve small entrepreneurs from across the country received Citi Micro-Entrepreneurship awards Thursday in recognition of their outstanding business initiative.

Loisa Lies Wally, a betel seller from Papua, won the first prize in the trade category in recognition of her creativity in selling betel, which is rarely traded.

Almost 90 percent of Papuans like to chew betel but most of them prepare the betel themselves. Loisa manages to sell around 700 packs of betel daily.

"The award has encouraged me to ask more people to get involved in the same business," Loisa told reporters after receiving the award.

Stanislaus Anwar from Magelang, Central Java, and Halimah from Tangerang, Banten, came second and third, respectively, in the trade category.

In the foodstuffs category, Sulastri, took first prize with her innovative snacks made from banana stalks. Agus Supriyanto and Wismawati, both also snacks producers, came second and third in the foodstuffs category.

Suratinah from Magelang, Chandra Nanda from Bengkulu and Hoiri from Lampung came first, second and third, respectively, in the crafts category, while Endang Kusumawati from Parigi Mautong, South East Sulawesi, Sunarno from Lampung, Sumatra, and Syahlul Munaf from Batusangkar, West Sumatra, came first, second and third, respectively, in the services category.

Each winner received a prize of Rp 11 million (US$ 1.220), while the second and third-placed runners-up each took home Rp 9 million and Rp 7 million, respectively.

Director of the University of Indonesia's Small and Medium Business Center, Nining I Susilo, said the committee this year put more focus on how these small entrepreneurs influenced their surroundings.

"We concentrated on how far these small business people could develop and maintain their social responsibility toward others in their surroundings," Nining said during the awards ceremony.

Ditta Amahorseya, senior vice president country corporate affairs at Citi Indonesia, said the winners were now expected to inspire others to develop their businesses in cooperation with microcredit institutions.

According to Ditta, the Citi group has sponsored the competition to the tune of US$170,000 over the last three years.

The awards were first presented in 2005.

This year's winners were selected from among 763 participants throughout the country based on detailed interviews and long-term monitoring conducted by a special team comprising representatives from the University of Indonesia, media and financial institutions. (dic)

Govt moves ahead with 'bonds-for-cash' swaps

Urip Hudiono, The Jakarta Post, Jakarta

Oil-rich regions will be able to choose from a variety of bonds that the central government will offer them in exchange for up to Rp 13.9 trillion (US$1.5 billion) out of the windfall revenues that accrue to them as their share of national oil and gas revenue next year.

The "cash-for-bonds" deal is part of the central government's efforts to mitigate the consequences of a worst-case scenario under which oil prices average $100 a barrel throughout the whole of next year, which could push up budgetary spending by Rp 54.7 trillion.

This figure includes more payouts from national oil and gas revenues to the producing regions -- like Riau and East Kalimantan -- apart altogether from additional subsidy spending on oil-based fuels.

"We will offer the bonds according to each region's specific cash-flow needs," the Finance Ministry's director general for debt management, Rahmat Waluyanto, said Wednesday.

"They could be short-term bills or long-term bonds, tradeable or non-tradeable ones."

The ministry might particularly suggest that the regions take up bonds from the secondary market, Rahmat said, should they prefer bonds, which are more easily tradeable.

"The plan is that the regions will purchase the bonds through private placements based on market-pricing mechanisms," he said.

On Tuesday, Finance Minister Sri Mulyani Indrawati said the government had prepared a package of measures for next year aimed at saving up to Rp 54.7 trillion to help it anticipate a worst-case scenario resulting from high oil prices.

The bonds-for-cash program for oil-producing regions is one of those measures.

On possible objections from the regions, Rahmat said that his officials would work with the ministry's Regional Financial Balance Office to inform the regions and negotiate with them.

"How much money will be exchanged for bonds will depend on the negotiations, while still adhering to the usual revenue-sharing formula," he said.

"Many regions let their funds sit idle, anyway, parking them in short-term investment instruments, like central bank bills, before putting to use."

Under the plan, the regions would still obtain such advantages as capital gains based on the option of tradable bonds, and more predictable interest earnings if they choose longer-term bonds.

The swap plan is expected to slightly increase the government's net bond sales next year.

The government plans to raise Rp 91.6 trillion in net bond sales to finance the 2008 budget, up from Rp 58.5 trillion under this year's revised budget.

Under the worst-case scenario, oil-and-gas related revenue payouts to the regions next year may come to Rp 41.2 trillion, compared to the expected Rp 23.6 trillion.

Overall, while the government's action plan is almost enough to cover the Rp 54.7 trillion in additional oil-related spending, the additional revenues only come to Rp 52.8 trillion, pushing next year's deficit up slightly to Rp 75.9 trillion, or 1.8 percent of GDP.

Britain is second biggest investor in RI After Japan

London (ANTARA News) - Britain is the second biggest investor in Indonesia after Japan but many British businessmen have complained about lack of information on new investment opportunities, Indonesia`s chief investment official said.

"Britain is one of the important countries for Indonesia as its business players have remained the second biggest investor in Indonesia since 1967," chairman of the Capital Investment Coordination Board (BKPM), Muhammad Lutfi, said here on Wednesday.

Lutfi was here to promote investment opportunities in Indonesia among British business people at a business luncheon held by the Indonesian Embassy and the BKPM Representative Office in The British capital.

He said he had previously held similar meetings with French and Belgian businessmen and would do the same with Japanese investors in Tokyo, Japan, later.

The sectors in which British businessmen were operating in Indonesia included technology, coal mining and palm oil production, he said.

He admited that although the BKPM had a representative office in London many British businessmen he had met had complained about a lack of promotion on investment opportunities in Indonesia, especially those opened under the country`s new investment law.

British businessmen had also raised questions about the manpower law, overlapping regulations and the consistency of certain laws.

About overall investment growth in Indonesia, Lutfi said it had been significant, namely 176 percent from US19 billion to US$35 billion.

Hopefully, he added, with the new investment law and the government`s strong commitment, Indonesia would draw more investors and even be able to compete with such countries as Thailand, Malaysia and Vietnam.

In order to better serve prospective investors` interests, the government would soon set up a one-gate service system for them and also provide them with other facilities and certain incentives, Lutfi said.

Indonesia central bank plans new instrument next year

Jakarta (ANTARA News) - Indonesia's central bank plans to introduce a new monetary policy instrument next year, a newly appointed deputy governor of Bank Indonesia told reporters on Thursday.

Budi Mulya said the central bank will use the reference interest rate, known as the BI rate , as the benchmark for the overnight rate instead of the one-month rate currently.

"Regarding the benchmark, the policy rate for one month will be changed to the overnight rate. Therefore the central bank will monitor the development in the interbank money market," Mulya was quoted by Reuters as saying after a ceremony to mark his installment.

"We are also considering adding the SBI (Bank Indonesia certificates) tenor with 6-, 9- and possibly 12-months," he said, adding that an announcement would be made at a bankers' dinner in January.

Mulya did not elaborate on the reason for the changes.

Bank Indonesia introduced the BI rate in July, 2005, when the central bank emphasised the focus of its monetary policy to control inflation.

58 firms to get tax incentives

The Jakarta Post, Jakarta

In a bid to further promote new investment and business expansion, the government has agreed to provide special tax incentives to 58 companies.

"We have already approved the applications for tax facilities, and these approvals have been sent to the Investment Coordinating Board (BKPM) and to each of the companies," said the Finance Ministry's director general of taxes, Darmin Nasution, in Jakarta as quoted by Antara on Monday.

Darmin said the tax facilities had been extended to the 50 companies under Government Regulation No. 1/2007.

Under this regulation, a company can write off 30 percent of the total cost of an investment against tax. In order to secure this incentive, they have to apply to the Investment Coordinating Board (BKPM).

"So, if the total investment is Rp 100 billion, a company can deduct 30 percent of the total, or Rp 30 billion, from its net corporate income," he said, adding that this would be spread out over the number of years the company needed to fully realize its investment.

"If the investment period is six years, then the company can deduct Rp 5 billion from its taxable income every year for six years.

Aside from the tax allowance, the regulation also allows certain companies to accelerate amortization to a maximum of 10 years, and offers reduced income tax of 10 percent on dividends paid to non-resident taxpayers.

Darmin did not name the companies, but said that notifications of the extending of the facilities would soon be sent to the tax offices within whose regions the companies were located.

"What the companies have to do now is visit the tax offices in whose areas they are located, and the designated tax officials will give effect to this facility," Darmin said.

For other companies that want the same treatment, he said, they should apply to the BKPM which will examine whether they are eligible.

The government is prioritizing 15 business sectors: food, textiles, pulp and paper, rubber, steel products, electrical generators, electronics and telematics, raw iron and steel, non-iron metal manufacturing, machineries and components, land transportation, shipbuilding, industrial chemicals and other chemicals.

Indonesian Chamber of Commerce and Industry (Kadin) chairman Mohammad Hidayat hailed the tax service's approvals, saying that it was not before time.

He also asked the tax service to increase the number of categories of companies eligible for tax allowances. "Incentives should also be given to those operating in remote areas, to business sectors that are labor intensive and to those that promote the use of local materials," he said.

Hidayat said that Kadin would soon meet with the government to discuss the sectors eligible for incentives in greater detail.

RI climbs one rung on development index

The Jakarta Post, Jakarta

Indonesia has raised its Human Development Index (HDI) ranking through improvements in a number of key sectors, the United Nations Development Programme (UNDP) announced Tuesday.

The Human Development Report for 2007/2008, Fighting Climate Change: Human Solidarity in a Divided World ranks Indonesia 107th out of 177 countries, with its overall index rising from 0.711 to 0.728 this year.

"The HDI report looks back at a measure of health, education and income ... the standard of living among 177 countries and Indonesia is number 107 this year, one step further than last year," Hakan Bjorkman, UNDP country director for Indonesia, said.

"The change is related to other countries which are improving more. But, slowly, slowly, Indonesia is improving in these areas, but maybe not fast enough," he told The Jakarta Post upon the launch of the Human Development Report.

"The improvement is not as fast as in Vietnam, but Cambodia and Myanmar are much slower than Indonesia," he added.

In the key sectors of life expectancy at birth and gross domestic product per capita, Indonesia rose respectively from 67.2 to 69.7 and from US$3,609 to $3,843.

This year, the UNDP especially focused its report on climate change issues in the lead-up to the global climate change conference in Bali in December.

"Since 1990 we have published the annual Human Development Report, but this year's report differs from last year's in that it is not from a narrow economic point of view, but from the climate change point of view," said Bjorkman.

"This report is a good reference for climate change issues." he added.

"The impact will be serious on the poor countries. If we don't do the right things right now, climate change will sabotage the Millennium Development (Goals)," said Bjorkman.

Bjorkman also said that most of the climate change has been caused by carbon emissions in developed countries over the past hundred years.

"As a good example of global solidarity between rich and poor countries, it's a big responsibility for rich countries to support the countries that are most affected, which are the poor countries, in terms of mitigating, fighting climate change or transplanting technology," Bjorkman said.

Indonesia should also be able to rely on international support. At a Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) in 2001, governments established some funding mechanisms, including the Special Climate Change Fund to support adaptation activities and to improve monitoring of diseases, early warning systems and responses, disaster planning and preparedness for droughts and floods. (rff)

Government Prepares Nine Steps in Anticipation of Oil Price Increase

Wednesday, 28 November, 2007 | 13:01 WIB

TEMPO Interactive, Jakarta: The government is preparing nine security steps in anticipating a potential additional 2008 State Budget deficit.

These steps are being taken in relation to continuing oil price increases.

Finance Minister Sri Mulyani guaranteed that the steps will not disturb the funds allocated for infrastructure and the poverty eradication programs.

“They’re still pro-growth and pro-poor, maintaining economic growth momentum with a constant budget,” she said during a press conference at her office last night (27/11).

If oil prices reach US$100 per barrel, Sri Mulyani explained, the potential additional deficit would be Rp54.7 trillion.

“That is if the government doesn’t do anything,” she said.

The potential deficit has been triggered by external factors, the oil price increases that contribute a Rp14.4 trillion deficit.

There are also internal factors, including additional fuel oil subsidies and electric sales growth, contributing Rp38.1 trillion.

The first securing step, said Sri Mulyani, was the use of the State Budget reserve fund amounting to Rp6 trillion, which can be used when base assumptions are changed.

The second, a saving of Rp11.7 trillion in the natural absorption of state expenditure, comprising savings of 10 percent of goods expenditure by Rp6.9 trillion and five percent capital expenditure by Rp4.8 trillion.

The third, using excess funds from oil and gas-producing regions amounting to Rp13.9 trillion.

The surplus from regional revenues will be placed in risk-free instruments.

"State bonds will be issued,” said Sri Mulyani.

The fourth, sharpening priority expenditure budgets of ministries and state institutions by Rp10.4 trillion.

The fifth, improving production parameters in terms of fuel oil and electricity subsidies.

The sixth step is efficiency by Pertamina and PLN (the State Electricity Company).

The seventh, optimizing taxes and dividends of state-owned enterprises, amounting to Rp9 trillion.

Eighth, relaxing the 2008 State Budget deficit.

The final step is maintaining momentum in terms of economic growth and macro-economy stability.

After the press conference, economist Chatib Basri said he considered that with these anticipatory steps, there need not be concern as regards any lowering of public purchasing power due to the oil price increases.

This is because, “Growth and inflation are sustained,” he explained.

HARUN MAHBUB

Taman Rama School gets Cambridge Awards

Denpasar (Jakarta Post) : The University of Cambridge International Examinations department (CIE) has given Taman Rama School, in Bali, a Cambridge International Fellowship status, making it the first school in the country to receive such recognition.

The school offers the Cambridge International Primary Program, the International General Certificate of Secondary Education and Advance level (A Level) study programs.

"We are very proud to receive such a prestigious status and we are committed to improving our education services," said Made Sutama, the school's principal.

He was accompanied by James Bird, director of studies at the Cambridge International Fellowship Center and Michael McBrien, director of studies for the Cambridge International Primary Program. CIE is the examinations department of the University of Cambridge in London, the United Kingdom. JP

Telkomsel launches mobile wallet

JAKARTA (The Jakarta Post): Indonesia's largest cellular provider PT Telkomsel Selular (Telkomsel) on Tuesday launched the first mobile wallet facility in the country, called T-Cash.

President director Kiskenda Suriahardja said in a ceremony the facility could be used by T-Cash subscribers whether they were Telkomsel customers or not, as an exchange tool to purchase goods or pay for services at selected merchants by sending an SMS to 2828 or showing a T-Cash card.

"We have invested some Rp 50 billion (US$53.30 million) in the establishment of the T-Cash facility," Kiskenda added.

He said T-Cash was the extension of his company's mobile banking program which offered banking services such as money transfers, deposit checks, bill payments and changes to personal identity numbers (PIN) via a banking menu on a cellular phone.(JP/nkn)

Information ministry gets ready to become ICT hub

The Jakarta Post, Jakarta

The Communications and Information Ministry says it should drive any attempts to establish an information and communication technology (ICT) culture in Indonesia.

"The culture of information and communication technology should be started from the ministry itself," said Communications and Information Minister Muhammad Nuh during the opening of the ministry's three-day national coordination meeting on Monday.

The main purpose of the meeting is to establish a new policy for the ministry in its efforts to accelerate the national ICT development program in 2008.

The national program itself is aimed at developing a prosperous, civilized and knowledge-based information society that is synergic and integrated nationally.

Nuh said that in order to be a reliable hub for the program, there were three things the ministry should do.

"First, improve the quality of human and other resources. Second, enhance the value system, including good governance and innovation, that can support its tasks," he said.

"Third, eliminate all performance burdens, including incapable human resources."

The minister also emphasized the need to provide concrete suggestions for revamping regulations related to foreign or joint businesses in the ICT sector.

"Any improvement must embrace both economic and political views," he said.

He also said that 2008 was an important year because it would mark the beginning of preparations for the 2009 presidential election.

"The Communications and Information Ministry will hold a big responsibility in making the election successful."

Another speaker at the meeting, Dr. Made Suwandi from the Home Ministry, explained the importance of information and communication technology in the implementation of the central government's decentralization program.

"The role of information and communication technology is very important for Indonesia's administration reform efforts, and finally for its economic development," he said.

"Progress in structural reform, both bureaucratic and institutional, is needed for improving the investment climate in Indonesia.

"More specifically, information and communication technology development is also needed for encouraging the development of small and medium enterprises, reforming the financial sector, and also for making a success of the national poverty reduction program."

Another speaker, Alex Bambang Riatmodjo from the Coordinating Ministry for Political, Legal and Security Affairs, said ICT had an important role to play in maintaining national security and defense, especially counterterrorism efforts. (uwi)

Businesses seek role in environmental policy-making

Andi Haswidi, The Jakarta Post, Jakarta

As the government prepares to unveil its National Action Plan (RAN), a road map to guide the effort against global warming, the Indonesian Chamber of Commerce and Industry (Kadin) has called for a say.

Chairman Mohammad Hidayat said Monday that Kadin had appointed a team of 15 industrial leaders to participate in drawing up the plan, which is to be made public in the upcoming United Nations Framework Convention on Climate Change (UNFCCC) conference in Bali next week.

The RAN plan will consist of a set of guidelines to help Indonesia mitigate and adapt to climate change.

According to the Environment Ministry, which is responsible for it, the plan incorporates the country's triple-track development strategy of pro-poor, pro-job and pro-growth, but adds another dimension: pro-environment.

The plan encompasses preservation of forests and carbon capture, aiming to reduce CO2 emissions by up to 30 percent by 2025.

However, for fear of having its interests neglected -- especially on issues of energy efficiency, spatial planning and tax incentives -- the Kadin team wants to be a part of the sustainable development coordination process, contributing ideas and suggestions.

"We need a comprehensive approach towards sustainable development that takes into account both environmental issues and the interest of industry," Hidayat said in a discussion with the Environment Ministry on Monday.

Hidayat said the effort to create balance between the environment and industrial growth had been marred by disputes and a lack of coordination between government agencies.

Regulatory ambiguity and discrepancies -- for example between central and regional government levels, he said, discouraged many companies from shifting to renewable sources of energy for production.

Also speaking at the discussion, Indonesian Employers Association (Apindo) chairman Sofyan Wanandi urged the government to create a comprehensive policy on the use of energy and how it will shape the future of industry.

"The government's approach in addressing the energy issue has always been ad hoc and tends to look for scapegoats if there are problems,"

"Having learned from past experience, even if we have a good plan, implementation is always an issue. I'm honestly skeptical about the action plan, especially on the implementation level," Sofyan said.

On the issue of spatial planning, Franky Wijaya, the CEO of Sinar Mas Agribusiness and Food, one of the major players in the palm oil industry, said the government must discuss land allocation matters, both with industry players and NGOs, in order to get an objective view on all related issues.

"For our industry, it is important to get a hold of exact spatial planning -- which areas are allocated for preserved forest and which are for production, to avoid disputes."

Similarly, at the UNFCCC negotiations in Bali, 180 country representatives will map out a plan for climate change mitigation and adaptation, ahead of the expiry of the Kyoto framework -- the first CO2 reduction arrangement -- in 2012.

Oil subsidy to soar to Rp87 T : minister

Jakarta (ANTARA News) - Energy and Mineral Resources Minister Purnomo Yusgiantoro said oil subsidy in the 2007 state budget is likely to soar to Rp87 trillion from Rp55 trillion previously because of the global oil price spiral.

Electricity subsidy would also increase to Rp42 trillion from Rp34 trillion, the minister said following a limited cabinet meeting at the presidential palace here on Friday.

Yet, the higher-than-expected subsidy would not lead to an increase in the 2007 state budget deficit which had been projected at 1.5 percent as the higher subsidy figure could still be offset by an increase in state revenues from the oil and gas sector, he said.

"We see it (subsidy hike) as being quite secure at the end of this year because there is still balance between the increase in revenues and that in spending. The deficit in the state budget will remain unchanged," he said.

He said oil output until the end of 2007 would stand at 910,000 barrels per day, or lower than the government-set target of 950,000 bpd.

"So, the oil output will reach 95 percent of the target. But the price of our crude oil is 118 percent above target. So, our oil revenues will still be higher than expected," he said.

Experts set up public policy think tank

JAKARTA (Jakarta Post): Experts announced Friday the new Indonesian Society of Public Policy, a non-government think tank, will recommend public policy improvements to the government.

A number of noted people are involved: Jakarta Governor Fauzi Bowo, Regional Representatives Council Speaker Ginanjar Kartasasmita, former Gadjah Mada University rector Sofian Effendi, legislator Drajad Wibowo, University of Indonesia public policy expert Eko Prasodjo, expert on policy reform Riant Nugroho, former Indonesian Military chief of territorial affairs Lt. Gen. (ret) Agus Widjojo and Gorontalo Governor Fadel Muhammad.

Organization chairman Sofian Effendy said there were plans to establish branch offices nationwide to assist policymakers at the local level.

"We'll soon give our recommendation to the government on how they can improve their bottom-up public policies," Sofian told The Jakarta Post.

The new organization will be officially launched next year in April. --JP/dic

Govt to establish innovation agency to help SMEs

The Jakarta Post, Jakarta

The government will establish a national agency aimed at strengthening and improving the competitiveness of small and medium enterprises (SMEs) through better access to information and the development of innovative technology, an official said Wednesday.

The agency, to be called the small and medium enterprise innovation center (PI UMKM), would work together with academia and business associations to develop innovative technology especially designed to strengthen SMEs, said Edy Putra Irawadi, the deputy for industry and trade at the Office of the Coordinating Minister for the Economy, on Wednesday.

The agency, whose establishment will be based on a recent presidential instruction, will be launched early next year after six months of preparations, said Edy, who chairs the preparatory committee laying the groundwork for the agency's establishment.

The committee consists of representatives from 15 ministries, the Agency for the Assessment and Application of Technology (BPPT), the Central Statistics Agency, the Indonesian Institute of Sciences (LIPI), entrepreneurial associations and universities.

Edy said that the agency would furnish assistance and information to SMEs on technical matters, intellectual property rights and marketing, and help them forge links with various communities, such as the leather association in Yogyakarta, textile association in Bandung, West Java, and research centers in the universities.

Dharmawan, the deputy chief of technology policy assessment at the BPPT and a member of the team, said that "The agency will also offer incentives to inventors of innovative technology."

Eddy said that the preparatory committee had started its work in July and had been allocated around Rp 1.4 billion (US$150,000) to disseminate information on the plan and establish a relationship with SMEs, government agencies, private institutions and universities.

"I think our budget for next year will be more or less the same," he said.

SMEs made up 90 percent of the country's 48.9 million business enterprises in 2006. They accounted for 53 percent of the country's gross domestic product of Rp 3,338 trillion and employed 96 percent of the approximately 88 million workers in employment that year, according to data from the Cooperatives and SMEs Ministry. (ind)

Middle class prefer information to soaps, says survey

The Jakarta Post, Jakarta

Although soap operas remain the most popular TV programs in Indonesia, most middle-income and educated households prefer news and other informative programs, such as talk shows and showbiz news, a survey reveals.

The results of the TV audience and viewing survey, which was conducted in 10 major Indonesian cities by AGB Nielsen Media Research Indonesia in July-September, also shows that, like their parents, only a small percentage of children from middle-income homes are partial to soaps, or sinetron as they are known here.

According to the survey, the households with a monthly income of more than Rp 3 million (about US$315) also preferred to watch soccer matches, musical programs like the Ungu-Nidji Superband Duet, Western children's movies like Harry Potter, and comedy shows, such as Extravaganza.

"Those who are highly educated, such as those who have attended university or equivalent institutions, also tend to watch informative shows, whereas those who are less educated prefer entertainment offerings, such as variety, reality and game shows," AGB Nielsen marketing communications executive Andini Wijendaru told a media briefing Thursday.

She said that other types of musical programs, such as Indonesian Idol and Mamamia, were favored by the upper-income brackets, in addition to Western movies and TV series, and sports tournaments, like the Asia Cup.

In terms of length of time spent viewing, housewives were found to spend the most time per day watching TV, with an average of 3 hours and 12 minutes, 59 minutes of which was spent watching soap operas and the remainder on religion-themed shows.

Other viewers would spend an average of between 2.4 hours and 2.9 hours a day watching a variety of shows, depending on their age segment, educational level, profession and socio-economic background.

"The kind of TV shows people watch depends on their demographic backgrounds, and this is confirmed by our survey," said Hellen Katherina, AGB Nielsen's associate director for marketing and client service.

The AGB Nielsen 2007 third-quarter survey essentially highlights the correlation between a viewer's socioeconomic status and his TV viewing preferences, particularly during prime time.

It reveals that 72.07 percent of soap operas' total viewership comes from households with monthly incomes of less than Rp 1,500,000 (about US$159.63).

"People with a monthly income of below Rp 500,000 spend the most time watching TV, whereas those who make more than Rp 3 million spend the least. The report shows that 74.77 percent of total TV viewership is made up of lower-middle income households," Andini added.

AGB Nielsen, which has been conducting audience surveys for TV networks and advertisers in Indonesia since 2004, carried out the July-September survey by stratified random sampling covering 42 million individuals in 10 major Indonesian cities, including Greater Jakarta, Bandung in West Java, Medan in North Sumatra, Makassar in South Sulawesi and Denpasar in Bali. (amr)

Income tax receipts from oil and gas expected to increase Rp5 T

Jakarta (ANTARA News) - Indonesia`s income tax receipts from the oil and gas sector are expected to increase by Rp4-5 trillion this year due to the current global oil price spiral, a tax official said.

"If I am not mistaken this year`s income tax receipts from oil and gas will increase by Rp4-5 trillion from the target set in the revised 2007 state budget," Director General of Taxation Darmin Nasution said here Friday.

But this would not be as high as an increase in non-tax state revenues from the oil and gas sector, he said.

He stopped short of revealing by how much the non-tax state revenues would increase. It was the director general of budgetary affairs who knew it well, he said.

If combined with an increase in other revenues, such as from crude palm oil, the increase in income tax receipts from the oil and gas sector would be higher than a rise in fuel and electricity subsidy borne by the government, he said.

"Although fuel and electricity subsidy goes up because of global oil price spiral, the rise in oil and gas revenues still will be slightly higher than the subsidy hike," he said.