Indonesia

[helios]

The Jakarta Post
Editorial: Redefining nationalism Mon, 05/19/2008 11:51 AM

As we mark a century of national awakening this week, here is a question worth pondering: Where is Indonesia going to be 100 years from now?

Will Indonesia remain a nation stuck in abject poverty and backwardness? Will Indonesia implode, dissolve or break up into smaller states sometime in the next 100 years because of its inherent contradictions? Or will Indonesia become one of the greatest nations on earth, not only prosperous, but also leading the world in the economic fields, science, art and sports, and playing a major role in helping promote global security and prosperity?

Of the three scenarios, the last is the most desirable. And Indonesia certainly has the potential to be a great nation. But this means that any notion of nationalism today must be couched in terms of making Indonesia a nation that is on par with the most advance countries in the world.

Imagine what it would mean for the economy if all the people of working age were gainfully employed, contributing to the gross domestic product. Imagine the richness of the diversity of the country's people, cultures and traditions, and how together they could contribute to the pursuit of science, knowledge and the advancement of humanity.

And imagine the abundance of natural resources, renewable and otherwise, being used efficiently and productively for the good of the national and global economy. Only a few other countries on earth are probably as blessed as Indonesia.

However, the same assets that could potentially make Indonesia a great nation instead have become liabilities or curses that have held us back. Our huge population has meant we are constantly struggling to produce enough food and to create jobs that would provide people with a decent income.

The diversity of our population has meant that we are constantly fighting one another or suspicious of one another because of our differences.

And the wealth of natural resources has led to greed and corruption, particularly among those who control them, impoverishing the rest of us.

A century ago, our founding fathers launched a movement that sought independence for a collection of peoples living in the archipelago then called the Dutch East Indies. Driven by this spirit of nationalism, their movement culminated with Indonesia's proclamation of independence in 1945, and a formal end to three-and-half centuries of Dutch colonialism five years later.

With independence secured, our leaders put forward a new vision of a just and prosperous society and of a country playing a role in the promotion of global peace and prosperity. This is written in the Preamble to the 1945 Constitution. More than 60 years later, however, this vision of Indonesia has remained a distant dream.

Instead, independent Indonesia has wasted six precious decades through petty fights and power struggles, followed by a long period of corrupt and violent dictatorship until 1998. We have made little progress.

It is like we have been stuck in second gear all this time. While undoubtedly the nation has made some progress in the intervening years, it is failing behind other countries in Asia that only gained their independence much later than Indonesia.

So, whither nationalism?

The same nationalism that fired up the struggle for independence somehow failed to rekindle the spirit as Indonesia embarked upon nation building.

And in spite of its touted potential, Indonesia has never turned into a great nation.

A big part of the problem lies in our failure to redefine the concept of nationalism. We have hardly departed from the concept that set us on the path to independence in the first half of the 20th century. Today, nationalism still carries xenophobic sentiments. While this may have had its merits during the struggle against Dutch colonialism, surely this definition of nationalism lost its essence the moment Indonesia became an independent nation, and especially today in a globalized world.

Instead of being a rallying point to move the nation forward, nationalism in the hands of leaders in independent Indonesia today has became a tool for narrow political objectives. Nationalism has become exclusive rather than inclusive, something that divides rather than unites. If nationalism is to remain a driving force, we need to come up with a new national consensus of what we mean by it.

In all honesty, looking at the condition of Indonesia today, there is really little to celebrate in marking the centenary of National Awakening Day. Rather than squandering time and resources to mark our meager achievements, we should probably use this occasion to contemplate the direction of this nation.

Implosion is certainly a possible scenario, just as it is possible for Indonesia to become a great nation in the next 100 years.

But for that to happen, we need to redefine our understanding of the term nationalism into one that looks at the larger interests of the nation, including Indonesia's place on the international stage. The old brand of nationalism that has xenophobic overtones no longer has a place in modern Indonesia.

Will Indonesia be able to fulfill its vision as a great nation? To borrow the government's slogan for the centenary commemoration of national awakening, yes, Indonesia Bisa (Indonesia Can).

[kennynah]

20 May 2008 10:34 GMT


Thousands protest Indonesian fuel price hike plan
JAKARTA (Thomson Financial) - Thousands of protesters rallied in the Indonesian capital and other cities Tuesday against a government plan to raise subsidised fuel prices by as much as 30 percent.

Around 1,000 people clogged the main street in Jakarta demanding the government cancel the plans and reduce the cost of food and other commodities which have soared globally.

"We will march to the (presidential) palace to reject the price hike and demand the government reduce food prices. The people's budgets have reached breaking point," demonstration spokesman Masinton told Agence France-Presse.

Separately, thousands of students and labourers rallied in Samarinda on Kalimantan island and in the city of Solo in Central Java, state-run news agency Antara reported.

The government has said it is considering a fuel price rise of up to 30 percent, which would see the cost of gasoline in Southeast Asia's biggest economy climb to 6,000 rupiah (65 U.S. cents) from 4,500 rupiah.

President Susilo Bambang Yudhoyono says the government has no choice but to slash fuel subsidies despite the political cost ahead of elections next year, as record world oil prices threaten to blow out the budget deficit.

To compensate the poor, his cabinet is planning to transfer more than $1.5 billion in cash handouts to millions of low-income families.

[winston]

From UOB-Kay Hian

Indonesia: A century of Awakening

Celebrating 100th anniversary.

Yesterday was a very special milestone in the history of Indonesia indeed as she celebrated the 100th anniversary of National Awakening Day. A group of young Indonesian intellectuals, led by
Boedi Oetomo who lived in the Netherlands, established the nation’s first political organization on 20 May 1908. The spirit of nationalism eventually led to Indonesia’s state proclamation or independence on 17
Aug 1945.

Unexpected ‘awakening’ in 1998. But exactly ten years ago, Indonesia had another unexpected ‘awakening’ when masses of people led by Indonesia’s university students forced the downfall
of then-president Soeharto in May 98, following the Asian financial crisis which started in Sep 97. Despite Indonesia’s longer history and immense natural resources, it is still lagging behind the
smaller economies of its regional peers such as Thailand, Malaysia, Brunei, and Singapore.

A century of corruption. Corruption, in various forms, has been blamed for slowing down the political and economic progress of the nation throughout the last century. It is a popular belief that
corruption was in fact introduced to Indonesia during the Dutch colonisation and by the Dutch East Indies Trading Company (VOC) which it found hard to shake off.

Still a dream. Like his predecessors, President Susilo Yudhoyono has pledged to reduce corruption to improve the effectiveness and efficiency of government institutions. Much constitutional changes have been made to control the powers of the executive, legislative and judiciary, but a truly
democratic system that truly works for the economy is still a distant dream.

[helios]

>>> REF: past article, e VIY2008 was not well organised, i'm reading up on e indonesia's tourism trade as below ...

i hope to visit bagang dua mall for shopping & to do my ice-skating.

u must know that JKT got e largest ice-skating rink, ie. Taman Anggrek Mall is one of the biggest of all of the mega-malls in Jakarta, located @ West Jakarta close to Grogol area & boasts a gross area of 300,000 sqft and an indoor ice-skating rink ...

Visit Indonesia Year?
Wed, 03/12/2008 The Jakarta Post

What an unfortunate year for Indonesia's tourism industry. Less than one month after the government declared 2008 Visit Indonesia Year, flooding crippled Jakarta's Soekarno-Hatta International Airport, the main gateway to the country, early last month.

Last week, the second annual Travel & Tourism Competitiveness Report 2008, by the Geneva-based World Economic Forum, downgraded Indonesia as a tourist destination to 80th among 130 countries surveyed. That was much worse than its position last year, which was 60th out of 124 countries.

The report showed that Indonesia scored very poorly in health and hygiene due to an inadequate supply of hospital beds, poor access to sanitation and drinking water and an acutely low number of qualified physicians.

The country also performed badly in that other pillar of the tourism industry -- infrastructure. In fact, Indonesian airplanes have been banned from European airspace since last year and no progress has been made on getting this blanket ban lifted.

Indonesia scored high only in terms of natural resources, with several World Heritage natural sites and the richness of it flora and fauna, and price competitiveness. But these strengths were undermined by such major weaknesses as underdeveloped infrastructure, including air and ground transportation.

There are even great concerns related to safety, particularly the prevalence of road accidents.

No wonder Indonesia, though richly endowed with a wide variety of cultures and interesting sites, has remained among the least popular tourist destinations even in the Southeast Asian region, outranked by Malaysia, Singapore and Thailand. Last year, Indonesia received just around 5.5 million tourists, compared to more than 9 million arrivals in Malaysia and almost 20 million in Singapore.

The survey showed the top-ranked countries in the travel and tourism industry -- Switzerland, Austria, Germany, Australia, Spain, the United Kingdom, the United States, Sweden, Canada and France -- understand the importance of support businesses and regulatory frameworks, coupled with world-class transportation and tourism infrastructure and a focus on nurturing human and natural resources.

Countries have vastly different underlying operational conditions, depending on where they fall in the tourism development spectrum. All have unique tourism products to offer, but the central goal is to encourage improvement in the underlying competitive conditions and infrastructure.

This is again where Indonesia is fundamentally weak, even in nature-based tourism, where the country should have a strong comparative advantage.

This latest travel and tourism report from the World Economic Forum should serve as a strong wake-up call for us, especially the government, to reinvigorate the tourism industry, especially now in the midst of a weakening global economy and uncertainty in the international financial market.

International tourism is known as a resilient industry, never suffering a deep and lasting recession and able to recover quickly because the need to travel, whether for business or leisure, is so deeply ingrained in our societies.

As a resource-based industry, tourism is also an ideal business for Indonesia to develop because of its multiplier effect and the labor-intensive nature of its operations. It directly benefits local communities economically. Travel businesses do their best when they use the local workforce, services, products and supplies.

The tourism industry also supports the integrity of a place. Destination-savvy travelers seek out businesses that emphasize the character of a locale. Tourism revenue in turn raises the perceived value of those assets.

Travel-related businesses such as hotels, restaurants, transportation, handicrafts and cultural shows are all labor intensive, the very kind of enterprises needed to absorb the huge pool of job seekers here.

But it is precisely because of its multi-sectoral activities that the promotion of the tourism industry should involve not only the tourism ministry but all other state and private organizations that provide the basic infrastructure and public services, including immigration, customs, transportation, accommodation and security.

(NB: STB Targets S$15.5 Billion Tourism Receipts & 10.8 Million Visitor Arrivals for 2008, so e article is not correct to state 20 Million)

[kennynah]

all my friends who visit jakartar on business, somehow never quite travel around. they always say how bad the traffic is in the city. so, they attend their meetings and have some evening entertainment.... that's indon to them...

[winston]

From kennynah with thanks:-

15 May 2008 07:39 GMT

Indonesia Q1 GDP up 6.28 percent, led by exports, investment

JAKARTA (Thomson Financial) - The Indonesian economy grew 6.28 percent in the first quarter from a year ago, driven by exports and investment, an official said Thursday.

Exports grew 15.03 percent year-on-year in the first quarter while investment surged 13.3 percent, said Slamet Sutomo, deputy chairman of the Central Bureau of Statistics.

The share of investment in GDP has increased to 25.34 percent in the first quarter from 23.8 percent in the first quarter of 2007.

Meanwhile, private consumption rose 5.5 percent, he said.

Sutomo said the economy grew 2.15 percent versus the fourth quarter of 2007 as exports rose 5.68 percent.

Private consumption declined 0.45 percent from the previous quarter and government consumption plummeted 30.45 percent, while investment shrank by 0.64 percent.

The contraction in private consumption is largely due to the increase in prices in the period, he said.

The GDP data was within analyst expectations. Ten economists polled by Thomson Financial were expecting growth of 6.11 percent to 6.46 percent on an annual basis.

Economists were expecting growth of between 1.7 percent and 2.32 percent versus the fourth quarter.

In the first quarter of 2007, the economy grew 6.1 percent on an annual basis.

[winston]

Indonesia's Stock Index May Rise 15%, Firmansyah Says
By Berni Moestafa

May 29 (Bloomberg) -- Indonesia's benchmark stock index may rebound from the worst year since 2000 after the government cut fuel subsidies to spend more on projects that will boost the economy, the stock exchange's chief said.

The 375-stock Jakarta Composite Index may rise as much as 15 percent this year, Indonesia Stock Exchange President Director Erry Firmansyah said in a May 27 interview. The index, which climbed the past six years, is down 11 percent in 2008. It advanced 0.4 percent to 2,444.3 at 10:25 a.m. local time.

PT Telekomunikasi Indonesia, the nation's largest company by market value, and PT Astra International, the biggest car dealer, dragged the index lower as the government cut its economic growth forecast and inflation accelerated. This month's decision to trim subsidies that made up 14 percent of the budget will free funds for bridges and roads, Firmansyah said.

``Money that previously was for subsidizing fuel can now be spent on infrastructure,'' said Firmansyah, 52, who has been president at the exchange since 2002. ``Infrastructure has a big multiplier effect as it absorbs labor and increases demand for cement and steel. The market needs certainty in the economy to rebound.''

Jakarta Composite companies trade at an average 15.07 times reported profit, making them cheaper than the 15.4 times profit for companies in the MSCI Asia Pacific Index. The Jakarta Composite rose 1.5 percent yesterday to 2,433.769.

Higher Estimate

Firmansyah is more optimistic than some strategists. UBS AG's Jakarta-based analyst Joshua Tanja predicts the index will rise to 2,925 this year, or about a 20 percent increase from today. Firmansyah's forecast would put the index at as high as 3,157.699 at year-end.

The government raised domestic fuel prices by an average 28.7 percent this month. Without an increase, the government would have to spend 190 trillion rupiah ($20 billion) on subsidies, Finance Minister Sri Mulyani Indrawati said May 21.

The government's plans to spur growth include adding 20,000 megawatts of power generating capacity by 2010 to keep up with demand.

``We were concerned that government infrastructure spending would be curtailed,'' said Raymond Gin, director of investment at Jakarta-based PT Manulife Asset Management, which oversees about $1.2 billion. ``Government expenditure will be appropriate and more balanced'' after the fuel-price increases, he said.

Indonesia's benchmark stock index dropped 2.8 percent the first two trading days after the energy price increase took effect May 24 on concern higher fuel prices will spur inflation. The change may push inflation to 11.2 percent by year-end, Sri Mulyani said. That could erode consumer demand, which accounts for about two-thirds of the economy.

Slowing Economic Growth

Inflation quickened to a 19-month high in April, prompting the central bank to raise its key interest rate to 8.25 percent on May 6, the first increase since December 2005. The government lowered its estimate for 2008 economic growth to 6.4 percent in February from its previous estimate of 6.8 percent.

Bandung, West Java-based Telkom fell 22 percent this year on concern consumer spending will decline. Jakarta-based Astra, the country's largest auto retailer, lost 25 percent.

``People are haunted by inflation issues and the policy direction of Bank Indonesia,'' said Patrick Chang, who helps manage $4.5 billion in equities at CIMB-Principal Asset Management Bhd. in Kuala Lumpur.

Firmansyah said higher inflation from fuel prices will ebb after six months, if history is a guide.

Overseas Investors

Inflation jumped to a six-year high of 18.4 percent in November 2005, a month after the government last raised fuel prices. The central bank began cutting interest rates in May 2006 after price rises slowed to 15.4 percent the previous month. The Jakarta Composite gained 16 percent in 2005 and 55 percent the following year.

Firmansyah also cited increased demand for the nation's equities by foreign investors as a reason to forecast a rebound. Overseas fund managers this month bought a net $336.7 million of stock, exchange data through May 27 show, set for the biggest monthly inflow since December.

``The index is now more stable and participation by foreign investors has returned,'' Firmansyah said. ``Hopefully, this will continue to improve.''

[helios]

The Jakarta Post , Tue, 06/17/2008

Indonesia, the world's third-largest tin producer, plans to limit production of the tin metal starting 2009 in a move that could keep the price high in international markets.

Simon Sembiring, director general for coal, mineral resources and geothermal energy at the Energy and Mineral Resources Ministry, said Monday the ministry would cap the country's annual tin production at between 90,000 and 100,000 tons.

"Even though the regulation will start in 2009, we will review the quota every year, if we need to change it, we will," Simon said.

Last year, the country produced 93,735 tons of tin bars, lower than 118,555 tons in 2006. However, because of soaring prices, last year's production was valued at US$1.3 billion, higher than $913 billion in 2006.

Data from the Trade Ministry shows May's tin export value rose 3.47 percent to $160.75 million, from $155.35 million in April, owing to record prices that peaked May 15, and despite export shipments falling 9 percent to 7,150 tons from 7,857 tons over the same period.

Exports in the January-May period this year reached 33,711 tons, with a value of $585.66 million.

The government's move to tighten regulations on exports has contributed to the rise in the price of the commodity.

Last year, in a bid to clamp down on illegal producers, the government passed a regulation stipulating that tin bars and tin sand must contain a minimum 99.85 percent tin, and that all export activities must be surveyed to be verified for standard compliance.

[helios]

The Jakarta Post , Tue, 06/20/2008

Indonesia's nascent but growing sharia banking industry gets a major boost this week from the passage of the new Islamic banking law, putting the country on a stronger footing to attract Islamic funds.

Together with the Islamic bond law, adopted a few months ago, the Islamic banking law will serve the interests of the growing number of Muslims who are not comfortable with conventional financial systems which charge interest on capital.

Many Muslims consider interest as riba, (prohibited by sharia law) and that's an important reason why more Indonesian Muslims are turning to Islamic banking services and even looking at Islamic investment in the form of sukuk, Islamic bonds.

Sharia bank lending increased by 30 percent in 2007, higher than the 25.5 percent lending growth of commercial banks. But sharia banking is expanding from a smaller base, currently accounting for only 1.98 percent of the total banking market.

This small sharia banking market segment is attributed to the country's late entrance into Islamic finance. Indonesia saw its first sharia banking in the early 1990s, with the establishment of Bank Muamalat Indonesia in 1991.

This was the only fully compliant sharia bank until the financial crisis in 1997, which many Muslim scholars attributed to the false logic of a financial system based on debt contracts.

To them, the crisis was generated by a debt structure whose nominal values and maturities were out of line with the ability of the economy to service them.

After the crisis, along with the rise of fundamentalism and some resurgence of mainstream orthodoxy among Muslims, sharia banking is becoming more popular. Two more full sharia banks were established, Bank Syariah Mandiri, the largest sharia bank by assets, and Bank Syariah Mega Indonesia.

On top of that, several conventional banks, including foreign-owned banks, have established sharia windows. These are not separate institutions, but specialized units within conventional banks that offer sharia-compliant products for their clients.

Sharia operations in this country have been governed by regulations from Bank Indonesia (BI), the central bank. The passage of this Islamic banking law provides a stronger legal basis for sharia banking and finance.

Unlike the present BI regulations, the law gives more room for sharia banking to develop. The law, for example, requires any sharia window in a conventional bank whose assets already reach 50 percent of its mother bank (or after 15 years of institutional existence since the passage of the law) to be separated from the conventional host bank and become an independent fully compliant sharia bank.

The passage of the law, however, does not automatically address all the problems currently faced by sharia banking and finance. The double taxation issue is one of them. Because sharia banking does not charge interest, sharia banking transactions often involve selling and buying of assets, which belong to the bank until the end of the transaction, when the client buys the asset back. This selling and buying cycle is subject to taxation, which may mean double taxation, compared to a conventional loan to buy an asset where it is only purchased by the client once.

The government has promised to address this with changes in taxation laws.

Another big problem for sharia banking is the limited choice of instruments currently available to Indonesian customers compared to countries with more developed Islamic financing institutions. Many fixed rate instruments currently available from sharia banks are not really very different from interest based transactions in conventional banks.

If you want to borrow money from a sharia bank to buy a car, for example, you have to buy the car from the bank and not from the car dealer. The bank would charge you a price based on the original price of the car plus management fees and the profit for the bank and its depositers.
Therefore, technically, there is not necessarily a big difference in pricing between sharia banks and conventional banks. That's why even Muslims themselves have expressed some skepticism and even cynicism regarding the present practices of Islamic banking.

There is a challenge for sharia finance scholars to devise truly sharia banking instruments or investment instruments that would attract more people to put their money in sharia banks and be recognized as sharia-compliant in Indonesia and internationally. These could include fixed cost instruments where there are fees or charges but not interest, and variable cost instruments where the client may share profits or losses with the bank.

If more instruments are available and attractive and better advertised, then sharia banking should serve not only Muslims but also people of other faiths, who are perfectly free to use it.

The Agriculture Development Bank of Iran, for example, through partnership with farmers, helps them to convert their physical possessions into assets that can generate additional capital, therefore improving their collateral and capacity to borrow.

Similarly, Islamic finance can be used here in Indonesia to convert dead capital of farmers into income-generating assets. This way, Islamic finance will be able to become a vehicle to develop and empower the economy for Muslims and non-Muslims alike.

[helios]

The Jakarta Post 07/02/2008

Rising transportation costs following the fuel price increases on May 24 pushed the country's monthly inflation up to a 21-month high in June, the Central Statistics Agency (BPS) reported Tuesday.

Inflation in June rose 11.03 percent from a year earlier, up from 10.38 percent in May. Month-to-month inflation was 2.46 percent, up from 1.14 percent in May.

The BPS changed its consumer price index calculation for measuring June's inflation by replacing old variables used since 2002 with new variables. It increased the number of cities surveyed to 66 from 45, commodities to 774 from 744, and reduced the weight of foodstuffs from 43.38 percent to 36.12 percent.

"These fundamental changes made inflation lower than it should have been," Bank Danamon chief economist Anton Gunawan said.

Anton earlier predicted month-to-month inflation in June would reach 2.78 percent, and year-on-year inflation 13.2 percent.

However, he said, the 2007 base year might be more representative to determine Indonesia's inflation in reflection of current conditions.

The BPS said the transportation, communications and financial sector rose 8.72 percent, the highest contributor to June's inflation, while the education, recreation and sports sector was the lowest contributor at 0.44 percent.

Kendari suffered the highest inflation of 6.49 percent, while Bogor -- previously considered part of Jakarta -- had the lowest inflation of 1.15 percent, the BPS said.

Anton predicted month-to month inflation in July would reach 0.65 percent due to the increase in price of liquefied petroleum gas (LPG) and the beginning of the new school year, when the prices of school uniforms and schoolbooks would rise.

State-owned oil and gas firm PT Pertamina on July 1 raised the price of LPG from Rp 4,250 (45 US cents) per kilogram to Rp 5,250, causing the price of a 12-kilogram LPG canister to go up to Rp 51,000 from Rp 63,000.

The government forecast inflation to reach 11.2 percent by the end of 2008.

Anton also said the central bank "will likely raise its interest rate by 25 basis points" during its collegial meeting on Thursday.

Bank Indonesia raised its interest rate by 25 basis points in two consecutive months to the current 8.5 percent to curb inflationary expectations.

"BI needs to focus on intervening in the rupiah against the dollar, bringing it to below Rp 9,200 per dollar," Anton said.

The rupiah was trading at Rp 9,225 per dollar at 4:34 p.m. Tuesday in Jakarta, up from Rp 9,226 on Monday, Bloomberg reported.