Sport Leads Brand Britain - at home, in Indonesia - Up Date June/July 2013 by BritCham Indonesia

JOURNAL

“Facilitating Trade & Investment Between Indonesia and Britain”

JUNE/JULY 2013

SPORT LEADS BRAND BRITAIN - at home, in Indonesia

MAY/JUNE 2013

TABLE OF CONTENTS

Chambers Initiative

EVENTS 6 7 8 10 11 13 14 15 16 17 18

Business & Social Gathering - April Professional Women's Group Perfect Jugglet: Reality or Myth ACCA Finance Leaders Luncheon European Day - Celebrating a Prosperous Partnership with Indonesia Professional Women's Group - The Tools and Diﬀerent Aspects of Positivity & Positive Psychology Giving Kids a Sporting Chance Activities Update BritCham's Sports Gala Night - A Celebration of Great British Sporting Success Business & Social Gathering - May Residence & DomicileManaging British Expatriates Exposure to UK Tax The Fry Group EIBD - Stakeholder Briefing on Infrastructure Professional Women's Group Guest speakers: Fardila Astari & Roy Simangunsong Executive Breakfast Briefing Financial Services Sector Business & Social Gathering - June

BritCham's Sports Gala Night

30 Mergers & Acquisitions in Indonesia contributed by SSEK.

THIS MONTH'S FEATURES

32 Taking a Multi- Country Approach to Political Risk & Trade Credit Insurance - contributed by Aziz Adam Sattar 34 Anti-Corruption in Indonesiacontributed by Control Risks 36 Mission Possible - Designing For Certainty in Uncertain Times contributed by Arup 37 Greater Scrutiny Of Indonesian Taxes - Are You Prepared? - contributed by VDB|Loi 38 Terrorism: Transcending National Boundaries - contributed by BritCham's Young Professional's Group

Boardroom Insight

SME SPOTLIGHT

40 Hello Are You Listening? contributed by Outward Bound Indonesia

LIFESTYLE & HEALTH

41 Looking Good For Your Heart contributed by Raﬄes Hospital 42 Legends Of Glastonbury - Myth 43 A Chronology Of Key Events: Indonesia 44 BLOODHOUND Project

MEMBER'S ANNOUNCEMENTS

45 OutwardBound Indonesia & TVET UK 46 ACCA 47 Etihad Airways & New Members

*Cover image taken from www.google.com

Our patron:

BANKING & FINANCE

19 Indonesian Manufacturing PMI contributed by HSBC 20 How Risk Free Are Your Investments? - contributed by PPi 22 Global Mobility Survey- contributed by Santa Fe Relocation Services

Proudly sustained by:

BOARDROOM INSIGHT

24 Giles Daubeney - Chief Operating Oﬃcer Robert Walters plc

The Executive Oﬀce is kindly sponsored by:

Airline partner of the year 2013/2014:

INDONESIAN BUSINESS NEWS

26 BKPM's New Guidelines for Investment Applications contributed by Makarim & Taira S. 28 Haste Makes Waste: The New Trade Law - contributed by KADIN

This publication is not for sale. It is distributed free to members of the British Chamber of Commerce in Indonesia (BritCham). The articles selected for this publication represent a range of views on significant current issues in Indonesia. The views expressed in this journal cannot be assumed to represent the oﬃcial views of BritCham as a whole nor of its Board of Management and Executive Oﬃce. Any errors of fact that occur in the articles are the responsibility of the contributing author or publisher. The articles are not intended as formal advice and should not be relied upon as such.

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FORTHCOMING EVENTS

For further information or to make a reservation, please contact events@britcham.or.id or call DHINI at +62 21 522 9453 For Associate sponsorship, please contact salesmkt@britcham.or.id

T HU R SDAY

25 JULY

PROFESSIONAL WOMEN’S GROUP

TH URSD AY

PROFESSIONAL WOMEN’S GROUP

AUGUST

BUSINESS & SOCIAL GATHERING

BUSINESS & SOCIAL GATHERING TBA | 16.00 – 18.00

TBA | 16.00 – 18.00

British Chamber of Commerce in Thailand (members.bccthai.com)

British Chamber of Commerce in Malaysia (www.bmcc.org.my)

THURSDAY

18 JULY

Networking Evening

THURSDAY

Speed Networking Evening

JULY

FRIDAY

Seaboard Networking Evening

SATURDAY

JULY

Ted Talk

AUGUST MONDAY

Scottish Business group meeting

AUGUST

British Chamber of Commerce in Philippines (www.bccphil.com) British Chamber of Commerce in Singapore (britcham.org.sg) THURDAY

TUESDAY

CSR Breakfast Briefing

Social Networking Night

AUGUST

JULY

Wisma Metropolitan I, 15th Floor Jl. Jend. Sudirman Kav. 29-31 Jakarta 12920 – Indonesia PHONE +62 21 522 9453 FAX +62 21 527 9135 EMAIL bisnis@britcham.or.id www.britcham.or.id

OFFICERS CHAIRMAN Haslam Preeston VICE CHAIRMAN Maxi Gunawan HONORARY SECRETARY ACTING James Bryson HONORARY TREASURER Daniel Hankinson SECTOR GROUPS CHAIRMAN OF ENERGY SECTOR David Braithwaite MBE CHAIRMAN OF HUMAN RESOURCES David Knowles CHAIRMAN OF INFRASTRUCTURE Scott Younger OBE CHAIRMAN OF FOOD, FORESTRY, FISHERIES & AGRICULTURE Roger Pinder SECTOR COMMITTEES CHAIRMAN OF MEMBERSHIP SECTOR COMMITTEE Aziz Adam Sattar CHAIRMAN OF SME SECTOR COMMITTEE Cynthia Wihardja CHAIRMAN OF YOUNG PROFESSIONALS GROUP Jay Singgih CHAIRMAN OF PROFESSIONAL WOMEN

COMMITTEE Juliette Williams BOARD MEMBERS Tom Aaker, John Arnold OBE (Former Chairman), James Bryson, David Burke, Rob Daniel, John Galvin, Colin Harvey, Malcolm Llewellyn OBE (Former Chairman), Tonny Pranatadjaja, Harun Reksodiputro, John Slack, Darwin Silalahi, Adrian Short, Juliette Williams, Aziz Adam Sattar EX OFFICIO Debbie Clarke – Director of UKTI, Keith Davies OBE – Director of British Council, Heru Dewanto – IABA (CORRESPONDENCE FOR BOARD MEMBERS may be addressed to: info@britcham. or.id EXECUTIVE OFFICE EXECUTIVE DIRECTOR Chris Wren (chriswren@britcham.or.id) EXECUTIVE ASST Irawati Nataadidjaja (administration@britcham.or.id) SALES & MARKETING COORDINATOR Shinta Permatasari (salesmkt@britcham.or.id) EVENT COORDINATOR Dhini Puspitasari (events@britcham.or.id) FINANCE OFFICER Daliana Tiono (finance@britcham.or.id) PUBLICATIONS Robbie Stone (publications@britcham.or.id) BUSINESS DEVELOPMENT Hans Mohammad (busdev@britcham.or.id)

JUNE/JULY 2013

CHAIRMAN'S MESSAGE

Haslam Preeston recent meeting of the International Business Chamber (IBC), ably led for many years by the Australian Chamber’s Peter Fanning, discussed the Negative List. It occurred to me during the discussion, that the details of the List, as infamous and widely discussed as it is, are at best probably somewhat hazy to most of us, except for those few brave souls that really enjoy that sort of thing. You know who you are. Thus, most of us find it diﬃcult to hold a conversation on the subject, even casually, let alone with the likes of Peter (or our illustrious former Chairman, John Arnold, for that matter).

A The Negative List, or Negative Investment List, or “Presidential Decree No. 36 List of Business Fields Closed to Investment and Business Fields Open, with Conditions, to Investment”, as its catchy official title runs, was last revised in 2010, and provides details of industries closed or restricted to foreign investment. The list is extensive and includes areas such as Agriculture, Mining, Fisheries, Defence etc (including a blanket prohibition on foreign investment in Marijuana Farming, which is disappointing). There have been some indications that the List is being reviewed once again, though if this is happening, it is so far without consultation. Certainly, this is a highly political time to be doing so and although during his time at the BKPM, Chatib Basri made some indications the List may be loosened in some areas, at this point in time the outcome is more likely to be additional restrictions, rather than any reform or liberalisation. Indeed, the Indonesian Employers Federation, APINDO weighed in on the debate in May, saying that retail trade and distribution should be included as a restricted industry “to maintain business opportunities for local people”. This somewhat protectionist view directly contradicts the pure economic argument from Pak Chatib, that “If we do not take steps that give room for those investors [to expand their production], then we will depend more heavily on imports.”

Put another way, better to encourage foreign companies to invest and set up production in Indonesia, rather than shut them out. Hopefully Pak Chatib’s new role as Finance Minister will give his views greater clout in the Cabinet. Certainly, we hope this opportunity is taken to improve Indonesia’s competitiveness in the FDI marketplace. The EU Ambassador, Julian Wilson kindly spoke to the Board of Management at a recent Board Meeting, giving his views on the major issues between the EU and Indonesia, before attending our Business and Social Gathering. Julian’s remit is almost exclusively trade focused, thus this was unsurprisingly the main area of discussion. The main message was that the EU’s share of Indonesia’s trade has now stabilized, though this is clearly not good enough, with the general view being that European nations continue to be crowded out by Japan, China, Korea and the US, who all have favourable trade agreements with Indonesia. Julian is very keen, therefore, that a Closer Economic Partnership Agreement (CEPA) be initiated and it is this that has kept him in Jakarta for a year longer than intended. Sadly, it looks like the attention of both Indonesia and the EU will be distracted for the foreseeable future, by elections and USEU trade talks respectively.

Ambassador Wilson, who will shortly return to Brussels. Julian has been a highly able and energetic representative during his time here and as a subject of perhaps the most Eurosceptic nation within the EU, did a splendid job making the case for closer cooperation between the member states here in Indonesia and it is no coincidence that EuroCham is now a stronger and more unified organisation than it was previously. As importantly, Julian will be greatly missed on the social scene, where he was a fixture on the exhausting diplomatic cocktail circuit, a stalwart on the golf course, and generous host at many enjoyable dinners. I believe his replacement is a Swede and we look forward to meeting him in due course. As a final point, BritCham recently signed an agreement with UKTI, executed by the Ambassador, Mark Canning and your Executive Director, Chris Wren in the presence of your Chairman and Lord Green, UK Minister of State for Trade and Investment, which marks the commencement of closer cooperation between UKTI and BritCham. In many ways, this is the most fundamental change to how we operate and are funded since the Chamber’s foundation. I am confident we can meet the challenges ahead and become an ever stronger, more capable Chamber in the years ahead.

This is, unfortunately, one of the last opportunities we will have to engage

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EXECUTIVE UPDATE

Business Confidence Inex and presented its findings to media and then Head of BKPM, Pak Chatib Basri. This was a landmark launch and the findings were significantly revealing and well received. Together with Kadence, the scope of the BCI 2013 is being widened and we will be polling members towards the end of August. The results help us shape key areas of strategy with regard to institutional relations. Therefore, please accept our thanks in advance for giving this some of your time and attention. Sports Gala Night We would like to oﬀer our sincere thanks to all those who supported our revised format ‘Sports Gala Night’. I was a very successful evening in terms of a fun night out, meeting some rugby characters and as a fundraiser for both Indonesian Ruby and BritCham’s ‘Giving Kids A Sporting Chance’. The Grand Kemang Hotel proved to be a great venue and we look forward to working together with them for next year. At a time when the Lions were in the middle of a major test series, it was also a pleasure to support rugby development in Indonesia. The Rugby Association made new friends and identified much-needed new commercial partners. Chelsea FC The Premier League is the UK’s biggest British export and Arsenal, Liverpool and Chelsea are slotted to play fixtures in Jakarta in July. Chelsea FC has been directly engaged with BritCham. We have played a role in direct meetings with authorities to encourage greater levels of organization aimed at reducing the sale of counterfeit goods around the stadium on match-day. Regardless of any outcomes and recognizing aims and achievements, Chelsea has invited the participation of ‘Giving Kids A Sporting Chance’ at their new ‘Blue Pitch’, constructed as part of their ‘Here To Play. Here To Stay’ programme. That will be a very special morning for some of the football contingent from our portfolio of projects. BritCham Business Confidence Index 2013 Last November, BritCham launched its

JUNE/JULY 2013

BISEA The conference of British Chambers and business groups around the region (BISEA) was signed into being five years ago in Jakarta. October 10-11 will mark the 10th BISEA Conference, also in Jakarta. The event will open with a ‘by invitation only’ cocktail reception on Wednesday October 9th and other plenary events around the round-table discussions currently include a very special speaker lunch and a breakfast session about the process of turning the legislation of the UK Anti-Bribery Corruption Act into an ISO standard – essential for all compliance conscious British corporate and individual members. Sponsors get to share in profiling for the entire programme. Two associate slots remain. Please contact me directly for detailed information. Christmas Party The BritCham Christmas Bash has become the iconic event of our calendar as a great way to share Christmas wishes and to close off the year with friends, colleagues and clients. It has been sold out each of the last three years and last year was 80% sold within 10 days of opening for bookings. After careful consideration of the option to increasing capacity, it has been decided that the intimacy of our traditional venue is a feature of this event, lending to a unique ambience for an ostensibly business crowd and partners. Therefore, we offer advanced notice that all those loyal attendees of the previous two bashes, sustaining and other special category sponsors, will be offered booking exclusivity for 2 weeks from September 1, before any general announcement. Please

keep your eyes open for your personalized invitation. July – December Sponsorship Opportunities It is very pleasing to advise our membership that all lead or exclusive sponsorship opportunities for the second semester are contracted. However, a few associate options remain for a couple of the Business & Social Gatherings, the annual Alumni Gathering on September 16, the Business Confidence Index 2013 release and, as mentioned, the BISEA Conference. They really are “a few”, so please get in touch soon if you think you may be interested in reaching out through BritCham.

After three years of repeat contracting the back-page of Up.Date is now available to be contracted from August by an international brand. Please mail me for our media pack. Debbie Clarke By the time you receive your personal copy of Up.Date, Debbie Clarke will have recently left after four years in the seat as Director of UKTI. In that time, it is true to note that BritCham’s relationship with the Embassy and UKTI has grown ever stronger and mutually advantageous. Consequently, that strengthening of collaboration has resulted in greater relevance to our membership here and an ever-important role in supporting UK SME market access to Indonesia. Knowing Debbie had packed up and acquired a lot of memorabilia, on behalf of the BritCham community, the Board and Executive Oﬃce presented Debbie with a commemorative English edition of Tempo, the issue of the week of her arrival four years ago.

Haslam Preeston (BritCham Chairman), Debbie Clarke (UKTI), And Chris Wren (BritCham Executive Director)

Chambers’ Initiative On June 4th, BritCham signed up to Lord Green’s Chambers’ Initiative. This followed 7 months of dialogue locally and with London. This project provides for the gradual transition of UKTI market access business services for SME’s over a 5-year period. The establishment of the RBS Smart Oﬃce was our first step in capacity-building in a variety of ways. Imminent next steps include expanding our oﬃce space and undergoing a further refurb to provide larger meeting/training facilities, the technology for delivering video conference info seminars and more headcount to build our research and web capabilities. We expect to run our first schedule of video conferences targeting UK SME’s from October. We will circulate more detailed information highlighting these value-add services after the holiday period.

And Finally…. Together with my EO team, we would like to wish peace and success to all of our Muslim friends fasting this Ramadhan . Selamat Idul Fitiri, and, in advance, ‘mohon maaf, lahir dan batin’. And, congratulations for Independence Day celebrations to all Indonesians.

Chris Wren EXECUTIVE DIRECTOR

Chambers Initiative – Lord Green, signing of the Grant Letter 4 June 2013 – British Embassy, Jakarta

Haslam Preeston (BritCham Chairman), Chris Wren (BritCham Executive Director), Lord Green and HE. Mark Canning at the signing of the Grant Letter.

Haslam Preeston – this new agreement will enhance and reinvigorate the focus on British Business in Indonesia. Chris Wren – With the benefit under the ‘Chambers Initiative’, Britcham will be able to immediately introduce new business services that will be of benefit to the existing membership and also to assist new UK SME’s looking at investing in Indonesia. We will be able to offer cost-effective solutions for UK based

Lord Green – British Chamber is of profound importance to the Indonesia Business community. Going forward the Chamber will become even more of a strategic partner for UKTI, building on the close links already forged. Government to government engagement is not enough in a politically stable, emerging market like Indonesia – with a high focus on UK SME’s, more and more on the ground advice will be required from people already doing business in country. The Chamber has a fundamental role in assisting British SME businesses providing practical advice and business development support in market.

SME’s and provide them with access to the substantial in-country experience we have across our membership and Board (some 150 years of experience on the Board alone). Britcham will also be able to oﬀer UKTI, greater support on Trade Missions from the UK and oﬀer a broader range of business support platforms and networking forums. Lord Green - There are more ways the UK Government and UKTI can help with

the evolution of the Chamber and the two should be seen as ‘complimentary service providers’, working closely to help UK SME’s with market entry into, what at times, can be seen as a challenging regulatory environment. This is an exciting time – Indonesia has lots of potential and with the strengthening of resources available to UK SME’s looking at entering the market and the continuing support of the UK Government, the outlook is positive.

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EV EN TS BritCham Guest

Richard Graham MP (The Prime Minister’s Trade Envoy for Indonesia

TVET UK delegation with BritCham Members Deborah TV Minicola (Allied Pickfords), Peter van Dijk (two in from M the right.) th

Peter van Dijk (Sinar Mas), Christopher Benz (Kemana Services)

Chris Wren (BritCham Executive Director), Debbie Clarke (UKTI / BritCham Board Member), Richard Graham MP (The Prime Minister’s Trade Envoy for Indonesia), Haslam Preeston (BritCham Chairman)

Richard Graham MP (The Prime Minister’s Trade Envoy for Indonesia), Chris Wren (BritCham Executive Director) and Maria Radyati, PhD (Trisakti University).

Business and social gathering : Thursday, 25 April 2013 |Oakwood Premier Cozmo Mega Kuningan

Sponsored by:

Colin Harvey and David Burke (BritCham Board Members)

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JUNE/JULY 2013

Paddy Flyn

Martin Rimmer

Residence and Domicile Managing British Expatriates Exposure to UK Tax Thursday, 20 June 2013 | Mandarin Oriental Hotel On June 20th 2013, the Fry Group in association with the British Chamber of Commerce held a seminar relating to UK Residency, returning tax eﬃciently to the UK, UK Domicile and Inheritance Tax Planning (IHT). The seminar also detailed and examined the implications of the new rules determining UK tax residence, which has been enacted since 6th April 2013. The seminar highlighted important points, among others were: • The concept of domicile, which determines the extent to which British Expatriates entire world-wide estate is

liable to inheritance tax. • Can British Expatriates change their domicile and how can this protect them from the UK’s world-wide Inheritance tax regime? • Are British Expatriates aware of the factors determining UK Statutory Residence Test? • What kind of planning do British Expatriates need to do before moving back to the UK? • What tax saving can be realised both before and after the move? • To what extent can the UK be viewed as a tax haven?

Speakers of the seminars were Martin Rimmer and Paddy Flynn, two of the Fry Group’s foremost international specialists. The Fry Group has been advising British expatriates on all aspects of their tax and financial aﬀairs since 1898. If you were unable to attend the seminar and would like to discuss or have questions on the topics above, please contact Paddy Flynn at: paddy.flynn@thefrygroupsg.com.

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EV EN TS Riko Amir (Ministry of Finance) delivering his update on Viability Gap Funding

he EU Indonesian Business Dialogue (EIBD) started in 2009, when European and Indonesian business leaders met in Brussels to reach joint recommendations on how to increase the volume of EU Indonesian trade and investment. These recommendations have addressed the need for regulatory reform, investment in infrastructure and the need for more personal contacts between Indonesian and European business leaders to improve mutual understanding and jointly develop the many business opportunities.

During the EIBD 2012 in Bali, the infrastructure sector identified opportunities available for investors to participate in the development,

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JUNE/JULY 2013

Sherina Mazyu (PT Lintas Marga Sedaya) Infrastructre Investment Case Studies: Success Story.

Richard MichaelIndonesia (Infrastructure Finance) moderating the seminar

Edward McCartin III (Asia Renewables Pte., Ltd.), Scott Younger (Nusantara Infrastructure), lee Lawrence (Qeema Investment Company Ltd.) during the panel discussion on Infrastructure Issues : Investors view.

Aart van nes (Royal haskoning DHV) and Riko Amir (Ministry of Finance)

namely, water systems; renewable energy; roads (toll-road); railways and ports (sea and air). However, up until now, there has been no clear information on which projects are financially and economically viable to investors. The workshop was held to gather all the regulators, investors and operators, to briefly discuss the expected projects with measurable outcomes both for the initiator and at implementation. Objectives The objectives achieved at the infrastructure sector briefing were as follows: • Identify and inform in more detail,opportunities available in infrastructure development and what is needed to get the projects running;

• Identify investors requirements and what they want to make projects more attractive and bankable; • Identify what steps must be taken to ensure all hurdles and backlogs are solved from a regulators point of view. Outputs • Clear and better picture on requirements needed to be met to get infrastructure projects running; • Investors’ perspective on valuing infrastructure projects in Indonesia; and • Investors’ intention to take part in the infrastructure development.

Sony Jethnani

Life Coach - Mindfulness, Values & Well-being www.sonyjethnani wordpress.com Email: sonyjethnani@gmail.com

PROFESSIONAL WOMAN's GATHERING Thursday 27 June 2013| Mercantile Athletic Club

round thirty women participated in the Professional Women Group’s sixth event for 2013 on 27 June at the Mercantile Athletic Club to listen to our guest speakers from Yahoo & Fortune PR. “Building reputation in Indonesia's Digital Age” Fardila Astari, Group Business Director of Fortune PR agency, shared data and information on how the tools and communication for PR strategies have changed in today's internet and digital era. Fardila explained that "Generation C" are Digital Storytellers constantly capturing and sharing their lives online with an insatiable appetite for creativity in the palm of their hands. Indonesia has a high and growing internet consumption with over 50 million Facebook users, nearly 30 million users on Twitter and currently ranking # 5 in the world in terms of number of Twitter accounts. We are living in the information era with widening availability of internet and mobile devices at cheaper prices. People are talking about brands relentlessly 24/7 on all media platforms and online news sites and social media channels are growing. In the global arena, the rebirth of PR is all about "People Relations" and the opportunity through captive-online communities and brand believers for creating new connections and increasing

sales. Digital marketing and PR are eﬀective in building trust, engaging customers and attracting consumers. Sharing stories through attractive photos and catching videos, influencing like-ability, offering solutions and promoting free prizes and giveaways result in engaging, inspiring and motivating the targeted audience's consumer habits. “Yahoo ! Indonesia - making users daily habits inspiring and entertaining” Roy Simangunsong, Country Manager and Sales Director of Yahoo! Indonesia, shared the tools and applications that Yahoo has designed for its users in Indonesia. He also shared strategies for maximizing sales and marketing opportunities that Yahoo oﬀers its clients and advertisers in Indonesia. Roy revealed Yahoo's online research shows consumer's habits have gone digital. Yahoo's mission is to make the world's daily digital habits inspiring and entertaining by delivering content through beautiful and intuitive products and applications and engaging its users through personalised online experiences. Yahoo is also enabling Brands to reach their targeted consumers through their daily habits by conducting research on trends and consumer habits and providing comprehensive solutions suitable for the market. Yahoo offers Brands the size, format and context to weave the Brand

into consumer's daily habits in a way that's personal, relevant and engaging. Overall, both speakers shared the optimism and excellent prospects pertaining to the growing internet and digital market of Indonesia that is likely to continue this decade and for the next couple of decades as well. Internet and digital users are encompassing all age groups, starting from 10 years to above 60 years old, so the market is really wide and varied. The top twelve daily online habits of internet users are : 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Socialising Ewmailing friends & family Using search engines Listening to music Watching videos Playing games online Shopping & Commerce Reading & watching News Reading & watching Events Reading & writing Blogs Reading & watching Sports Searching for Weather/ Climate Information

Please join our Facebook page : http://www. facebook.com/pages/Professional-Womenat-BritCham/168739736491714.

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EV EN TS James Bryson (HB Capital Indonesia)

Executive breakfast briefing David Fletcher (Permata Bank), Tom Dav Aaker (Standard Chartered Bank), Aake William Kuan (PT Prudential Life Will Assurance), James Bryson (HB Capital Assu Indonesia) Indo

Wednesday, 19 June 2013 | 07.00 â&#x20AC;&#x201C; 08.45 | Mercantile Athletic Club Sponsored by:

David Fletcher (Permata Bank), Tom Aaker (Standard Chartered Bank), William Kuan (PT Prudential Life Assurance)

Business & SOCIAL GATHERING Thursday, 27 June 2013 | Mercantile Athletic Club Sponsored by:

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JUNE/JULY 2013

Much of the recent focus on Indonesia has been on the compelling demographics and the domestic consumption theme. An integral part of this structural story is the development of the financial services sector. Our panel of senior industry representatives and experts discussed some of the key trends, challenges and opportunities.

BANKING & FINANCE

HSBC Purchasing Managers’ Index™ 2013

HSBC Indonesia Manufacturing PMI™ Manufacturing operating conditions improve for fourth consecutive month Summary May data pointed to a further improvement in operating conditions across the Indonesian manufacturing sector. The headline HSBC Purchasing Managers’ Index™ (PMI™) – a seasonally adjusted index derived from individual diffusion indices measuring changes in output, new orders, employment, suppliers’ delivery times and stocks of purchases – posted above the no-change level of 50.0 for the fourth month running. At 51.6, the PMI was broadly unchanged from April’s six-month high (51.7) and indicated a moderate expansion in the country’s goods-producing sector. Output increased for the third consecutive month in May, amid evidence of higher levels of incoming new work. Growth in production remained moderate and eased slightly from April. New work intakes also expanded at a moderate pace, with 27% of monitored companies indicating higher order book volumes and 21% noting a decline. According to panellists, solid demand was maintained over the month. New export orders in the Indonesian goods-producing sector rose for the third successive month during May. Although modest, the overall rate of growth was the fastest since last November. Monitored companies largely commented on improved demand from Chinese, Japanese and Vietnamese clients. In line with higher volumes of new orders, manufacturers increased their input buying during May, taking the current period of rises to four months. The pace of expansion was solid, but the weakest since February. Consequently, holdings of raw materials and semi-manufactured goods were accumulated. However, with 19% of survey participants indicating higher stocks of purchases and 16% noting a depletion, the overall rate of inventory building was only slight.

Historical Overview HSBC Indonesia PMI 50 = no change on previous month

Increasing rate of growth

Increasing rate of contraction

Apr'11

Jul

Oct

Jan'12

Apr

Jul

Oct

Jan'13

Apr

Sources: Markit, HSBC.

Staffing levels in the Indonesian manufacturing sector rose for the second month running during May. The rate of job creation was, however, only slight and little changed from April. Among those panel members that indicated additional hiring, this was mainly linked to higher production requirements. Backlogs of work fell, ending a five-month period of accumulation. That said, the pace of depletion was only slight, with 12% of companies indicating lower unfinished business levels and 10% noting a rise. Meanwhile, post-production inventories decreased slightly during May. According to survey participants, stocks of finished goods were used to fulfil part of the increase in new orders. Average purchase prices in the Indonesian manufacturing sector rose further during May. The overall rate of cost inflation was robust, but eased to the slowest in five months. Higher prices paid for raw materials and unfavourable exchange rates were mentioned by surveyed companies. As a result, goods producers increased their selling prices again. The rate of charge inflation eased from April, but remained solid. Input and output prices have both increased throughout the 26-month survey history. Comment Commenting on the Indonesia Manufacturing PMI™ survey, Su Sian Lim,

ASEAN Economist at HSBC said: “Manufacturing activity in Indonesia continued to expand in May. This time round, however, external rather than domestic demand seems to be the bigger driver of manufacturing activity, with new orders little-changed from April but new export orders significantly stronger. Rises in input and output prices eased, but the ongoing deterioration in suppliers' delivery times suggests that we cannot be too relaxed about the inflation outlook as structural factors continue to impede the bringing of goods to market.” Key points PMI little-changed from April’s six-month high Both new orders and output expand moderately Growth in export orders fastest in current three month sequence of rises About Markit: Markit is a leading, global financial information services company with over 2,800 employees. The company provides independent data, valuations and trade processing across all asset classes in order to enhance transparency, reduce risk and improve operational eﬃciency. Its client base includes the most significant institutional participants in the financial market place. For more information please see www.markit.com About PMIs: Purchasing Managers’ Index™ (PMI™) surveys are now available for 32 countries and also for key regions including the Eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www. markit.com/economics The intellectual property rights to the HSBC Indonesia Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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BANKING & FINANCE

Indonesia

Colin Bloodworth

has worked as a financial consultant in Indonesia since 1992. He is Director of PPI Indonesia and can be contacted at colin.bloodworth@ppi-advisory.com or +62 21 3004 8024

PERSONAL FINANCE

HOW RISK-FREE ARE YOUR INVESTMENTS? might default and the bonds would not be guaranteed by the central European bank. In the case of both cash and bonds there is also inflationary risk and currency risk, so even if the money is ‘safe’ it does not mean it will retain its purchasing power. Is property the answer? A quick look at the property market in Indonesia would indicate this is clearly what many people believe. I was amazed recently to see how easy it was for my wife to obtain financing for a new apartment in Jakarta. Apartment developments are being snapped up like hot cakes. Yet looking around at existing apartment buildings the vast majority of units appear to be unoccupied. The perception seems to be that bricks and mortar are more secure than cash in the bank, with or without occupants.

Perhaps the most important principle to understand in investing is the inescapable relationship between risk and return. However, it does not automatically follow that an investment offering a higher return will fail and similarly even a low-risk investment such as a bank account can run into diﬃculties. No investment is risk-free, not even cash and bonds. Anyone who is risk-averse is really limited to bank deposits or government bonds. Even then there are risks. Bank deposits are generally backed by government guarantees, but only to certain limits and these guarantees are only as good as the

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ability of the particular government to honour them. When the Irish government announced a blanket guarantee on bank deposits to stem an outflow of funds from Ireland in 2008 it had to quickly add a disclaimer to the eﬀect that it would honour them so long as it had the funds to do so. Government bonds are safe to the extent that a government can always honour its obligations by printing money, except in the case of European countries where a central bank controls the printing. At one point during Europe’s debt crisis last year you could buy Euro bonds in Germany paying less than 2% per annum, or 8% in Spain or a whopping 27% in Greece. The huge premium reflected the risk that Greece and to a lesser degree Spain

But there are also big risks. Those relying on a rental market may find that oversupply will make it hard to find tenants which in turn could make it diﬃcult to service loans and cover service charges. Worse, if there is a credit crunch, it may become diﬃcult to resell and values would invariably fall. At the moment there is an assumption that prices will keep rising. Half a world away we can see the results of a property boom and bust in parts of Europe such as Spain and Ireland. It could take a decade or longer for the market to recover. In the meantime whole estates are being demolished in Ireland as empty properties become a health and safety issue. Unlikely we will see the same happening in Indonesia but such are the potential risks.

Are stock markets the best place for savings? If your stock picking skills are as good as those of Warren Buﬀett, the ‘Oracle of Omaha’ then you would be on the right track as Mr. Buﬀet became the second wealthiest man in the world. Admittedly, it took him a long time to get there but it demonstrated the importance of patience and taking a long term view. The capital markets are in business to make profits so by investing in those markets you should share in those profits.

year period. What are the risks? – Very simply, you can lose all your money if the project is not commercial!

But what are the risks? The price of shares can fall as well as rise. Sometimes the falls are steep and recovery can take many years. If a company fails, you can lose all the money you placed in that stock.

The unforeseen risk factor – human nature! Unfortunately we share the characteristics of other species in that we tend to follow the herd. This is why many investors have lost money in the stock markets over the years. People tend to buy when markets are high and sell when they have fallen. The same is true of other asset classes. I once had a request from a client to sell all his funds and put everything into gold. When I pointed out to him that gold fell from around $800 to $300 an ounce in 1980 and remained around that level for almost a quarter of a century he changed his mind, which is just as well in view of gold’s recent fall.

Are ‘absolute return’ funds safer? Successive stock market shocks since 1987 have caused more than a few investors to flee the stock markets. Many have turned to funds that produce regular, positive returns. Examples are funds that invest in property, student accommodation, asset-backed lending, litigation funding and hedge funds. While returns may be steadier than those of the stock markets, the main risk is one of liquidity. Should a large number of investors request the return of their funds at the same time the fund may not have access to suﬃcient cash and so it has to be ‘gated’ pending an orderly run-down of its assets. So while your money may still be ‘safe’ you cannot actually get hold of it! As you move into more esoteric funds there is also an increased risk of losses through mismanagement or even fraud, as in the case of the billions of dollars lost in Mr. Bernard Madoﬀ ’s Ponzi scheme. Where are the really high returns and what are the risks? At the higher end of the risk scale there is private equity and venture capital. An example would be the funding of research into a particular invention which, if commercially viable, could be sold at considerable profit to a large company. Previous examples in this particular field have produced actual returns of 10 to 15 times the original investment over a five

Of course there is nothing quite the same as running your own business. If you have the skills of Bill Gates or the late Steve Jobs, the sky is the limit to amassing a fortune. Sadly the majority of small businesses fail within five years so if this is your chosen investment route make sure you use only a portion of your assets. Don’t put your home and pension at risk!

People like to feel they are part of a success story and will often buy into the ‘flavour of the month’ at a late stage. When the asset falls out of favour they no longer want to be a part of it and consequently will often sell at a loss. The launch of Facebook shares was a good example. The most successful investors are often those who are contrarians. When everyone was piling money into technology shares at the turn of the century Warren Buﬀett was buying shares in paint. Is it possible to measure risk? Clearly with so many variables it is not possible to assign a precise risk score to each asset class. However, the following may serve as a guideline: 1. No risk No investment falls in this category! Doing nothing is a risk in itself. 2. Low risk Cash in more than one currency

and in more than one bank. Major market government bonds (with some European exceptions). Medium risk Emerging market bonds, corporate bonds, major market equities, balanced managed funds. Medium to high risk Emerging market equities, commodities (including gold), absolute return funds, real estate and property funds, structured notes. High risk Frontier market equities (countries such as Egypt, Mongolia, Iraq which are not yet in the category of ‘emerging’), non-conventional funds without a track record. Very high risk Private equity, venture capital, own business.

The groupings are very general and could be broken down further. For example, owning a single share poses a greater risk than owning a portfolio of shares. Remember that even a ‘blue chip’ share can lose 50% or more in the event of a single disaster such as BP’s well blow-out in the Gulf of Mexico. Investing in a single country is more risky than investing in several. And so on. Risk management is the key There are other pitfalls in investing that require awareness including scams and fraud. There have been plenty of these over time and they have caught out not just investors, but advisors and even the big life companies. The best defence against risks of all kinds is to have a diversified portfolio of assets. Never put all or most of your eggs in one basket. Make sure you have a solid core of investments in the lower to medium risk range. If you are seeking above average returns, allow some exposure to the higher risk categories as long as you understand the risks. In short, investing is full of risks. The key lies in managing those risks so that you can still reap the rewards.

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BUSINESS AND ECONOMICS

Jason Will

Managing Director Sanfa Fe Relocation Services jwill@santaferelo.co.id

Largest survey of international HR employee mobility programmes shows growth in international employee transfers fuelled by “emerging markets" The 2013 Global Mobility Survey, the largest annual analysis of international mobility programmes, reports continued growth in the number of international employee assignments undertaken by international businesses and their HR departments and 41% of businesses expecting the number of international employee transfers to increase in the coming year. The 2013 Global Mobility Survey, the largest annual analysis of international mobility programmes, reports continued growth in the number of international employee assignments undertaken by international businesses and their HR departments and 41% of businesses expecting the number of international employee transfers to increase in the coming year. The study surveyed HR departments and their employee mobility functions in 1,273 companies across a range of industry sectors in 70 countries. The Rise and Rise of Emerging Markets The report found significantly more growth in employee mobility programmes that involved countries that are classed as “emerging markets”, compared to programmes relating to non-emerging markets. “The world is changing and its centre of gravity is moving east. Today’s economic powerhouses of India and China are increasingly becoming headquarter locations rather than the far-flung outposts of yesteryear” said Brian Friedman, Founder and CEO of the Forum for Expatriate Management, one of the experts oﬀering analysis for the report. The report also showed that for those

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organisations whom regularly transfer their employees internationally, more of their HR departments were decentralising the way that they manage global mobility operations away from a single global centre of control. The report showed more had adopted regional approaches to how they manage their mobility programmes in order to focus on increased growth in assignments to emerging market countries in Asia, South America and now Africa. “This has especially been seen in international mobility programmes where practices between locations have diﬀered for no good reason and this inconsistency has become apparent for serial expatriates. Delegation control of mobility programmes to a regional unit makes sense when either movement is confined to a region, or where there is a regional scheme (with diﬀerent terms and conditions) running in parallel to a global scheme,” said Peter Reilly, Director HR Research & Consultancy, Institute for Employment Studies Three quarters of companies say that emerging markets are important to their mobility programme; one third go so far as to describe them as “very important.” Experts interviewed in conjunction with the report cite reasons for this trend including a changing marketplace, improved skill sets in emerging markets, economic

challenges in the West, accelerated growth in Brazil, India and particularly China, and sheer volume of assignments in and out of regional locations. “Often organisations have regional global mobility teams where there is a critical mass of employees moving into or out of a region. This justifies the headcount and allows the Global Mobility Managers faceto-face time with employees, removing the challenges posed by time zone diﬀerences,” said Emma Gibbs, Director, The Expat Academy. “For companies unfamiliar with a region in which they wish to do business, outsourcing provides a number of advantages, that might include payroll and benefit administration, recruiting and hiring support, employee assignment coordination, immigration, transportation, and communication. But one of the most critical areas where outsourcing supports the company is to provide a ‘boot on the ground’ representative to address company needs and to communicate issues back to the corporation,” said Peggy Smith, SCRP, SGMS, President/CEO, Worldwide ERC. Other highlights in the market identified in the Global Mobility Survey • Retail, pharmaceuticals, and oil and

the opportunity. Beyond this though, it’s important to consider the role of ‘connected-ness.’ The presence of geographical, economical or cultural connections an organisation has tends to skew expansion in ways beyond what might be merely economically advantageous,” said Maury Peiperl, Professor of Leadership and Strategic Change, IMD.

gas are the industry sectors largely driving growth. • China, India and Brazil were ranked as the most challenging destinations. • Hardship locations are dominated by the emerging markets, with enhanced packages provided by most companies to support e m p l o ye e s o n t h e s e assignments.

Along with major trends in global mobility, the survey also reports on assignment packages, management team structures, use of technology and investigation of compliance. The report also features an expert panel forum with key figures from the global mobility industry.

The Global Mobility Survey analyses key trends relating to international employee mobility and HR. The report also investigates trends in terms of how companies manage their employee mobility programmes, how they structure their assignment packages, critical aspects of managing mobility programmes such as cost management, compliance and management of risk, key tools used to manage employee mobility programmes, “HR departments within international organisations are seeing an increase in the number of employees that work internationally” Andrew Dalglish, Director of independent research company Circle Research, commented “the subject of emerging markets has dominated the headlines and has prompted additional research into this area. The results of the Global Mobility Survey research show that traditional growth markets still present significant challenges to mobility programmes and that new frontier locations in Asia, South America and Africa look set to bring their own set of unique circumstances. This study provides highly compelling information for any global mobility programme touching these areas.”

Mike Brazier, Global Mobility Survey Research Editor, commented “The Global Mobility Survey continues to provide new and detailed insight into key mobility trends. We are particularly grateful of everyone who has participated in this body of research and our expanded panel of experts who have added their additional thoughts. We hope everyone finds the report, the infographic and the web portal useful for benchmarking their own programmes.”

Across global mobility, companies reported expansion within existing markets, expansion within new markets, local skill shortages, talent development and mergers & acquisitions as the major reasons for overall growth.

About the Global Mobility Survey The Global Mobility Survey is the most robust review of multinational mobility programmes. The results are collected from 1,273 company respondents from across North America, Latin America, Europe, Middle East, Asia and the Pacific region and span a wide range of industry sectors. The Global Mobility Survey is conducted by Circle Research and commissioned by Santa Fe Group. Copies of the report can be requested from www.globalmobilitysurvey.com

“Of course, expanding into new markets demands an analysis of costs, risks and

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BOARDROOM INSIGHT

Giles Daubeney What is your general career background? What have the strands been that have brought you to be COO of Robert Walters? After studying hotel management at college, I worked in sales and marketing for 18 months before I saw a small advert in The Times for a position at a recruitment business. Having learned the ropes, I then moved to a second recruitment business, where I spent 18 months, before joining Robert Walters. That was 25 years ago when we had one office in the UK in London – and now we’re in 24 countries around the world, employing over 2,200 people in 53 offices. I joined as a consultant – number 34 on the payroll – and am proud of the fact that I have worked my way up through the Company, during which time I’ve seen more good times than bad and learnt a lot along the way. Between 1990 and 1994 I opened – and worked in – our office in Amsterdam which gave me a valuable insight into working outside of the UK. The job remains the same but the challenge when internationalising your business is learning how to work and prosper in different cultures. Since then I have been involved in opening many of our overseas operations in some of the world’s most exciting growth markets, from Australia and Singapore to Hong-Kong and our acquisition in China. I’m lucky to have joined an industry in its early days of development and to have played a part in its growth and professionalisation over the last 25 years.

I would like to go back to a comment you made. Years ago the recruitment industry was less well regarded than it is now: why do you think that was and what things have happened to change that?

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Recruiters were traditionally paid commission for placing a candidate in a job – in some cases this is still the case. This approach can make candidates feel commoditised and undervalued by their Giles Daubeney recruitment consultants. Chief Operating Oﬃcer, Robert Walters plc We at Robert Walters are diﬀerent. We don’t pay commission and instead pay our has been proven to work well with other consultants a share of profit. This bonds professional services businesses, such as teams and creates a positive and collegiate law and accountancy. atmosphere which has been great for the business. What are your specialties in terms of Over the years we have been at the forefront of the recruitment industry’s transformation. Our approach has helped to improve industry standards and, as a result, help recruitment to become more acceptable, professional and grownup. Where people used to get into the recruitment industry by accident, there are now professional trade bodies and we get bright young graduates who apply to us because they want have a career in a fast moving and dynamic industry.

You mentioned that many of your new oﬃce openings happen because you are supporting existing clients entering new markets. Would you say that is a fair reflection on how support services companies are growing from Europe into Asia? Yes, absolutely. Setting up new oﬃces in foreign countries can be expensive and risky. Going into a new market with an existing client to help them make a success of their internationalisation strategy reduces your own risk when entering new markets and deepens client relationships. There’s a real sense of shared endeavour with our clients and it’s an approach that

the types of work you are searching for?

As a business we specialise in professional middle-management. Historically we focused on finance and accounting, which still accounts for a large proportion of our business worldwide. But as the business has grown in size, stature and footprint we now help clients find lawyers, human resources, sales and marketing, engineering, supply chain and IT professionals. But it’s still very much professional middle-management.

You mentioned that you’re in Japan, Singapore, Hong Kong and now Indonesia. Why wasn’t Indonesia first? We went into Hong Kong first because of its historic links with the UK and because client demand took us there. We opened our oﬃce there in 1997 and soon found that there were strong opportunities in Singapore – again on the back of client demand. An existing client was looking to move its back oﬃce to Singapore and we got involved in the project which enabled us to research the market and establish ourselves there.

The market here in Indonesia has only really begun to take oﬀ in the last two or three years: it’s an emerging market, one of the top 10 growing economies in the world, and I think the timing of our entry is right. We tend to open in new markets with people who have been in the organisation for some time so that they fully understand the Company’s objectives and how to get the right support. In the case of Jakarta, we sent Nick Neal who had worked for us in Hong Kong. His brief is to hire local talent, train them and create a highly professional local team with the knowledge to be successful in their own right whilst having the capabilities to inject an international dimension into the local talent pool.

New businesses coming into Indonesia often cite the high level of ‘red tape’ in order for them to set up, perhaps more so when they’re in education, training and human resources. What has been your experience in dealing with Indonesian bureaucracy? It would be easy to describe the regulatory process as onerous compared to other jurisdictions. But local governments have rules for a reason and we have to respect the law of the land. Happily our knowledge of South East Asia and experiences in Thailand, Vietnam and Taiwan made the license application process much easier.

Your work clearly takes you around the world and entails a lot of travel. Do you find that destabilising or is it something you enjoy? I love the travel element of my job. I am fortunate to be able to see a huge range of markets, working practices and cultures all of which enable me to do my job better. I am often asked what my favourite place is, but I don’t really have one. The recruitment process is basically the same around the world. What makes it interesting is the cultural backdrop to doing that job. One of the best things about travelling, however, is coming home and I make the most of the time I spend with my family.

You used the word culture and you also mentioned competitors. What

would you say diﬀerentiates Robert Walters in terms of its culture vis-à-vis others in the market place. Aside from our approach to remunerating consultants and the way this impacts the Company’s DNA we have a business where people can build long term careers. We like to promote from within and have an organic growth culture which creates opportunities. Just about everybody that runs our business in South East Asia has been with Robert Walters and worked their way up from within the organisation. This demonstrates our ability to provide international careers, look after our people and provide a sense of fun in the business. All our people work hard and I think it’s important they enjoy their time at work. If you enjoy being at work you’ll do a good job and if you do a good job you are going to make money.

Staying with the theme of culture you mentioned getting as many locals on board as quickly as possible. What do you see as the particular challenges of building the right Indonesian team and getting them to work within Robert Walters? A shortage of local competition means that it can be diﬃcult to find individuals with the right recruitment skills. However we do have success in hiring professionals from within the sectors in which we recruit, for example finance, HR, sales and marketing. Our job is to then provide training to give them the recruitment skills they need. Our industry attracts young and highly motivated people here. This often means that our consultants may be in their late 20s or early 30s, discussing a career opportunity with somebody 10 or 20 years older. They balance the need to develop their recruitment skills with showing older clients and candidates the necessary deference and working hard to get the job done. That’s a tough job and they do it very well.

Of the other countries you are present in across South East Asia where do you see Indonesia in the rankings? What is its potential? Do you see it

becoming your number one market here? Indonesia has huge potential. If I look back 14 years to when we opened in Singapore, we had two people. Now we now have over 100. We opened Malaysia five years ago with one person and now have over 50. We’ve been here just over a year and have eight people. There is no reason why we couldn’t have several offices in Indonesia and employ 60 people. Indonesia has the fourth largest population in the world within which there is a huge amount of talent. But the biggest challenge businesses face is finding the right people to help them grow. That translates into a huge opportunity for us so I’m optimistic about Indonesia’s potential.

Is there a role for an organisation like yours in terms of capacity building, at an educational level, whether it be university, post graduate or something like that? I don’t know if we would get involved from a recruitment point of view. We have tried to build relationships with universities in other South East Asian countries where we take-on and offer work experience to some graduates. It has given us access to young graduates who had never thought of recruitment as a career. Educating people ourselves is not what our business does, but we strongly support better education systems wherever we work. You recently celebrated the Company’s formal launch in this country and you say you’ve been here for a year – albeit with a lower profile. You’ve joined the British Chamber of Commerce in Indonesia: what value do you see in associating with Chambers of Commerce? We see great value in affiliating with the British Chamber of Commerce. Wherever we have opened new offices around the world, we have always joined the Chamber of Commerce. It’s a great networking opportunity; helps us to better understand the local market; and provides a valuable support network that works both ways.

www.britcham.or.id | 25

INDONESIAN BUSINESS NEWS

Richard Cornwallis

is a Foreign Legal Consultant with the law firm Makarim & Taira S. He has lived in Indonesia for 20 years and is a former member of Britcham’s. richard.cornwallis@makarim.com

Fransiska Dwi Melani

(Fransiska.Melani@makarim.com) is an Associate with the Indonesian law firm, Makarim & Taira S.

BKPM’S New Guidelines for Investment Applications The Capital Investment Coordinating Board (“BKPM”) as the first gate for foreign investment has tried to simplify the procedures for foreign and domestic investment in Indonesia by issuing Chairman of BKPM Regulation No. 5 of 2013 regarding The Guidelines and Procedures for Capital Investment Licenses and Non-Licensing Applications (“Regulation”). The Regulation revokes a previous, similar regulation from 2009 as well as a separate regulation relating to venture capital companies. The Regulation adds regulatory weight to informal policies of BKPM which were previously not explicitly stipulated such as the provision regarding minimum capital investment. BKPM has also increased its supervision of foreign investment (“PMA”) companies in Indonesia by, for example, undertaking on-site inspection on a PMA company proposing an extension of its Principle License if the given time frame had lapsed. According to informal discussions with BKPM, they found several cases in the past where a PMA company was only used for certain purposes (e.g. to obtain work permits) and did not carry out any activities. In certain sectors such as general services, BKPM requires an initial business plan to be presented to it prior to applying for the license. Minimum Capital Investment The Regulation requires foreign capital investment to be more than Rp 10 billion (or USD equivalent) excluding land and buildings. The issued capital must be at

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least the same as the paid up capital, i.e. not less than Rp 2.5 billion (or USD equivalent) while the minimum capital participation in the company of each shareholder must be at least Rp 10 million (or USD equivalent). These minimum capital requirements are a formalisation of BKPM’s previous unwritten policy and, of course, will have a significant impact on investors who, for example, may wish to only establish a small consultancy company. Domestic capital (PMDN) investment must be at least Rp 500 million Types of License The previous “Investment Registration/SP BKPM,” will be replaced by the “Principle License/Ijin Prinsip”. Accordingly, there are now only two types of license under the Regulation, namely Principle Licenses (Ijin Prinsip-IP) and Business Licenses (Ijin Usaha-IU). These licenses may be issued for starting a business or for an expansion or a merger of an existing company.

Initiating an Investment The areas of business in which a foreign investment company may operate are still restricted by the so-called Negative List. As before, it is important to make preliminary inquiries at BKPM to ensure there are no objections to the proposed line of business which would cause the investment application to be rejected or subject to certain policy restrictions. Unlike before, no registration is now required for the establishment of the entity. The first step is to apply for a Principle License. Certain documents required for Principle License applications must be originals; however, BKPM stated in an informal discussion, that if an applicant cannot present original documents and can provide an acceptable reason for this, BKPM will not be too strict about this requirement. Upon obtaining a Principle License and once it is ready to commence operations/ production, the company can submit an application for a Business License to BKPM.

Projects for industrial companies under a Principle License must be in commercial production or operation within 3 years of the issuance of the Principle License, although for certain lines of business which take longer to complete a longer period might be given by BKPM. Further, if the projects cannot be completed within the given period under the Principle License, a 3 year extension is possible. Further extensions will only be approved by BKPM after an on-site inspection.

one year period to change the status of a subsidiary will not be strictly enforced. If the relevant PMA has more than one subsidiary, BKPM will require at least one subsidiary to be converted to PMA within a one year period while the other subsidiaries may be given a longer period to change status. Further, if the subsidiary’s business line is closed for foreign investment, it will also have to either change its share-holding composition or its line of business. Inadequate supervision of subsidiaries of PMA companies in the past led to some businesses taking advantage of the absence of this requirement.

Amendments to Investment Plans

Public Company

For many existing companies, their first encounter with the Regulation may relate to an amendment to the investment plan, for example, in respect of a change of name, location, production capacity, capital and financial sources, as well as a change in shareholder. In each case, a Principle License for Amendment will be required from BKPM.

An important new development under the Regulation is the classification of a public company which is now viewed as either a PMA company (if all or one of its controlling shareholders is a foreign investor) or a domestic investment company (if all of its controlling shareholders are domestic investors). The Regulation defines a “controlling shareholder of a public company” as a party owning more than 50% of all issued shares or a party which can directly or indirectly determine the management and/or policy of the company.

Project Timeframe

is satisfied, the Indonesian share-holding must be maintained for as long as the company continues to operate. KPPA (Foreign Company Representative Office) Licenses for foreign company Representative Offices are now limited to 3 years under the Regulation, but may be extended twice for one year each time. After 5 years, a representative office may apply for an extension if its activities are to change from those undertaken during the first 5 year period. Transitional Provision

Expansion For an industrial company, an “expansion” (which will require a Principle License for Expansion) means an increase in production capacity for a certain product under the same KBLI of more than 30% of its current licensed capacity and in the same location as the current production facility. For non-industrial companies, an expansion may be the addition of a new line of business and/or an increase in current licensed production capacity in the same location or in another location. An expansion should be completed within 3 years, but the license is extendable. There are a number of activities which are not an expansion under the Regulation but which are classified as the start of a new business and therefore a new Principle License must be applied for. Change of Status If a company changes to PMA status within one year of the issuance of the Regulation, any subsidiary of the company must also similarly change its status. According to informal discussions with BKPM, the

Under the Regulation, a PMA public company must now apply for a Principle License or an amendment to its existing Principle License if there is any change of controlling shareholder(s). Such application requires the Financial Services Authority (OJK) to state that the shareholder is a controlling shareholder of the public company. According to an informal discussion with BKPM, as long as there is no corporate action, this does not apply to existing public companies. Divestment The Regulation also strengthens the divestment obligation which was not included in the previous 2009 regulation. Divestment obligations imposed before the Regulation remain valid and must be complied within the stipulated time limit. If the deadline is now due, the company can apply to BKPM for an extension of up to 2 years. Once the divestment obligation

Licenses issued before the issuance of the Regulation remain valid and companies which obtained their Investment Registration before the issuance of the Regulation can, in most cases, still apply directly for a Business License. Conclusion The Regulation is intended to simplify the procedure for capital investment in Indonesia as well as the license application forms and does provide some certainty with regard to the timing of the licensing process. The Regulation also appears to refine its predecessor by amending existing and adding new provisions, such as the somewhat controversial minimum capital investment levels for foreign and domestic investment companies. Some provisions in the Regulation may not be practical; for example, where applicants must show original documents. This is a response to past cases of false documents being submitted. Supervision of subsidiaries is also a notable feature of the Regulation. The Regulation is more comprehensive than its 2009 predecessor and, as mentioned above, some provisions are strict. However, the effectiveness (especially regarding simplification) of the Regulation remains to be proven as it only became eﬀective on 27 May 2013 and there will no doubt be continuing discussions within BKPM and among investors as to many aspects of the detailed implementation of the Regulation.

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INDONESIAN BUSINESS NEWS

Zita Primarini

Oliver Oehms Senior Economic Advisor in KADIN Indonesia (Any views or opinions presented in this essay are solely those of the

KADIN Indonesia Business Support Desk Senior Policy Advisor

author and do not necessarily represent those of KADIN Indonesia).

Haste Makes Waste: The New Trade Law A comprehensive new law is in the making, a legal framework which is supposed to cover domestic and foreign trade of the Republic of Indonesia. What are the legislators aiming for with the Trade Law? Foremost, the Draft Trade Law fills a long-lasting gap: a single national law that consolidates, streamlines and simplifies the many and often scattered trade-related regulations. Furthermore, the Government of Indonesia pursues the new law for political reasons: the Trade Law aims at accelerating growth and strengthening competitiveness. Indirectly it is supposed to secure national sovereignty and promote the welfare of Indonesian people.

The process leading to the current draft Trade Law started in 2008. That year the Government of Indonesia called for a harmonisation meeting together with all ministerial departments and the Indonesian private sector as represented by the Indonesian Chamber of Commerce and Industry (KADIN Indonesia). Since then the diďŹ&#x20AC;erent parties have worked on drafting the law until its final submission to the House of Representatives (DPR) at the end of April 2013. The debate within DPR triggered another intensive round of consultations, including with the Indonesian private sector. In their statement to the parliament the two leading business organisations KADIN Indonesia and APINDO objected as follows: 1. With regards to the Articles related to Domestic Trade the following comments were submitted: a. Regulation of service industries: the private sector considers the Draft Trade Law to be not specific enough on trade in services, which happens to be one of the drivers of economic growth. Therefore, the private sector suggests that the government dedicates a special article to the service industries.

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b. Recognition of skills and competencies of technical personnel from other countries: the private sector believes that the respective article will limit the ability of domestic entrepreneurs to gain competencies, especially if this is strictly based on recognition through bilateral or multilateral agreements. Rather, it is recommendable to refer to international standards/best practices instead of bilateral or multilateral agreements. This will have a stronger impact on enhancing domestic capacities. c. Promotion of the Use of Domestic Products: the private sector suggests a new, specific article to promote the use of domestic products which is to be aligned with the current Draft Industry Law. d. Trade Facilities: the respective article (Article 11) does not consider the role of central and regional governments with regards to sustaining the development and protection of traditional markets. e. Supervision: the private sector is afraid that new problems could arise due to the local governmentsâ&#x20AC;&#x2122;

authority to interfere with the trade of goods and services. The private sector believes that regional governments might act arbitrarily. f. Article 21 stipulates that all producers or importers trading goods or items related to security, safety, health, and environment must register the goods or items with the Ministry of Trade. The private sector believes that any compulsory registration of goods or items will only add to the (costly) bureaucracy resulting in an uncompetitive national economy. 2. Standardisation: There are overlapping stipulations. To avoid confusion and double standards, the private sector suggests applying international standardisation rules, qualification or technical requirements. This could also help push SME's to improve the quality of services or goods. 3. Foreign Trade: This chapter too should regulate trade in services, taking into account the importance of cross-border trade in services. Furthermore, the government plans to allow individuals to act as importers/exporters. Their function as traders should be legitimised by

a kind of identity card provided by the government. This would ease transparency. Export Development: The private sector thinks that state-driven export development programmes should concentrate on initiatives such as SME development programmes, support on export policies (financial support, law, fiscal, monetary), and related support through dedicated institutions. Foreign Trade Relations: the Draft Trade Law aims at forming a negotiation team consisting of trade experts and other professionals in order to investigate the bilateral trade relations. The private sector sees the need to be included in the negotiation team. Facilitation and Communication: there is no stipulation that the Government of Indonesia will involve the private sector when drafting trade regulations. Therefore, the private sector suggests adding respective facilitation and communication fora to this article. Trade Information System: the private sector encourages the Government to provide for an accurate and comprehensive trade information system (covering traders/importers) which can be utilised by business practitioners. Criminal Provisions: the private sector believes that the determination of fines and penalization is not clear. The Draft Trade Law foresees imprisonment of up to 4 years, even during the investigation process. Only in particularly grave case of guilt should the imposition of criminal sanctions exceed civil liabilities of reprimand, license revocation and imposition of fines. Government’s role and responsibility: The Draft Trade Law fails to clearly explain the Government’s role and responsibility in domestic and international trade. The Law should stipulate a clear mandate to central and regional governments for fostering entrepreneurs. The Draft Trade Law should enable the Government to instruct central and regional

governments to communicate actively with the private sector. 10. Licenses and Coordination amongst Central Government, Regional Government and institutions: a. Long and bureaucratic licensing procedures are one of many impediments which harm national competitiveness. Therefore, the private sector suggests regulating ease in administering licenses by applying the ‘Indonesia National Single Window, enabling the private sector to obtain licenses through a single access tool. b. Moreover, it is recommendable to clearly define the authority of regional governments, as unnecessary and arbitrary bureaucracy should be avoided. Politically a bumpy road, and still no end in sight Beyond the above mentioned contributions and objections from the Indonesian private sector the Draft Trade Law and its various versions was subject to criticism by other parties. The foreign investment community submitted their positions on several occasions, either directly to the Government of Indonesia or through the Indonesian private sector organisations. Many foreign business chambers and organisations raised concerns that the new Law might disproportionately protect Indonesian trade, therefore violating existing regulations of the World Trade Organization (WTO) such as stipulated by GATT and GATS. On several occasions even high-ranking government officials felt obliged to reconfirm the Government’s commitment to obey the standards set by the WTO.

Indonesian economists and law experts as well as former Indonesian Ambassadors to the WTO to comment on the draft law. In short: according to these experts, the Draft Trade Law refers to the WTO framework which allows countries, under defined circumstances, to temporarily apply import restrictions (see for instance Chapter IX Article 51 of the Draft Trade Law). The experts saw herein no violation of Indonesia’s international commitments. What are the next steps during the process leading to a new Trade Law? Even while these lines are being written, the process is still going on. The statements of a number of organisations, domestically as well as internationally were submitted to the House of Representatives in late April 2013. After the current recess, internal consultations will be continued so that the oﬃcial announcement can take place before the elections in 2014. In summary, the government can be applauded for carefully preparing such a complex and politically charged law. Indeed, especially the private sector as the main party concerned should be consulted with, even when the over arching political objectives might drive the genesis of the Trade Law. Until the final ratification it can only be hoped that this important, and to a certain extent ground-breaking, law continues being shaped further.

During its internal discussions the Indonesian private sector invited prominent

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INDONESIAN BUSINESS NEWS

Jonathan Streifer

is a senior foreign advisor at SSEK law firm. Prior to joining SSEK, he worked for six years as a legal advisor to law firms in Jakarta focusing on corporate finance, debt restructuring, bank lending, acquisitions and other international business transactions. He is recognized as a leading practitioner in M&A, capital markets, and projects and natural resources. (jonathanstreifer@ssek.com)

Covering your bases:

Mergers & Acquisitions in indonesia Mergers and acquisitions in Indonesia have the potential to involve a myriad of laws and regulations, and parties looking to undertake such transactions would be wise to keep the most important areas of law, and the issues arising under them, in mind. Mergers and acquisitions are principally governed by Law No. 40 of 2007 regarding Limited Liability Companies (the Company Law). They also implicate other areas of law, including Indonesia’s Labour Law (Law No. 13 of 2003 regarding Manpower); tax laws and regulations; the Investment Law (Law No. 25 of 2007 regarding Capital Investment) and implementing regulations; antitrust and unfair business competition laws and regulations; and industry-specific laws and regulations, particularly in regulated industries such as mining and telecommunications. Merger vs Acquisition In Indonesia, a company typically obtains control of another company through a share acquisition. Mergers are less common unless they are undertaken for operational or tax reasons. The Company Law does not contemplate or permit a foreign company to merge with an Indonesian company, and a share acquisition is the only structure under which foreign companies can acquire Indonesian companies, unless the foreign company first establishes an Indonesian subsidiary to undertake the merger. In a share acquisition, Company Law compliance is only required if there is a change of control. Often the threshold

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resulting in transaction risk if the tax oﬃce does not ultimately approve taxfree treatment.

question of determining whether a transaction involves a change of control is easily determined. For instance, where a party acquires a majority of the share capital and controls the board of directors and board of commissioners of the company being acquired, change of control will be obvious. Under other circumstances the question may require further factual analysis. For example, an Indonesian shareholder may hold all of the issued share capital of an Indonesian company. If the Indonesian shareholder disposes of half of that shareholding to a foreign party, other factors must be reviewed and analysed to determine whether a change of control has occurred. Company Law Compliance Mergers are typically less common than acquisitions in Indonesia because the Company Law provisions governing them are viewed as more burdensome than those applicable to an acquisition. The tax-free treatment of a merger is also typically only confirmed by the Indonesian Tax Oﬃce after the merger is completed,

The parties to a merger must prepare a merger plan that includes, among other things, the names and domiciles of the companies planning to conduct the transaction, the reasons for the merger as provided by the board of directors of each company, the procedures for valuation and conversion of the shares of the merged company into shares of the surviving company, the financial statements of both companies for the last three years, the draft amendment of the Articles of Association of the surviving company, a pro forma balance sheet of the surviving company using Indonesian generally accepted accounting principles, and other requirements in respect of the settling of obligations to third parties, employees and members of the board of directors and board of commissioners of each company. An acquisition can be undertaken through a purchase of existing or new shares, and the Company Law distinguishes between the two structures. A further reason why acquisitions are more common in Indonesia is that while an acquisition of new shares requires preparation of an acquisition plan, which contains some but not all of the elements of a merger plan, an acquisition of existing shares is permitted without a detailed plan – all that is required is an announcement of the acquisition in an Indonesian newspaper, notification to creditors and employees, and shareholder approval.

Shareholders holding 75 percent of the shares at a general meeting of shareholders subject to a 75 percent quorum must approve the merger or acquisition. Creditors may object to the merger or acquisition within 14 days of being notified. The merger or acquisition cannot be completed until any creditor objections are resolved. Minority shareholders objecting to the transaction have the right to be paid fair value for their shares. The Investment Law and BKPM Investment by a foreign company in Indonesia is typically undertaken through the establishment of an Indonesian company or purchase of shares in an existing company. If the foreign investor owns an Indonesian company, that company can also undertake a merger or acquisition. Foreign investment implicates the Investment Law and implementing and related regulations, including regulations of the Indonesian Capital Investment Coordinating Board (BKPM). Presidential Regulation No. 36 of 2010 regulating investment sectors closed and conditionally open to investment, known as the Negative List, determines the permitted percentage of shareholding by a foreign party in the target company, or if there is no restriction. A new Negative List is expected to be issued in 2013.

(the Anti-Monopoly Law). The AntiMonopoly Law and important decisions of the Competition Supervisory Committee – known as Komisi Pengawas Persaingan Usaha (KPPU) – should be reviewed in respect of any merger or acquisition that results in a company acquiring a significant share of a particular market or where the proposed transaction has other elements that may violate the Anti-Monopoly Law. pay of one month’s salary for each year worked, up to a maximum of nine months’ salary. Employees who have worked for more than three years and less than six years are entitled to another two months’ salary for long-service pay, and for each three-year increment of employment thereafter the employee is entitled to another month’s salary (up to a maximum of 10 months’ salary).

If one or more of the companies to a merger or acquisition is in a regulated industry, the license and permits of such companies and relevant laws and regulations should be reviewed to determine whether any other governmental approvals are required.

Employees are additionally entitled to “other compensation” in the amount of 15 percent of the aggregate amount of the severance pay and service pay. Other compensation is paid for lost benefits such as health care and other benefits.

Labour Law

In a merger, an employee of the target company also has the right to terminate his or her employment. Contrary to an acquisition, the employer also has the right to terminate an employee of the merged companies.

An underlying policy of the Labour Law is that employees in Indonesia should have a choice of which employer they work for, and in a merger or acquisition the change of ownership triggers that right. In an acquisition, an employee can terminate his or her employment with the company being acquired, but employees of the acquiring company do not have such rights. An employee choosing to terminate his or her employment is entitled to severance

Anti-Monopoly and Unfair Business Practices

KPPU Regulation No. 1 of 2009 regarding Pre-Notification for Merger, Consolidation and Acquisition provides procedures for a party to obtain pre-clearance for a merger or acquisition if there is concern that the proposed transaction could be later reviewed by the KPPU as potentially violating the Anti-Monopoly Law. Obtaining prior clearance from the KPPU for a merger or acquisition will preclude later review assuming there are no changes in the transaction structure as approved by the KPPU. Government Regulation No. 52 of 2010 requires that all change of control transactions above a certain value in terms of assets or sales be notified to the KPPU within 30 days of the eﬀective date of such transaction. Tax-Neutral Mergers Under applicable tax rules and regulations, a merger can be conducted on a taxneutral basis by using the book value of assets being transferred pursuant to the merger if certain conditions are met. Such treatment must be approved by the Directorate General of Taxation, typically after the merger has been completed. The tax consequence of using book value for asset transfers is, among others, that there will be no gain or loss on the transfer of assets, and thus no income tax on such transfers. Shareholders of the merging companies are also typically treated on a tax-neutral basis, which can also be an advantage when compared to an acquisition that is typically a taxable event for the selling shareholders.

The relevant law in this area is Law No. 5 of 1999 regarding the Prohibition of Monopoly and Unfair Business Practice

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THIS MONTH'S FEATURES

Aziz Adam Sattar

Aziz has been located in Indonesia since 2002. He currently serves as a BritCham Board member and is the Marine Practice Leader at Marsh & McLennan Companies' for their Indonesian oﬃce, PT. Marsh Indonesia.

Taking a Multi-Country Approach to Political Risk and Trade Credit Insurance Political risk and trade credit risks are high on the agenda for many organisations as political violence, terrorist threats, expropriation actions, and economic uncertainty are among the harsh realities of doing business globally. Nearly one-in-five countries experienced escalating political violence at the start of 2013, according to research from Marsh and Maplecroft. Beyond the violence and terrorism threats, global businesses face a diverse set of political and economic risks in the countries in which they operate. Forecasting Political and Trade Credit Risk At first glance, some political and trade credit risks may seem easy to spot or to predict. A significant portion of political violence today, for example, is a result of violence in Libya and Syria “spilling over” into other countries in Western and North Africa and the Middle East, including Mali, Lebanon, and Algeria. As evidenced by events in Egypt during and since the Arab Spring of 2011 and in Thailand and elsewhere, political instability can develop quickly. Much like the stock market, past performance is not necessarily an indication of future results. In other words: Political risk frequently emerges in countries that have historically been considered “stable” by risk managers, insurers, and other observers. In the years since the peak of the financial crisis in 2008, global credit risk has persisted. The European sovereign debt crisis — and the growing willingness of

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companies to use bankruptcy as a strategic option — has added to multinationals’ concerns about trade credit exposures, and made predicting the location of the next default diﬃcult. Further complicating matters are several broad macroeconomic and societal factors that have been at work for several years. • Geography: Whereas in the past economic downturns and political turmoil would typically spread geographically, today’s increasingly interconnected global economy means that “contagion risk” no longer knows borders. • Social media: The broad availability and use of social media in countries at all levels of economic development has played an important role in fuelling societal and political change. At times social media has even sparked unrest by spreading misinformation. • Emerging markets: Global economic power continues to shift to emerging markets, which inherently carry more

political risk than developed markets (see Figure 1).

A Broader Approach Given this new level of unpredictability, it might seem odd that businesses would try to anticipate specific countries in which they would face the greatest political and trade credit risks and the specific nature of those risks. But for much of the last decade, this is precisely what many multinationals did as they purchased separate political risk and trade credit insurance policies to cover particular risks in specific countries. For example, a company might buy a policy to cover war risks in Kuwait and a trade credit insurance policy on one customer in China, while leaving exposures in other countries uninsured. Many multinationals have since discovered that this country-by-country approach may leave them vulnerable to unexpected events. In recent years, many businesses

Companies purchasing political risk insurance on foreign investments and assets are also seeking to insure a broader range of risks, rather than focusing on what they perceive to be the most likely events to occur. Some of these risks include expropriation, forced divestiture, political violence (including forced abandonment), business interruption and contingent business interruption, contract frustration, and trade disruption. Beyond Political Risk and Trade Credit Insurance

Figure 1

A strategic approach to managing political and trade credit risks, of course, extends well beyond assessing insurance needs. Organisations doing business in countries with high levels of political risk, for example, also should review their current business interruption and supply chain resiliency plans and procedures. These businesses should evaluate the immediate and long-term impact of potential political risk events on their own operations and

on those of their customers and suppliers. Among other things, businesses should ensure that they can give early warnings of any potential problems to employees, customers, and suppliers, and review crisis communication plans and procedures to ensure the safety of employees. Business should also review their credit risks and credit control policies and procedures. Ongoing financial monitoring of customers and suppliers can identify strengths and weaknesses in their credit risk management processes, ultimately enabling businesses to avoid bad debts and improve cash flow. Emerging markets play an increasingly important role in the global economy, making it clear that multinationals will require insurance and consulting services to help expand global sales and supply sources. Evan Freely, Trade Credit Practice Leader

have recognised the unpredictability of global risk and have increasingly turned to a broader approach to political and trade credit risk management through the purchase of multi-country insurance policies. A multi-country policy enables businesses to take a more holistic approach to managing risk. Instead of attempting to cover unpredictable risks through a patchwork of policies for individual nations, a multi-country policy typically covers 15 to 20 countries, but potentially more. These policies can be customised to cover a single region — for example, the Middle East and North Africa — or include countries worldwide. Underwriters often prefer this multicountry approach as it allows them to spread their political and trade credit risks across several countries. Because of this, the terms available in such policies can often be more favourable than singlecountry policies. For example, policies may have higher limits available; provide coverage for countries that are typically diﬃcult to insure, such as Egypt; and/or oﬀer more attractive pricing.

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THIS MONTH'S FEATURES

ControL risKs martin.brown@controlrisks.com

Anti-corruption in Indonesia Until recently it was easy to spot first-time visitors to Indonesia as they pointed at signs in English above immigration counters at Soekarno Hatta International Airport declaring: “Grafters will be heavily punished.” The signs served as an indication to newcomers of the ubiquitous nature of corruption in Indonesia, one of the world’s fastest-growing economies. For British companies seeking growth opportunities during the persistent global economic uncertainty, Indonesia appears to be highly attractive. Over the next 20 years the country is anticipated to move into the top ten of the world’s largest economies, with optimism fuelled by an existing pool of 45m potential consumers that is set to swell by a further 90m. Indonesia’s striking economic outlook provides a much-needed good news story for executives across Europe, America and beyond. Jakarta airport’s anti-graft signs may be gone but the wider, deeper and serious challenges that they pointed towards remain. Concerned by how international companies encounter and manage corruption risks in Indonesia, Control Risks conducted interviews with senior executives from a range of companies, civil society representatives, legal advisors, diplomats and the Indonesian Anti-Corruption Commission (KPK). We published our findings and practical recommendations in a White Paper that is now available to download.

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Navigating the daily grind Many British investors seeking new opportunities in Indonesia have pledged to comply with strict extraterritorial anti-corruption legislation, such as the UK Bribery Act and US Foreign Corrupt Practices Act (FCPA). While Indonesia’s government has significantly improved measures to combat corruption over the past ten years, it remains a major impediment for foreign investment. The experiences of British and other international companies in Indonesia presented in our White Paper attest to the fact that there is little to suggest a tangible reduction in corruption risks, for all the KPK’s exertions. Grand corruption scandals play a large role in Indonesian domestic politics, with political groups attempting to use these issues to undermine their political opponents. Recent corruption scandals show that involvement in corruption does not need to be proved to be politically

damaging. Corruption is so widespread and the legal system so easily manipulated that the Indonesian public cynically assumes that most allegations have at least some truth behind them. Meanwhile, smallscale corruption is a feature of daily life in Indonesia, a product of a centuries-old system of patronage that the achievements of the KPK can do little to erode. All senior executives interviewed by Control Risks acknowledged that corruption presents a persistent headache when doing business in Indonesia. Making a profit and meeting head office expectations, while remaining compliant with anticorruption laws and company policy, is a universal challenge. Equally challenging is communicating the day-to-day prevalence of corruption to head oﬃce and tempering expectations about achievable growth in light of the complex operating environment. One financial oﬃcer of a European manufacturing company said: “we want to do the right thing. No one wants to make facilitation payments. But we need practical help to get us through this without [compliance] killing our business.”

The question for British companies investing in Indonesia, then, is whether it is possible to take full advantage of tantalising economic opportunities and apply eﬀective zero-tolerance anti-bribery and corruption policies and procedures in Indonesia. We think it is possible, but it takes considerable tenacity. Resolving tensions between profit and compliance Best practice anti-corruption principles were widely recognised and understood by the managers interviewed during our research. In line with these guidelines, most interviewees confirmed that their organisation had in place comprehensive anti-corruption policies and procedures. All interviewed confirmed they conduct due diligence on third parties, carry out anti-corruption training and ensure that anti-corruption clauses are incorporated into contracts with third parties. Yet several interviewees expressed concern that policies, procedures and training programmes set at a headquarters level did not necessarily help them solve complex integrity problems in their dayto-day operations in Indonesia. Equally, interviewees expressed frustration when attempting to reconcile the significant resource requirements of implementing adequate anti-corruption procedures against pressure to cut costs, increase sales and grow margins. Given these concerns, what can be done by British companies to eﬀectively combat corruption? We believe the tension between compliance and achieving growth can be resolved. Companies that have successfully done so in Indonesia have used a combination of creative problem solving, consistent communication on company policy, training focused on

those individuals most likely to encounter corruption and the intelligent selection and active management of third parties to reduce exposure to corruption risk.

it is possible to take full advantage of tantalising economic opportunities and apply eﬀective zero-tolerance anti-bribery and corruption policies and procedures in Indonesia. We think it is possible, but it takes considerable tenacity. Practical measures that can have a significant impact in reducing rent-seeking behaviour range from the very simple – for example, requiring contracts over a certain value to be signed by at least two signatories – to the more complex, such as switching to an electronic procurement system. In many cases companies can

reduce their exposure by clarifying regulatory or legal requirements – several companies expressed concern that they were paying out hundreds of thousands of dollars in per diems to third party inspectors without really knowing whether these parties were entitled to the money. Companies that manage corruption risk well typically have the clear support of head oﬃce, that comes in the form of financial assistance for compliance functions as well as acknowledgement that to do things right will take longer than in other, less complex markets. For further insights into the nature and prevalence of corruption risks in Indonesia, and how to best manage these risks, download a complimentary copy of our White Paper here [ http://www.controlrisks. com/OurThinking/SitePages/Reports.aspx# ]. Control Risks is ideally placed to assist clients to assess, navigate and mitigate corruption risks in challenging markets like Indonesia. (For further information please contact Jakarta@controlrisks.com)

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THIS MONTH'S FEATURES

Mission possible Designing for certainty in uncertain times

Peter Hoad peter.hoad@arup.com.au

Before 9/11, natural threats such as fire, wind, earthquakes and floods represented the major risks to building structures. Since that time, the need to protect structures against blast loads has significantly increased. The threat of terrorism now affects everyone and should not be the responsibility of governments alone. In Singapore, the authorities have introduced requirements to incorporate counter-terrorist measures into the design of key infrastructure. However, businesses and individuals can also mitigate risks to their assets, buildings and people. Blast resilience The resilience of the structure and fabric of a building are critical factors in effectively protecting lives in a terrorist attack. Investigations of bomb damage in the UK show that steel or concrete buildings can offer significant resilience to bomb blast loads, and are more likely to prevent the possibility of progressive or disproportionate structural collapse.

shock impact transmitted to the supporting structure. Myth: The further a blast is from a building (standoff distance), the less likely the building facade will be damaged. One should always increase stand-off distance. Busted: For multi-storey buildings, the extent of facade damage from a blast at ground level can be significantly increased with increased stand-off.

Designing resilient structural frames and facades so that a building has a certain level of robustness is crucial for protection against bomb blasts. A well-designed outer facade is also a significant factor in ensuring that blast waves do not enter the building.

There is an optimum distance for buildings that causes maximum facade damage. This distance depends on the blast size and facade type. Close proximity blasts do not often yield the greatest facade damage.

Understandably, the quality of blast engineering advice varies considerably in the market. As a result, design “myths” which could compromise the integrity of blast security have surfaced. These include:

Myth: Anti-shatter (blast) film on glazed facades will significantly reduce the risk of occupant casualties from an external blast event. The thicker the film, the better the resilience provided.

Myth: The biggest cause of injuries from a bomb is flying glass. One should always minimise the use of glass on a building that may be subjected to blast loading.

Busted: Blast film merely binds fractured glass to reduce the likelihood of hazardous glass shards being projected at high velocity. Increasing film thickness increases the pane stiﬀness. This can often increase loads transmitted by the pane to the frames, thus increasing likelihood of frame failure.

Busted: Blast energy will cause brittle fracture of plain glass, converting it into high velocity, hazardous shards. However, laminated glass can absorb considerable blast energy while retaining integrity as a flexible membrane. This ‘softens’ the blast

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Myth: Blast resilience of structure and facades is improved by increasing the structural sizes and thickness of facade systems.

Busted: Increased structural dimension (glazing thickness, column dimensions, etc increases flexural stiffness, which results in more significant load transfer to the support structure. This can have a detrimental eﬀect on structural and facade performance. Myth: A bomb blast can cause a building to be ‘blown over’, thereby causing a collapse of the building. Busted: Buildings rarely collapse from being ‘blown over’, except in extreme blast scenarios like a nuclear detonation. Buildings generally collapse post-blast from the loss of key structural elements (columns). Protection of such elements will result in protection of the overall building structure. Myth: Incorporating blast resilience into the building structure and/or facade has little or no other benefit to building performance. Busted: In addition to improved blast protection for building occupants, security measures introduced can be integrated with the fire, acoustics and sustainable design strategies. This makes good design sense and results in improved fire performance of the building by introducing more robust alternative load paths, as well as improved environmental performance of the facade.

Graham Garven

Graham has over 20 years of professional tax experience, 16 of which have been in Indonesia. He is widely acknowledged as one of Indonesia’s most experienced foreign tax advisers. He was formerly a partner with KPMG Indonesia, where he established its Transfer Pricing practice. Under his leadership, this unit went on to be recognized as the “Indonesian Transfer Pricing Firm of the Year” in 2010 and 2012. graham.garven@vdb-loi.com

Greater Scrutiny of Indonesian Taxes – Are You Prepared? Increased media attention on tax issues, together with recent developments in the Indonesian tax landscape mean that it’s becoming even more important for companies registered as Indonesian taxpayers to ensure that they are well prepared to withstand tax oﬃce scrutiny. What specific developments should concern taxpayers? Additional assessment powers and more stringent penalties The verification process has been added to the ITO armory. Whilst this has been in place since the end of 2011, implementing regulations and experience have shown just how powerful this weapon can be. Outside of a normal tax audit procedure, which in recent years has been largely limited to entities requesting a refund of overpaid taxes, the ITO may now raise an assessment based on information available to them through other means, whether through regular reporting or perhaps whistle-blowing. An assessment raised in such a manner does not provide the taxpayer with the comfort that the fiscal year in question has now been closed. On the contrary, the year can still be audited and additional amounts discovered may be subject to more stringent penalties.

Focus on the years 2003-2008: Instructions to audit companies with tax losses/VAT claims With the tax audit statute of limitations reduced from 10 years to five all years up through 2008 face expiration this year. In this context, the DGT has issued an instruction to tax service oﬃces to audit any years from 2003 through 2008 in which corporate tax losses were claimed or where VAT claims from these years are still included in returns. Priority will be given to the more recent years, but all years since 2003 where the ITO believes potential tax revenues lie may be subject to scrutiny. In addition, the national audit strategy has been published and includes most sectors, together with a re-emphasis on transfer pricing issues.

Pressure on tax collections = greater incentive to issue assessments With the recent economic downturn and the delay in tackling the impact of the fuel subsidy, the state budget is under pressure and by default this means that there will be additional focus on tax collection. Despite the recent lowering of the tax collection target, this risk remains.

Most taxpayers will face additional claims Whilst the new Finance Minister talks of tax incentives and holidays, currently the latter only apply to the biggest investors

and less than 10 companies are directly aﬀected. The vast majority of taxpayers do not have access to incentives and unless some major reform takes place, with the pressures mentioned above, most taxpayers are instead likely to face additional calls for tax payments.

What should taxpayers do? In the context of a tax audit, taxpayers have 30 days in which to submit all supporting documentation or risk being in a position where valid evidence is not admissible in their defence against an assessment.

We recommend that you: • Ensure that your board and/or overseas head office is aware of the environment and the potential need for support, particularly with regard to cross-border charges but also in terms of how to deal with tax office queries. • Ensure that you can support the tax positions taken with robust supporting documentation and proper representation by the right people. • Be aware of your rights so that you can address any potential disputes at the earliest stage and in the most effective way. Please contact us if you require further details and/or assistance.

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THIS MONTH'S FEATURES

Andrew Sutedja LL.M in Commercial Law at the University of Sheﬃeld, UK., M.CIArb (Candidate)., Member of Young Professionals Group at the British Chamber of Commerce in Indonesia, Member of Young International Arbitration Group-the London Court of International Arbitration., Legal Manager at PT. Coal Networks Resources.

Terrorism: Transcending National Boundaries Terrorism is not a new phenomenon, existing since the 19th century in the international political community. Terrorism attacks were at first small and largely localised, related to a country’s domestic stability. However, terrorism has transcended national boundaries and is no longer relative to country's domestic stability. The impact terrorism has on a nation is obvious, but with ever present threat levels and the country's image at stake, is it right for the government to impose tougher measures...?

This article will give definitions about terrorism, how terrorism activities have developed over the years, particularly in Indonesia, motivation from the terrorists themselves from diﬀerent aspects, such as: economic, legal and also information technology (IT) motivations. Lastly, what steps should governments consider to combat the terrorism activities. Definition of Terrorism Many have striven to find a definition for terrorism as there is no universal definition. For instance, under Interim Law Number 1 Year 2002 as adopted in Law No. 15 Year 2003 (“Indonesian Terrorism Law”) does not give a definition on terrorism per se. Article 1(1) of the Law stated: The crime of terrorism is any act that fulfils the elements of a crime under this Interim Law. These elements are set out in Article 6-23. This article quotes Article 6 of the Indonesian Terrorism Law as it provides a general description of terrorism: “Any person, who through intentional use of violence, creates a widespread atmosphere of terror/fear or causes mass casualties, by taking the liberty or lives and property of other people, or causing damage or destruction to strategic vital objects, the environment, public

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facilities or international facilities, faces the death penalty, or life imprisonment, or between 4 and 29 year’s imprisonment.” A brief on Indonesian Terrorism Law The full title of Indonesian Terrorism Law is ‘Interim Law No. 1 Year 2002 on the Eradication of the Crime of Terrorism’. It was signed by the Former President Megawati Soekarnoputri under her emergency ‘legislative’ powers. Under normal situations, the Indonesian President would only able to issue Regulations; however, Article 22 of the Constitution permits the President to issue Government Regulations in Lieu of Law (Peraturan Pemerintah sebagai Pengganti Undang-Undang (PERPU)”, herein referred to as ‘Interim Laws’. Interim Law No. 1 Year 2002 was adopted to become a Law No. 15 Year 2003 and the substantive provisions remains Indonesia’s Anti-Terrorism Law (“Indonesian Terrorism Law”). The Indonesian Anti-terrorism Law was imposed into law by the Indonesian President Megawati Soekarnoputri on 18th of October 2002 six days after the Bali bombings took place. The Law had first been drafted in April 2002, in response to September 11, but the Bali bombing was

the climax of its finalisation. In comparison, an academic definition that has found wide respect is based on a linguistic survey of over 100 definitions produced around the world which states:

“Terrorism is an anxiety-inspiring method of repeated violent action, employed by (semi-) clandestine individual groups or state actors, for idiosyncratic, criminal or political reasons, whereby-in contrast to assassination-the direct targets of violence are not the main targets”. Lord Carlile of Berriew Q.C., The Definition of Terrorism

Development on Terrorism Activities Terrorism activities started more than 100 years ago with diﬀerent objectives and victims. The first phase of terrorism activities had targets to soothe civil political reform and it was claimed between 1880s-1920s. An example of this first phase was Tsar Regime in Russia. The next phase of terrorism activities occurred in 1920s until the 1960s. In this phase, terrorists appeared for national self-determination, such as: The IRA in Northern Ireland, Red Army in Japan,

Palestine, Harakat Al Anshar (known as Harakat Al Mujahidin) in Pakistan. These groups claimed themselves as defenders over third world countries confronting global capitalism. Current terrorism activities are motivated by certain ideological beliefs, such as: revolutionary or religious motivation. The main distinction between the first and the current phase as the terrorists do not hesitate to involve civilians to be their targets; for example, the recent case, socalled: “Woolwich Incident” in London on 22nd of May 2013 which killed the soldier Drummer Rigby as he was hacked to death in front of shocked onlookers. One of the terrorists, believed to be Michael Adebolajo, is thought to have been wellknown on the Islamic extremist scene in Britain and to have been either stopped or arrested on his way to join militant Islamist group al-Shabaab in Somalia in the past year (BBC News). The Woolwich Incident has many similarities with terrorism activities that have taken place over the past few years. First, there was the shock that such a horrific attack could take place on the streets of the capital. Second, there was the awful realisation that it was carried out by local residents. Ironically, the terrorists are denounced by most mainstream Muslims, who say they were not acting on their behalf. Islamic religious leaders insist that nothing in the teachings and preaching of Islam would ever provoke such barbarism, although some more radical Islamists are less condemnatory than they should be. Similarly, in Indonesia, claims on terrorism activities appeared just after 11 September 2001; to be exact on 12th October 2001, so called: 'The First Bali Bombing'. The terrorists claimed their actions were permitted by God (“Jihad”). Religion was used as a justification for their heinous deed.

However, there had been numerous 'terrorist attcaks on previous occasions, including; the Garuda DC 9 Woyla aircraft hijacking by a Jihad Group in 1981; The BCA Tower incident along Jalan Gajah Mada; The Borobudur temple bomb blast in 1985. Current Motivation on Terrorism Activities There are a handful of motivations behind the current phase of terrorism activities. Firstly, economical motivation. Undoubtedly, terrorists are dead against modern-world countries seeking economic gains in less developed countries through investment in sectors such as natural resources. Moreover, social disparity and unemployment also motivates the brutal acts of terrorism. Secondly, terrorism activities are implications on the government’s failures. Terrorist activities still exist in Indonesia because the government has failed to impose social welfare systems and accompanying laws; as a result, many people live in limbo and get frustrated with their current conditions. These circumstances are also supported by the number of corruptions scandals, increasing year-on-year from year. Many people face tough economic situations, the number of criminal oﬀences is on the increased.

Conclusion In combating terrorism, there are several points which both government and our communities should take into account:; Firstly, the government should be absolutely resolute in its stand against violent extremism and terrorism. Never give a single opportunity for terrorism in any of its forms. Secondly, and more importantly, the community of a country should share this view. Thirdly, the law on combating terrorism activities should be imposed fully. Terrorism is not related to any particular religion, belief or country, but world-over. It attacks the sovereignty and integrity of every nation. Terrorism has transcended national boundaries. The best protection against terrorism is not in the creation of more laws, but in applying consistency in the laws that are already in place!

Thirdly, the development in Information Technology (IT) directly contributes to the terrorism activities. Recent developments in IT has influenced economic, socioculture and political aspects of human life. Many countries use developments in IT as driver to revolutionise its industries and boost economies. Cyber terrorism was used in the Bali Bombing of 2002. In his attack, Imam Samudera used his laptop to plan his actions, communicate with his extremist group and support their funding through forgery.

www.britcham.or.id | 39

SME SPOTLIGHT

Wendy Kusumowidagdo She is the Senior Consultant for Outward Bound Indonesia. An international licensed organisation for outdoor learning, focuses on maximizing businesses performance by empowering leadership, developing winning attitude and building teams. To learn how we can help you accelerate your teams, visit www.OutwardBoundIndo.org

“Hello? Are you Listening?” Outward Bound Indonesia helps youth and adult learners to reach their potential, develop their leadership, attitude and team spirit. For complete information about how we can help optimise your business and people performance, please contact info@outwardboundindo.org I recently gave a communication workshop that I called "Hello?? Are you Listening??" to a wonderful group of professional women. The premise of this topic was to raise awareness of the importance of listening as an equal counterpart of speaking, to understand why listening is not as easy as we like to think, and to get the practical ways of how we can enhance our listening skills and therefore improve the quality of our communication. The workshop went tremendously well, with all the ladies actively participating and attentively listening! *big smiles on my face How can I be more interesting to people? I completed my day afterwards by attending a networking event. You always meet diﬀerent, unique and interesting people at these events. Personally, I prefer to ask questions to and about the person I'm talking to, especially when I'm

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just meeting them for the first time, with the intention to explore about them - and make conversations. Dale Carnegie, an international communication guru said in his book "How to win friends and influence people" that in order to be interesting, you must first be interested! He also said that the rule of thumb of a good conversationalist is to be a good listener. Here's a fact, most of us think that the only person we think is interesting is ourselves! As the story goes, I met a gentleman at the event who was very interesting. He had a story for everything,...and apparently the stories never stopped coming. What I came to realize was that he was a talker, as he began to monopolize the conversations. At one point of the conversation, I made an attempt to reply to his comment by telling a short story. And sure enough, he interrupted me halfway by starting a new topic altogether. I was actually quite dumbfounded by this notion. I found it ironical and comical at the same time, knowing the fact that I'd just given a workshop about listening earlier that day. Okay, are you listening now?? The incident I had with that gentleman just re-confirmed my belief that listening is NOT easy and that it's a skill everyone can learn and practice. You know when

you're having a good conversation with someone when there's an equal amount of interaction, equal amount of asking and equal amount of answering or story telling. Conversations are like a game of tennis, it's fun when two players are hitting the ball back and forth to each other. Good communication or conversations are also based on respect. When you respect someone, you're able to listen to them better. But don't forget, the opposite also holds true, respecting someone means giving them a chance to be heard. When you're sharing a story to a friend, and she gives you an undivided attention, doesn't it make you feel really good about yourself? Like you're the most interesting person on earth? I hope you can benefit from my (unfortunate) encounter. But we can change things around in our daily communications and make a conscious eﬀort to listen better. Next time you want to interrupt someone in the middle of their sentence, stop and listen more - there might be something very interesting you wouldn't discover otherwise.

LIFESTYLE & HEALTH

Dr Lynette Ngo MBBS (singapore), M Med (int Med), MRCP (UK), Dip Palliative Med Raﬄes Cancer Centre Medical Oncology Dr Ngo’s areas of interest are in breast and gynaecologic cancers, psychosocial oncology and palliative medicine, in addition to general medical oncology

Looking Good for your Heart There is no denying the importance of one having to maintain an ideal weight, a perfect body shape and a set of healthy teeth. However, does your oral health and the way you manage your weight also aﬀect your general heart health? Read on and you will be surprise to иnd out more! How does obesity increase the risk of heart failure? According to Dr Stanley Liew, Specialist in Endocrinology & Consultant, Raffles Internal Medicine Centre, if you consume more calories than your body burns, the extra calories will be stored as fat. Other factors that may aﬀect your weight include your genes (e.g. family history of obesity), your metabolism (i.e. how your body processes food), and your age (i.e. your metabolism rate slows down as you get older). “Sometimes, an illness or medication may contribute to weight gain. However, physical activity and total caloric intake remain as the fundamentals to weight control,” shared Dr Liew. Studies have found out that excess weight increases a person’s risk of developing heart failure. For example, an overweight individual with a BMI ranging from 25 to 29.9 has a 34% of increased risk. As for an obese person with a BMI 30 or higher, he or she has a 104% of increased risk. “The more fatty tissue you carry, the harder your heart has to pump. For patients with heart failure (weak heart), this additional burden may tip them into severe heart failure with sudden accumulation of water in the lungs, which can result in a life threatening medical emergency,” shared Dr Teo Swee Guan, Specialist in Cardiology & Consultant, Raffles Heart Centre.

A set of healthy teeth for a healthy heart? During your childhood days, you learnt that brushing and flossing your teeth is extremely important if you want to avoid tooth decay and have healthy gums. However, can keeping your gums healthy also help to reduce your risk of getting heart disease? According to Dr Aaron Tan, Dental Surgeon, Raffles Dental, your mouth is filled with bacteria; most of them harmless. Usually, our body’s natural defences and good oral health care, such as daily flossing, brushing and regular six monthly dental visits, should be able to keep these bacteria under control. “Poor oral hygiene can cause a bacterial imbalance which will lead to possible gum infections (gingivitis) and in serious cases, both gum and bone infections (periodontitis). Continued poor dental care will also lead to tooth decay if left unchecked by your dentist,” shared Dr Tan. Studies have shown that periodontal disease increases the risk of heart disease by 50%. This is because bleeding gums are a gateway for the bacteria to enter into your bloodstream. Once in the bloodstream, the bacteria will travel throughout the body where they could cause inflammation and become a prelude to a build-up of fatty deposits that can block the arteries. When the blood arteries are clogged, stroke and heart disease will occur. Dr Tan also commented that systemic diseases, medical procedures (radiotherapy) and medications can reduce your salivary flow (xerostomia). Oral pH will thus be reduced and the loss of the buﬀering capacity of saliva can subsequently lead to dental caries and possible dental infections,

not to mention bad breath. It has been proven that periodontitis increases your risk of coronary heart disease (CHD) and also the possibility of pre-term low birth weight babies in pregnant mothers. Atherosclerosis is described as a condition when plaque builds up along the walls of arteries and causes them to become thick, leaving only a narrow passageway for the blood to flow. Eventually, this can lead to one being diagnosed with a possible stroke, heart attack, high blood pressure and even death. Research has also shown that poor oral hygiene can cause the carotid artery wall, which is the major artery in the neck to become thick with plaque which increases one’s risk of cardiovascular disease. Prevention starts early Therefore, treating cardiovascular disease (CVD) depends on what form of the disease is and a person’s health condition. The most eﬀective treatment always begins with personal lifestyle changes. Whether cardiovascular disease development is related to obesity and gum disease or not, keeping up with good personal oral hygiene and managing your diet well are essential fundamentals that we need to have to maintain a good heart health.

Raﬄes Medika Indonesia Menara Anugrah 1st Floor, Kantor Taman E3.3. Jl. DR Ide Agung Gede Agung Lot. 8.6 - 8.7 Kawasan Mega Kuningan, Jakarta 12950 Phone : (021) 5785 3979 Fax : (021) 5785 3977 24 Hour Hotline: (65) 6311 1111 Email: enquiries_indonesia@raﬄeshospital.com

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LIFESTYLE & HEALTH

Legends of Glastonbury Joseph of Arimathe There are so many myths associated with Glastonbury that it is diďŹ&#x192;cult to know where to begin to talk about them. There are two main streams of legend that surround Glastonbury, though they twine around each other to some degree. The two streams revolve around the romantic figures of Joseph of Arimathea and King Arthur, a myth covered in a previous edition of Up.Date.

Joseph was said to have established the first church in England at Glastonbury, and archaeological records show that there may well have been an extremely early Christian church here. What happened to the Holy Grail is another matter. Some legends have it that Joseph buried the Grail at the foot of Glastonbury Tor, whereupon a spring of blood gushed forth from the ground.

Joseph was the Biblical figure who took Jesus' body after the crucifixion. According to some legends he was actually Jesus' uncle, and had visited Britain years before with Jesus in the pursuit of his interests in the tin trade. It appears that there actually was a strong Jewish presence in the west of England at that time, and many of the tin miners may have been Jewish settlers. At any rate, when Jesus died, Joseph thought it prudent to flee Palestine, and after much travel he came to Britain with a company of followers. He brought with him the Holy Grail, the cup used by Jesus at the Last Supper. Some versions of the legend have it that the Grail contained two drops of blood captured from Jesus' side when he was wounded on the cross.

There is a well at the base of the Tor, Chalice Well, and the water that issues from it does indeed have a reddish tinge to it, from the iron content of the water. Other legends have it that the Holy Grail was interred with Joseph when he died, in a secret grave. The search for the mysterious Grail emerges again and again in the tales of Glastonbury.

When Joseph came to Britain he was granted land at Glastonbury by the local king. When he arrived at Glastonbury, Joseph stuck his thorn staďŹ&#x20AC; in the earth, whereupon it rooted and burst into bloom. A cutting from that first tree was planted in the grounds of the later Glastonbury Abbey, where it continued to bloom every year thereafter at Christmas time. There is still a thorn tree in the Abbey grounds, of a variety native to the Holy Lands, and it does indeed bloom around Christmas time.

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Further legends tell that the church founded by Joseph continued for many years. Eventually it became a monastery, and one of the first abbots was the future St Patrick, who was born in the west country.

A chronology of key events: INDONESIA 1670-1900

1966

1928

1969

Dutch colonists bring the whole of Indonesia under one government as the Dutch East Indies.

A youth conference pledges to work for "one nation, one language, one people" for Indonesia.

1942

Sukarno hands over emergency powers to General Suharto, who becomes president in March 1967.

1975

1945

1976

The Japanese help independence leader Sukarno return from internal exile and declare independence.

Maluku (Moluccas) declares independence from Indonesia and fights an unsuccessful separatist war

1962

Western New Guinea, or West Papua, held by the Netherlands, is placed under UN administration and subsequently occupied by Indonesian forces. Opposition to Indonesian rule erupts.

1965

Failed coup: In the aftermath, hundreds of thousands of suspected Communists are killed in a purge of leftists which descends into vigilantism.

2004 September

Indonesia invades East Timor and incorporates it as a province.

1997

1950s

First-ever direct presidential elections; first round narrows field to Susilo Bambang Yudhoy`ono and incumbent Megawati Sukarnoputri.

West Papua formally incorporated into Indonesia, becoming Irian Jaya Province.

Portugal grants East Timor independence.

The Dutch recognise Indonesian independence after four years of guerrilla warfare.

Car bomb explodes outside the Marriott Hotel in Jakarta, killing 14 people.

2004 July

Japan invades Dutch East Indies.

1949

2003 August

Asian economic crisis: Indonesian rupiah plummets in value.

1998

Car bomb attack outside Australian embassy in Jakarta kills nine, injures more than 180.

2004

Former general Susilo Bambang Yudhoyono wins second round of presidential elections

2004 December

Ethnic violence breaks out in Maluku. Free elections are held in Indonesia.

More than 220,000 people are dead or missing in Indonesia alone after a powerful undersea earthquake oďŹ&#x20AC; Sumatra generates massive tidal waves. The waves devastate Indian Ocean communities as far afield as Thailand, India, Sri Lanka and Somalia.

1999

2005 March

Protests and rioting topple Suharto; B J Habibie becomes president.

1999

East Timor votes for independence in UN-sponsored referendum.

East Timor becomes independent.

Court finds Muslim cleric Abu Bakar Ba'asyir guilty of conspiracy over 2002 Bali bombings, sentences him to twoand-a-half years in jail. He is freed in June 2006.

2002 August

2005

2002 May

Constitutional changes are seen as a step towards democracy. For the first time, voters will be able to elect a president and vice president.

2002 October

Bomb attack on the Kuta Beach nightclub district on Bali kills 202 people, most of them tourists.

A powerful earthquake oďŹ&#x20AC; Sumatra kills at least 1,000 people, many of them on the island of Nias. The quake triggers tsunami alerts around the Indian Ocean.

www.britcham.or.id | 43

LIFESTYLE & HEALTH

BLOODHOUND Project

be used in conjunction with a customdesigned hybrid rocket to propel the car. Rolls-Royce will also be lending the project our financial and technical support. Colin Smith, Director of Engineering and Technology, announced Rolls-Royce's sponsorship at an event for employees and BLOODHOUND team members at their Filton site in Bristol, UK. Also attending were children from two local schools.

On 13 May Rolls-Royce officially announced their sponsorship of The BLOODHOUND Project, an international education initiative which aims to break the land speed record with the world's first 1,000mph car. To help power the attempt, Rolls-Royce are providing an EJ200 engine normally used for the Eurofighter Typhoon. It will

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During the event Colin paid tribute to BLOODHOUND's global education programme, which aims to inspire the next generation of scientists, engineers and mathematicians. Fifty-six trained Rolls-Royce BLOODHOUND ambassadors will take part in this programme, helping school teachers across the UK deliver inspiring BLOODHOUNDthemed lessons.

They will play an important role in helping young people make the right career choices by showing where the study of science, technology, engineering and mathematics (STEM) subjects can lead. "Cutting edge engineering keeps RollsRoyce, and the UK, at the forefront of global business," said Colin. "We understand the fundamental importance of inspiring young people about STEM and know that more needs to be done. Sponsoring BLOODHOUND gives us an opportunity to showcase world-class British engineering and invest in our future." Richard Noble, BLOODHOUND Project Director, added: "Rolls-Royce support for the programme is invaluable as their highly motivated ambassadors will help us reach many more schools and youth groups across the country. Their experience working within a first class aerospace company makes them perfect role models for aspiring engineers."

MEMBER'S ANNOUNCEMENTS

Outward Bound Indonesia. The theme this year was "Lake Summer Holiday" which we took quite literally because all the activities were done on and around the great lake Jatiluhur in West Java. The goal of the program is to develop the character of teenagers by taking them out of their comfort zone, placing them in simple environments so they can learn to overcome adversity or uncomfortable settings, as well as learn to lead and work with others. Outward Bound Indonesia helps youth and adult learners to reach their potential, develop their leadership, attitude and team spirit. For complete information about how we can help optimise your business and people performance, please contact info@ outwardboundindo.org Our annual summer camp Outward Bound POWER TEEN Camp & Expedition program ends on a high note once again. A group of teenagers aged 12 to 18 join the challenging but fun 6-day camp from 24 - 29 June 2013 out in the wilderness.

The activities include canoeing around the lake, visiting fish farms while assisting the fish farmers, visiting a rubber plantation for harvesting, making and flying a kite, cooking, pitching a tent, camping and sleeping on floating canoes, rock climbing and hiking. The purpose of the adventurebased activities is to teach teenagers that are living in modern lives about simplicity, tenacity and positive attitude. Aside from the outdoor adventures, teenagers also experienced living in the homes of local people for 24 hours. The goal of this activity is to teach humility, compassion and gratitude.

The group was obviously awkward in the beginning, they were not talking to one another. However, due to the nature of the activities that forced them to interact, they were already making jokes in no time. At the end of the program, their bond was very strong. "We are tight like brothers and sisters," said Fadhli (15). In the beginning, there were a lot of complaining and whining that took place. The challenge got the best of them. Eventually, they were able to conquer it, by communicating and working together as a team. The parents of the participants attended the closing and graduation ceremony on the last day. Needless to say, they were emotional and proud to see the transformations evident in the faces and behaviours of the teens. This is what character building is essentially about, a positive and apparent change in attitude and behaviour. We hope to continue touching and transforming lives one character at a time through impacwtful programs.

Prioritising education in Indonesia - TVET UK signs UK vocational education sectorâ&#x20AC;&#x2122;s first Memorandum of Understanding (MOU) with Indonesian government skills needed to develop Indonesiaâ&#x20AC;&#x2122;s key industries.

TVET UK has signed a Memorandum of Understanding MOU with the Indonesian Ministry of Education and Culture to work in partnership to equip students with international standards of knowledge and

TVET UK, an association of UK vocational education sector, is currently visiting Indonesia with a delegation of some of the UKâ&#x20AC;&#x2122;s leading vocational and technical education providers and equipment suppliers. This memorandum signals the start of a commitment to work together to reform and develop the national education system and workplace training through new infrastructure, curriculum development, teacher training, professional development and state-ofthe-art resources and equipment.

Education is a priority for the Indonesian government and is part of its key objective to develop human capacity over the next three years. Around 20% of total government expenditure is ring-fenced for investment in education. Indonesia has not been a traditional market for the UK education system, but with the growing trend for training and development to be delivered in English, and increased demand for textbooks and equipment from overseas, and future skills gaps there are opportunities for experienced organisations offering high quality products and services to work with local agencies. TVET UK is the first UK vocational

www.britcham.or.id | 45

MEMBER'S ANNOUNCEMENTS

and technical education organisation to take a proactive approach to working with the government, and is investing time and resources into ensuring that it understands the market and can successfully meet its requirements. TVET UK Executive Director, Matthew Anderson, says: ‘ The Indonesian government has identified a need for a greater alignment between education and industry. This will require the investment of time, money and energy in skills training and development. TVET UK is a gateway to experienced experts from across the UK educational sector who are ready to commit to this objective and work in partnership with local providers to achieve it. ‘We are delighted and proud to have signed this MOU today and look forward

to a long and successful partnership with our new friends in Indonesia.’ The TVET UK delegation is in Indonesia from 23 – 28 April 2012. Delegates have a packed agenda and will be visiting a number of institutions in Jakarta and Bali, as well as hosting a conference for 300 vocational school principals and senior figures in Malang, eastern Java Information on TVET UK TVET UK enables international customers to access the UK’s leading vocational education and training providers and suppliers easily and eﬀectively through a single point of contact. Working with TVET UK provides access to an extensive network of members ready and able to work with customers all over the world to:

• quality assure existing training programmes or develop bespoke or internationally recognised UK training and qualifications • implement best practice and policy • send students to the UK • develop in-country study programmes • source top quality equipment and learning material suppliers TVET UK will works with clients to understand their situation and needs, scope out an agreed approach and identify suitable TVET UK members to ensure success. TVET UK is the only UK organisation focussing specifically on skills training within the international arena and so uses its unique position to represent the interests of the UK vocational education sector, and lobby on its behalf.

ACCA Launches Presence in Indonesia

ACCA’s President speaks about finance leadership at launch event ACCA launched its new representative office in Jakarta on 30th May 2013. ACCA’s President, Professor Barry Cooper, was in Indonesia for a series of engagements, including a gala dinner to commemorate the official launch. ACCA Indonesia is headed up by Mr. Mulyadi Setiakusuma, who has had an extensive career in senior leadership positions in the banking and finance industry. ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It aims to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. ACCA supports its 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of over 83 offices and centres, and more than

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8,400 Approved Employers worldwide. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence. Founded in 1904, ACCA believes that accountants bring value to economies in all stages of development and seeks to develop capacity in the profession and encourage adoption of global standards. During his presentation at the ACCAorganised Finance Leaders Luncheon held on 29th May 2013, Professor Cooper highlighted the role finance professionals play in creating a strong and sustainable economy, and in providing public value. In his keynote address at the gala dinner for the grand launch of the oﬃce, Professor Cooper reiterated the necessity for capacity building in the finance function in Indonesia. He also

shared his views about the future of finance leadership, and highlighted the need for complete finance professionals who are forward-looking, business ready, and more thoroughly prepared to take on strategic leadership roles. The gala dinner was held at the Le Meridien Hotel, and was attended by over 200 of Indonesia’s key business and finance leaders. Mr. Mark Canning, the British Ambassador to Indonesia, Ikatan Akuntan Indonesia Council members, representatives from the Ministry of Finance, and Mr. Achmad Kurniadi, Deputy of Investment Corporation, BKPM (Indonesia’s Investment Coordinating Board) were Guests of Honour at the gala dinner.

Etihad Airways and Garuda Indonesia Join Forces on Jakarta to Perth Etihad Airways and Garuda Indonesia this week commenced a new codeshare flights between Jakarta and Perth, the capital of Western Australia. The daily nonstop flights, to be operated by the Indonesian flag carrier, begun on June 28. Emirsyah Satar, Garuda Indonesia’s President and CEO, said: “The JakartaPerth nonstop flights are part of the airline’s expansion program to develop

its international network and in line with Garuda Indonesia’s ‘Quantum Leap Program 2011-2015’. The new route is expected to boost inbound travel to Indonesia, and strengthens the airline’s network in Australia – a total of 42 weekly flights serving Sydney, Melbourne and Perth.” Flight GA724 / EY7126 will depart Jakarta at 1030 and will arrive in Perth at 1550 – a

total journey time of 5 hours. The return flight GA725 / EY7125 will depart Perth at 1740 and arrive in Jakarta at 2115 – a total journey time of 4.50 hours. The Jakarta-Perth flights will be operated by a two-class Boeing 737-800 aircraft with 12 seats in Business Class and 144 seats in Economy Class.

STANDARD MEMBERSHIP

Yuan Handayana Managing Director

Sholichin Darmawan Training & Business Development Director

yuan.handayana@bsigroup.com

sholichin.darmawan@bsigroup.com

Anwar Siregar Sales Manager anwar.siregar@bsigroup.com

www.bsigroup.co.id Established in 1901, BSI was the world’s first national standards body in London BSI Group Indonesia was established on 1st January 2011 with the acquisition of PT. Sistem Manajemen Indonesia. Our product ranges from standards development, certification, assessment, training, product inspections and testing. To date, BSI has issued hundreds of certification to organisations from various industries in Indonesia.

INDIVIDUAL MEMBERSHIP

STANDARD MEMBERSHIP

Raymond Lee

Giles Selves

Mr.Simon McCrum CEO

rlee@cbn.net.id

giles.selves@luxurycollection.com

mccrums@willis.com

OVERSEAS 'HEADSTART' PROGRAMME

Mark Chowdhry Managing Associate

Caroline Oliver Senior Associate

mark.chowdhry@magrath.sg

caroline.oliver@magrath.sg

www.magrath.sg Magrath Global (Singapore) is an Associated Company of London specialist immigration solicitors Magrath LLP. Magrath LLP is recognised as a major force in corporate immigration and was the first practice in the UK to oﬀer specialist US immigration law and global immigration law services to help businesses locate their personnel worldwide.

www.britcham.or.id | 47

OFFICE FACILITIES FOR YOU Full Ofmce & Hotdesk Facilities Introductions to already established UK companies • Temporary ofmce space with ongoing access to Chamber staff • Access to local business networks •

‘HEADSTART’ Indonesian Market Access, Country Information & Intelligence Made Easy.

For all enquiries and a complimentary conference call with an experienced business development adviser contact:

uksme@britcham.or.id

F R E E

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in pla Li so ce mi m s t Ap e y ava ed pl ear ila y To gro ble da up y! s-

Learning Together is Fun! 49 |

In our Primary School the pupil teacher relationship is crucial and we consciously offer a happy, safe, caring and practical environment to learn in. We focus on independence and skills development, with a balance between adult led and child initiated activities. Oh, and we have fun too!

www.britcham.or.id | 49 MAY/JUNE 2013For 2012/2013 enrollments, please contact Admissions today. Tel: (62-21) 745-1670 • Fax: (62-21) 745-1671 • E-mail: admissions@bis.or.id • www.bis.or.id

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