Jakarta Civil Servants Set to Lose Official Cars

Jakarta Globe, Lenny Tristia Tambun, Nov 26, 2014

This handout photo taken and released by
the Presidential Palace on Nov. 19, 2014
 shows President Joko widodo, right, leading the
 swearing-in ceremony for Basuki Tjahaja
Purnama, left, as Jakarta’s governor at the
 Palace in Jakarta. (AFP Photo/Presidential
Palace/Cahyo Sasmito)

Jakarta. The Jakarta City Council is forging ahead with an edict by former governor Joko Widodo to auction off 300 cars used by city officials and provide them with transportation stipends instead.

Civil servants in echelon II, III and IV will soon have to return their keys and take up transportation allowances as part of cost-cutting measures passed by the administration of Joko, who left office to become Indonesia’s president in October.

Reza Pahlevi, from the assets division of the Jakarta Financial Management Body (BPKD), said that the State Assets and Auction Service Office (KPKNL) was currently calculating the cars’ prices.

“We involved the KPKNL so that the car pricing will be fair,” Reza said on Wednesday in Jakarta. “We could ask the Transportation Agency to do it, but we think the result wouldn’t be fair and right. Therefore, we decided to ask the KPKNL.”

Reza said the BPKD would request Jakarta Governor Basuki Tjahaja Purnama — who took office last week — to issue a removal of asset letter once pricing had been recommended.

“We will commence the auction once we have obtained approval from the governor which is why we haven’t asked the officials to turn in their cars yet,” Reza said.

The KPKNL, which will auction the cars, has promised the process would be transparent as the public was allowed to bid, but civil servants were not.

In July, City Hall announced that officials would be provided with transportation fees taken from the city’s regional budget because it was considered more efficient that buying new cars, which devalued.

“The decree was signed by Joko Widodo back in July and we have started implementing it since October,” Reza said.

The transportation fees vary: echelon II officials get Rp 9 million ($592) per month, echelon III officials receive Rp 6 million ($395) and echelon IV officials get Rp 4 million ($263). The transportation fees will be subjected to 15 percent tax.

Jokowi to Trim 2015 Budget for Official Trips, Meetings by 40%

Jakarta Globe, Ezra Sihite, Nov 24, 2014

President Joko Widodo and Vice President Jusuf Kalla (center) seen with
 governors from across the country, at the Bogor Palace on Monday. (Antara
Photo/Andika Wahyu)

Bogor. President Joko Widodo said on Monday that he would trim the budget for official trips and meetings by nearly 40 percent next year, and use the funds saved for the development of remote provinces.

“I’ve told my ministers to trim as many funds as possible from the 2015 state budget, because it is inefficient,” the president told a meeting of regional governors and other officials at the Bogor Palace. “For instance, the budget for official trips and meetings stands at Rp 41 trillion [$3.4 billion] and I’ve instructed to bring this down to Rp 25 trillion.”

According Joko, who is popularly known as Jokowi, Rp 25 trillion should be more than enough to cover the state expenditure for official trips and meetings, which he estimated would amount to not more than some Rp 22 trillion.

The budget cut of Rp 16 trillion would be used to develop the infrastructure in provinces across the country, Joko said, citing the building of dams and irrigation systems and improvement of border markers as examples.

EU Chief Van Rompuy Urges Transparency During Indonesian Visit

Jakarta Globe, Nov 21, 2014

This handout photo taken and released on Nov. 19, 2014 by the Presidential
Palace shows President Joko Widodo, right, walking with European Council
 President Herman Van Rompuy, left, following their bilateral meeting at the
palace in Jakarta. (AFP Photo/Presidential Palace/Cahyo Sasmito)

Jakarta. Visiting European Union chief Herman Van Rompuy has praised the progress of Indonesia’s democracy and its economic development, and says the EU can offer much more to Indonesia than the current level of cooperation.

In his speech at the opening of the 5th Europe-Indonesia Business Dialogue in Jakarta on Wednesday, Van Rompuy, the EU Council president, told the gathering that Indonesia had indeed undergone an impressive transformation since democratic and political reforms were initiated more than 15 years ago, and that the country’s robust economic growth and social development bore testimony to this.

He said that the energy of President Joko Widodo and his administration reflected the aspirations of a young and growing Indonesian population that looked to the future with great hope.

“I see great potential for expanding cooperation over the next five years between the new Indonesian government and the European Union,” Van Rompuy said.

“I was particularly interested this morning to hear President Joko talk of his vision for Indonesia as a maritime axis, and I feel that Europe, much of whose trade goes by the open seas, not least passing through the Indonesian archipelago, has much in common with you on this agenda.”

He said the EU was also interested in Joko’s plans for upgrading Indonesia’s infrastructure, for improving the business climate, and for cutting the red tape that can stop projects from getting under way.

“More streamlined and transparent procedures will certainly bring more European investment in this sector,” Van Rompuy said.

European companies are increasingly interested in Indonesia, and in 2013 foreign direct investment from the EU reached a record high of $2.4 billion, according to Van Rompuy. “The EU is the second-biggest investor in Indonesia this year,” he added.

But in spite of all these successes, Van Rumpuy said Indonesia was not yet realizing the full potential of the scale that European business had to offer.

“The EU’s trade with Indonesia is healthy, yet it is well below our trade with other smaller countries in the region, such as Singapore, Malaysia and Thailand. This is despite the fact that Indonesia is by far the largest economy in Asean [Association of Southeast Asian Nations], representing around 40 percent of total Asean GDP and population. We can do better.”

From 2004 to 2011, Indonesia received 12 percent of all EU investment flowing into Asean, and 0.4 percent of total FDI outflows from the EU to the world in 2011.

Deepening trade and investment links with the world’s largest trading bloc — the EU — will bring substantial gains to Indonesia, he said.

He said a recent study showed that a comprehensive economic agreement between the EU and Indonesia would boost our overall trade and facilitate more FDI from the EU, which in turn would help develop Indonesia into the manufacturing hub of Asean.

“My message here is that European companies stand ready to increase their already considerable investments in Indonesia, provided that the business climate is welcoming, open and transparent.”

Jusuf Kalla: Indonesia to Stop Sending Women Workers Abroad

Jakarta Globe, SP/Novianti Setuningsih, Nov 21, 2014

Vice President Jusuf Kalla talking with citizens concerned over rising fuel
prices, in Jakarta on Wednesday. (Antara Photo/Setwapres/Jeri Wongiyanto)

Jakarta. Indonesia plans to end the practice of sending female workers (TKW) abroad by creating more job opportunities here, Vice President Jusuf Kalla said on Friday.

Speaking at a conference of the women’s organization of Nahdlatul Ulama (Fatayat NU), Kalla said women are mostly forced to seek a better future abroad because of limited opportunities in Indonesia, and that many suffer mental and physical abuse.

“We will end all of this [bad treatment of workers],” the vice president said. “The problems with the TKW [will end], in five years we must [stop sending them] abroad.”

Kalla said that the agriculture sector would be a primary source of future jobs, followed by light industrial work.

The lot of the migrant worker is a major political issue in Indonesia. While remittances sent by construction workers and domestic workers from abroad has had an important impact on raising hundreds of thousands of families out of poverty, migrant workers often fall victim to abuse and in many cases have to surrender their passports to either agents or employers.

Extreme cases such as the recent murders of two Indonesian women in Hong Kong, allegedly at the hands of a British banker, occasionally make international headlines, but the domestic press is never short on stories of abuse.

Advocacy group Migrant Care estimates that every day between 400 to 500 Indonesian migrant workers are extorted by security and immigration officers on their return to Indonesia.

The group has recorded more than 1,000 extortion cases over the last ten years, which are said to involve police and military officials as well as from other government agencies.

“Everyday, 400 to 500 TKI [Indonesian migrant workers] are extorted,” Migrant Care chairwoman Anis Hidayah said in August. The figure, she said, represented 45 percent of Indonesian migrant workers returning home everyday. The extortion scheme “is systematic,” Anis continued.

The culprits, Anis alleged, are from the military, police, the Manpower and Transmigration Ministry and the Indonesian Workers Placement and Protection Agency (BNP2TKI).

Earlier this month, the newly inaugurated minister of manpower and transmigration, Hanif Dhakiri, pledged to audit all migrant worker placement agencies in a bid to crack down on widespread extortion.

Related Article:

Indonesia a Hive of Modern-Day Slavery

No Dissent to Fuel Price Hike by Markets

Conditional Love: Markets broadly supportive of subsidized fuel price hike — as long as infrastructure follows

Jakarta Globe, Muhamad Al Azhari & Vanesha Manuturi, Nov 18, 2014

Financial markets responded to the fuel price increase positively. The benchmark
 stock index rose 0.96 percent to close at 5,102.47 on Nov. 18, a day after the
president Joko Widodo announced the fuel price increase. (Reuters Photo/Beawiharta)

Jakarta. Economists and local executives praised President Joko Widodo’s decision to raise the price of subsidized fuel, a move considered a bold first step toward further fiscal reform.

Joko raised the subsidized fuel price by an average 33.6 percent as he eyes plans to shift subsidy government spending toward productive sectors, such as infrastructure and education investments.

“This gutsy policy will allow him to unburden himself from the heavy shackles which held back previous administrations, because of one simple rule: You need money to do stuff in life,” said Wellian Wiranto, a Singapore-based economist with OCBC Bank.

“It will not escape the market’s attention, too, that this is a man who manages to do this within less than a month in office, and, crucially, in an environment where tyglobal oil prices are dropping,” Wellian said.

“Previous administrations have largely chosen the more convenient path of discussing and deliberating until their backs are shoved against the wall of incessant global oil price upticks before they did the inevitable,” he said, referring obliquely to  former President Susilo Bambang Yudhoyono.

Joko’s move is slated to save around Rp 120 trillion ($9.8 billion) in the 2015 budget, which can now be re-allocated to other sectors rather than being burned in people’s vehicles while they are stuck in traffic jams.

Barclays Research sent a note to clients on Tuesday that said the fuel price hike could help Indonesia to help curb the oil deficit and support portfolio inflows.

Singapore-based economists, including Wai Ho Leong, Barclays’ senior regional economist for Asia excluding China, contributed to the note.

“We deem the fuel price hike to be supportive of the rupiah, and in the near-term we think the rupiah is likely to strengthen,” the note said, adding that their analysts believe the fuel hike is positive on two fronts.

The note highlighted that Indonesia’s oil trade deficit has gradually widened in recent years due to rising domestic fuel consumption.

“While rapid income growth is probably the main driver [for higher fuel consumption], artificially depressed prices [in fuel products] have also contributed to higher consumption.”

“A decisive move by Joko to raise prices, accompanied by a roadmap for longer-term fuel subsidy reforms, will be critical in limiting oil consumption and import growth over the longer-run,” the note said.

Indonesia’s government has perennially found that demand for subsidized fuel exceeded the quota set aside.

This year state oil company Pertamina estimated that the country will be short 1.9 million kiloliters of subsidized fuel, as demand exceeds the annual quota of 46 million kiloliters.

The Barclays note also said that the price hike helps narrow of Indonesia’s trade deficit, which traditionally has been driven by broad-based import compression rather than stronger exports.

Such a trend — which means that fewer capital goods have been imported, supporting the local manufacturing sector — has contributed to the slowdown in economic growth.

“Should infrastructure spending increase in coming years, as promised by Joko, growth and capital goods imports could rebound,” the Barclays note said.

Indonesia’s trade deficit shrank in September after imports slowed.

The Central Statistics Agency reported a smaller trade deficit of $270 million in September versus a revised $311 million in August.

In September, exports grew 3.87 percent, while imports rose 0.23 percent.

That compares with a 10.6 percent growth in exports and a 13.7 percent expansion of imports in August.

“Policies to curb the oil deficit, along with broader measures to encourage exports and domestic manufacturing, are thus essential in preventing a renewed widening of the overall trade deficit,” the Barclays note said.

The Barclays note also said that “the ability of Joko to push through a fuel price hike shortly after taking office should strengthen investor confidence in his administration’s resolve to implement crucial but unpopular economic reforms.”

“This should help sustain foreign portfolio flows into Indonesian markets, providing support for the rupiah at a time when concerns over current account funding could rise due to the end of the third round of  quantitative easing and Fed policy normalization,” the Barclays note said.

Indonesia’s economy slowed in the third quarter of 2014 to the lowest level in five years, as weaker exports dragged down economic expansion even as private consumption remained strong.

Indonesia’s economy expanded by 5.01 percent in the three months ending September compared with the same period last year.

That compares with a 5.12 percent year-on-year expansion in the second quarter.

Financial markets responded to the Joko’s move positively. The benchmark stock index rose 0.96 percent to close at 5,102.47 on Tuesday.

As many as 6.3 billion shares worth more than Rp 5.3 trillion changed hands on the day.

Foreign investors, which contributed to 34 percent of the day’s trading, bought Rp 243.7 billion more shares than they sold. Gainers beat losers 192 by 111.

Meanwhile, the rupiah strengthened to 12,146 per dollar on Tuesday from 12,193 on Monday, according to data from the central bank. The yields for benchmark 10-year government bonds declined to 8.0319 percent from 8.0457 percent.

A lower yield, suggesting that investors take lower risks premiums over the securities, reflected their confidence over the overall economy.

Sara Loebis, corporate secretary of United Tractors, the heavy equipment distributor arm of Astra International, said that the fuel price hike would affect much of its operations since the company uses industrial fuel. Industrial fuel is priced more expensively than the subsidized fuel.

“If state funds from fuel subsidy can be diverted to more productive sectors such as infrastructure, this would indirectly open up the heavy machinery market.”

Irwanto, corporate secretary at BW Plantation did not rule out that the expected higher inflation may trigger the company’s operational costs to soar.

“But that may only have effects for about for 42 days to 2 months, I think,” he said.

“As long as the budget is used towards infrastructure development, we support the decision because it will eventually bring down costs.”

“In Indonesia, everything is expensive because our infrastructure is lacking,” Irwanto said.

Further coverage

• Indonesia Mostly Nonplussed Over Fuel Price Hike
• Govt Moots Floating Subsidized Fuel Price Next Year
• Editorial: Test Taken, Passing With Flying Colors

Jokowi Eyes Infrastructure Focus With Fuel Subsidy Cut

Bitter Medicine: The president says savings will go toward more productive sectors

Jakarta Globe, Dion Bisara & Muhamad Al Azhari, Nov 18, 2014

 (JG Graphics/Nadia Tammu)

Jakarta. Indonesia raised subsidized fuel prices by an average 33.6 percent as it seeks to shift subsidy spending to productive sectors.

“The government decided to divert the subsidy spending,” President Joko Widodo said during a live television broadcast at the State Palace on Monday night.

He added that his administration planned to allocate more money on infrastructure, education and health.

Joko said the new price of subsidized fuel would be effective from 00:00 on Tuesday. The prices of the widely used low-octane gasoline, or Premium and subsidized diesel were increased by Rp 2,000 (16 cents) per liter.

Indonesians will now pay Rp 8,500 per liter for Premium and Rp 7,500 per liter for subsidized diesel. Previously, Premium was sold at Rp 6,500 per liter and subsidized diesel at Rp 5,500 per liter.

News reports previously stated that the government planned to increase subsidized fuel prices by Rp 3,000 per liter on average.

Part of President Joko Widodo’s
infrastructuire plan includes building more
 roads with money saved from the fuel
subsidy. (Antara Photo/Wahyu Putro A)

“The increase is moderate compared to recent increases because we currently see a declining trend in global oil prices,” Energy and Mineral Resources Minister Sudirman Said said.

On Monday, Brent crude fell by 73 cents to $78.68 a barrel after Japan, the world’s fourth-largest crude oil importer, slipped into recession and as Saudi Arabia officials reiterated that the oil price should only be subject to supply and demand.

Finance Minister Bambang Brodjonegoro said that by raising the subsidized fuel prices and slashing fuel subsidy spending, the government would now have more than Rp 100 trillion in additional budget funding in its war chest that can be spent on infrastructure, welfare and development of the nation’s maritime sector.

The minister said the fuel price increase would save Rp 120 trillion in the 2015 budget.

Fuel subsidy spending in next year’s budget is set at Rp 276 trillion, up from 246.5 trillion in the 2014 revised budget.

Bambang said the state budget deficit can fall to below 2.2 percent of the estimated gross domestic product next year.

Indonesia’s inflation rate rose to 4.5 percent in October from 4.3 percent a month earlier, as people already anticipated the subsidized fuel increase and traders jacked up the prices of goods, including food, before the fuel price increase was announced.

Minister Bambang believes inflation may soar to 7.3 percent by the end of this year from an estimated 5.3 percent in the revised state budget.

Development targets

Sofyan Djalil, the coordinating minister for economic affairs, said in a press briefing on Monday that the government needs to build so much infrastructure, that “we must save some of our budget for productive spending.”

National Development Planning Minister Andrinof Chaniago said between 2015 and 2019, the government plans to build 2,600 kilometers of new roads; 1,000 kilometers of new toll roads; 15 airports; 24 sea ports; and expand the railway network by 3,258 kilometers.

The government also plans to procure 50 ferries to deploy in remote areas and to improve public transportation in 29 cities.

In the energy sector, the government plans to build two new refineries with a total capacity of up to 600,000 barrels of oil per day. It also plans to upgrade the existing refineries of state energy firm Pertamina in Cilacap, Central Java, and Balongan, West Java.

The government further plans to add up to 35,000 megawatts to state utility PLN’s installed electricity capacity of nearly 52,000 megawatts.

Andrinof said the development would prioritize infrastructure “for the public good.”

By doing that, the electrification ratio is expected to be boosted to 96.6 percent of the nation’s population by 2019 from the current 81.4 percent.

A gasoline station attendant fills fuel
 into her customer’s car in Jakarta.
(Reuters Photo/Supri)

Shielding the poor

The government has registered about 15.6 million poor households that will require financial protection from the knock-on effects of higher fuel prices.

Rini Soewandi, the state enterprises minister, said the government would issue one million chip-based cards this year, starting today, which the government will use to transfer cash directly to the poor to help pay for education, health care and welfare.

The remaining 14.6 million poor will get the cards next year, but in the mean time they will receive cash transfers under the old system where local administrations register poor households and distribute cash to them directly.

Efforts to reduce fuel subsidy spending were also made in the energy sector.

Indonesia spends massively on oil imports, while oil exports have dwindled due to falling production.

Government data show that Indonesia recorded a $27.7 billion crude-oil output deficit  last year, more than seven times the 2004 levels due to a lack of investment in exploration activities.

Energy Minister Sudirman said on Sunday that his ministry had established a special committee to fight what he described as a secretive cabal, or “mafia,” which illegally benefits by acting as brokers in the oil and gas sector.

The committee has been tasked with initiating reforms that include reviewing policies and the bureaucratic systems within the energy sector.

It will table a possible revision of the 2001 Oil and Gas Law and create a healthy investment climate, although details are not yet forthcoming.

Additional reporting by Reuters

Further Coverage:

Editorial: Jokowi Proves Himself as a Man of Action

Indonesia Raises Subsidized Fuel Prices by Rp 2,000 a Liter

Indonesia Raises Subsidized Fuel Prices by Rp 2,000 a Liter

Jakarta Globe, Dion Bisara, Nov 17, 2014

(Antara Photo/Fanny Octavianus)

Jakarta. Indonesia raised subsidized fuel prices by an average Rp 2,000 per liter, in an attempt to curb fuel usage and narrow the gaps in the current account and the state budget.

The price for low-octane gasoline, or Premium, will rise to Rp 8,500 per liter, from Rp 6,500. Subsidized diesel was raised to Rp 7,500 per liter from Rp 5,500. The prices would go into effect at midnight on Monday.

The move would also help to reduce state expenses on the subsidy and that money could be used for other programs such as education and health care.

President Joko Widodo announced the prices increases at around 9:10 p.m. on Monday in an address that was broadcast via television.

“The increase is moderate even by recent latest increases standard because we see a decline in global oil price trend,” said Energy and Mineral Resources Minister Sudirman Said before the announcement.

Sofyan Djalil, the coordinating minister for economic affairs, said in a press briefing on Monday that the government has so much infrastructure that needs to be built that “we need to save some of our budget for productive spending.”

Bambang Brodjonegoro, the finance minister, said that the increase will save Rp 120 trillion ($9.8 billion) in the 2015 state budget.

Indonesia’s current account deficit has narrowed to 3 percent of gross domestic product in the third quarter from 4.3 percent of GDP in the previous three-month period.

The government last raised subsidized fuel prices in June 2013 by an average Rp 3,000 a liter.

Feuding Coalitions in House Sign Peace Deal

Jakarta Globe, Nov 17, 2014

KIH and KMP representatives show off drafts of the peace pact signed at
the parliament on Monday. (Antara Photo/Ismar Patrizki)

Jakarta. The two rival coalitions in the House of Representatives have signed a peace pact supposedly ending the long-standing feud between them over leadership positions of commissions and legislative bodies.

The agreement between President Joko Widodo’s Awesome Indonesia Coalition (KIH) and Prabowo Subianto’s Red-White Coalition (KMP) was signed at the House of Representatives (DPR) building at 1:30 p.m on Monday, news portal vivanews.co.id has reported.

“After this signing, there will be no more KIH and KPM at the House of Representatives,” senior Indonesian Democratic Party of Struggle (PDI-P) politician Pramono Anung said, adding the DPR could hold a plenary session on Tuesday.

The minority KIH bloc was represented at the meeting by Pramono Anung and fellow PDI-P politician Olly Dondokambey, while the five-party opposition KMP was represented by the chairman of the National Mandate Party (PAN), Hatta Rajasa, and Golkar politician, Idrus Marham.

Details of the settlement are unclear, however, the signing is a major step toward overcoming the protracted split which has seen the DPR deadlocked.

The rift was prompted by the five-party opposition Red-White Coalition (KMP)’s move to control all leadership positions in the legislature, appointing its own members as House speakers as well as chairmen of all 11 House commissions.

Since the vote of no confidence, the KIH has boycotted nearly all House meetings and sessions, stopping the legislature from deliberating important issues including the planned subsidized fuel price increase, the ratification of a recently passed government regulation in lieu of law on regional elections, and choosing a replacement for the outgoing deputy chairman of the Corruption Eradication Commission (KPK).

Australia Brings ‘Koala Diplomacy’ to Bear at G20

Jakarta Globe – AFP, Nov 16, 2014

First Lady Iriana Widodo holds a koala while on a spouse visit to a koala sanctuary
 at the G20 conference in Brisbane, Australia on Nov. 15, 2014. (EPA Photo/Ian Waldie/
Pool Australia And New Zealand Out)

Brisbane. Australia arranged a warm and fuzzy welcome for the world’s most powerful leaders at this weekend’s G20 summit with a campaign dubbed “koala diplomacy”, in which top politicians cuddled the shy native marsupials.

While there may have been sharp differences during policy discussions, G20 leaders were unanimous in their desire be photographed with the furry grey animals, which were brought in from a local wildlife park for the summit.

Everyone from US President Barack Obama to China’s first lady Peng Liyuan queued up to hold the koalas as the world’s press snapped away.

Even host Tony Abbott’s pre-summit threat to aggressively “shirtfront” Russian leader Vladimir Putin was temporarily forgotten as the pair smiled and posed side-by-side cradling koalas in their arms.

The well-traveled White House press corps, normally immune to the charms of “local color”, were also enchanted by the iconic bush creatures when they met a two-year-old female named Jimbelung.

The koala, which is destined to be sent to Japan as a gift, munched contentedly on eucalyptus leaves but her handler said she was too tired to pose with reporters after photo sessions with Putin and Obama.

However, there was time for one more round of pictures when local powerbroker Campbell Newman, the Premier of Queensland state, turned up with a gaggle of media in tow.

But handler Al Mucci, from the Dreamworld wildlife park on the nearby Gold Coast tourist strip, said bringing the koalas to the summit was not just about ramping up the event’s cuteness factor.

He said Jimbelung, whose name means “friends” in the local Aboriginal dialect, belongs to a species struggling with declining numbers as human development encroaches on their habitat.

“As an Australian, I am proud of the fact that we are hosting the G20 and I’m proud that today we can share the koala story,” he told AFP.

“Koalas and people aren’t learning to live together and their population is dropping. We want to share that with the global community, that more help is required to make sure that people and koalas live together for another 200 years here in Australia.”

While not listed as endangered, koalas are officially considered “vulnerable”, and efforts to boost their population have been stepped up in recent years.

A 2011 study estimated there were more than 10 million before British settlers arrived in 1788 but numbers had declined to less than 45,000 in the wild, though it noted their existence high in the treetops makes them difficult to count.

Koalas spend up to 20 hours a day sleeping. On the rare occasions when they are spotted in the wild, they are usually nestled in the crook of two branches either napping or chewing leaves.

Agence France-Presse

Australia's Prime Minister Tony Abbott, left, and US President Barack Obama each
 hold a koala before the G20 Leaders' Summit in Brisbane on Nov. 15, 2014.
(Reuters Photo/G20 Australia/Handout)

Related Article:

G20 Leaders Target Trillions in New Economic Growth

Jokowi Pitches Strategy on Tax Reforms, Fuel Subsidies at G-20

Jakarta Globe, Robertus Wardhi, Nov 16, 2014

Australia's Prime Minister Tony Abbott greets Indonesia's President Joko Widodo
 in the Reading Room at Parliament House during the G20 Leaders' Summit in Brisbane
in this Nov. 15, 2014 handout.(Reuters Photo/G20 Australia/Handout via Reuters)

Brisbane. President Joko Widodo again pitched how he would make Indonesia’s business climate friendlier to investors, by implementing tax reforms and cutting fuel subsidies to pay for the nation’s infrastructure projects, as he delivered his speech before other leaders of the world’s 20 biggest economies on Saturday at the Group of 20 forum.

This is not the first time Joko talked publicly about his plans for tax reforms and the establishment of a one-stop service for investors. Taking advantage of his first G-20 forum after his presidential inauguration last month, Joko promoted his plans and promised to tidy up the country’s business sector, to lure more money in from international investors.

The G-20 meeting in Brisbane from Saturday to Sunday is part of Joko’s international debut, following the Asia-Pacific Economic Cooperation summit in Beijing on Nov. 10-11 and the Association of Southeast Asian Nations Summit in Naypyidaw, Myanmar, on Wednesday and Thursday last week.

Joko began his speech during a retreat session of the G-20 heads of states’ gathering by saying he was there to introduce himself among other members of the club. At the beginning, he had reportedly been unsure whether he needed to attend the meeting.

And then he briefly shared his experience while serving as the mayor of Solo, Central Java, from 2005 to 2012 and his short stint governing Jakarta afterward.

Joko said he had managed to finance development in Solo after boosting the city’s income through tax reforms, which included the introduction of an online tax payment system to ensured a transparent and accountable process.

“After four years, the city’s income rose by up to 80 percent,” Joko said.

To tidy up unruly parts of the city, Joko said he established dialogues with the people who would be most affected by his policies, and won them over after persistent efforts to talk them into supporting his programs.

His trademark “blusukan,” or impromptu visits to constituents by state officials, have been very helpful to learn directly from those involved and affected how his policies would best serve the public, Joko added.

“I used similar approaches after elected as the governor of the capital Jakarta, in 2012,” the president said.

“Based on my experience in Solo, I also improved Jakarta’s tax payment mechanism with the introduction of an online system. As a result, after a year the regional tax income rose by 50 percent.”

Joko said he would use those experiences in Solo and Jakarta and scale them up for the national level during his term as Indonesia’s president.

As part of his priority programs, he said he promised to boost the country’s tax-to-gross domestic product ratio from below 13 percent at present to 16 percent. There will be a tax system revamp; to complete an “integrated” one-stop national service for investment and business licensing in six months; to cut fuel subsidies and divert the funds for infrastructure financing, as well as to support human resources development and people’s welfare.

“We will do all of these efforts simultaneously. This will be our method to tackle with, and avoid the ‘middle-income country trap,’ aside from eradicating corrupt practices that have overridden developments in Indonesia,” said the former businessman-turn-president.

He added Indonesia’s average economic growth of 5.8 percent during the past eight years had depended a lot on the growing middle-income class, who make up a quarter of the country’s population.

In order to keep the economy growing, he said he would maintain the purchasing power of the middle-income people, while improving that of low-income families.

“Our growth patterns will be inclusive, based on the growth of groups [of society] that all these times haven’t had adequate access to development,” Joko said.

“I think this is in line with G-20 nations’ joint goals toward strong, sustainable and inclusive growth. In the next five years, Indonesia will adopt [such growth] to recover its economy, and in turn contribute to the global economic growth.”

Sideline meetings

On the sidelines of the G-20 meeting, Joko met up with several other heads of state in separate bilateral talks.

On Friday evening, upon arrival from the Asean Summit in Myanmar, Joko invited Australia to invest in Indonesia’s trade sector and infrastructure projects during a dinner with Australian Prime Minister Tony Abbott.

On Saturday morning, before the opening of the G-20 Leaders’ Summit, Joko met with Italian Prime Minister Matteo Renzi.

“[We talked about] cooperation in sectors of creative economy; on leather and fashion products,” Joko said after the meeting.

He added he also hoped Indonesia would be able to sell its palm oil products to Italy and other European markets.

On Sunday morning, before the closing session of the G-20 forum, Joko held separate bilateral meetings with German Chancellor Angela Merkel, French President Francois Hollande and Turkish Prime Minister Ahmet Davutoglu.

The outcomes of the last three meetings, though, were not immediately known.

Joko was accompanied by Indonesian Foreign Minister Retno Marsudi, Finance Minister Bambang Brodjonegoro and Cabinet Secretary Andi Widjajanto during the bilateral talks.

Retno separately attended two minister-level meetings; the first being with other foreign ministers grouped under Mikta (Mexico, Indonesia, South Korea, Turkey and Australia) and the second being with her Argentine counterpart.

On the sidelines of the G-20 forum and the bilateral talks, Joko met with Indonesian citizens in Brisbane during a Friday night event at the Queensland University of Technology campus in Brisbane.

“Our nation is a big nation. Don’t feel inferior. We must show others that we are a big nation,” Joko told the gathering.

Ending his nine-day first official overseas visit as Indonesia’s president, Joko is scheduled to leave Brisbane on Sunday afternoon and land back in Jakarta later that evening.

Chinese Ambassador: Maritime Links Key in Boosting Ties With Indonesia

Xie Feng speaks at length about his thoughts on President Joko Widodo, the historic treatment of ethnic Chinese, and the future of bilateral relations as both countries pursue parallel visions

Jakarta Globe, Nov 13, 2014

President Joko Widodo (left) walks with China’s President Xi Jinping after
 arriving to take part in the Asia-Pacific Economic Cooperation (APEC) leaders
 meeting at Yanqi Lake, north of Beijing on Tuesday. (AFP Photo/Greg Baker)

On the eve of President Joko Widodo’s departure for Beijing to attend this week’s APEC Summit and meet a number of world leaders, including China’s President Xi Jinping, the Chinese ambassador to Indonesia, Xie Feng, was interviewed by the Chinese newspaper Global Times.

In the interview, Ambassador Xie, who has been in the country since June, talked about his impression of Indonesia, his interaction with the new president, economic ties between China and Indonesia, and the correlation between Jokowi’s vision of a “maritime axis” and President Xi’s plan to build a “21st-centurty maritime silk road.”

With permission, the Jakarta Globe is republishing the interview, which first appeared on Nov. 6. It was edited for style only.

Global Times: Global media said that Mr. Joko Widodo won voters’ support because he’s a ‘People’s President.’ After your arrival in Jakarta, have you had any contact with him and what are your impressions about him?

Chinese Ambassador Xie Feng. (Photo
 courtesy of the Embassy of the People’s
 Republic of China)

Ambassador Xie: In less than a decade, Mr. Joko Widodo’s journey from being a furniture businessman to president is truly a political miracle in Indonesia and even worldwide. In my first week as ambassador, I had the honor of meeting with him briefly and was deeply impressed by his sincerity, easy-going style and kindness. After that I had two in-depth conversations with him and paid courtesy calls on him on several occasions with visiting Chinese delegations after he won the presidency. I believe President Joko Widodo is a firm, visionary, pro-people and down-to-earth leader, with a clear sense of purpose. His policy agenda has a lot in common with that of Chinese leaders. These include governance in the interest of people, pushing forward reform, developing economy, improving public well-being and fighting corruption. The Indonesian people have quite high expectations for him.

President Joko Widodo told me that he much values the face-to-face communications with the public. He believes such communications should happen day in and day out and this is the only way to understand what people need. That’s why he frequently visits traditional markets, rural villages and street food vendors to talk to and eat together with people. In the Javanese language, there is a specific word to describe his work style, blusukan. It means impromptu visit, which is akin to what we call “reach out to the grassroots.”

Global Times: What does President Joko Widodo’s trip to China mean to the APEC Summit and China-Indonesia relations?

Ambassador Xie: Indonesia was among the first countries to establish diplomatic relations with China. In 1950s, China, Indonesia and other Asian and African countries initiated the Bandung Spirit. At the heart of it is peaceful coexistence, seeking common ground and shelving differences. The Bandung Spirit remains a significant norm in state-to-state relations today. China today is Indonesia’s largest trading partner, its No. 1 source of overseas tourists and a major destination for Indonesian students. In October last year, President Xi Jinping paid a successful state visit to Indonesia. He and Indonesian leaders agreed to lift the China-Indonesia relationship to a comprehensive strategic partnership. This has laid a solid foundation and mapped out a blueprint for the long-run development of our bilateral relations. In 2014, Indonesia’s general elections year, our bilateral relations have had a smooth transition and got off to a good start. President Joko Widodo attaches great importance to China-Indonesia relations. He has chosen China for his first overseas visit after inauguration.

Indonesia was the birth place of APEC Bogor Goals. Last year, Indonesia hosted its second APEC Summit in 20 years, and raised three major topics including achieving the Bogor Goals, promoting sustainable and equitable growth and improving connectivity. China actively echoed and supported these ambitions. We look forward to closer coordination and cooperation with Indonesia for positive outcomes out of this year’s APEC Summit, including launching the process of the Asia Pacific Free Trade Area (FTAAP), promoting innovative development, economic reform and growth, and improving connectivity in the Asia-Pacific region.

Global Times: It’s almost five months since your arrival in Jakarta. Can you share with us some of your impressions about Indonesia?

Ambassador Xie: I’ve been deeply impressed by Indonesia in many ways.

First, Indonesia is a big country with rich resource endowment. Indonesia has around 250 million population. It is the world’s largest archipelagic state, with over 17,000 islands. It takes 9 hours to fly from its east to west. That’s roughly the distance between London and Tehran. Indonesia has abundant natural resources and is known as the Emerald of the Equator. My Indonesian friends often say with great pride that ‘please don’t ask what we have, just ask what we don’t have!’

Second, diversity and inclusiveness. Indonesia is the most populous Muslim country in the world, yet it’s also known for its ethnic and cultural diversity. We Chinese value ‘harmony but not uniformity.’ In the same vein, the Indonesian people believe in ‘unity in diversity.’

Meanwhile, Indonesia has around 20 million Chinese Indonesians, that’s the largest ethnic Chinese community outside China. Over the past hundreds of years, generations of Chinese migrants sailed to Indonesia. They settled down and took root in this country. They survived the tribulations yet always worked hard to pursue a better life. Today, many of them have built a successful career and become social elites. They have made major contribution to Indonesia’s economic, social development and cultural prosperity, and have acted as a unique bridge in promoting China-Indonesia friendly exchanges and cooperation. Since 1998, successive Indonesian governments have made active efforts to improve the social status of Chinese Indonesians and promote ethnic harmony. In 2000, President Abdurrahman Wahid lifted the ban on Chinese culture and customs. In 2002, President Megawati Soekarnoputri announced the Chinese Spring Festival as a public holiday in Indonesia. In 2006, the Indonesian House of Representatives (DPR) passed a new law on citizenship, annulling the previous legal distinction between native and non-native Indonesians. It marked an end to many discriminatory policies against Chinese Indonesians. In March this year, President Susilo Bambang Yudhoyono repealed the discriminatory term for the Chinese Indonesians through legislation and adopted ‘Tiongkok’ and ‘Tionghoa’ to refer to China and Chinese Indonesians respectively. This past August, Indonesia’s first Museum on Hakka history and culture was completed. President Susilo Bambang Yudhoyono and I attended the opening ceremony. In his remarks, President Susilo Bambang Yudhoyono spoke highly of the Chinese Indonesians’ outstanding contribution to Indonesia’s independence, development and progress.

Third, goodwill and kindness. The Indonesian people are warm, hospitable and are always ready to help others. Their happiness index is quite high.

Fourth, great potential. Indonesia’s population, landmass and GDP are all over 40 percent of the 10 Association of Southeast Asian Nations member states combined. It’s the only Southeast Asian member of the G20 and is the 16th-largest economy around the world.

Global Times: China is Indonesia’s largest trading partner. Where is the growth point for the bilateral commercial cooperation in the future?

Ambassador Xie: China and Indonesia are both major emerging markets and developing countries. Our economies are highly complimentary and the cooperation potential is huge. Two-way investment will be a bright spot in our business cooperation in the years ahead. And infrastructure is expected to be a new growth driver in this regard. My Indonesian friends told me that the cargo freight from Papua to Jakarta is three times the cost of shipping the cargo from Shanghai to Jakarta. Nearly 50 million population in Indonesia have no access to electricity. Infrastructure is a major bottleneck holding back Indonesia’s economic growth. The Indonesian new government is implementing the ‘ocean highway’ strategy, and planning to build 2,000 kilometers of road, 10 new airports, 10 new sea ports and 10 industrial parks. The purpose is to promote air, land and sea connectivity, and improve energy, telecommunications and transport infrastructure. In my recent meetings with Indonesian leaders, responsible officials of economic departments and entrepreneurs, I could feel their strong desire to enhance cooperation with China.

Global Times: President Joko Widodo vows to develop marine economy and turn Indonesia into a global maritime axis. What’s the purpose of this strategy? What does it mean to China-Indonesia relations?

Ambassador Xie: Indonesia sits between the Pacific and Indian Oceans and connects Asia and Oceania. It controls a number of strategic chokepoints, such as the Malacca Straits, the Lombok Strait and the Sunda Strait. In history, Indonesia was a major hub in the maritime silk road, with a rich legacy of friendly exchanges between our two countries. The city of Semarang has been named after the well-known Chinese navigator Admiral Zheng He. It retains much heritage of Zheng He’s voyages to the Western Seas in the 15th century.

In his inauguration speech, President Joko Widodo called for building Indonesia into a maritime power. This policy agenda focuses on raising maritime awareness, building ocean highways, promoting maritime connectivity, developing marine economy, upholding maritime security and conducting maritime diplomacy. And the Coordinating Ministry of Maritime Affairs has been established. In his visit to Indonesia in October last year, President Xi Jinping announced the strategic initiative of building a “21st century maritime silk road.” This is to develop a ‘silk road’ spirit of peace, friendship, openness, inclusiveness and win-win cooperation among China, Indonesia and other coastal countries of the maritime silk road. The purpose is to promote policy communication, transport connectivity, trade relations, monetary circulation and understanding between the people, and build a community of common destinies. This shows the strategic visions of Chinese and Indonesian leaders complement each other. Maritime cooperation will become a ‘blue bond’ connecting our two countries’ development strategies. It is expected to be a new highlight and a new driver for strengthening the comprehensive strategic partnership and deepening the practical cooperation between our two countries.

Russian President Vladimir Putin walks past US President Barack Obama

as Indonesian President Joko Widodo and his wife Iriana and other world leaders

and their spouses get into position for a family photo before a banquet in Beijing

on Nov. 10, 2014. (EPA Photo/Sergei Ilnitsky)

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