Jokowi and 2015 Haze: Step-down on smallholder interest, Indon-Malaysia cooperation, Singapore haze clampdown
http://khorreports-palmoil.blogspot.my/2015/10/jokowi-and-2015-haze-step-down-on.html
30 November 2015: Indonesia finance and health ministries mull sugar tax
Indonesian Sugar-Tax Talk Chills Drinks Industry - Health concerns may prompt curbs on the growing taste for sweet beverages in Southeast Asia’s largest economy, By Ben Otto and Anita Rachman Nov. 27, 2015; .... Finance officials in the world’s fourth most populous nation have asked the health ministry to study whether sugary drinks, including soda and Indonesia’s most popular bottled drink after water, tea, constitute a health threat, said Suahasil Nazara, head of the ministry’s Fiscal Policy Agency. That would make such drinks eligible to join an excise list of high-bracket tax items comprising tobacco—one of the country’s biggest tax contributors—and alcohol. ...Indonesia has taxed some sweetened beverages in the past under a luxury-goods tax, but stopped the practice in 2004. The taxes crippled drink makers, according to the local Beverages Industry Association, which said sales of sweetened beverages have averaged double-digit annual growth since taxes were lifted.... http://www.wsj.com/articles/indonesian-sugar-tax-talk-chills-drinks-industry-1448621453
Should There Be a Tax on Soda and Other Sugary Drinks? Supporters say it is an effective way to cut obesity. Critics say the health benefits are far less than claimed. July 12, 2015 http://www.wsj.com/articles/should-there-be-a-tax-on-soda-and-other-sugary-drinks-1436757039
22 October 2015: Scorecard Mixed as Indonesia's Jokowi `Drifts' in First Year, PT Bank Mandiri - commodity-based provinces should find new sources of economic growth as the commodity boom is over, Scandal-Hit Malaysia Risks Lost Decade. Sarawak asks for more than "palm oil, palm oil, palm oil"
Scorecard Mixed as Indonesia's Jokowi `Drifts' in First Year by Neil Chatterjee Updated on October 20, 2015 — 3:00 PM HKT; Jokowi behind targets on growth, infrastructure, inequality. Some progress on bureaucratic reform, step backwards on graft....His popularity among voters and investors has fallen in a year marked by slowing economic growth, policy u-turns and controversy over appointments. Widodo, known as Jokowi, said on his Twitter account Tuesday that the past year was about laying foundations and the first step was often the hardest. “His first year in office has been characterized more by drifting through, rather than a seamless execution of a meticulously thought out master plan,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp. in Singapore....Consumer confidence fell to more than a six-year low in September, in a country where domestic consumption makes up over half of the economy, and foreign direct investment has stagnated. A series of recent stimulus measures have amounted to tinkering rather than fresh cash or major structural reforms. “There is no evidence of a strategy to turn around the economy,” said Paul Rowland, an independent Jakarta-based political analyst. “Tweaks won’t do it unless they add up to a more coherent strategy that unshackles domestic and foreign investment.”...“The decision to rearrange a number of ministries also ate up a lot of time while new senior bureaucrat positions were filled, and it’s arguable that was unnecessary,” said Keith Loveard, head of political risk analysis at Jakarta-based security company Concord Consulting. “However, one year on there is a sense that the ship of state is settling on a steady course.”...INFRASTRUCTURE DEVELOPMENT. Jokowi pledged to build 30 new dams, 15 airports, 24 ports, and 3,258 kilometers of railroads among infrastructure plans. After a slow start, there are signs some projects are starting to get going. The government opened the taps for a Chinese-built dam in August and state companies agreed terms with China for a new railway to Bandung this month. Jokowi attended a ground-breaking ceremony for a $4 billion coal-fired power plant that he said would start after years of delays. Yet the Japanese investors in the project say they have not fully acquired the land they need.... FIGHTING CORRUPTION. Jokowi vowed after wining the July election to cut corruption by 70 percent by building new systems, such as electronic tax collection, and the remainder by adding staff to the anti-graft agency known as the KPK. This issue has perhaps been the biggest disappointment for his supporters. The KPK named Jokowi’s choice for police chief a suspect and the police retaliated by investigating the agency’s commissioners, leading several to step down. Since then, there have been few high profile arrests by the agency.... INEQUALITY. A “dangerous” level of inequality threatens the world’s fourth most-populous nation, Jokowi told Bloomberg in February. The economic slowdown isn’t helping. Around 43,000 workers in Indonesia lost their jobs between January and September, the Bisnis Indonesia newspaper reported. The country’s poverty rate was 11.25 percent in March, up from 10.96 percent in September before Jokowi took office.... http://www.bloomberg.com/news/articles/2015-10-19/scorecard-mixed-as-indonesia-s-jokowi-drifts-in-first-year
Analysis: The effect of commodity price changes on Sumatra and Kalimantan Mamay Sukaesih, Jakarta | Business | Wed, October 21 2015, 5:45 PM; .... Our analysis has revealed that commodity-based provinces should find new sources of economic growth in the future. The main reason is simply that the commodity boom is over, implying that they can’t rely on commodity-based development anymore. One of the alternatives is to promote resources-based industries such as manufacturing and adding the value of goods that have been produced in the regions. PT Bank Mandiri (Persero) Tbk. - See more at: http://www.thejakartapost.com/news/2015/10/21/analysis-the-effect-commodity-price-changes-sumatra-and-kalimantan.html#sthash.rdFSxar4.dpuf
Sarawak has to industrialise: CM 22 October 2015 by Patricia Hului BPO Newsdesk; ...In an interview with Bloomberg TV Malaysia, ‘Spotlight on Sarawak: Playing Catch-Up’ broadcast on its website Oct 21, the chief minister addressed the need for the state to industrialise, diversify its agricultural sector and increase infrastructural development....On the need for the state to industrialise, the chief minister said that Sarawak was no longer satisfied with only producing raw materials as in the old days. “We want to process these products ourselves so that we can retain the added value.” About 40 per cent of Sarawak’s economy is reliant on commodities, but contribution from manufacturing, construction, services and other industries is on the increase. “I have decided no more timber licensing, no more plantations. For the time being, give ourselves a respite and then perhaps eventually we will depend on our industry.” .... On the state’s palm oil industry, Adenan is looking to diversify the agricultural sector in Sarawak. “Food production is very slow and now we insist on palm oil, palm oil, palm oil. It’s good, but why can’t we grow other crops for production, food crops and so on,” he said, foreseeing increased interest in this area coupled with Sarawak’s availability of land for food production. Read more: http://www.theborneopost.com/2015/10/22/sarawak-has-to-industrialise-cm/#ixzz3pHYAZ1CD
A Case of Brazil Blight? Scandal-Hit Malaysia Risks Lost Decade by Shamim Adam October 16, 2015 — 6:00 AM HKT http://www.bloomberg.com/news/articles/2015-10-15/a-case-of-brazil-blight-scandal-hit-malaysia-risks-lost-decade; Meet Malaysia, the new Brazil. Nearly felled by the Asian financial crisis in the late 1990s, the Southeast Asian nation recovered to become a global commodities juggernaut, known for its stable government and investor-friendly policies. Now, with its premier enveloped by a multi million dollar funding scandal, Malaysia risks being infected with the kind of economic malaise that has struck its emerging market counterpart in South America....http://www.bloomberg.com/news/articles/2015-10-15/a-case-of-brazil-blight-scandal-hit-malaysia-risks-lost-decade
Ringgit Falls as Malaysia Faces Oil-Revenue Pressures in Budget by Y-Sing Liau Updated on October 19, 2015 — 5:21 PM HKT Budget will be ``one of the most difficult'': PM Najib. China growth beats forecasts, but still slowest since 2009. http://www.bloomberg.com/news/articles/2015-10-19/ringgit-falls-as-malaysia-faces-oil-revenue-pressures-in-budget
19 October 2015: Greenpeace - Indonesia's new emission target a step back, other policy flip-flips, seeking dilution of sustainability pledges and policies for smallholders, illegal palm oil mills, Singapore haze angst targets pulp & paper, palm oil and banks
Indonesia’s new emissions target actually a step back: Greenpeace The new target might seem like an improvement over Indonesia’s previous commitment to cut emissions growth by 26 per cent over projected business-as-usual levels by 2020, but it actually represents a regression, Greenpeace says. http://www.eco-business.com/news/indonesias-new-emissions-target-actually-a-step-back-greenpeace/
Jakarta’s baffling rail flip-flops - Indonesia’s handling of the bidding for its first high-speed train, with reversals and mixed messages to Japan and China, added to the confusion foreign companies face as the government courts them to boost southeast Asia’s largest economy; Indonesia picks China to build high-speed rail project Ben Otto | The Wall Street Journal | October 02, 2015 12:00AM http://www.theaustralian.com.au/business/wall-street-journal/indonesia-picks-china-to-build-high-speed-rail-project/story-fnay3ubk-1227552755589
China, Japan baffled by Indonesia bullet train decision Saturday, 5 Sep 2015 | 3:23 AM ETReuters; ...Indonesia's 11th-hour decision to scrap plans for the nation's first high-speed railway has sown confusion among top investors China and Japan, potentially undermining the strong foreign investment that has been a rare economic bright spot. China and Japan had been battling over the multi-billion dollar contract, until it was abruptly pulled in what appeared to be the latest in a series of regulatory flip-flops and erratic policy-making moves under President Joko Widodo. Indonesia's chief economics minister was left to explain to the two Asian giants on Friday the reason why Jakarta decided at the last-minute that the bullet train project was the wrong option for Southeast Asia's largest economy. "It looks like a sudden move because the recommendation was made after a review of both proposals," Teten Masduki, presidential chief of staff, told Reuters. "But the recommendation is in the best interest of the country." .. Tokyo and Beijing had lobbied heavily for the $5 billion contract, each sweetening the terms of their bids up until Monday's deadline. Analysts believed that whoever had won would likely have been the front-runner for future high-speed rail projects in Asia, including one linking Kuala Lumpur and Singapore.... http://www.cnbc.com/2015/09/05/china-japan-baffled-by-widodo-decision-to-scrap-indonesia-bullet-train.html
http://khorreports-palmoil.blogspot.my/2015/10/jokowi-and-2015-haze-step-down-on.html
9 September 2015: Jokowi to Discuss Drought, Wildfires With Key Aides, KPK leadership to fight natural resources corruption
Jokowi to Discuss Drought, Wildfires With Key Aides Jakarta. By : Novy Lumanauw, Arnold Sianturi & Radesman Saragih | on 02:53 AM August 31, 2015; With the end of the dry season not nearly in sight due to this year's El Nino, wildfires raging out of control and parts of the country barely coping with thick smoky haze, President Joko Widodo is looking for solutions. Environment and Forestry Minister Siti Nurbabya was set to meet the president on Monday, along with key climate change advisers such as special presidential envoy Rachmat Witoelar and Sarwono Kusumaatmadja. "The problem of forest fires will be one topic of discussion," Teten Masduki, a spokesman for Joko, said on Monday morning. "A lot of issues will be talked about, but it's about coordination." Forest fires in Jambi and South Sumatra, meanwhile, continued to also cover parts of North Sumatra in smoke, causing problems for people in major cities such as Medan....The Meteorology, Climatology and Geophysics Agency (BMKG) is advising people in the region to wear face masks when they need to leave the house. Activists in Jambi say palm oil entrepreneurs and the government are not doing enough to prevent the fires or to contain them.... http://jakartaglobe.beritasatu.com/news/jokowi-discuss-drought-wildfires-key-aides/
Walhi to gather complaints on forest fires The Jakarta Post, Jakarta | National | Wed, September 02 2015, 4:48 PM; The Indonesian Forum for the Environment (Walhi) is setting up regional posts to accommodate complaints from the public related to losses caused by forest fires. The posts will be set up at district levels in five provinces: Riau, Jambi, South Sumatra, Central Kalimantan and West Kalimantan. Each post will be equipped with doctors and academics that will record health, ecosystem and social losses caused by the man-made disaster.“This is a new breakthrough. Usually we sued companies that caused fires without submitting data on loss experienced by the public. This time we will include the data to sue not only the companies but also regional and central governments for letting the companies cause the fires,” said executive director of Walhi, Abetnego Tarigan, in a press conference called “Where There are Concessions, There is Smoke” at Walhi headquarters in South Jakarta on Tuesday.So far one post as been set up in Palangkaraya, Central Kalimantan, and it has been operating for a week.Walhi notes at least four types of losses are caused by the draining of high carbon stock peatland for agriculture use, the root reason for forest fires. They are losses to ecosystem balance, social and health, which lead to economic losses. - See more at: http://www.thejakartapost.com/news/2015/09/02/walhi-gather-complaints-forest-fires.html#sthash.pwErlp4b.dpuf
Smoky Haze Forces Jambi Schools to Close By : Radesman Saragih | on 08:17 AM August 29, 2015; A study by the local conservation group KKI Warsi and the Bogor Institute for Agriculture (IPB) estimates economic losses due to the fires to be at least Rp 716 billion ($50 million) so far this year. "There's losses due to palm oil plantations burning down on peatlands, there's losses due to flight and shipping disruptions, there's air pollution causing a lot of people to suffer respiratory tract infections and there's environmental damage," said Rudy Syaf, a spokesman for KKI Warsi. http://jakartaglobe.beritasatu.com/news/smoky-haze-forces-jambi-schools-close/
KPK leadership to fight natural resources corruption Abetnego Tarigan, Jakarta | Opinion | Wed, September 02 2015, 4:20 PM; Various civil society groups have raised the issue of corruption in the natural resources sector, with several cases occurring particularly in the oil palm and mining sectors, in which industry players are linked with regional heads of government....Through monitoring coordination and supervision, about 4,000 mining licenses in 12 provinces have been found to be questionable. The KPK has suggested annulment of such licenses, despite lackluster responses from regional administrations. According to the Indonesian Environment Forum (WALHI), only a small number of the licenses have been repealed, including those in Bangka Belitung (eight), South Sumatra (17), Jambi (184), South Sulawesi (33), Southeast Sulawesi (184), Central Sulawesi (85) and West Kalimantan (nine). The KPK has estimated state losses from corrupt licensing practices at Rp 1,000 trillion (US$71.4 billion).As part of the National Movement for the Rescue of Natural Resources, 29 ministries/institutions and 12 provincial administrations signed on Mar. 19 a memorandum of understanding regarding the eradication of corruption in the maritime, forestry and palm oil sectors. The movement was prompted by the need for cooperation between relevant sectors, ministries and institutions. The initiative has been further supported by the investigative and prevention efforts of the KPK, thus indicating the KPK’s growing role in the area of natural resources corruption eradication. - See more at: http://www.thejakartapost.com/news/2015/09/02/kpk-leadership-fight-natural-resources-corruption.html#sthash.pNZtYY9o.dpuf
30 August 2015: Indonesia Coordinating Economic Minister worries voluntary corporate pledges jeapordise small farmer prospects
Govt opposes zero-deforestation pledge by palm oil firms Hans Nicholas Jong, The Jakarta Post, Jakarta | Headlines | Sat, August 29 2015, 6:21 PM; In stark contrast to Indonesia’s commitment to reduce rampant deforestation, the government has surprisingly become a vocal opponent of a “zero deforestation” pledge signed by the four biggest palm oil companies in Indonesia.The Office of the Coordinating Economic Minister said on Friday that the pledge would jeopardize the country’s palm oil industry, currently the biggest in the world, as it puts restrictions on small farmers.“Oil palm plantations are the livelihoods of many of our people. The most effective driver of economic growth is through oil palm plantations,” the office's deputy for food and agriculture coordination Musdhalifah Machmud said on Friday...... http://www.thejakartapost.com/news/2015/08/29/govt-opposes-zero-deforestation-pledge-palm-oil-firms.html#sthash.BdBqwUSO.dpuf
18 August 2015: Jokowi says "let's work" and letter of credit implementation
Editorial: Time to Get to Work for Real Now By : Jakarta Globe | on 13:15 PM August 14, 2015; Joko Widodo’s inaugural state-of-the-nation address as president this Friday came just two days after he carried out what was widely seen as a much-needed reshuffle to knock his economics team into shape. We realize the president is in a bind: he came into office just as Indonesia’s economic growth started grinding down to its slowest pace in five years, and the rupiah embarked on a perilous slide (whether the latter’s continued slide is an effect of the government’s recent policies is a whole other story). He is also beholden, on one hand, to his political benefactors, and on the other, to the people who expected a cabinet of professionals, not party appointees. Joko closed his speech with a rousing chant of “Let’s work!” Inspiring? Perhaps, but it invites an uneasy question: Just what has the government been doing for the past 10 months?... http://jakartaglobe.beritasatu.com/opinion/editorial-time-get-work-real-now/
Freeport's Export Halted Due to Letter-of-Credit Predicament By : Rangga Prakoso | on 09:21 AM August 11, 2015 Riza said there is no obligation to use letters of credit under Freeport's current working contract with the government, but that the company wanted to make a point of strictly complying with all of the ministry's regulations. The mechanism is based on a regulation that the Trade Ministry issued in 2015 on the use of letters of credit for exports of specific goods. The regulation stipulates that exports of commodities, such as mineral, coal, oil and gas and crude palm oil must use letters of credit issued by a domestic foreign-exchange bank — lenders that are allowed by the central bank to perform international transactions. The government wrote the regulation in an attempt to ensure exporters keep orderly foreign-exchange records. http://jakartaglobe.beritasatu.com/business/freeports-export-halted-due-letter-credit-predicament/
14 August 2015: Jokowi reshuffles Cabinet in bid to boost economy
Jokowi reshuffles Cabinet in bid to boost economy Published: 4:16 AM, August 13, 2015
JAKARTA — Less than 10 months into his term, Indonesian President Joko “Jokowi” Widodo yesterday fired four Cabinet ministers, including crucial members of his economic team, in a much-anticipated reshuffle that reflected growing frustration with his government’s struggles to improve the country’s sluggish economy. The economy is growing at its slowest pace since 2009, with gross domestic product rising only 4.7 per cent year on year in the second quarter, while the rupiah is at its lowest level against the dollar since the late 1990s. The biggest casualty of the reshuffle was Mr Sofyan Djalil, Coordinating Minister for Economic Affairs, who was replaced by Mr Darmin Nasution, the former governor of Bank Indonesia. Mr Sofyan has been reassigned to the post of Minister for National Development Planning. The post of Trade Minister went to Mr Thomas Lembong, a private investment fund manager, replacing Mr Rachmat Gobel, who had mired himself in controversies. Most recently, Mr Gobel’s decision to slash cattle imports led to beef prices surging, forcing the government to backtrack and increase imports. “Indonesia and the President are aware of a rising negative perception of its trade policies, and Lembong’s appointment is a corrective measure for that,” said Jakarta-based analyst Douglas Ramage. In addition, Mr Widodo appointed Mr Rizal Ramli, who served as coordinating minister for the economy more than a decade ago, as Coordinating Minister for Maritime Affairs, a sector the President is counting on to help his economic turnaround plans.... http://www.todayonline.com/world/jokowi-reshuffles-cabinet-bid-boost-economy
Editorial: Realigning the economic team The Jakarta Post | Editorial | Thu, August 13 2015; The main message Jokowi conveyed through the realignment of the economic portfolios is the urgent need for strong teamwork. Only with solid teamwork will the government be able to demonstrate how the various individual policies hang together in moving toward the broad direction into which the economy is being steered. Yet more important is that both Jokowi and Vice President Jusuf Kalla must protect the economic team from intervention by vested interests. - See more at: http://www.thejakartapost.com/news/2015/08/13/editorial-realigning-economic-team.html#sthash.K0iGi71v.dpuf
Jokowi inaugurates six new ministers The Jakarta Post, Jakarta | National | Wed, August 12 2015, 3:47 PM .... http://www.thejakartapost.com/news/2015/08/12/jokowi-inaugurates-six-new-ministers.html#sthash.ceeBWLoB.dpuf
16 July 2015: Jakarta Post Editorial - "righting" a 1999 Forestry Law wrong that has resulted in complaints and large inequalities in landholdings; UOBKH Indonesia 2H2015 roadmap
Khor Reports note: Another VERY important 1999 policy change was that year's Forestry Law. Thus, it was the World Bank / IMF liberalization policy package for Indonesia that helped lay the essential groundwork for the state to promote plantation private sector investment. State Forest Areas was an important move and so was the removal of old low 15-20% ceiling for corporate farm (inti) vs smallholder (plasma). The ratio was reversed to the current 80:20 inti:plasma. No surprise that these key policy changes sparked big FDI and DDI, enhanced by the commodity-biofuels boom. Subsequently, complaints of detrimental impacts to smallholder and indigenous peoples development and large inequalities in landholdings.
Editorial: Tackling inequality, land conflict The Jakarta Post | July 13 2015 | 8:48 AM The business community should not be surprised, nor inordinately worried, about the March regulation of the Environment and Forestry Ministry regarding the reallocation of up to 30 percent of industrial forests and forest concession areas to indigenous people. Rather, business players should have anticipated the regulation after the Constitutional Court’s ruling in May 2013 that the customary forests of indigenous peoples should not be classed as State Forest Areas. The civil society organization for indigenous people’s rights (AMAN) that asked for the juidicial review of the 1999 Forestry Law quoted the government’s own statistics in 2012 that revealed that there were some 32,000 villages whose lands overlapped areas classed as State Forest Areas, as defined in the 1999 Forestry Law....Many companies now own and manage pulp and tree crop (mainly oil palm) plantations ranging in size from a few hundred thousand to one million hectares. We are afraid that if this condition is not gradually corrected, mounting problems of inequality of income, wealth and land conflicts could threaten the long-term sustainability of the plantation industry, even the macroeconomic stability. We believe that harmonious and mutually-beneficial cooperation between big plantations and smallholders is the most effective way of expanding tree-crop plantations such as oil palm and rubber without widening inequality in landholding....http://m.thejakartapost.com/news/2015/07/13/editorial-tackling-inequality-land-conflict.html?sthash.vV5yJalC.mjjo
Editorial: Tackling inequality, land conflict | The Jakarta Post http://m.thejakartapost.com/news/2015/07/13/editorial-tackling-inequality-land-conflict.html?sthash.vV5yJalC.mjjo
UOBKH STRATEGY - INDONESIA Road Map 2H15 Feedback; RECOVERY IN 2016 ON THE BACK OF GOVERNMENT STIMULUS - Mixed feedback. Our conversations with local and regional fund managers regarding our upgrade on Indonesia received mixed feedback. Some fund managers view that in 2H15, the performances of corporate earnings and the JCI could be better as government spending picks up. Some are skeptical on the execution and currency risk involved in the infrastructure roll-out....
Large government stimulus translates to earnings growth. Analysing corporate earnings and stock market performance post various stimulus measures in China,Japan, the US and the EU, we found corporate earnings were likely to grow post the stimulus and the respective stock markets should appreciate if the stimulus is larger than 2% of GDP.
Signs of life in construction. Channel checks with construction companies revealed 53% yoy higher bookings ytd. The latest month suggested a very large pick-up. If this is sustained (especially if the bookings are public-sector projects, we should be positive on the construction sector .....
Ramping up spending at the Ministry of Transportation. Channel checks with the Ministry of Transportation (MOT) revealed that Minister Ignasius Jonan has pushed for spending from MOT’s Rp60t 2015 budget to be realised at the rate of 15% of budget per month starting 2H15. Despite the slow roll-out due to planning, the MOT revealed that the first route of the sea toll project has started with short sea shipping from Lampung to Surabaya via a regular Roro ferry.....
2 July 2015: Indonesia’s Military Resurgence , shift away from US dollar transaction, Jokowi's feud with Megawati
Indonesia’s Military Resurgence Posted on June 17, 2015By Warren Doull; Jokowi gambles on trading democracy for stability In recent months, Indonesia’s embattled President Joko Widowo has overseen a remarkable resurgence of military power over Indonesian society. Beginning in 1999, the military had been eased out of the dual role of dwifungsi – safeguarding the country against both external and internal threat – but the military now to some extent is resuming it. It has agreements in place to distribute fertilizer to farmers, guard prisons, and assist the national anti-narcotics agency. Talks are underway to also give it a role assisting the Corruption Eradication Commission and the ministries of transportation and fisheries. “I want the military to be involved more in humanitarian missions in the future,” the Defense Minister Ryamizard Ryacudu said earlier this month. The military even seems to be turning against civil society, conducting a nationwide campaign to tell Indonesia’s youth that Indonesian NGOs and civil society organisations could be vehicles for foreign interests.... Earlier this month, Jokowi even stood by while the corrupt national police asserted their right to ‘help’ select new commissioners for the Corruption Eradication Commission. These concessions have allowed his relationship with PDIP and senior police to remain on manageable terms. In November 2014, Jokowi approved military plans to build two new army commands: one in Papua and the other in Sulawesi. His concessions to the military are an attempt to befriend an institution that has played a role in the early departures of two previous civilian presidents: Habibie in 1999 and Wahid in 2001. These concessions are also an attempt to empower the military as a counterbalance to the increasingly arrogant police force.....While safeguarding himself against political maneuvers by the military, police force and PDIP, Jokowi has begun to take on other groups. In November 2014, he took on the illegal logging industry, maintaining a six-month moratorium on the issuance of all forest-exploitation permits that began under the previous government. In May, he renewed the moratorium. Also in May, he took steps against Indonesia’s powerful oil mafia via a newly-established anti-energy mafia committee that has succeeded in disbanding three corrupt government institutions: Pertamina Energy Trading Limited (PETRAL) and two of its subsidiaries. ... For reasons either of domestic politics or real conviction, Jokowi has identified new foreign adversaries. He has ordered the burning of encroaching fishing vessels and executed foreign drug smugglers. A decision to ban transactions and invoicing in US dollars is scheduled to come into effect on July 1, expected to cause chaos in the business community. Jokowi has also taken on opposition parties, who said his health cards and smart cards to expand social welfare were insufficiently explained and unclearly financed.....Environmental groups have expressed doubts about Jokowi’s ability to protect forests. Earlier this year, they noted that while rates of illegal logging have declined steadily in recent years, the legalized conversion of forests to plantations for palm oil has gone through the roof. Environmental activists aren’t feeling very safe either, since one was murdered in March 2015 in Jambi province and another in May 2015....http://www.asiasentinel.com/politics/indonesia-military-resurgence/2/
Jokowi’s Feud With Mega Colors Indonesian Politics - The Corruption Eradication Commission is caught in the middle of it by Asia Sentinel Posted on June 22, 2015; Relations between Indonesian President Joko Widodo and Megawati Sukarnoputri, the woman who was instrumental in putting him in power, are continuing to deteriorate, with Megawati’s Indonesian Democratic Party of Struggle (PDI-P) pushing a bill to diminish the clout of the powerful Corruption Eradication Commission and Jokowi saying he has no plans to revise the law governing the commission. Jokowi, the popular former governor of Jakarta and a longtime member of the PDI-P, rode the party’s machinery to victory in the 2014 presidential election over Prabowo Subianto, his opponent. Today, however, he has little apparent support in the party, few allies in the country’s national institutions and will only need voter support if he runs for reelection in 2019. The rift with Megawati has been growing for months...In April, at the PDI-P’s party enclave in Bali, Megawati delivered a speech with Jokowi sitting in the audience that in effect told the President he was a product of the party and that his job was to remain in its service. Indonesia’s system of democracy, she said “regulates that the president and vice president naturally enforce a political party’s policy line,” she said. She said she had faced “many betrayals,” adding that “multiple times I was stabbed in the back” because of “political ambitions for power.” It was a humiliating moment. Jokowi was not invited to speak at the congress. She is also said to be angry because the PDI-P was given only four positions in the 34-member cabinet last October – no more than any of the other parties in Jokowi’s coalition....
http://www.asiasentinel.com/politics/indonesia-jokowi-feud-benefactress/
Jokowi and the mysticism of Indonesian politics - In Javanese belief, Jokowi is seen by many as the messianic Ratu Adil (Just King). Photo: Reuters By Johannes Nugroho Published: 4:16 AM, June 23, 2015; ....in Indonesia, ardent supporters of President Joko “Jokowi” Widodo are having a difficult time acknowledging his blunders. He was, after all, seen by many as the messianic Ratu Adil (Just King), prophesied to usher in a golden age for the country. When the President, better known as Jokowi, nominated police general Budi Gunawan as the sole candidate for the position of chief of National Police, there was a general outcry of disbelief. Given his publicly declared commitment against corruption, the decision came as a surprise, especially as the Corruption Eradication Commission (KPK) had told Mr Widodo the general was under investigation for graft. Criticised for bowing to the pressure from his political patron Megawati Soekarnoputri, chairwoman of the Indonesian Democratic Party of Struggle (PDI-P), the President proved himself willing to compromise his stance on corruption....http://www.todayonline.com/world/asia/jokowi-and-mysticism-indonesian-politics?singlepage=true
27 June 2015: Indonesia May Replace Economics Team, VP Kalla says
Indonesia May Replace Economics Team, Vice President Says - Jusuf Kalla says speeding up spending on stalled infrastructure projects is priority By Ben Otto And Anita Rachman June 26, 2015 8:41 a.m. ET; JAKARTA, Indonesia—A cabinet shake-up is coming and could bolster the Indonesian government’s economics team as it struggles to reverse a downturn in Southeast Asia’s largest economy, Vice President Jusuf Kalla said Friday. “We’ll change [to create] a better team” after evaluating all ministers, Mr. Kalla said in an interview. Pressure has been building on President Joko Widodo to shake up his cabinet as his programs to...
http://www.wsj.com/articles/indonesia-may-replace-economics-team-vice-president-says-1435322407
26 June update note: Traders point out that new Indonesia levies applies to corporates and NOT smallholders
25 June 2015: Indonesia palm oil - levies for prices below $750 and export taxes if prices exceed $750; Gapki seeks CPO Fund support for replanting efforts as well as biodiesel subsidies and other industry development efforts; acknowledges short-term costs of levies but expects positive effects in one year; Jokowi administration prepares areas for sugar, cattle investors in Eastern Indonesia, but NGOs vow action
Port infrastructure, replanting issues challenge govt’s CPO push Grace D. Amianti, The Jakarta Post | Business | Wed, June 24 2015; Indonesia, the world’s top palm oil producer, still needs to improve its port infrastructure and boost replanting to increase competitiveness amidst a government push on the major industry, a business group says. The two issues are expected to be addressed by the government’s recent establishment of the crude palm oil supporting fund (CPO Fund), which will collect levies from CPO exporters to be channeled into the development of the industry, as well as biodiesel subsidies, according to the Indonesian Palm Oil Producers Association (Gapki). The business group, acknowledging that the levy will create additional short-term costs, welcomed the government’s funding initiative, as it is expected to develop and improve competitiveness of the industry in the international market.“Infrastructure problems, including industrial cluster ports, have been one of our main concerns regarding our palm oil competitiveness,” Gapki chairman Joko Supriyono said after discussing a road map of the country’s palm oil industry with the Industry Ministry.“We expect that the levy will create positive effects in one year, but on top of that, we also hope that the fund will support replanting efforts, which are currently urgent,” he added.....The levies imposed on palm oil exporters will consist of a US$30 per ton charge on processed palm oil and $50 per ton on crude palm oil, if prices fall below $750 per ton, according to a Finance Ministry regulation.If prices exceed $750 per ton, palm oil producers will continue to pay export taxes of between 7.5 and 22.5 percent, as required by existing regulations. Currently, CPO trades above $670 per ton and its benchmark price fell nearly 15 percent last year. - See more at: http://www.thejakartapost.com/news/2015/06/24/port-infrastructure-replanting-issues-challenge-govt-s-cpo-push.html#sthash.xwXWXp5M.dpuf
Govt prepares areas for sugar, cattle investors; Grace D. Amianti, The Jakarta Post, Jakarta | Business | Thu, June 18 2015, 9:01 AM; The government has prepared three areas in eastern Indonesia for new cattle farms and sugarcane plantations, Agriculture Minister Amran Sulaiman said in Jakarta on Wednesday. Speaking after a meeting with the Investment Coordinating Board (BKPM) head Franky Sibarani, Amran said the government had prepared three regions — Southeast Sulawesi, Merauke in Papua and the Aru Islands in Maluku — as the main sites for at least 10 sugar factories and sugarcane plantations for new investors. Amran said his ministry and the investment board would work together to continue removing barriers so that interested investors would be able to realize their investment plans in these two important sectors. He said as many as 26 foreign investors had expressed an interest in developing sugar refineries and sugarcane plantations, while nine others wanted to enter the cattle business. The 26 investors who expressed a keen interest in entering the country’s sugar industry consisted of 11 refined sugar producers and 15 sugarcane plantation companies, Franky said.
“There are also around two to three Japanese investors who are interested in investing in the sugar industry. However, most of the time, in the sugar sector, foreign direct investors choose to first collaborate with their local partners in joint-venture companies,” Franky said. According to his ministry’s calculations, Amran said, a sugar refinery with a capacity to process 10,000 tons of sugarcane per day would cost about Rp 5 trillion (US$374.4 million) to build. The Agriculture Ministry has also run the plan by the Environment and Forestry Minister Siti Nurbaya, who agreed that the land in the three regions would be able to support the industry, Amran added. “We are planning to allocate 500,000 hectares of land in the three regions, calculating that one mill with a plantation will need at least 50,000 ha of land,” Amran said. Aside from the sugar industry, Amran said at least nine foreign and domestic investors also showed an interest in investing in Indonesia’s cattle sector, which would be located in regions such as East and West Nusa Tenggara, Buru Island in Maluku and East Kalimantan. - See more at: http://www.thejakartapost.com/news/2015/06/18/govt-prepares-areas-sugar-cattle-investors.html#sthash.cpdfVvip.dpuf
Palm oil isn’t the only junk food ingredient threatening Indonesia’s forests by Margaret Badore (@mbadore) Science / Climate Change June 23, 2015 Much attention has been paid to the role of palm oil the loss of Indonesian forests, but plans for expanded sugarcane plantations are more bad news. Indonesia is among the countries with the highest rates of deforestation in the world. Between 2000 and 2012, over 6 million hectares of primary forests were cut down, according to a study published in Nature Climate Change. Demand for timber and wood pulp is a factor in forest loss, as is conversion of forest to produce agricultural products. Deforestation is a serious threat to the local communities who depend on the forests for their traditional livelihoods. The result is not only a loss of local biodiversity and cultural heritage, but also a large contribution to global warming as the rich carbon sink embodied by natural forests is lost. For many consumers in the U.S. and Europe, palm oil is the commodity of concern, as it's found in everything from cookies to ice cream to shampoo. Forest is regularly cleared to make way for palm oil plantations, which is largely grown for an export market. But last week, the Indonesian government announced that it’s setting aside 500,000 hectares for a different crop: sugarcane. According to The Jakarta Post, 26 foreign investors have expressed interest in sugarcane plantations and refineries, which are planned for three different regions of Indonesia, including the Aru Islands. The announcement goes against earlier government statements, in which the Minister of Forestry announced that sugarcane permits would be cancelled in the Aru Islands, due to unsuitable land conditions. Environmental advocates and indigenous groups have criticized the announcement and vowed to fight it, according to Forest Watch Indonesia, an independent monitoring network.... http://www.treehugger.com/climate-change/palm-oil-isnt-only-junk-food-ingredient-threatening-indonesias-forests.html
21 June 2015: Rising unemployment worry for Jokowi - youth unemployment already over 20% in 2013, slow spending on infrastructure and shortage of skilled labour, purchasing power - consumption takes a hit
Rising unemployment piles up problems for Indonesian president - Reuters By Eveline Danubrata and Cindy Silviana 8 hours ago; JAKARTA (Reuters) - Indonesian companies are shedding jobs as they grapple with the weakest economic growth in six years, adding to the troubles facing President Joko Widodo, who was elected last year on pledges to dig the country out of a rut. Government data might suggest no cause for alarm - unemployment was 5.81 percent in February, up only slightly from 5.70 percent a year earlier - but the official numbers are notoriously unreliable and don't adequately cover the informal sector, which is two-thirds of Southeast Asia's biggest economy.
Recent reports of heavy lay-offs across the country paint a bleaker picture, and business executives, recruitment firms and jobseekers say it is getting worse....... Young people are being hit hardest; the International Labour Organization estimated the youth jobless rate was more than 20 percent in 2013, and economists believe it is higher now. About a third of the workforce is aged 15 to 29, a youth bulge that could bring Indonesia, a country of 250 million people, the sort of demographic dividend China and South Korea enjoyed a generation ago - but only if there are jobs for the 2 million people joining the workforce every year. "The government doesn't have a blueprint for labor absorption," said property businessman Hariyadi Sukamdani, chairman of the Indonesian employers' association. ........When he took office eight months ago, Widodo said he would pour billions of dollars into infrastructure and foster growth in manufacturing. But the promised splurge on roads, power plants and ports has not materialized, largely because of bureaucratic hold-ups and land disputes, and a shortage of skilled labor is holding back growth in value-added industries. Miners have been hammered by a double whammy: a ban on mineral ore exports and a sharp drop in commodity prices.
Meanwhile, labor-intensive industries such as textiles and manufacturing have been hit by the rupiah's slide to a 17-year-low, which has raised the cost of imported raw materials ........Unemployment in turn is hitting consumption, which makes up more than half of Indonesia's economy. Automobile sales in May fell 18.4 percent from a year earlier, the ninth decline in a row. "Stocks are piling up because nobody is buying. The people's purchasing power is weak," said Ade Sudrajat, head of Indonesia's textile association. "This has never happened before in the last 45 years.".....At job fairs in Jakarta the gloom is palpable... http://news.yahoo.com/rising-unemployment-piles-problems-indonesian-president-033557677--sector.html
16 June 2015: Jokowi's key Econ Coordinating Minister presides over FGV-Eagle High strategic partnership announcement and BLU (new agency) for $30-50/tonne levy targeted at oil palm farmers - growers to support biodiesel segment (and hoping to boost palm oil prices in longer term).
16 June 2015: FGV - Eagle High deal - The Edge reports 23% down payment prior to S&P agreement and Peter Sondakh / Rajawali cash raising and strategic deal witnessed by Sofyan Djalil (Econ Coordinating Minister) and Malayisa MITI's Mustapa Mohamed - Jakarta Globe
Rajawali Piles Up Cash, Gets Ready for More Acquisitions By Vanesha Manuturi on 05:08 pm Jun 14, 2015.... The venture would mark Rajawali’s second sale this year as the group works to focus on its other core businesses: property and mining.... Peter (Sondakh) built his reputation by buying then selling companies with a hefty profit in the past decade. The conglomerate’s most lucrative deals include the sale of Bentoel International Investama for $494 million in 2009 to British American Tobacco. In 2010, Rajawali sold $1 billion worth of shares in Semen Gresik, which it bought from Mexican cement maker Cemex for $337 million in 2006.....The business conglomerate — whose businesses range from palm oil, property to mining — signed an agreement with executives from Felda Global Venture on Friday, witnessed by Indonesia’s Coordinating Minister for Economy Sofyan Djalil and Malaysia’s Minister of International Trade and Industry Mustapa Mohamed.
The acquisition deal is expected to be completed by August, according to Darjoto. “This strategic partnership is a great collaborative example that is beneficial to both Indonesia and Malaysia,” Darjoto told reporters after the signing event in Jakarta on Friday.
http://thejakartaglobe.beritasatu.com/business/rajawali-piles-cash-gets-ready-acquisitions/
More here: http://khorreports-palmoil.blogspot.co.uk/2015/04/corporate-news-indomie-morocco-delta.html
15 and 10 June: Indonesia delays start date for palm export levy to July 1 - Reuters; new Indonesia agency (BLU) under Office of the Coordinating Economic Minister to be completed for near term start of $20-50 levy; more here: http://khorreports-palmoil.blogspot.co.uk/2014/07/biodiesel-news-update-5.html
8 June 2015: Indonesia Is Using Drones to Catch Tax Cheats
Indonesia Is Using Drones to Catch Tax Cheats by Chris Brummittand Herdaru Purnomo June 3, 2015 — 11:00 PM BSTUpdated on June 4, 2015 — 5:04 AM BST The tax drone cometh. Above the vast forests of oil-palm and rubber trees in Sumatra and the scattered tin mines on islands to its east, the Indonesian government is flying unmanned aircraft to catch cheats who under report the size of their plantations or the extent of their mineral extraction. “Mines and plantations make good profits just taking stuff from nature,” said Samon Jaya, head of the tax office in South Sumatra and Bangka-Belitung islands. “But they don’t pay enough tax. This has to stop.” For Indonesia’s cash-strapped government, policing revenue across a chain of 17,000 islands that would stretch from New York to Alaska is no easy task. Remote areas on the islands of Sumatra and Borneo, where most of the palm oil trees are grown, are difficult to access and the government can’t afford a dedicated satellite or helicopters. Out of a population of 250 million, only about 900,000 Indonesians submitted a tax return last year, and the country’s tax-to-gross domestic product ratio of about 11 percent is below the Asia-Pacific region’s average. Jaya says the mines and plantations in his jurisdiction only pay about 30 percent of the tax they should. The industries, along with the rest of agriculture, forestry and fisheries, account for about a quarter of the nation’s nominal GDP. President Joko “Jokowi” Widodo wants to plug such leaks to help fund a more-than $400 billion infrastructure program. Since he took office in October, Jokowi has offered to exempt citizens from penalties if they settle unpaid taxes. He’s also raised pay for collectors. http://www.bloomberg.com/news/articles/2015-06-03/drones-seek-out-tax-cheats-in-indonesia-s-palm-oil-plantations
28 May 2015: Jokowi wants to lift GDP to 7 percent within five years, in part by cutting logistics costs that account for almost a quarter of the $811 billion economy - $6 billion port revamp - Bloomberg
Sinking Indonesia Docks, Idle Ships Spur $6 Billion Port Revamp - President Joko Widodo wants to cut logistics costs to drive domestic trade and increase exports 'By'Neil Chatterjee, Fathiya Dahruland Chris Brummitt May 27, 2015; Jokowi, who turns 54 on June 21, plans to link industrial centers in Jakarta to a new port in the capital by building a road and raising canal bridges to accommodate barges. In January, the government broke ground on a new deep-sea port in Medan on Sumatra. Jokowi wants to start constructing four more ports in October and expects to have finished an offshore project begun earlier at Kalibaru in Jakarta by then. It’s all part of his commitment to drive domestic trade and increase exports of everything from palm oil to cars. “When we have good infrastructure, there’s connectivity from city to city, from province to province, from island to island,” Jokowi said in a February interview with Bloomberg in his office, where he displays a bust of Indian independence leader Mahatma Gandhi. “There is connectivity to ensure that our economy will grow fast.” Jokowi has reason to act quickly. Gross domestic product in Southeast Asia’s biggest economy grew 4.7 percent in the first quarter of 2015, the weakest since the financial crisis. He wants to lift that to 7 percent within five years, in part by cutting logistics costs that account for almost a quarter of the $811 billion economy........
1 May 2015: Trans Sumatra Toll Road (JTTS), the Bakauheni quay and double track railway will support the distribution of logistics for both the agriculture and plantation sectors in all provinces across Sumatra
Trans Sumatra toll road will support logistics: Jokowi Oyos Saroso HN, The Jakarta Post, Bandarlampung | Business | Thu, April 30 2015, 7:51 PM; President Joko “Jokowi” Widodo has said the Trans Sumatra Toll Road (JTTS), the Bakauheni quay and double track railway will support the distribution of logistics for both the agriculture and plantation sectors in all provinces across Sumatra island when the facilities are complete.“Industrial areas around the toll road will develop more significantly. This will support Indonesia’s economic growth,” he said on Thursday.The president was speaking at an event to mark the groundbreaking of the Bakauheni-Terbanggi Besar toll road construction project in Sabahbalau village, Tanjungbintang district, South Lampung.The Bakauheni-Terbanggi Besar toll road is part of the 2,818-kilometer JTTS project. (ebf) - See more at: http://www.thejakartapost.com/news/2015/04/30/trans-sumatra-toll-road-will-support-logistics-jokowi.html#sthash.LNLG4bZX.dpuf
28 April 2015: Indonesia’s Joko Loses the Economic Plot - Asia Sentinel
Indonesia’s Joko Loses the Economic Plot Posted on April 22, 2015; ....President Joko Widodo said Indonesia is “an incredible place to invest” and invited the participants “to join our incredible people on an incredible journey and make incredible profits.” But mounting protectionist policies have ruled Indonesian economic policy for the past several years and they are not going away. Investors complain that it is getting harder not easier to invest in “incredible” Indonesia....... From moves to force banks and other companies to place their data centers onshore to making dollar transactions illegal and even banning the sale of beer in mini markets, a number of often capricious and confusing policies have foreign investors and others wondering if Indonesia wants to withdraw from the world......“I heard a presidential advisor in a top-level meeting say globalization has been bad for Indonesia,” said one businessman with good political connections. “This is being taken seriously.”
The recent decision to ban dollar transactions and invoicing by July 1 is an example. Seemingly designed to shore up the weakening rupiah, trading at lows not seen since 1998, it threatens long-standing contracts, insurance policies and investment tenders. It has businesses scrambling to understand what to do now. The rupiah is the worst-performing currency in Asia this year, and foreign exchange reserves dropped by almost $4 billion in March as the central bank stepped in to support the rupiah....... Eko Yulianto, acting director of money management at Bank Indonesia, told Reuters that with the new regulation, the bank aims to reduce current demand of at least $6 billion each month for domestic transactions. “We don’t want a dollarized economy so we need to uphold the sovereignty of the rupiah,” Eko told reporters at a briefing...........Other companies worry about a staggering 40 percent target to increase tax collections for 2015 over the previous year. The drive has resulted not in an increase in the small number of Indonesians who actually pay taxes but still more actions against companies who suddenly find routine logistic deductions and other charges denied. In the first quarter, tax collection did not even reach levels from a year earlier........
http://www.asiasentinel.com/econ-business/indonesia-jokowi-loses-economic-plot/
22 April 2015: Papua food estate project to be revived, Norway PM - Jokowi stressed environmental commitment, REDD+ program and moratorium extended, recognizes "cultural change" needed to curb deforestation
Govt to revive food estate project in Papua Linda Yulisman, The Jakarta Post | Business | Thu, April 16 2015, 8:03 AM; With its high food self-sufficiency target, the government is considering reviving the stalled “food estate” program of the prior administration by involving private and state-owned companies.The extensive commercial farming will focus on rice, corn and soybean — all are food crops laid out in the self-sufficiency goal, according to State-Owned Enterprises Minister Rini Soemarno. “We will synergize the whole processes from seeding to fertilizing,” she said.State-owned enterprises, such as fertilizer producer PT Pupuk Indonesia Holding Company, seedling company PT Sang Hyang Sri and agribusiness firm PT Pertani, will take the lead in the projects, Rini said.Designed in the early days of Yudhoyono’s administration in 2009, the project was meant to integrate farming and food-based energy generation to replicate the success story of Brazil’s large-scale agricultural projects.... By last year progress had stagnated in the completion of an environmental analysis (Amdel) and in provincial spatial planning, Agriculture Ministry’s director general for agriculture infrastructure and facilities Gatot Irianto told The Jakarta Post.“The stocktaking of customary land is a difficult thing and this must be endorsed further,” he said, adding that he viewed the need to make the planned food estate a special economic zone to enjoy special treatment to enable implementation. Despite the snail-paced progress in the past, Minister Ferry said the planned project could, nevertheless, begin as soon as the second half of this year..... With the strategic location of Merauke near the sea, it will be easy to transport the output to other areas once seaports are established, according to Ferry.Investment Coordinating Board (BKPM) chief Franky Sibarani said the broader Indonesian food sector might receive investments this year, notably from foreign companies.“We’ve heard about interest by American and Japanese firms to invest in growing corn and cassava,” he said..... http://www.thejakartapost.com/news/2015/04/16/govt-revive-food-estate-project-papua.html#sthash.OzWpIE6x.dpuf
Norway PM: Jokowi Stressed Environmental Commitment By Randy Fabi on 06:22 pm Apr 15, 2015; President Joko Widodo welcoming Norwegian Prime Minister Erna Solberg at the State Palace on Tuesday. (Antara Photo/Yudhi Mahatma); Jakarta. President Joko Widodo has assured Norway, which has pledged up to $1 billion in aid to help preserve Indonesia’s forests, that he is as committed to the environment as his predecessor, the Norwegian prime minister told Reuters. Soon after coming into office in October, Joko dissolved the independent National Reducing Emissions from Deforestation and Forest Degradation Agency, merging it with the Environment and Forestry Ministry. That raised concern among green activists that Indonesia might be rolling back on its climate deal with Norway, signed in 2010 by then-president Susilo Bambang Yudhoyono.
“We also have been a bit anxious about whether the new government would continue at the same pace as the old government. I think they are back on track,” Norwegian Prime Minister Erna Solberg said in an interview late on Tuesday after meeting with Joko in Jakarta. Indonesia imposed a temporary moratorium on clearing forests as part of the deal with Norway. A government official said earlier this month the Joko administration would extend the ban. Under the deal, Indonesia will receive payments based on the amount of reduced deforestation. But environmental groups say forest clearing has accelerated due to an expansion in mining and palm oil plantations. “We have become more realistic on how fast you can achieve results,” said Solberg, adding that Indonesia needed “cultural change” to successfully curb deforestation..... http://uk.reuters.com/article/2015/04/15/indonesia-norway-environment-idUKL4N0XC1UU20150415
18 April 2015: The race for a slice of China’s manufacturing is part of Indonesian President Joko “Jokowi” Widodo’s effort to reduce the country’s dependence on exports of minerals and palm oil
Is Indonesia the world’s next China? Published: 4:16 AM, April 11, 2015; Indonesia is looking to recreate the success of Shenzhen, the marshy village in southern China that became the heart of that nation’s industrial expansion in the late 1990s. Now China is too expensive for many factories, and industries that poured money into cities from Shenzhen to Shanghai for two decades are looking for somewhere with lower costs and lots of cheap workers.... “The great China boom was really bad for the South-east Asia economies,” said Mr Tim Condon, the Singapore-based head of Asia research at ING Groep. “With the China slowdown, all that moves in reverse. South-east Asia’s manufacturing sector is the big winner, as it was in the early ’90s.”..... That’s created a beauty contest among low-income nations looking to lure investment, including Vietnam with its high-technology parks and the Philippines with its young population and English-language skills. Indonesia’s trump cards are the region’s biggest economy and some of its lowest wages...... Workers in Central Java, the province of 30 million people where Mr Saefullah is fishing, earn as little as 50 cents an hour — less than US$100 (S$136) a month. In the industrial area around Jakarta, they get almost twice that. In Vietnam the minimum monthly wage is US$146, while it’s about US$200 in the Philippines and US$240 in Malaysia...... The race for a slice of China’s manufacturing is part of Indonesian President Joko “Jokowi” Widodo’s effort to reduce the country’s dependence on exports of minerals and palm oil........ http://www.todayonline.com/world/asia/indonesia-worlds-next-china
12 Mar 2015: Kalla says Indonesian business in forestry now looked on more as public enemies, profiteering form national assets, and people now fight discharge of industrial waste and changing expectations should be reflected in new laws - on forestry, the Jokowi administration seen as taking charge and doing things differently
Tackling haze: Look beyond words to action taken By Simon Tay and Cheong Poh Kwan Published: 4:13 AM, March 11, 2015; The recurring haze from fires in Indonesia has returned, visibly and early, even if not as thickly as in past years. The politics around the issue may also heat up following a recent comment by Indonesia’s Vice-President Jusuf Kalla.... The respected political veteran last week chided Malaysia and Singapore for overreacting about the haze, largely a by-product of peat fires in Sumatra and Kalimantan. “For 11 months, they enjoyed nice air from Indonesia and they never thanked us,” he was quoted as saying in Indonesian media. “They have suffered because of the haze for one month and they get upset.” His remarks triggered a predictable torrent of criticism on social media and satire websites.... Mr Kalla’s words should be understood in context. The Vice-President was speaking at a ceremony to launch a national programme for judicial reform in natural resources and environmental management last Tuesday.... While he made that comment most likely in response to a question from the press, his key point was on the need to adapt the country’s laws to changing times and public perception, reported Indonesian media such as Kompas and Metro TV....
The Vice-President recalled how Indonesian businessmen were once looked at with pride for being good at exporting the country’s forestry products, but are now often seen as public enemies, profiteering from national assets. Similarly, while people used to see black smoke rising from factory chimneys as signs of progress, they now fight to stop the discharge of such health-threatening industrial waste. Such changing expectations should be reflected in new laws, he said.... The increased attention on this issue is also signalled by Mr Widodo and supported by his Cabinet. The President, a forestry graduate, personally made a high-profile visit to a haze-prone zone in Riau late last year. This followed a petition filed by an ordinary citizen against one of the more controversial concessions in the region. ... Notably, the President’s Cabinet has fused the ministries of Environment and Forestry to seek to balance and align their interests for a more sustainable industry. The new minister, Dr Siti Nurbaya, has won praise for her frequent consultations with non-governmental organisations as well as business groups. She has also launched a standard geospatial map for use across all ministries to increase coordination in the administration of Indonesia’s forested areas. For Riau, a new forest and land fire mitigation and prevention action plan has also been launched under her watch. Her ministry is also closely monitoring lawsuits brought against forest-burning suspects over the past two years. When a state court recently dismissed charges against a firm in Riau’s Meranti Islands regency, the minister personally challenged the verdict. ... For many long-time observers of the forestry industry, this goes beyond business as usual. The new administration has shown that it is taking charge and is prepared to do things differently.....
http://www.todayonline.com/commentary/tackling-haze-look-beyond-words-action-taken?singlepage=true
28 Feb 2015: Jokowi agenda on rice sector development to see TNI-Babinsa's 50,000 force deployed as quasi-agricultural extension officers but it could mean a lot more
A very fascinating move. Sounds like it could immediately help strengthen Jokowi's position in Indonesia's high politics? Close observers have been noting his recent political shifts as seeking more independence of his party sponsors. He clearly a lack of a party political machinery of his own. Would Jokowi have a strong sway over the TNI-Babinsa's 50,000 force? I recall some consider Indonesia military-linked enterprises to be among the biggest business groups in the country. The new presence in agriculture of the TNI-Babinsa's 50,000 personnel as an agricultural extension force will be something to keep in view. It could be a new player who will directly / indirectly affect rural power relations in various geographic and crop sectors, with a key target on rice. It is notable that nearby Malaysia's rural political history clearly attests to the importance of rural development administration agencies, political and/or state-linked NGOs in electoral politics*. Thus, we need to look at the current state of Indonesia's rural politico-administrative organisations and NGOs and how TNI-Babinsa will be positioned and funded. How will a stronger military-SOE (state owned enterprise) and rural administration role eventually even touch on other key rural interest group including palm oil smallholders? This sector's farmers are likely relatively more well-off than the average rice farmers, but may still be keen on extension services to improve yields, and may need assists in certification to ensure international market access (which is being challenged via regressive - higher cost to small farmers - de facto international sustainability trade voluntary deals).
Note: *"The Political Tussle Over Felda Land Schemes" by Khor Yu Leng http://web.usm.my/km/32(Supp.2)2014/KM%2032%20Supp.%202_2014-Art.%204%20(89-121).pdf: "During the run-up to GE13, key PAS personnel and the UMNO Information Chief Datuk Ahmad Maslan have estimated (without disclosing their estimation methods) the FELDA voter support for UMNO at 70%–90%, while UMNO hypothesises that most PAS supporters emerged when PAS was a member of BN (New Straits Times, 2010). The activity and strength of UMNO linked non-governmental organisations (NGOs) in the social sphere among FELDA areas has been cited as a reason for PAS's inability to increase its voter base (New Straits Times, 2010): If PAS has Anak to help champion its cause, UMNO has several non-governmental organisations, such as Gabungan Wawasan Generasi FELDA (GWGF) and Majlis Belia FELDA Malaysia (MBFM), on its side. MBFM has been very active in all 54 parliamentary constituencies covering FELDA settlements since the last general election. It boasts of about 100,000 members and organises mostly social and sports programs..."
Jokowi’s Food Sovereignty Narrative: Military in the Rice Land? By Jonatan A. Lassa and Adhi Priamarizki RSIS Commentary No. 040/2015 dated 27 February 2015; THE INDONESIAN government is moving quickly to create a big impact in the agricultural and food sectors. Framed within a strong food sovereignty narrative, President JokoWidodo is now imposing two big agendas for the rice sector’s development. The first is to boost rice production to achieve 100 per cent self-sufficiency. The second is to graduate from 100 per cent rice self-sufficiency to be a rice exporting nation in the near future...... To achieve these targets, the Ministry of Agriculture (MoA) recently planned to re-utilise the military’s (TNI) civic mission (TNI Manunggal Masuk Desa) through the Village Supervisory Non-Commissioned Officers (Babinsa) as quasi-agricultural extension officers. Amran Sulaiman, the minister argued that “50,000 Babinsa across the country would be a big help to cover the deficit of 20,000 agricultural extension officers (AEOs)”. In the past, this was largely inspired by security concerns (such as controlling communism and farmers’ movement)..... Jokowi’s food sovereignty concept has its origin in the global farmers’ movement which allowed farmers to have greater autonomy and control over their own affairs based on their own decisions. In fact, food sovereignty is a rather ‘leftist paradigm’. The military’s recent interest in backing up Jokowi’s agenda could be justified by their interest in controlling the implication of food sovereignty on the farmers’ movement.... One can therefore question why and how the government’s involvement of the military in boosting agricultural production as a temporary solution to quicken the achievement of rice production targets amid the lack of AEOs. Some concerns remain as this policy may have long term implications. Firstly, one may question the urgency, effectiveness and value added of the military involvement in entering the rice field.... Secondly, the military presence may affect civil society’s role in agriculture because their involvement may discourage the genuine participation of farmers. Even though agriculture work can be classified under military operations other than war, the government should be able to explain the urgency of the military’s involvement in the food sector. This can be counter-productive for food production. A decline in public trust in Jokowi’s administration can dramatically accelerate.....
24 Feb 2015: Jokowi political and police-KPK tussles? Jokowi tax amnesty offer and commodity export LC requirement to shift money flows and expand Indonesia capital market; Singapore observation; firm stance on drug executions
Just over a week ago, we managed to catch up with one of our contacts who's a Southeast Asia business development specialist and very familiar with the Indonesia political-economy. Interesting feedback on the Jokowi attempted political shifts vis-Ã -vis his sponsor party; and also the talk on his relative political and advisor isolation given that he is an outsider, with no grassroots party of his own. There is also news on possible police-KPK tussles.
On the news front, more interesting policy commentary on shifting regional trade bookings and money flows. The April policy on LCs for key commodity exports hopes to clamp down on transfer pricing and bookings in tax-friendly trading centers. The new policy (reported early Feb) to help bring more money back to Indonesia is a tax amnesty. The question is how Indonesia businessmen and businesses respond to these policies (even if partially) and how it will inject more activity into Indonesia's banking sector and domestic investments. Policy moves to develop Indonesia's own capital markets, investment and value-add are to be expected. A shift of money from Singapore could be significant - back in the early 2000s when I was doing market sizing work in the private banking / wealth management sector there, it was frequently said that perhaps half the money was from Indonesia. The LC and tax amnesty issues are relevant for many in the Indonesia palm oil sector.
Over the last few weeks, at visits in Singapore, the gloom among staffers we met in the financial sector was palpable. Worries of business volumes and also the chatter about the many firings going on - from an international bank closing its Asia equity business, to a Malaysian investment bank with a big expenditure cutting plan and more. This seems to link up with the commentary below (see investor newsletter The New World) on slowing Singapore growth and the relative outperformance of the markets in its client-neighbours. Singapore has also been boosting its gaming and property sectors ever since the launch of its two casinos. We happened to speak to an analyst who covers the gaming sector - he noted that the Macau and Singapore gaming stories may be over with the China anti-corruption clampdowns. Over the Lunar New Year long weekend, a friend who has been based in Beijing for many years reported that while we may read of big political names being caught, the international audience may be missing the news on the many corporate players including retired managers being caught. China's anti-corruption drive is serious. Meanwhile in Singapore, we also hear from investors in the high-end sector there that prices and rentals may have fallen some 40% off the peak. It may seem a bit odd for this blog to dwell a bit on Singapore issues, but a lot of the regional commodity folk spend some time there.
News and commentary links:
Indonesia’s new tax law is bad news for Singapore From Lars Henriksson, in Bangkok, The New World newsletter; 23 February, 2015; Indonesian president Joko Widodo isn’t going to be very popular in Singapore right now.... He’s recently announced plans to introduce a tax amnesty for Indonesians in a bid to lure investors and companies back to the country. The nuts and bolts of it is that money kept in Singapore and other offshore countries could be repatriated to Indonesia without paying tax on it. It’s part of President Widodo’s plan to increase Indonesia’s GDP from about 5% to 7%. To make that a reality, a lot of capital is needed to build ports, railways and industrial estates and this tax amnesty plan is just one of several ways Widodo is planning to raise funds... It’s great news for Indonesia but bad for Singapore....Its success came from its popularity as a trading hub. Natural resources were either shipped or traded through Singapore to buyers elsewhere. Singaporean entrepreneurs were able to profit from this and Singapore established itself as the middleman of Southeast Asia.... For decades, countries like Indonesia, Malaysia, Philippines and Thailand have lagged Singapore in trading and services, But I think the gap is narrowing, making it tougher for Singapore to continue its economic growth model.... Official statistics bear out this view.... Since 1976, Singapore has registered an average GDP growth of 6.9%. In the 4Q14, GDP dropped to a pedestrian 2.1% (2.9% for whole 2014).... The Ministry of Trade and Industry forecasts 2%-4% GDP growth in 2015. Even if they are proven right (too bullish in my view) it would mean that Singapore is still slowing down massively.... Meanwhile, Indonesia, Malaysia and the Philippines have generated positive returns since November 2010 but they have also outperformed Singapore....
Jokowi plans tax amnesty to lure cash back - Money repatriated to Indonesia will not be taxed, companies will get tax break; 7 Feb 5:50 AM http://www.businesstimes.com.sg/government-economy/jokowi-plans-tax-amnesty-to-lure-cash-back
Tax reform under Jokowi’s platform Adri AL Poesoro, Jakarta | Opinion | Mon, July 21 2014, 10:17 AM - See more at: http://www.thejakartapost.com/news/2014/07/21/tax-reform-under-jokowi-s-platform.html#sthash.Gb2ST3aL.dpuf
New police detectives may hamper KPK investigations Haeril Halim and Margareth S. Aritonang, The Jakarta Post, Jakarta | Headlines | Mon, February 23 2015, 5:58 AM; Doubts have mounted over the Corruption Eradication Commission’s (KPK) future commitment to pursuing high-profile cases following a plan to assign new police investigators to assist the antigraft body at the request of its new leadership.Antigraft campaigners have voiced pessimism over the future of high-profile graft probes under the leadership of acting chairman Taufiqurrahman Ruki and acting deputy chairman Indriyanto Seno Adji because of perceived potential conflicts of interest in a number of cases being investigated by the KPK....http://www.thejakartapost.com/news/2015/02/23/new-police-detectives-may-hamper-kpk-investigations.html#sthash.DMLlaRhk.dpuf
Indonesia says executions won't be delayed despite mercy pleas By Kanupriya Kapoor Tue Feb 24, 2015 2:55am EST; Feb 24 (Reuters) - Indonesia's president said on Tuesday the planned execution of 11 convicts on death row, most on drugs charges, would not be delayed, warning foreign countries not to intervene in his government's right to use capital punishment.... President Joko Widodo has denied clemency to the convicts despite repeated pleas from Australia, Brazil and France, who have citizens due to be executed by firing squad.... "The first thing I need to say firmly is that there shouldn't be any intervention towards the death penalty because it is our sovereign right to exercise our law," Widodo told reporters.... "We plan to appeal today's court decision. We have two weeks to file an appeal," said Todung Mulya Lubis, a lawyer for the two men... "If the law is respected, the execution should be postponed until the legal process is over."... Australia has been pursuing an eleventh-hour campaign to save the lives of Myuran Sukumaran, 33, and Andrew Chan, 31, two members of the so-called Bali Nine group of Australians, convicted in 2005 as the ringleaders of a plot to smuggle heroin out of Indonesia.... Shortly before Widodo spoke, a court in Jakarta threw out an appeal by the two Australians against Widodo's rejection of their request for presidential clemency.... http://www.reuters.com/article/2015/02/24/indonesia-executions-idUSL4N0VY16M20150224
14 February 2015: Jokowi wants to soon stop the sending of domestic migrant workers to other countries; he felt "ashamed when discussing the matter in [recent] bilateral talks with Malaysia... We must have pride and dignity"
Jokowi to halt the sending of domestic workers abroad The Jakarta Post, Jakarta | National | Sat, February 14 2015, 12:36 PM; President Joko "Jokowi" Widodo wants to soon stop the sending of domestic migrant workers to other countries, arguing that doing menial chores abroad undermines Indonesian pride and dignity. Jokowi told the Antara news agency on Friday in Surakarta, Central Java, that he felt "ashamed when discussing the matter in [recent] bilateral talks with Malaysia. I have instructed the manpower minister to make a clear road map and [set a timeline] to stop the program. We must have pride and dignity." As part of the plan, the government would repatriate 1,800 migrant workers. "We have repatriated 800 workers. More will follow suit," Jokowi said. There are some 2.3 million Indonesian migrant workers worldwide, 1.2 million of whom were undocumented, according to the president. - See more at: http://www.thejakartapost.com/news/2015/02/14/jokowi-halt-sending-domestic-workers-abroad.html#sthash.eg8VKWmR.dpuf
4 February 2015: Jokowi talks about dangerous inequality, increasing tax collection and tax payer base, promise to ease land acquisition for infrastructure, one-stop centers for business permits, state-owned plantation ordered to release land for port-industrial project, creation of single map to prevent overlapping land concessions
Bloomberg - ‘Dangerous’ Inequality Spurs Widodo’s Indonesia Shakeup by Neil Chatterjee, Yudith Hoand Chris Brummitt, 6:01 AM BNT, February 3, 2015; A “dangerous” level of inequality threatens the world’s fourth most-populous nation, said Indonesian President Joko Widodo, who took power in October after beating a former army general. “Economic growth is very important for my administration, for my people but it’s more important to narrow the gap,” Widodo, known as Jokowi, said Monday in an interview at the presidential palace in Jakarta. “When we invite investors they must give benefit to my people. Also to my country.”... Jokowi, less than four months into a five-year term, said a key initiative will be to expand tax receipts, boosting them to 16 percent of the economy from less than 12 percent now. The leader, 53, underlined his confidence in boosting growth to 7 percent and described a policy program centered around holding government officials to account for impeding investment. ... Record buying by global funds sent the Bloomberg Indonesia Local Sovereign Index of government bonds up the most in more than a year last month, amid optimism Jokowi’s fiscal reforms will improve the nation’s credit quality. The benchmark Jakarta Composite Index of stocks has climbed more than 4 percent since Jokowi’s Oct. 20 inauguration, outperforming markets in Malaysia, Thailand and Vietnam.... Bureaucratic Bottlenecks: While total investment rose more than 14 percent last quarter from a year before and reached 463.1 trillion rupiah ($36.5 billion) in 2014, the nation with the world’s largest Muslim population will need more than $430 billion over five years to build transport links and other infrastructure, according to government estimates....
The economic dividends from Jokowi’s changes may take a while. The economy probably grew 5.1 percent in 2014, a five-year low, according to official estimates.... Freeing Land: The administration has promised to ease land acquisition to spur infrastructure projects, including buying land and establishing a land bank managed by different ministries. Jokowi also began a national one-stop service to coordinate the approval of business permits from more than a dozen agencies. Regional authorities who don’t set up a similar service in their cities or provinces this year will have funding cut, he said.... The president said he ordered a state-owned plantation company to release land for a port and industrial zone project that has been stalled for eight years. He’ll also create a single map to be used by all provinces to prevent overlapping land concessions, and is encouraging state-owned companies to issue bonds to increase financing for infrastructure..... http://www.bloomberg.com/news/
28 January 2015: Jokowi kicks of North Sumatra projects to be completed in 2 years - Kuala Tanjung Port, KT-Sei Mangkei Integrated Industrial Zone, Sei Mangkei power transformer, 600,000 tonne cooking oil plant
Jokowi kicks off 7 projects in N. Sumatra Apriadi Gunawan, The Jakarta Post, Kuala Tanjung, North Sumatra | Headlines | Wed, January 28 2015, 8:03 AM ; President Joko “Jokowi” Widodo officially announced the commencement of seven strategic projects located in a number of regions in North Sumatra, via a teleconference at Kuala Tanjung Port in Batubara regency on Tuesday.The projects comprise Kuala Tanjung Port, an aluminum smelter at state-run PT Inalum, the Kuala Tanjung-Sei Mangkei Integrated Industrial Zone, state power company PT PLN’s Sei Mangkei power transformer, the 600,000-ton capacity Sei Mangkei cooking oil plant, the Sei Mangkei Special Economic Zone (KEK) and the 17-kilometer Medan-Binjai toll road. Jokowi said all projects should be completed in two years. - See more at: http://www.thejakartapost.com/news/2015/01/28/jokowi-kicks-7-projects-n-sumatra.html#sthash.iyoqQLMM.dpuf
18 January 2015: upgrade to the north-south Trans-Sumatra Highway, national “smart cards” to more than 15 million poor Indonesian families
For Indonesians, President’s Political Outsider Status Loses Its Luster By JOE COCHRANEJAN. 17, 2015... Perhaps his most contentious proposal was the elimination of fuel subsidies which, popular with voters and politicians, cost the state tens of billions of dollars a year, more than the government spends on health care and social services combined. His predecessor had tried to kill the program and failed.... He was able to eliminate the gasoline subsidy this month and, in a remarkable sleight of hand, lower fuel prices at the pump on the same day. The wild card that allowed that to happen was plummeting world oil prices.The change freed up money for his ambitious social programs. His government, as promised, mailed out national “smart cards” to more than 15 million poor Indonesian families in November, entitling them to free health insurance and education-related expenses for their children for up to 12 years of school..... He has also rolled out grand infrastructure plans for 2015, including 13 new dams and a long-overdue upgrade to the north-south Trans-Sumatra Highway.
The smart card program, especially, is already winning praise from needy families, said Wardah Hafidz, founder of the Urban Poor Consortium, a Jakarta-based nongovernmental organization.... “People are happy about it because it’s very different than before, when it was difficult to get health treatment, or people had to pay or were being turned away from public hospitals,” she said. “People are watching, people are commenting on the program, they are active. It’s hopeful.".... On Friday, The Jakarta Globe, a leading English-language daily, published a full-page photo on its front showing Mr. Joko bowing to Ms. Megawati with the headline, “End the Kowtowing.”......... http://www.nytimes.com/2015/01/18/world/asia/for-indonesians-president-joko-widodos-outsider-status-loses-its-luster.html?_r=0
14 January 2015: National police nominee gets KPK warning, but removal of fuel subsidies seen as "breaking the back of the country's notorious Oil Mafia"
100 Days of Indonesia’s Jokowi: Mixed Record by Dewi Kurniawati TUE,13 JANUARY 2015
Indonesian President Joko Widodo, who came into office on Oct. 20, ends his first hundred days in office next week with a record more mixed than his most enthusiastic adherents had expected when he was elected... Jokowi, as he prefers to be known, has earned domestic criticism through some suspect cabinet appointments, raising questions whether he is able to stand up to Megawati Sukarnoputri, the former president (2001-2004) and head of the Indonesian Democratic Party of Struggle, which sponsored his electoral campaign.... The nomination of Megawati’s former adjutant, Budi Gunawan, as head of the national police has turned into a major embarrassment, with the Corruption Eradication Commission (KPK) charging the official with bribery when he was head of the career development bureau at the National Police headquarters from 2003-2006.... But Jokowi has won praise from economists for doing away with fuel subsidies, which had the corollary effect of breaking the back of the country’s notorious Oil Mafia. He has served notice internationally with a new strong maritime policy that has resulted in the spectacular sinking of Vietnamese fishing boats that intruded into Indonesian waters. The policy was given prominence in his inaugural address and again in mid-November that he intends to make his nation into a regional maritime power..... The move to eliminate the subsidy is said to have surprised the oil mafia, a shadowy cabal that profited from importing 500,000 barrels of oil per day from offshore sources, reportedly costing the government as much as US$5 billion annually. The oil mafia is said to include even members of Jokowi's PDI-P, as well as officials of Golkar and Yudhoyono’s Democratic Party. Political sources describe the system as a funding mechanism for powerful political parties and a route to vast wealth.
Reportedly the top figures in the oil trading business have been told that the party is over and there will be no more skimming from imports. Officials close to Jokowi say they have warned top figures of the oil business it is time to quit. Getting them out is regarded as the key to breaking the stranglehold on imports.... http://www.asiasentinel.com/politics/jokowis-first-100-days-mixed-record/
13 January 2015: Indonesia revamps to lower fuel cost, accelerated reforms to come; Jokowi has neutralized political opposition
Khor Reports comment: Plantation analysts remain concerned about the non-viability of palm biodiesel at the current prices. This affects the significant voluntary blending market as well as concerns about the usage in countries with soft mandates such as Indonesia; where it is also fighting to reform its energy sector to bring down spending on energy to free up money for investment in infrastructure. At the same time, Indonesia seems to be pushing on bureaucratic reforms and anti-corruption moves in the agro forestry sector as well as in aviation which recently suffered the Air Asia QZ8501 disaster. The Jokowi-JK presidential election manifesto also talks about the reorientation of economic gains in its biofuels sector to ensure gains for farmers. All in, several challenges issues for Indonesia biodiesel?
Note comment from FT: "...surpassing investor expectations in his first three months by abolishing $18bn of wasteful fuel subsidies and neutralising political opposition in the fractious parliament..."
Widodo’s Next Hurdle: What Indonesia Can Tackle Post Fuel Revamp By Chris Brummitt Jan 13, 2015 1:12 AM GMT+0800; The opening salvo in Indonesian President Joko Widodo’s bid to revitalize Southeast Asia’s biggest economy was a revamp of the country’s energy sector. His next hurdle is delivering the gains from the shake-up.... In his first three months in office, Jokowi, as the leader is known, freed up 230 trillion rupiah ($18 billion) of budget funds for development by scrapping gasoline subsidies and capping government aid on diesel. He also moved to plug revenue leaks and improve efficiency in the energy industry, changing the management of the state oil company as well as setting up an oil and gas reform team..... http://www.bloomberg.com/news/2015-01-12/widodo-s-next-hurdle-what-indonesia-can-tackle-post-fuel-revamp.html
[these comments and links will be replicated in our biodiesel blog posting - read more here: http://khorreports-palmoil.blogspot.com/2014/07/biodiesel-news-update-5.html]
Indonesia’s Joko Widodo pledges to accelerate reforms 5:08AM by Ben Bland in Jakarta
Indonesian president Joko Widodo has vowed to accelerate economic reforms after surpassing investor expectations in his first three months by abolishing $18bn of wasteful fuel subsidies and neutralising political opposition in the fractious parliament.... When asked whether he could sustain the pace of change, Mr Widodo traced an exponential growth curve with his index finger, saying: “it will be like that”.... The president — who is universally known by his nickname Jokowi — said he would use the fuel subsidy savings to pump billions of dollars into infrastructure investment and push for “total reform” of the aviation sector following the shortcomings highlighted by the AirAsia crash.... But the 53-year-old has moved quietly to stifle his critics by appealing to key opposition politicians and the public. Several opposition parties, including the largest, Golkar, have become mired in internal disputes after senior leaders switched allegiance to Mr Widodo.... Mr Widodo will channel the Rp230tn ($18bn) of savings into infrastructure and social protection, reversing years of under-investment that have hobbled economic growth and left Indonesia with the highest rate of wealth inequality in Asia after China.... The depth of the problems afflicting the civil service has been underlined by the crash of AirAsia Flight QZ8501 en route from Surabaya to Singapore, which revealed worrying flaws in aviation regulation.... Facing his first major crisis as president, Mr Widodo said the government must use the crash as an opportunity “to totally reform our air transportation”, from the central government to the state-owned airport operator and air traffic control service.... http://www.ft.com/intl/cms/s/0/ae2fd588-9a48-11e4-9602-00144feabdc0.html#axzz3Og9TsjPb
12 January 2015: Palm oil company crackdown continues, tycoon arrested after 5 day hunt with police coordination; after Riau agroforestry audit will be Central Kalimantan audit
Police arrest Kalimantan palm-oil tycoon Budiono Tan The Jakarta Post, Jakarta | National | Mon, January 12 2015, 9:38 AM; The West Kalimantan Police have arrested palm-oil tycoon Budiono Tan, who allegedly misappropriated 1,535 land certificates of oil-palm farmers in Ketapang, West Kalimantan. The businessman, who runs a plantation through PT Benua Indah Grup (BIG), was caught on Friday night in West Jakarta after being sought for five years.... He is currently in the process of being transferred from Jakarta to Pontianak, West Kalimantan, for prosecution. Budiono was placed on the police’s most-wanted list in 2009 after committing fraud and embezzling money from hundreds of oil-palm farmers who worked for BIG. But his case was abandoned when he allegedly obtained strong support from police officers..... The latest hunt that involved the joint police team was started on Jan. 7. A team of seven police officers was deployed to check potential hiding places for Budiono.... Budiono was reported to the police in July 2009 for embezzling Rp 300 billion from the farmers. The money was supposed to be paid to the farmers for harvests during the year as well as the farmers’ savings. Budiono has been charged with embezzlement and fraud... The West Kalimantan Police have admitted that the case is hard to resolve due to intervention from “certain groups”.... Since 2012, the ministry has investigated and filed lawsuits against a number of plantation companies... Last year, Meulaboh District Court found PT Kallista Alam guilty of burning peatland in the Leuser conservation area in Nagan Raya regency, Aceh, and ordered the firm to pay a fine of $30.5 million.... The year also saw PT ADEI Plantation & Industry... After auditing agroforestry companies in Riau, the government has planned to run its next audit in Central Kalimantan..... http://www.thejakartapost.com/news/2015/01/12/police-arrest-kalimantan-palm-oil-tycoon-budiono-tan.html#sthash.uqvK6PRV.dpuf
Indonesia’s post-Lima homework Warief Djajanto Basorie, Jakarta | Opinion | Sun, January 04 2015, 2:51 PM; ....An early directive from Siti Nurbaya Bakar, the new Environment and Forestry Minister, is to place a 6-month moratorium on new logging licenses. On a Nov. 26 visit to Riau, a province ravaged by peat fires early in 2014, Jokowi ordered a review of the permits of firms that converted peatland to oil palm and acacia plantations. In Meranti Island district, he ordered the damming of canals to restore moist peatland. Drained peatland converted to oil palm estates becomes brittle-dry peat and is vulnerable to fire. Any new low-carbon growth strategy would have to factor in commitment by major planters to practice zero-deforestation palm oil.....http://www.thejakartapost.com/news/2015/01/04/indonesia-s-post-lima-homework.html#sthash.yk4mk0YK.dpuf
11 January 2015 (evening): Indonesia boosts bilateral and maritime doctrine in high profile foreign policy; not supportive of AEC if it merely opens up Indonesia as market for ASEAN neighbor exports
Jokowi preparing Indonesia for role beyond Asean? by Emirza Adi Syailendra, RSIS January 10, 2015 1:00 am; Under President Joko Widodo (Jokowi), foreign policy appears to be increasingly high profile as Jakarta seeks to tighten bilateral relations with Pacific and Indian Ocean major powers, with a heavy focus on the domestic-economic dimension. This is in opposition to the focus on multilateralism and norms promotion that were stressed during Yudhoyono's administration. How would Asean be positioned under the Jokowi government's foreign policy?... As Indonesia's global profile rises, the choices of partners are expanding but doubts have also resurfaced on whether Asean is still the bedrock of its foreign policy. With foreign policy given a high profile - in contrast to earlier predictions by some analysts that President Jokowi would be more inward-looking - it is tempting to argue that Indonesia's foreign policy priorities are shifting beyond Asean..... For example, Jokowi's new maritime doctrine of "global maritime fulcrum" has highlighted Indonesia's intention to 'Look West' in terms of deepening relations with major players in the Indian Ocean such as India and South Africa. Strengthening bilateral ties with Pacific powers is also becoming a major agenda instead of multilateralism. The emergence of a more nationalistic approach has further underscored these shifts..... According to Retno Marsudi, the new foreign minister, the current policy focus would be people-oriented. This statement was echoed by Jokowi during a discussion on the implementation of the Asean Economic Community (AEC). The president said Indonesia would not be supportive of the AEC's goal of a single market and production base by end 2015 if it puts Indonesia at a disadvantage by merely being a market for goods produced by neighbouring countries. Several other policies such as the sinking of the illegal fishing vessels in Indonesian waters have been interpreted as signals that Indonesia would not hesitate to defend its national interest at the expense of Asean
The point to stress here is that Indonesia's proactive and consensual leadership in Asean will endure during Jokowi's administration. However, pragmatism will be its defining feature. A recent effort by Indonesia to push Asean as the centre of the regional architecture was its proposal to expand the Asean Chiefs of Defence Forces Informal Meeting (ACDFIM) into an ACDFIM Plus that includes counterparts from key players like the US and China in the Asia-Pacific. The proposal underscores the interest of Indonesia to expand the scope of Asean into a more inclusive and accessible forum extending to major Pacific and Indian Ocean countries.... With the present security environment in the region marked by many flashpoints, exacerbated by external pressures arising from the US-China rivalry, Indonesia is concerned about Asean's ability to speak with one voice. Considering that the benefits Indonesia gains depends on how effective it is in rallying Asean, a break in Asean unity will have implications on Indonesia's image as the first among equals.....
http://www.nationmultimedia.com/opinion/Jokowi-preparing-Indonesia-for-role-beyond-Asean-30251598.html
11 January 2015: REDD+ agency future is in doubt? Forestry Ministry finds better business and public awareness of state environmental standards, while Greenpeace points to over 15,000 fire hot spots in 2014 versus under 6,644 in 2011 across Riau.
After only one year, REDD+ agency future is in doubt by Hans Nicholas Jong, The Jakarta Post, Jakarta | Headlines | Sat, January 10 2015, 9:48 AM. The future of the National Reducing Emissions from Deforestation and Forest Degradation Agency (BP REDD+) has become uncertain after only one year because of a plan from the Environment and Forestry Ministry to liquidate it.BP REDD+ head Heru Prasetyo said on Friday that he was concerned about the plan from Environment and Forestry Minister Siti Nurbaya Bakar to merge the agency with the ministry, which she is currently restructuring. - See more at: http://www.thejakartapost.com/news/2015/01/10/after-only-one-year-redd-agency-future-doubt.html#sthash.6hYSi4cE.dpuf
As Indonesia’s Forests Burned, No End in Sight to Infernos - Seventy percent of 1,908 companies under the Forest Ministry’s supervision are said to be committed to complying with state environmental standards; By Kennial Caroline Laia on 02:08 am Dec 30, 2014; JAKARTA — The slash-and-burn clearing of forests to make way for plantations topped Indonesia’s list of environmental problems this year, with several major forest and land fires in Sumatra once again undermining the country’s fight against deforestation while generating choking clouds of smoke that left local residents ill and prompted the ire of neighbouring countries.....The Indonesian office of international environmental group Greenpeace said the number of fire incidents over the past few years has continued to increase in Riau, a Sumatran province at the centre of major forest and land fire incidents in Indonesia in recent years......Greenpeace Indonesia forest campaigner Muhammad Teguh Surya said a total of 6,644 hot spots were detected across Riau in 2011 and the figure has continued to rise, with 8,107 hot spots detected in 2012 and 15,112 last year...... “As of October this year, we recorded more than 21,000 fire hot spots,” he told Indonesian news portal Tempo.co earlier this month......Agency spokesman Sutopo Purwo Nugroho has highlighted the need for better law enforcement. In the wake of the peak of the fire and haze incidents in the first quarter of the year, the police arrested dozens of people for allegedly starting the blazes, but law enforcement in the sector has generally been considered toothless, with security officers criticised for only nabbing small-scale farmers and barely going after the large plantation companies in whose concessions many of the hot spots are located...........Agency spokesman Sutopo Purwo Nugroho has highlighted the need for better law enforcement. In the wake of the peak of the fire and haze incidents in the first quarter of the year, the police arrested dozens of people for allegedly starting the blazes, but law enforcement in the sector has generally been considered toothless, with security officers criticised for only nabbing small-scale farmers and barely going after the large plantation companies in whose concessions many of the hot spots are located...... However, Mr Rasio Ridho Sani, a deputy to the Environment and Forestry Minister, argued that Indonesia had made significant improvements in the environmental sector, citing growing environmental awareness among logging, plantation and mining firms operating in forests...... He said 70 per cent of the 1,908 companies under the ministry’s supervision were committed to complying with the government’s environmental standards. The figure is an increase from 49 per cent in 2004. “This means the environmental awareness of the business community has increased. And we hope that the number will stay that high and increase even further,” Mr Rasio said......He added that the public’s awareness about environmental issues was also improving, citing how more people were starting to cycle to work and were committed to recycling their waste as part of a greener lifestyle...... http://thejakartaglobe.beritasatu.com/news/indonesias-forests-burned-end-sight-infernos/
12 December 2014: Peatland for community sago instead of oil palm plantations?
Swift action on forest fires by President Jokowi by Wimar Witoelar, Jakarta | Opinion | Thu, December 11 2014, 10:04 AM; On Nov. 27, in the Riau Islands province, President Joko “Jokowi” Widodo studied the dried peatland and man-made canals that locals were building to prevent the further drainage of precious water in the peat. He held impromptu talks with victims of peat-based forest fires. The President made some announcements off the cuff. Obviously he had thought about the issues for some time... President Jokowi said plantation permits had to be reviewed if they were indeed destroying the ecosystem; they would have to be terminated. “We must not allow our tropical rainforests to disappear because of monoculture plantations like oil palm,” he said.... In his remarks in Sungai Tohor, the President described the community-built canal dams as very good and that they must be made permanent. He further said it was best for peatland to be given to the community to be managed for sago.... http://www.thejakartapost.com/news/2014/12/11/swift-action-forest-fires-president-jokowi.html
10 December 2014: Jokowi orders review of licenses of all plantations that have plantations on peatland
Indonesia’s New President Promises to Put Peat Before Palm Oil By Jeff Conant, From Inter Press Service News Service; December 5, 2014; Jakarta: "Last week, Indonesia’s new president, Joko Widodo, ordered the country’s Ministry of Environment and Forestry to review the licenses of all companies that have converted peatlands to oil palm plantations.... If the ministry follows through, this will be one of the most important actions the Indonesian government can take to begin truly reining in the destruction reaped by the palm oil industry there – and to address the severe climate impacts of peatland destruction.... The Indonesian Forum on the Environment, known as WALHI/Friends of the Earth Indonesia, has been pushing for this initiative, and the announcement was made in the village of River Tohor, in Riau Province, where WALHI has long worked with the community.... Walhi had invited Jokowi, as the president is casually known, to come to Riau because the province is ground zero for Indonesia’s massive haze crisis that comes from the near-constant burning of carbon-rich peatlands in order to convert these fragile ecosystems to plantations.
“We invited him to River Tohor to demonstrate the community’s success in preserving the peat forest ecosystem,” said Zenzi Suhadi, forest campaigner for Walhi. “We hoped this visit would show the president that community management can protect forests, and that granting concessions to companies is the wrong approach,” Suhadi said. The strategy appears to have succeeded, as Walhi hailed President Jokowi’s Riau visit as proof of his commitment to solving ecological problems..... “The best thing to do is to give the land to people,” the president told The Jakarta Globe. “What’s made by people is usually environmentally friendly. They won’t do any harm to nature. However, if we give the land to corporations, they will only switch it to monoculture plantations.”...... Jokowi’s move came shortly after his government announced a four- to six-month moratorium on all new logging concessions. That prohibition goes beyond the 2011 nationwide moratorium on new concessions across more than 14 million hectares of forests and peatlands... The move also comes on the heels of Jokowi’s announcement that the Ministry of Forests and the Ministry of Environment would be combined into one ministry, headed by Siti Nurbaya – a move that not all see as positive but that does signal a radical effort to restructure the way the government manages lands and resources.... Jokowi has also pledged to clean up Indonesia’s notoriously corrupt forestry sector as a step toward reducing deforestation.... http://www.ipsnews.net/2014/12/indonesias-new-president-puts-rainforests-before-palm-oil-plantations/
19 November 2014: Jokowi talk to President of European Council on export barriers to palm oil
Govt asks EU to ease RI palm oil export by Hasyim Widhiarto, The Jakarta Post, Jakarta | Business | Wed, November 19 2014, 5:44 PM; "Indonesia, the world's largest producer of palm oil, has asked the European Union (EU) to ease its regulations on palm oil imports, mainly to help Indonesian farmers enjoy benefits from the exportation of palm oil.... In a meeting with the President of the European Council, Herman Van Rompuy, on Wednesday at the Presidential Palace, President Joko "Jokowi" Widodo personally asked the EU's principal representative to ease the export barriers for its palm oil products in the bloc's 28 member countries.... Van Rompuy said that he would take Indonesia's request as "the council's concern", according to Foreign Minister Retno LP Marsudi, who accompanied Jokowi during the meeting... The EU is the Indonesia's third largest trading partner and the second largest foreign investor after Japan...." http://www.thejakartapost.com/news/2014/11/19/govt-asks-eu-ease-ri-palm-oil-export.html
17 November 2014: EU palm oil market access, strategic sectors of EU-Indonesia trade, assertive foreign policy approach?
Jokowi explores cooperation in fashion industry with Italy BY Rendi A. Witular, The Jakarta Post, Brisbane, Australia | World | Sat, November 15 2014, 12:13 PM; "President Joko “Jokowi” Widodo told his counterpart Italian Prime Minister Matteo Renzi in a bilateral meeting on Saturday ....“I also demanded that Italy and the European Union provide easier access for our palm oil into their market,” he said...." http://www.thejakartapost.com/news/2014/11/15/jokowi-explores-cooperation-fashion-industry-with-italy.html
EU offers RI chance to export more to Europe BY The Jakarta Post, Jakarta | Business | Fri, November 14 2014, 8:33 PM; "EU Ambassador to Indonesia, Brunei Darussalam and ASEAN, Olof Skoog, said Friday that President Joko "Jokowi" Widodo aimed to achieve a growth rate of 7 percent, which would need a high level of imported goods to increase GDP while still experiencing a negative trade balance... He said that the EU, with its 28 member countries, was a big market for Indonesia’s exports, even bigger than countries like China and India.... “We are the biggest export market for Indonesia,” Skoog said, adding that Europe had been the biggest export market for Indonesia’s palm oil in recent years... Meanwhile, Skoog said that the Nov. 19 dialogue, which is supported by five European chambers of commerce – BritCham, EKONID, EuroCham, IFCCI and INA –, would be focused on five strategic sectors of automotive; agriculture, food and beverages; infrastructure, maritime and logistics; pharmaceuticals and cosmetics; and energy and renewable energy...."
http://www.thejakartapost.com/news/2014/11/14/eu-offers-ri-chance-export-more-europe.html
Foreign friendships must benefit RI: Jokowi by Rendi A. Witular, The Jakarta Post, Brisbane | Headlines | Mon, November 17 2014, 9:53 AM; "After a string of meetings with leaders of the world’s powerhouse nations during his first nine-day official trip overseas, President Joko “Jokowi” Widodo may have redefined the meaning of a “free and active” foreign policy... In a press conference on board the presidential aircraft en route to Jakarta, Jokowi said that diplomacy during his administration would no longer be confined to image-building... “For me ‘free and active’ is making friends with countries that can provide us with benefits. What’s the point of making friends if we are always on the losing end?” said Jokowi, when asked how his vision of international affairs differed from his predecessor’s. ... “What’s the benefit of making friends if it is aimed merely at image-building and if it risks our national interests? It does not mean that we’re creating enemies. It is just that we won’t be close [with countries providing no benefit to Indonesia].”... Although he speaks in a soft tone, Jokowi has been direct in recent conversations with world leaders during the Asia Pacific Economic Cooperation (APEC) summit in Beijing, the ASEAN and East Asia summits in Naypyitaw, Myanmar, and the G20 Summit in Brisbane, Australia.... Jokowi held bilateral talks with, among others, Chinese President Xi Jinping, US President Barack Obama, Japanese Prime Minister Shinzo Abe, Russian President Vladimir Putin, German Chancellor Angela Merkel, Australian Prime Minister Tony Abbott and French President Francois Hollande.... Foreign Minister Retno LP Marsudi told The Jakarta Post that the administration would be more assertive in matters concerning the President’s maritime-axis doctrine.... “It seems [in the past] that Indonesia could not make up its mind. Now, from the very beginning [of Jokowi’s administration] we can deliver a message on what Indonesia is demanding,” she said.... Jokowi also ensured that agreements forged in the recent bilateral meetings would be followed up. “I will instruct on Monday [in a Cabinet meeting] that all related ministers follow up on the commitments made during my meetings with world leaders. I want something concrete,” he said....."
http://www.thejakartapost.com/news/2014/11/17/foreign-friendships-must-benefit-ri-jokowi.html
12 November 2014: Jokowi demands Obama heed concern on palm oil trade restrictions impacting farmers and small companies, caution on FTAs
Jokowi ushers in ‘blak-blakan’ diplomacy by Rendi A. Witular, The Jakarta Post, Jakarta | Headlines | Wed, November 12 2014, 9:28 AM; "As ethnic Javanese, both President Joko “Jokowi” Widodo and his predecessor Susilo Bambang Yudhoyono adhere to the profound norms of the Javanese culture that emphasize the need to compromise and to avoid getting too directly to the point.
While Yudhoyono often refused to be straightforward during bilateral meetings, Jokowi is doing the opposite.... In a press conference late on Monday, Jokowi described his brand of diplomacy as blak-blakan (Javanese slang meaning “being direct”).... During a meeting with Xi on Sunday, for example, Jokowi directly requested that China bolster economic ties through concrete actions including the involvement of Chinese state companies in the development of Indonesia’s infrastructure. Jokowi has also demanded a bigger role for Indonesia in the China-led Asian Infrastructure Investment Bank (AIIB), proposing that the bank open its headquarters in Jakarta.... When he met Obama on Monday, Jokowi demanded that the US lift restrictions on Indonesian palm oil entering the US market. Jokowi said he had expressed his concerns to several other leaders about the difficulty experienced by certain Indonesian agricultural and fisheries products in entering overseas markets. “We don’t want to enter into any discussions on free trade deals. We don’t want to open up unless there is something we can gain,” he said. “Many of our commodities, such as rattan, palm oil and fish, have fallen victim to trade restrictions. These are not commodities produced by big corporations. These are the products of our farmers and small companies,” said Jokowi...." http://www.thejakartapost.com/news/2014/11/12/jokowi-ushers-blak-blakan-diplomacy.html
Jokowi on world stage, first stop Beijing by Rendi A. Witular and Hasyim Widhiarto, The Jakarta Post, Beijing and Jakarta | Headlines | Sun, November 09 2014, 11:27 AM; "In his first official overseas excursion since taking office on Oct. 20, President Joko “Jokowi” Widodo is embarking on a nine-day bilateral and multilateral diplomatic trip aimed at courting investors for the country and showcasing his maritime vision... Beijing was his first stop as he arrived on Saturday evening to attend the annual APEC summit, a prestigious powwow of 21 leaders of Asia-Pacific economies, on Nov. 10 and 11, and also to shore up support from Chinese government and business leaders.... As China is Indonesia’s biggest trading partner, Jokowi looks to be devoting much of his attention during the trip to seeking support from the world’s second-biggest economy...."
http://www.thejakartapost.com/news/2014/11/09/jokowi-world-stage-first-stop-beijing.html
Jokowi asks more of China by Rendi A. Witular, The Jakarta Post, Beijing | Headlines | Mon, November 10 2014, 9:02 AM; "Appearing upbeat and donning a stylish suit, President Joko “Jokowi” Widodo met China President Xi Jinping on Sunday on the first leg of his overseas trip since taking office on Oct. 20. Jokowi suggested the leader of the world’s second-biggest economy bolster ties through “concrete” actions.... In his introduction note to Xi at his office in Beijing, Jokowi said Indonesia’s relationship with China, which stretched hundreds of years, was underlying capital to expand future strategic partnerships.... In his welcoming note, Xi congratulated Jokowi for his ascension to the presidency and hoped that under his leadership Indonesia would not only see more rapid development but also play more of a role in dealing with regional and international issues.
“China has always regarded Indonesia as our old best friend and we have always prioritized keeping our relations intact by seeing Indonesia as a strategic partner that we can trust,” said Xi.... In a press conference later in the evening, Jokowi explained that he had requested of Xi that China be more involved in Indonesia’s infrastructure development, particularly in the maritime sector. “What I mean by concrete outcomes is that there should be more progress in the sectors of investment and trade. I’ve requested to President Xi that Chinese state companies be involved more in the construction of our seaports, railways and toll roads,” he said. ... Jokowi has also demanded bigger role in the China-led Asian Infrastructure Investment Bank (AIIB), by proposing that the bank open its headquarters in Jakarta for funds to flow into the country. “China will of course have a 50 percent stake in the bank. We will also have a stake, but smaller. We will inject around Rp 5 trillion [US$ 416.67 million) in participating funds to be paid in installments over five years,” he said.... "
http://www.thejakartapost.com/news/2014/11/10/jokowi-asks-more-china.html
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