Update News March 03, 2017

In The News

Indonesia, Saudi Arabia Sign Trade Agreements
Tempo, 03/03/2017

The Indonesian government and the Kingdom of Saudi Arabia have agreed to work closely on developing foreign trade strategies, marketing researches, fostering joint activities and joint courses in trade and trade information exchange.

Indonesian Trade Minister Enggartiasto Lukita said that the two countries have also agreed to share experience in trade database and to encourage businesses participation in forums, workshops and seminars.

“Following the agreement, Indonesia and Saudi Arabia are expected to explore and jointly encourage bilateral trade,” Enggartiasto said in a written statement on Thursday, March 2, 2017.

Engartiasto added that Indonesia is wishing to step up trade cooperation with Saudi Arabia through the preferential trading area (PTA) or the comprehensive economic partnership agreement (CEPA).

However, Saudi Arabia is tied with the Gulf Cooperation Council customs union, therefore, trade deals must be entered into with the GCC.

As such, Indonesia is hopeful to get Saudi Arabia’s backing to commence a joint feasibility study in the framework of Indonesia-GCC cooperation. “Saudi Arabia is a key player in the GCC. Our trade relations and cooperation have not been maintained well,” Enggartiasto said.

Indonesia trade with Saudi Arabia totaled an estimated USD4.06 billion in 2016, or down by 25.98 percent compared to 2015.

In the same year, Saudi Arabia is Indonesia’s largest export destination in the Middle East amounting to USD1.33 billion, whereas the Indonesia’s import from Saudi Arabia was USD2.73 billion.

Indonesia saw a trade deficit with Saudi Arabia of USD1.39 billion in 2016 due to a substantial amount of oil and gas imports. On the contrary, Indonesia experienced non-oil and gas trade surplus at USD627.5 million.

“King Salman’s visit is expected to bring a positive momentum in a bid to improve trade relations and investment, which have not been exploited well,” the Trade Minister said.

King Salman bin Abdulaziz al-Saud’s visit to Indonesia is a historic one. A Saudi King last visited Indonesia in 1970 or 47 years ago.

King Salman bring along an entourage of 1,500 persons comprising of state officials and businessmen to explore cooperation opportunities in various sectors, particularly the economy.

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Saudi Delegates Visits SME Ministry, Discuss Cooperation
Tempo, 03/03/2017

The Saudi Arabian delegates visiting Indonesia along with King Salman bin Abdulaziz al-Saud visited the Cooperatives and Small-Medium Enterprises Ministry office at the Smesco building on Thursday, March 2, 2017.

the visit, the delegates and their Indonesian counterpart traded information and discussed partnership opportunities in the small-medium enterprises (SME) sector.

"[The meeting] is a follow up of the Memorandum of Understanding on SME development sign by SME Minister Anak Agung Gede Ngurah Puspayoga and the Saudi Arabian SME authorities at the Bogor Palace [on Wednesday, March 1, 2017]," said SME Ministry secretary Agus Muharam in a written statement on Thursday, March 2, 2017.

The MoU includes six important points, including exchanges of information on SME programs, expert exchange, cooperation on improving SME's product quality and competitiveness, vocational and managerial training cooperation, SME training facilities, and access to information on opportunities and support for SMEs to access both countries potential market.

"The Cooperatives and SME Ministry cannot work alone, but will cooperate and coordinate with other ministries, such as the Research and High Education Ministry, Industrial Ministry, and Agriculture Ministry," Agus said.

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Sri Mulyani Confirms Saudi Arabia USD 1 Million Investment
Tempo, 03/03/3017

Finance Minister Sri Mulyani Indrawati confirmed that the Indonesian government has established a financing partnership with the Saudi Fund for Development worth USD 1 billion.

Sri Mulyani stated that USD 750 million will be used to fund Indonesian development programs. "Actually, [the partnership] is still too general and has not gone into detail," Sri Mulyani said on Thursday, March 2, 2017.

Sri Mulyani asserted that based on Saudi Fund's experience in many countries, the funds will mostly invest in infrastructure projects. "It can also be used for financing and we can combine it with financing from other sources," Sri Mulyani said.

Sri Mulyani added that the rest USD 250 million will be used to fund non-oil export from Saudi Arabia to Indonesia. "They might have other non-oil products needed by Indonesia," Sri Mulyani stated.

Sri Mulyani however, denied that the financing program will be channeled in the form of a loan. "It's not a loan, not at all," Sri Mulyani explained.

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Depok To Build 1,000 Kiosks For Micro Businesses
The Jakarta Post, 03/03/2017

The city administration of Depok, West Java, has vowed to build 1,000 kiosks for micro enterprises in the city starting this year until 2021. It has so far conducted a location study and issued a regulation on the construction project.

Depok Cooperatives, Micro, Small and Medium Enterprises and Trade Agency head Mohammad Fitriawan said Thursday that the construction was the realization of Depok Mayor Mohammad Idris Abdul Shomad’s campaign promise made ahead of the mayoral election.

“The construction of the 1,000 kiosks has been outlined in the 2016-2021 mid-term regional development plan. The kiosks will be provided for free, of course with some requirements,” Fitriawan said, as quoted by tempo.co.Micro enterprises are those with less than Rp 50 million (US$3,750) in capital and no more than Rp 300 million in annual revenue. 

Fitriawan further said that 200 kiosks would be built this year, once the study was completed. “We are now studying sellers to receive the facilities.”

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MRT Project to be Sped Up: Transportation Minister
Tempo, 03/03/2017

The government will expedite the construction of Mass Rapid Transit (MRT) project, which the first phase that covers Lebak Bulus-Hotel Indonesia (HI) Roundabout route is expected to complete by 2019.

“Mr. President has instructed us to complete the first phase of MRT [project] by 2019, but the second phase of MRT i.e. HI Roundabout-East Ancol will commence in 2018, [to be] accelerated,” Transportation Minister Budi Karya Sumadi said after his address in the Regional Meeting on Sustainable Urban Transport Index in Jakarta on Thursday, March 2, 2017.

Budi added that the third phase of MRT project from East to West, from Cikarang to Balaraja, will commence two years early. “MRT East West which was planned to begin by 2020 will start in 2019,” he said.

The MRT project construction will be expedited, according to him, to reduce congestion in the capital city by offering a fast, safe, comfortable mass transport.

Budi said that sustainable transportation development is of the central government’s concern even if it has to be achieved with great efforts. Budi is confident that the MRT project will have significant impacts on urban development.

“If we succeed to get out of the current, frustrating traps due to gridlocks, I believe that in 2024-2025 Jakarta will be better,” he said. At present, he said, the government is conducting a study on the acceleration of the third phase of the MRT project (Balaraja-Cikarang).

All tunnels in the first phase of MRT project have been linked and the ultimate drilling works will commence using the boring machines of Antareja 1, Antareja 2, Mustikabumi 1, dan Mustikabumi 2.

The meeting of the four boring machines will mark 80 percent completion of MRT underground structures from Sisingamangaraja to Hotel Indonesia Roundabout. Meanwhile, the structures of an overpass from Lebak Bulus to Sisingamangaraja have been completed 50 percent.

The MRT project is constructed in three phases: the first phase is the construction of 16 km long Lebak Bulus – HI Roundabouts route, the second phase is the construction of 13.5 km long HI Roundabouts – East Ancol route and the third phase is the construction of 87 km long Cikarang – Balaraja route.

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Environment Document For Patimban Port Approved
The Jakarta Post, 03/03/2017

The Environment and Forestry Ministry has approved the environment document for a Indonesia-Japan flagship deep seaport project in Patimban, West Java, an official has said.

The environmental impact analysis (Amdal) document for the U$3 billion project was approved on Tuesday, Transportation Ministry director general for sea transportation Antonius Tonny Budiono said.

“It’s pretty fast. The project detail plan [RIP] for Patimban has also been completed,” he told The Jakarta Post on Thursday, adding that the next step would be the project location submission (Penlok) and the detailed engineering design (DED) before the loan was finally approved.

Documents like Amdal are needed to secure loan agreements with the Japan International Cooperation Agency (JICA), which is slated to cover an estimated US$1.7 billion from the total value of the project.

The port will have a container capacity of 1.5 million 20-foot equivalent units (TEUs) once it is partly completed in 2019 and then 7.5 million TEUs by 2027, which is around half the capacity of Jakarta’s Tanjung Priok part, the country’s busiest port.

It will be located about 70 kilometers from the Karawang Industrial Estate and Bekasi in West Java, where many Japanese industrial firms, particularly automotive manufacturers, operate.

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Indonesia,France Agree to Work Together on Green City Development
Tempo, 03/03/2017

Indonesia and France have signed a memorandum of understanding (MoU) on green city development. The MoU was signed by the Indonesian Public Works and Public Housing Ministry and French Ministry of Housing and Sustainable Homes and Ministry of the Environment, Energy and Marine Affairs.

“Agreements on fresh water, waste water and green cities have been initiated for nine cities in Indonesia,” the Indonesian Public Works and Public Housing Minister Basuki Hadimuljono said in a written statement on Thursday, March 2, 2017.

Basuki elaborated that the nine cities are Semarang, Wonosobo, Yogyakarta, Bandung, Bogor, Mataram, Purbalingga, Jombang and Singkawang. Three out of the nine regions are EcoDistrict pilot projects which will roll out this year, namely Semarang Western Flood Channel, Yogyakarta’s Gajah Wong Kota area and Wonosobo District’s town hall.

The EcoDistrict programs are funded through the French government’s loan amounting to USD61 million and the state budget (APBN) totaling USD23.6 million.

The budget is allocated to enhance the capacity of human capital and institutions, construction works in the three regions and technical assistance.

As for the agreement on fresh water, the two countries will develop regional fresh water supply system (SPAM) in Benteng Kobema, Bengkulu Province, SPAM in Jatigede, West Java Province and SPAM in Durolis (Dumai, Rohil, Bengkalis), Bengkulu Province, which are expected to commence in 2018.

Moreover, a review of waste water treatment facility design in Bogor City has been carried out since 2015 and construction is expected to begin in 2018.

A letter of intent on sustainable urban development had earlier been signed between the Public Works Minister Basuki Hadimuljono and French Ambassador to Indonesia Corinne Breuzé on December 11, 2014, in Bali.

Indonesia and French bilateral cooperation in infrastructure have long been established, including for the rehabilitation of 150 km long primary and secondary drainage system in Banda Aceh, which covers the procurement of pump stations and the construction of retention basins.

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WWF Indonesia Launches Interactive App to Aid Marine Conservation
The Jakarta Globe, 03/03/2017

The World Wildlife Fund Indonesia launched a mobile application on Thursday (02/03) to promote awareness of the importance of marine conservation amid a steady rise in the number of tourists flocking to the country's marine reserves.

The Marine Buddies app provides information on the 165 marine parks scattered across the archipelago. "With rising marine tourism in Indonesia, the urgency to maintain clean oceans is as important as ever.

The app will be a useful tool to help familiarize travelers with Indonesia's marine parks, allowing them to responsibly input data on the conditions of each park they visit," Dewi Satriani, campaign and mobilization manager for WWF Indonesia, said during the launch in Jakarta.

The app also allows users to rate individual parks in a wide variety of categories, by judging how clean each reserve is and by noting the abundance, or lack thereof, of fish populations in park waters.

"The reports by divers on the variety of fish will be essential. The more diversity in fish species, the healthier the coral [reef]," Dewi added.

According to data released by the Ministry of Maritime Affairs and Fisheries, only about 10 percent of marine parks in the country are deemed properly maintained.

Alor Island in East Nusa Tenggara and Mentawai Island in West Sumatra were among those listed as under suitable management. With the release of its app, WWF Indonesia hopes that the number of properly maintained parks will increase through public interaction.

reports filed through the app will be forwarded directly to both the
Ministry of Maritime Affairs and Fisheries and the Ministry of Environment and Forestry. 

Ultimately, WWF Indonesia hopes to speed up the search for an adequate solution to rising pollution levels in Indonesian waters, as more than 8 million tons of plastic waste make their way into oceans globally every year, according to Coastal Care, a foundation that tracks pollution.

"Protecting our oceans is becoming harder and harder. Even with sea patrols, we can't really know what's going on underwater," Dewi said.

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EU, Asean Set to Cooperate on New Conservation Programs
The Jakarta Globe, 03/03/2017

In celebration of 40 years of bilateral relations, the European Union and the Association of Southeast Asian Nations will unveil two new cooperative programs this year to promote sustainable use of peatlands and enhance biodiversity conservation in the Asean region.

Francisco Fontan Pardo, the EU ambassador to Asean, said recently that the partnership between the two blocs continues to promote strong political, economic and social cooperation.

"Today, I am glad to highlight some of the successes of our joint work. We are starting two new ambitious programs aimed at protecting the environment and supporting the fight against climate change in Asean," Pardo said.

Pardo launched the 40th anniversary of the EU-Asean partnership alongside Asean Secretary General Le Luong Minh at the Asean Secretariat in Jakarta on Thursday (02/03).

"The two new programs on the sustainable use of peatlands and biodiversity conservation further signify and strengthen the long-standing relationship between Asean and the EU," Minh said. "They reflect the shared goals and commitment of Asean and the EU in environmental protection and sustainable development."

With a budget of 20 million euros ($21 million), the program is aimed at reducing carbon emissions, mitigating transboundary haze and promoting responsible use of peatlands in the Asean region. 

Approximately 90 percent of transboundary haze in the southern part of the Asean region is caused by fires originating in peatland areas.
The second program described by Pardo will boost efforts to protect biodiversity in the region and produce more effective systems of managing bio-protected areas.

The program will target the extensive network of both existing and potential heritage parks in Asean to reduce loss of biodiversity.
The European Union has contributed 10 million euros to the conservation program as part of its larger allocation of 170 million euros for the region from 2014 to 2020.

The European Union will be working with Asean to promote projects in specific areas, including enhancing connectivity through sustainable and inclusive economic integration and climate change-related environmental management.

Earlier this year, the EU Mission to Asean initiated a regionwide youth photo competition to highlight the strength of relations between the two blocs. Irianto Frederico Da Lopez of Indonesia was one of the winners in the competition. He received his award on Thursday.

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Indonesia Hosts IORA Summit
The Jakarta Globe, 03/03/2017

Indonesia will serve as the host of the Indian Ocean Rim Association (IORA) Summit on March 5 to March 7, 2017. Foreign Minister Retno Marsudi explained that as the host, Indonesia will attempt to exercise leadership in the IORA.

"Indonesia's participation [as a host], this is an addition or part of the leadership role played by Indonesia in many regions. As we had done in Asia, in the Pacific, then we would like to [play a role] in Indian [Ocean Rim]," Retno said during a press conference on IORA at the State Palace on Thursday, March 2, 2017.

Retno said that Indonesia needs to display strong leadership skills in the Indian Ocean Rim because according to Minister Retno, currently there is no strong leadership figure in the Indian Ocean.

By hosting the IORA Summit, Retno said, Indonesia will have the chance to assume an important role and maintain security in the region.
"On the other hand, it would guarantee many forms of cooperation in the Indian Ocean Rim, especially with Indonesia," Retno said.

A number of priority sectors in IORA include maritime security and safety, investment and trade facilities, disaster risks management, fisheries management, science, and tourism. Retno added that issues on investment and trade facilities will be made related to blue economy principles.

"To picture of how important the Indian Ocean rim is, it has 2.7 billion population, passed by half of all of the containers in the world, one-third of the world's cargo, and two-thirds of the world’s energy shipment," Retno said.

State Secretary Minister Pratikno said that Indonesia's interest in becoming IORA Summit host is to show the country's commitment to becoming the world's maritime axis.

"After 20 years, this is the first time IORA held a Summit attended by its leaders. This happens because of Indonesia's initiative," Pratikno said.

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'Government Prepares Funding Scheme To Buy Freeport’s Shares'
The Jakarta Post, 03/03/2017

An official has said the Indonesian government has enough funding to buy shares in copper and gold miner PT Freeport Indonesia as it has started to prepare a holding company to manage the mining site in Papua.

“The holding company will buy shares in Freeport,” said Fajar Harry Sampurno, the deputy for mining, strategic industry and media affairs at the State-Owned Enterprises Ministry, on Thursday.

Currently, the Indonesian government and Freeport are negotiating changes to Freeport’s prevailing contract agreement following the issuance of new mining regulations.

Freeport insists that the Contract of Work (CoW) signed in 1991 is still valid and should be respected. The government wants the company to convert its CoW into a special mining license and divest 51 percent of its shares.

Fajar said his ministry planned to send letters to the Finance Ministry and the Energy and Mineral Resources Ministry to discuss the funding scheme to take over the mine in Mimika regency, Papua.

If the government assigns the State-Owned Enterprises Ministry to handle the process, the ministry will appoint an independent appraisal company to assess the value of Freeport’s shares, said Fajar.

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Luhut Push Freeport Indonesia to Construct Smelter
Tempo, 03/03/2017

Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan said that the Indonesian government is still searching for the best solution of the dispute with PT Freeport Indonesia.

Luhut said that according to the currently available parameters, the government will acquire 51 percent of Freeport's shares and that Freeport must construct a smelter to provide added value for the company's mineral products and create new jobs.

"That is why we're adamant that Freeport must have a smelter. Because currently don't know about the added value [of the mineral products], or how much gold there is in the exported concentrate," Luhut said during a lecture at the Bandung Institute of Technology on Wednesday, March 1, 2017.

Another problem, according to Ruhut, is related to tax. "The amount of tax must adapt to each regime, it can't have the same value forever," Luhut said.

Luhut said that if Freeport refuses to comply and decided to permanently stop their mining operation in Papua, the government is ready to take over.

"Technological wise, the management can be done by Indonesia's men and women from ITB and other campuses that are already there.
Regarding which company will take over, it could be Inalum, Antam, or through cooperation with the private sector," Luhut said.

As previously reported, Freeport has given the Indonesian government a 120-days deadline in order to decide whether the company can continue its production under the previous Contract of Work (CoW). If the government refuse, Freeport said that it would take the case to international arbitration.

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