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SBY Underscores Nation’s Dignity, Cancels Dutch Trip Photo: www.presidenri.go.id

By Lukman Hakim

gal] proceedings to be clear and conclusive before deciding to reschedule the visit,” the Coordinating Political, Legal and Security Affairs Minister’s Office said in a press statement last week.

JAKARTA (TPP) – President Susilo Bambang Yudhoyono last week put national dignity above all else, canceling his departure for a visit to the Netherlands as a Dutch district court decided to hold a trial on the same day in response to a lawsuit by activists of the so-called Republic of South Maluku (RMS), an Indonesian rebel movement.

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he President’s decision earned praises from politicians covering a wise spectrum. Mahfudz Siddiq, chairman of House Commission I that covers foreign affairs, said he supported Yudhoyono’s decision, as “there is a sense the Dutch government was disrespecting Indonesia by allowing the protest and the legal suit to happen at the same time as his visit.”

His colleague from the same House Commission, Ramadhan Pohan, said the President Susilo Bambang Yudhoyono made the right decision to postpone the Dutch visit.

“I fully support the President`s decision to postpone his visit to the Netherlands until that country`s internal problem had been solved,” he said.

“It would be totally unethical if the President in meeting the in-

SBY to state firms: shape up or ship out Earlier, the President minced no words in criticizing stateowned enterprises (SOEs), dismissing them as inefficient and corrupt.

Speaking before hundreds of top executives at the annual state firm expo and conference (IBBEX)last month, Yudhoyono said state firms must get rid of their bad habits in order to serve their appointed role as engines of development.

“From ministers, especially the coordinating economic minister and the state enterprises minister, I want a critical evaluation within three years. Something will have to be done on SOEs that are still inefficient, not productive, and not profitable and with no prospects,” the President said.

President Susilo Bambang Yudhoyono: Speaking at a press conference at the Halim Perdanakusuma air base before he was supposed to fly him on Tuesday to the Netherlands, he said: “It concerns our dignity as a nation, our dignity as a country.”

vitation from the Dutch Queen and Prime Minister became victim of embarrassment.”

He also said that the economic, education, trade and agricultural relations between the Netherlands and Indonesia were much more important than the RMS and the Dutch internal political frictions.

Meanwhile, House Deputy Speaker Anis Matta of the Islamdriven Justice and Prosperity Party (PKS) said the cancellation of the President’s visit to the Netherlands would not disturb bilateral relations of both nations.

“The government should soon ask clarification from the Dutch government over its stance towards the separatist “Republic of South Maluku” (RMS) movement,” Anis told Antara.

Historians may recall that in the late 18th century, the Dutch colonial forces commander Van de Kok had invited Prince Diponegoro for a meeting to dicuss a peace settlement.

However, de Kok reneged on his promise to allow Diponegoro return even if the talks failed, and arrested the Javanese royalty on site.

Business circles in Indonesia, contacted by The President Post, dismissed the notion that the canceled visit would have an impact on future investment plans on the part of Dutch businessmen.

Rudy Pesik, a prominent businessman with extensive ties in the Netherlands said: ”It’s just a minor ripple. It will soon become business as usual in both sides.”

Speaking at a press conference at the Halim Perdanakusuma air base before he was supposed to fly him on Tuesday to the Netherlands, he said: “It concerns our dignity as a nation, our dignity as

WORLD BANK:

Indonesia Growth Continues, Challenges Lie Ahead Indonesia’s economic growth reached 6.2 percent in the second quarter, the fastest growth since the global economic crisis struck two years ago.

The Outlook remains for robust growth in 2010 and 2011 2009

2010

2011

Gross domestic product

(Annual per cent change)

4.5

6.0

6.2

Consumer price index

(Annual per cent change)

4.8

5.1

6.4

Budget balance*

(Per cent of GDP)

-1.6

-1.5

-1.7

Majjor trading partner growth

(Annual per cent change)

-0.8

6.5

4.3

*Ministry of Finance projection, 2011 figure is proposed budget Sources: Minsitry of Finance, BPS and other national statistical agencies via CEIC, Consensus Forecasts Inc., World Bank

fected by wet ‘dry’ season. Local rice prices are now much higher than international prices, impacting poorer households especially since a greater share of their expenditures is on food.

“We’re seeing a renewed confidence in the country’s prospects and a strong return of capital inflows,” said Enrique Blanco Armas, World Bank Senior Economist for Indonesia, referring to the inflow of USD 7.3 billion during the month of June and August.

World Bank reports that the Indonesia’s economy is growing rapidly, in contrast with the world’s major economies as of September 2010.

This growth has allowed the policy focus to shift from nearterm uncertainty towards laying the foundations for long-term growth through policies that can support a better investment, and achieve a stronger social outcome for all Indonesian citizens, the report said.

“The Indonesian government target of 7 percent growth in

2014 can be achieved by greater investment in infrastructure, enhanced skills development, and increase productivity,” the report also said.

Indonesia’s economic growth reached 6.2 percent in the second quarter, the fastest growth since the global economic crisis struck two years ago.

This growth was driven primarily by domestic demand, particularly private consumption, which made the level of imports increase.

Government spending was weak throughout the first half of this year, although it is expected to rise in the second half. This growth patterns are expected to continue over the near-term, with investment increasing along with the improvement of credit access for investors, as well as the proposed increase in public spending on capital expenditures in 2011.

Indonesia’s inflation rate had returned to historical averages by last August, although there was some turmoil between June and August due to food prices of af-

VIEWPOINT

INTERVIEW

INVESTMENT

MINING

Linking Business and Culture

SD DARMONO: Big Plan for a “Bigger Picture” in Motion Pictures

State to Take Over PT Inalum

A Nation that Remains Blessed with Rich Mining Resources

Zara Zettira ZR of The President Post recently met up and discussed with him his latest pet project: Movieland, “Indonesia’s Hollywood”.

The government`s technical team for PT Inalum estimates Indonesia will earn an annual profit of US$120 million from Inalum if it takes over the company fully in addition to fulfillment of domestic needs.

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Linking business to culture is not how to reduce cultural forms into commodities, but to appreciate culture as a humanizing power

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IDR 20,000

Needed policy reforms: greater public investment for infrastructure to respond to the limitations of private sector activity caused by Indonesia’s stretched infrastructure; facilitate access to financial services that can enhance the ability of poor households to start up businesses, and reduce the inequality between skilled workers in the job market with demands skills required by employers.

Indonesia is the world’s 2nd largest producer of tin, 2nd largest thermal coal exporter, 3rd largest copper producer, and 3rd largest liquefied natural (LNG) exporter.

PAGE C1

a country.”

“I decided to delay the visit. A presidential visit should not be marred by events that are unacceptable to Indonesians,” he said.

Yudhoyono’s state visit would have been the first in 40 years by a president of Indonesia, which gained independence after 350 years of colonialism under the Netherlands.

On Thursday, the president reiterated his regret over a Dutch court’s holding of a trial session on the same day he was supposed to arrive in the Netherlands, saying it breached the “ethic and conduct of nation-to-nation relationships”.

The plaintiffs demand, among others, that the Dutch government lift the President’s diplomatic immunity during his visit to the Netherlands and have him arrested on charges of human rights violations; both of which have been rejected by the court.

The President “wants all [le-

Yudhoyono further remarked that as state firm directors “earn 10 times more” than he did, they should work harder than him.

The President’s current salary is around Rp 93 million per month.

Indonesia currently has 141 state-owned enterprises, known better as BUMNs, operating in various sectors.

State firms booked Rp 45.3 trillion in net profit during the first half of this year, an 18.26% increase from Rp 38.3 trillion in the same period last year.

The State-Owned Enterprises Ministry is eyeing Rp 93 trillion in net profit this year.

The combined assets of 141 state-owned companies in 2009 totaled Rp2.258 trillion or more than 40& of the Gross Domestic Product.

The SOE Ministry oversees assets of more than Rp 1,000 trillion ($112 billion) in 141 SOEs operating in various sectors.

BUMNs contributions to the State Budget through taxes and dividends reached Rp120.2 trillion or 12% of the state budget in 2009.

RI Slams Advanced Nations Over Climate Change Program Indonesia is questioning the commitment of advanced countries to helping developing countries in adapting to climate change.

The statement was made by the executive chairman of the National Council for Climate Change (DNPI), Rachmat Witoelar, leader of an Indonesian delegation to international negotiations on climate change in Tianjin, China, ANTARA reported last week.

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“Following increasing frequency of extreme climate phenomena and natural disasters that go along with them, the Indonesian delegation is questioning the advanced countries` commitment to the adaptation action program in developing countries,” Rachmat Witoelar Executive Chairman National Council for Climate Change

“Following increasing frequency of extreme climate phenomena and natural disasters that go along with them, the Indonesian delegation is questioning the advanced countries` commitment to the adaptation action program in developing countries,” he said.

The Indonesian delegation had raised the issue in view of increasing natural disasters linked to climate change such as the recent flash floods in Wasior, Papua.

A Indonesian delegation member from the Conservation International (CI), Muhammad Farid, meanwhile said due to the vulnerability of men and ecosystem to climate change, a clear institutional framework and adaptation funding was needed ahead of the 16th Conference of Parties(COP)/ CMP-6 in Cancun later.

The Indonesian delegation has also been active in the negotiations on other issues such as funding currently seeking an agreement on the establishment of a new fund to be expectedly made known at the COP16/CMP-6 in Cancun, Mexico, in December.

The President Post

A2 October 12, 2010

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Viewpoint Linking Business and Culture

By Rev. Natan Setiabudi

Linking business to culture is not how to reduce cultural forms into commodities, but to appreciate culture as a humanizing power in two directions: business helps cultural forms to be available to the world for spiritual enrichment of more people, and culture helps business by making business humane.

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or a while I have been contemplating on a social phenomenon, which is symbolized by the existence of the luxurious malls proliferating everywhere in the cities in our country for the last two to three decades. (In Jakarta at this time, it can be said that almost at every corner of the cities you bump into one, so to speak).

The malls make an ambiguous impression on me. I enjoy and is disturbed at the same time by them. Malls are very convenient for our life. But malls are usually built near slums of the cities, the kampungs, .creates a contrasting scenery of the gap between prosperity and poverty. The gap is intensified by the closeness of the two, creating what is called “a situation of permanent social danger.” I ask myself, Where will money or capital flow more into?

Into the malls or into the kampungs? If the answer is evident, the consequent effect is not always visible in the minds of many people.

Then the question is, Is prosperity for more prosperity, or prosperity for eradicating poverty? If prosperity is for more prosperity that depends on more poverty, then the bomb will explode eventually. But if prosperity is for poverty eradication, then the bomb will be defused, hopefully on time.

Experts conceptualize our world situation succinctly as characterized by an intersection among three forces of delegitimation: first is generalization of corruption; second, destabilization of legislative and judiciary powers of the government; and third, crisis of representation. Any problem is intersected, so to speak, by these three and rendered seemingly unmanageable. I said seemingly, for we are not supposed to give up in despair even when we are facing the unmanageability of poverty eradication or of traffic jam in Jakarta, for example.

Culture: The Resource In all its forms and products, such as art or craft, custom or belief system, science or skill, way of life or way of thinking, culture is essentially about how to be human.

When Indonesia proclaimed her independence, she cried to the world out of her deep suffering, especially to the Dutch, the colonizer, that colonialism is not human and that freedom is! Colonialism works both ways, making inhuman both the colonized and the colonizers. If we treated other people inhumanly we made ourselves inhuman. So does freedom. Freedom sets free both the oppressed and the oppressor to be human.When we talk about culture in all its manifestations, we

Build and develop cities not just as save and comfortable places to live, to work, to study, to play, but also as the solution for our planet sustainability and prosperity for all at the same time.

From left to right: Mr Peter Fanning (Australian Business Chamber), S.D. Darmono (Chairman THF), Rev. Natan Setiabudi, Prof Dr. Bambang Pranowo, Djangkung Soedjarwadi

talk about how to be human.

When Indonesia fought the Dutch and colonialism and proclaimed her independence, Indonesia was telling the whole world how to be human according to the Indonesian way, Pancasila. Pancasila can be understood as the Indonesian cultural achievement of how to be human among all nations by linking Indic (Hindu & Buddhist), Sinic (Confucianist, Taoist), Arabic (Islam), Western (Christian) cultural strands, which had been enculturated in various local cultures (belief systems, customs, arts, etc) throughout the Nusantara archipelago, and fusing them into a new reality called Indonesia. Within it, local cultures with their local wisdoms and all those four cultures are united without being made uniformed.

Within the sphere of Pancasila, culturally we teach each other how to be human and what it means to live as human beings one to another and to the environment. Culturally, we learn from each other how to be human and how to live as human beings.

Thus, linking business to culture is not how to reduce cultural forms into commodities, but to appreciate culture as a humanizing power in two directions: business helps cultural forms to be available to the world for spiritual enrichment of more people, and culture helps business by making business humane.

Models of Linkage: The Solution Albert Einstein was quoted as saying: “The significant prob-

lems we have cannot be solved at the same level of thinking with which we created them.”

Another quote of the same idea but in a different wording: “We can’t solve problems by using the same kind of thinking we used when we created them.”

In short, to shape a sustainable future, we all need to work together differently than we have in the past. All real change is grounded in new ways of thinking and perceiving.

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basis), real life of society (still a dream; the most comprehensive approach in with scale of impact commensurate with world problems).

Philanthropy : contribution/ funding Traditional philanthropic relationship (a one-way linking). It is a donor/recipient linkage. Basically, it is a corporate contribution to those in needs. Here, NGOs (with their credibility

Then the question is, Is prosperity for more prosperity, or prosperity for eradicating poverty? If prosperity is for more prosperity that depends on more poverty, then the bomb will explode eventually. But if prosperity is for poverty eradication, then the bomb will be defused, hopefully on time.

With this Einsteinean spirit and perspective I present the following quick notes on ways in which business is linked to the broader context: philanthropy, commodification, partnership, cities as solution.

Contribution/ funding (commonplace; no inner logics contact), patronizing (commonplace; business’ inner logics dominating culture’s spirit), among equal (emerging; genuine encounter of the two inner logics on equal

and expertise on the broader issues) are about funding by the corporations more than partnership with them. CSR (corporate social responsibility) still belongs to this model of linkage. Basically, philanthropic linking is oneway, a contribution or funding from business to culture; no real inner logics contact between the two. This is most common linkage. Results: limited to isolated recipients, no real change in scale big enough to impact the existing

problem trends.

Commodification: business’ inner logics dominating culture’s inner logics Here business turns cultural forms into commodities and renders culture open to the commercializing influence of business.

And it is very hard to maintain cultural integrity under such accelerative dominating pressure.

Generally and basically, it is a bad linking from the interest of culture.

Partnership between Equals: an emerging way of linking of inner logics of business and culture Serious and adequate partnership (a two-way linking) to build capacity whose scale of impact should be commensurate with the problems we face today. This new model of linking business and the broader context (the external stakeholders of business) is beyond gaining access to expertise (hiring consultant).

No one social actor (government, corporation, NGO, or the other) has sufficient resources and understanding to address the sustainability issues alone. Instead, they have mutual distrust and different technical know-how, they speak different languages and focus on different stakeholders, but they have the same urgency: sustainability of the planet. So, partnership is a necessity, though not an easy one.

Cities as the solution: a dream of linking the whole complexity of life in a significant entity Build and develop city as an entity having significant scale of

impact on managing sustainability and prosperity in harmony, instead of becoming the source of all significant problems as is now the case in general. Build and develop cities not just as save and comfortable places to live, to work, to study, to play, but also as the solution for our planet sustainability and prosperity for all at the same time.

This is the dream of Jababeka, a new evolving city. The dream is still being developed further and further under the popular motto of Pak S.D. Darmono: “think big, start small, move fast.” The think big is not only measurable numerically and geometrically, but also ideally, that is, openness to bigger imagination and new development and capacity to incorporate new elements. The ‘move fast’ of the motto can be seen from the following features of the present Jababeka: 5.600 ha land, 1 million population, 270.000 workers, 10.000 students, 2.500 expatriates, 5000 police/military security personnel, 1.350 companies, 22.500 houses, 2 water treatment plants, 2 waste water treatment plants, 3 power plants, 1 dry port, 16 schools, 36 vocational training institutions, 7 hotels/apartments, 24 shopping centers, 55 medical centers, 12 fitness centers, 18 lanes for public transportation, and US$5.75 billion investment value, US$17.5 billion/year export value = 19% national export.

In short, Jababeka is building capacity and gathering momentum to realize its dream, becoming an example of the solution.

The President Post

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October 12, 2010 A3

Interview SD DARMONO

Big Plan for a “Bigger Picture” in Motion Pictures

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he driving force behind the 5400 hectare Jababeka (“a bigger and better Jakarta”), SD Darmono also has a personal mission in life: to help others by opening doors to opportunities.

My bigger picture is that I would love to see film makers from all over the world come and use Movieland, because we have more than what others offer. And maybe one day people from all over the world will come to Indonesia and visit Movieland as they would go to Hollywood just because it is Hollywood.

A strict vegetarian since his youth, SD Darmono is also well-known for his “Think Big, Start Small, Move Fast” theory, which also happens to be the title of his recently published book.

Zara Zettira ZR of The President Post recently met up and discussed with him his latest pet project: Movieland, “Indonesia’s Hollywood”, which is set to raise the country’s movie business to a higher level.

You are a successful businessman in industrial and residential estates, what made you interested in the movie business?

I see the film industry as an asset with huge potentials as a business commodity. Indonesia has everything it takes to be the next Hollywood. We have to treat movies as an industry rather than as merely a form of entertainment. This is what I mean by Think Big! Indonesia’s film industry has not shown any significant progress for some time now. Where

do you see its potentials?

In every problem there are hidden potentials, but often enough we just haven’t recognized it as yet. This is the kind of situation that always tends to stimulate my thought process; I am the type of person who never stops thinking and seeking possible solutions to problems.

As in any other businesses, the most important thing is human resources. Indonesia’s population is one of the largest in the world.

That’s a huge potential! But we can’t rely on quantity alone, we also need quality. As such, we

have a film academy to help those who are serious to make changes in Indonesia’s film industry.

Second, we have more than 3000 ethnic groups. Diversity is a very valuable resource in the film industry. Neither Hollywood nor Bollywood has that.

Third, the film industry is able to generate massive businesses, opening job opportunities for a large number of people, and is a very effective means to spread moral and social education that will change the way Indonesians think.

Film is essentially education

and entertainment put together. As we possess creativity and knowledge on this sector, it can be a huge asset for national business and the economy. So, the solution is to make available complete facilities to assure more rapid progress towards attaining our big goal.

What kinds of facilities are available in Movieland?

We have industrial buildings up and ready to be used as studios, props and costume departments or warehouses. We have a wide range of accommodation

for crews, actors and actresses.

We provide a real city as a playground or shooting locations so film makers don’t have to go elsewhere. Also, different types of houses, hospitals, campuses, golf courses, sport clubs, and hotels.

Whatever location you need to shoot a film, we have it. A production team will never need to leave the location, and as such the film making process will be more cost and time effective.

Are you a movie lover yourself?

I have loved movies ever since I

The 1st One Stop TV and Film Industry Center in Indonesia.

Indonesia Movieland is PT. Jababeka’s vision of the future of Indonesia’s TV broadcast and film industry. Capitalising on PT. Jababeka’s corporate spirit of being a pioneer in the industrial sector since 1989, we seek to contribute to the establishment and development of Indonesia creative industry sector. Our focus is on the TV broadcast and film industry.

Indonesia Movieland is envisioned to be “the 1st one stop film and TV industry centre in Indonesia”. It is a fully integrated movie industrial estate using all facilities available in 5600 ha Kota Jababeka, with approximately 40 ha is dedicated for movie industry activities. As such, it will provide the facilities and resources needed to bring Indonesia’s TV broadcast and film industry to greater height.

was a kid. But most of the ones I watched came from other countries, which featurd their own cultures.

This should never always be the case, as we know better our audience and market than Hollywood or Bollywood producers do. We should not let them control or influence our social and culture lives.

But our films have to inspire our people rather than promote violence or sex to make it interesting.

So, what is “the bigger pic-

ture” in Movieland?

Movieland will allow filmmaking become a less complicated and expensive business. More people will do it, more local films will be made, and all o this means more choices for audience.

My bigger picture is that I would love to see film makers from all over the world come and use Movieland, because we have more than what others offer. And maybe one day people from all over the world will come to Indonesia and visit Movieland as they would go to Hollywood just because it is Hollywood.

The President Post

A4 October 12, 2010

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The Economy SBY’s Anti-Poverty Efforts in Full Swing

ECONOMIC UPDATES Non-oil/non-gas exports to reach $115 bln this year The government has projected non-oil/non-gas exports to grow 16% at the end of 2010 to US$115 billion from US$87.5 billion the year before, Trade Minister Mari Elka Pangestu said.

She said the non-oil/non-gas exports were expected to range from US$113 billion to US$115 billion this year, compared with US$107.8 billion in 2008 and US$97.5 billion in 2009.

The country`s non-oil/non-gas exports in the first seven months of 2010 reached more than US$70 Mari Elka Pangestu billion.

The Central Statistics Agency (BPS) said earlier the July 2010 non-oil/non-gas exports reached US$10.6 billion, up 29.5 percent from July 2009.

In the period of August 2009 to July 2010, the non-oil/non-gas exports grew 22.4 percent compared to the previous period.

Switzerland to help develop Flores tourism The Swiss government is set to help develop tourism on Flores Island, East Nusa Tenggara (NTT) Province.

Swiss Ambassador to Indonesia Heinz Walker Naderkoorn and the Indonesian cultural and tourism ministry`s director general for tourism destination development Firmansyah Rahim last month signed a Memorandum of Understanding on tourism development on Flores Isle.

The MoU covered the isle`s tourism development improvement, establishment of Destination Management Organization (DMO), sharing of experiences, as well as transfer of knowledge and technology in the tourism sector, according to Rahim.

Switzerland will also help train tourism personnel in Indonesia and send tourism experts to Indonesia, as well as promote sustainable tourism.

Bali`s exports to Portugal reach $1 Million Bali`s non-oil/gas exports to Portugal in the first seven months of 2010 reached US$1.1 million, a local official said.

Putu Bagiada, head of the Bali industrial and trade agency, said last month foreign trade of small industrial products, handicraft goods and farm products increased by 23%, though foreign exchange income in 2009 reached only US$897,000.

Garments made by Balinese female craftspeople with local cultural design were also exported to Portugal.

RI to keep promoting tourism in KL despite strained ties Indonesia will keep promoting its tourism in Malaysia despite strained ties between the two neighboring nations over sea border disputes, a Culture and Tourism Ministry official said.

“We will continue to promote our tourism there as the country is one of the main markets for Indonesian tourism,” the ministry`s deputy director for ASEAN, Chrismiastutie, said here last month.

Malaysia is second after Singapore with 1,179,366 tourists, contributing US$807.64 million to the foreign exchange earnings.

In the year to July 2010, 648,865 Malaysian tourists visited Indonesia, a 17.07 percent increase compared with the same period last year.

Government upbeat on keeping 2010 inflation within target The government has reiterated its optimism that it will be able to keep this year`s inflation rate within its target range.

“We are still optimistic that the inflation rate target of roughly 5% for this year will be achieved,” Coordinating Minister for Economic Affairs Hatta Rajasa said here last month.

The August inflation rate which fell from the previous month suggested that government efforts to control the prices of food stuffs had been fruitful, he said.

The inflation rate hit a 15-month high of 1.57% in July 2010, fueled by a rise in the prices of rice and vehicle taxes.

The Central Statistics Agency (BPS) said on Wednesday the August inflation rate reached 0.76%, bringing the calendar inflation rate to 4.82% and the yearon-year inflation rate to 6.44%.

Photo: www.presidenri.go.id

The head of state said that the creation of job opportunities would help reduce the poverty rate and at the same time improve the people`s economic conditions.

They comprised among other things academics, economists and economic observers.

Govt to balance high growth with pro-poor policies The government is to balance projected high economic growth with pro-poor policies so as to evenly distribute the trickle down effect of the growth, a senior minister has said.

“Poverty reduction will be an important element (in government policies). When there is high growth, there will be policies to spread the growth,” Coordinating Minister for Economic Affairs Hatta Rajasa said last month.

He said, in the past, growth was not sufficiently made to trickle down evenly.

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resident Susilo Bambang Yu d h o y o n o has stated that the government will step up efforts to reduce poverty and boost the national economy.

“We want it to be faster,” the president said here Wednesday during a presidential lecture at the State Palace last month.

President Yudhoyono and Vice President Boediono were present in a presidential lecture at the State palace featuring Prof. David T. Ellwood as the key speaker.

The head of state said that the creation of job opportunities would help reduce the poverty rate and at the same time improve the people`s economic conditions.

Therefore, the government was determined to pursue a four-tract policy in the economic sector, namely growth, job opportunities, reduction of the poverty

rate, and preservation of the environment.

Yudhoyono was optimistic that Indonesia would be able to grow and become prosperous by doing optimally.

The government has set its economic growth target at 6% at the end of 2010, an increase from 4.5% in the previous year.

PLN had originally expected gas production from the Donggi-Senoro field would be entirely allocated to the company to operate its power plants particularly in Sulawesi, PLN President

Dahlan Iskan

Director Dahlan Iskan said here last month.

“However, the government has decided to export most of the gas production and therefore, we will review the plan,” he said.

Only about 50% of areas in Sulawesi currently enjoyed electricity. The present electricity services in Sulawesi were the same as those in Java in 1978 when many areas had no electricity, he said.

“I have just arrived from Palele in Buol district where electricity

The special lecture was also attended by a number of ministers, chief executives of state-owned companies, university rectors, and chief editors of several media.

Members of the National Economic Committee and the National Innovation Committee also participated in the event.

WEF: RI More Competitive, Rising by 10 Notches Indonesia`s macroeconomic indicators rose from 52nd to 34th and health and primary eduction from 82nd to 62nd Indonesia`s global competitiveness ranking (CGR) rose by 10 notches to 44th this year mainly because of improving macroeconomic indicators and health and primary education, according to a World Economic Forum (WEF) report.

Indonesia`s macroeconomic indicators rose from 52nd to 34th and health and primary eduction from 82nd

to 62nd, the Indonesian ambassador/permanent representative to the UN, WTO and other international organizations in Geneva, Dian Triansyah Djani, said in a statement recently.

The country`s quality of overall infrastructure increased from 96th to 90th, intellectual property protection from 67th to 58th, national savings rate from 40th to 16th, effectiveness of anti-monopoly policy from 35th to 30th, and extent and effect of taxation from 22nd to 17th.

Meanwhile, the country`s business sophistication index also rose, including local supplier quantity from 50th to 43rd, value chain breadth from 35th to 26th, control of international distribution from 39th to 33rd, production process sophistication from 60th to 52nd.

The ranking was based on the

PLN Reviews Power Plants Scheme in Sulawesi State electricity company PLN is to review a plan to develop power plants in Sulawesi after the government has decided to allocate 30% of gas production from the Donggi-Senoro field to domestic needs.

President Yudhoyono and Vice President Boediono were present in a presidential lecture at the State palace featuring Prof. David T. Ellwood as the key speaker.

Prof. Ellwood on the occasion spoke on “Creating Jobs, Reducing Poverty and Improving the Welfare of the People: Acting in Time on Hard Problems.”

Pro-poor polices would be an important means to make growth trickle down in a more equitable manner, and this was something not sufficiently done in the past, he said.

Hatta did not elaborate on the programs that would be devised to implement the pro-poor policies.

Indonesia enjoyed the relatively high economic growth rate of 5.9% in the first semester of 2010 fueled mostly by household consumption that reached 4.5%, investment 8.0%, exports and imports 17.2% and 20.1% respectively, according to a recent report by Central Bureau of Statistics (BPS).

services last for only six hours a day. The same is also true with Bungku, capital of Morowali district,” he said.

Earlier, the Central Sulawesi provincial government said a total of 348 villages in the province had not as yet enjoyed electricity.

Dahlan said the electricity condition in Central Sulawesi is similar in the rest of Sulawesi.

Nii Tanasa thermal power plant to operate The Nii Tanasa thermal power plant in Soropia sub district, Konawe district, South East Sulawesi, is expected to become operational in December 2010, the head of South East Sulawesi`s Mineral and Energy Resources Office, Hakku Wahab, said here recently.

Initially, the 2 X 10 MW Nii Tanasa power plant was to have been completed in September

2009 but due to technical constraints, the plant`s owner, state electricity company PT PLN, had to postpone it until the end of this year, Hakku said.

“One of the constraints had to do with the acquisition of land over which a high-voltage line linked to the plant would pass. But the problem has now been solved,” he said.

The high-voltage overhead line would connect the Nii Tanasa power plant with the power grid of Kendari city.

“Power from the thermal power plant will be channeled into Kendari`s electricity distribution system to meet the power needs of people in Kendari city, Konawe and South Konawe districts,” Hakku said.

results of a comprehensive survey conducted in and on open data compiled from each of the countries surveyed, she said.

The CGR of 2010-2011 was also based on inputs from the WEF Advisory Board on Competitiveness, of which Indonesia`s Trade Minister Mari Elka Pengestu is one of the members.

Indonesia left Portugal behind in 46th place, Italy 48th, India 51st, South Afrika 54th, Brazil 58th, Turkey 61st, Russia 63rd, Mexico 66th, Egypt 81st, Greece 83rd and Argentina 87th.

Among ASEAN member states, Indonesia ranked 5th after Singapore in 3rd place, Malaysia 26th, Brunei 28th, Thailand 38th, while Vietnam ranked 59th, the Philippines 85th, and Cambodia 109th.

“One of the outstanding issues in the Global Competitiveness Report 2010-2011 is the fact

that the competitiveness of developed and developing countries is moving in the direction of convergence point,” the ambassador said.

Citing as an example, she said a number of Middle Eastern and North African countries joined the top 50 on the list, led by Qatar in 17th place, Saudi Arabia 21st, United Arab Emirates 25th, Tunisia 32nd, Oman 34th, Kuwait 35th, and Bahrain 37th.

The WEF releases the report every year based on surveys of business leaders and the latest economic indicators deemed critical to global competitiveness.

The report showed Switzerland remaining at the top of the list, unchanged from last year, followed by Sweden, Singapore, the United States and Germany.

Japan came in sixth place, with Finland, the Netherlands, Denmark and Canada making the

top 10 on the list this year.

Hong Kong, Taiwan and China ranked 11th, 13th and 27th respectively.

The GCR 2010-2011 covers reports on the competitiveness of 139 countries/economies, up from 133 the year before.

The GCI was based on 12 competitive sectors, namely institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

“The significant increase in Indonesia`s GCR shows the business world`s growing confidence in the Indonesian government`s efforts to improve infrastructure and business climate in the country,” she said.

Government Urges State Banks to Extend More Loans Bank Mandiri and Bank BNI currently had LDR of 68% and 66% respectively The government is encouraging state-owned Bank Mandiri and Bank BNI to extend more loans to meet a loan-to-deposit ratio of 78100% by constantly observing prudential principles, a minister said.

“We call on them to meet Bank Indonesia`s new regulation immediately,” State Enterprises Minister Mustafa Abubakar said here last month.

Bank Mandiri and Bank BNI currently had LDR of 68% and 66% respectively, he said.

“The LDR of the two

Mustafa Abubakar

banks are still within the lower limit of LDR set by the banking authorities. They must meet the LDR requirement so they will not receive warning from the government,” he said.

He said the government had set the credit growth target of more than 20% for this year and therefore, banks must extend more loans by constantly observing prudential principles.

“It is true we expect stateowned banks` credit growth to

reach more than 20% this year. But it is up to the two banks to take immediate steps to meet the BI rules, to become sound banks,” he said.

“I think it is important to increase the number of debtors and the amount of credits channeled. But more importantly, the banks must not do so recklessly,” he said.

Under the new regulation, banks that have LDR outside the target range will be subject to disincentives based on the difference between the LDR and the target range.

If their LDR exceeds the target range with adequate capital they will deserve incentives.

The regulation will come into force as from March 1, 2011 to give banks a chance to meet the target range.

The President Post

www.thepresidentpost.com

October 12, 2010 A5

The World GLOBAL ECONOMIC OVERVIEW:

The Developing World

By Atmono Suryo

Business Innovation is becoming another factor of strength or engine of growth for the Developing World.

T

WORLD ECONOMY he United Nations forecast that the world economy will bounce back in 2010 after experiencing a steep downturn at the beginning of 2009. Global growth rate is expected to be 2.4%. At the same time the United Nations and other international organizations warned that the recovery will be fragile, uneven and could be short-lived.

These warnings are based a.o. on the following risks factors: Stimulus measures These measures were strongly recommended by the G20 Summit in Washington in 2009, attended by Indonesia for the first time. There are now differences of opinions, however, on the need to continue with these measures.

Recovery efforts International concerns are also expressed about the inadequacy of international coordination of the recovery efforts. Now that the global economy is on its way to achieve full recovery there are now conflicting views on the question of recovery measures.

Financial reform Concerns are also expressed about the efforts taken to reform the eco-

nomic system, particularly the international financial system.

It concerns a very complex issue and extremely difficult to solve.

Advanced countries Another risk factor concerns the economies of the advanced countries, namely the US economy, which is still not in good shape, and the EU economy, which was once feared to jeopardize global recovery.

The question is whether these risks factors can be overcome in due time. The forthcoming G20 meeting in November in Seoul, South Korea will have to deal with a large number of difficult and complex issues.

It is the first time that it will be held in a developing country in Asia. In the G20 five countries come from Asia: Japan, China, South Korea, India and Indonesia (with the full support of ASEAN). Clearly, Asia is well represented in the G20.

THE DEVELOPING WORLD According to the World Bank, prospects in rich countries, which declined by 3.3% in 2009, is expected to increase less quickly, namely by 1.8% in 2010 and 2.3% in 2011, increases that are not sufficient to sustain world re-

covery.

On the other hand developing nations are expected to have a more robust recovery, growing by 5.2% in 2010 and 5.8% in 2011.

It is important to note that the Developing World has come up with high growth, especially China and India.

Achieving high growth is an important economic indicator, as it shows overall economic progress. The macro-economic factor also serves as an important pillar for change, or as engine for growth for various sectors of the economy.

The Developing World is now coming up with other engines of growth to accelerate further progress. To that end important analysis are made in the Economist special issue of April 17th 2010 with the heading “The World turned upside down”.

In that publication Adrian Wooldrige wrote “The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation”.

Now emerging countries are developing their own distinctive management ideas. Western companies are now learning from their rivals. Business Innovation is becoming another factor of strength or engine of growth for the Developing World.

From the articles, which appeared in the Economist, there are at least three factors which stand out, namely a) business in-

novation b) emerging markets and c) consumers and business confidence, all of which are important as engines of growth.

Business innovation In the 80’s American car manufactures were perplexed that car makers in (the once-defeated Asian country) Japan were able to replace the mighty United States as the world’s leading car maker.

It was neither big money nor sophisticated industrial policies or superb top-down management tactics which made it tick. Japan came up with a new innovative system of making things that was dubbed “lean manufacturing”.

Something comparable is now happening in the emerging world.

Developing countries are becoming hotbeds of business innovation. The same way Japan did in the past, they are coming up with new products and services that are very much cheaper and often better designed than the ones produced in the more advanced countries.

China’s BYD, which produces batteries and and has a capacity to produce a wide range of consumer goods, India’s Tata and Bharat Forge and Brazil’s Embraer jet aircraft are mentioned as examples of innovative management. It is reported that the United Nations World Investment Report calculates that “there are now around 21,500 multinationals in the emerging world”

Emerging countries, in particular from Asia, are coming up fast in such areas as cars, motor cycles, computers, mobile phones, refrigerators and all kinds of electronic gadgets and articles.

To go for volume in production at affordable prices seems to be one of the key factors to reach expanding markets with large populations in the developing world. New forms of business innovations are at work to satisfy and keep track with the “exploding demand” of the emerging world.

Emerging markets At present a large population is no more a “source of all evils” as it develops large emerging markets. With the downturn of global demand, the emergence of large commercial markets in the developing world becomes most relevant, and the main emerging markets are Asian markets.

Hundreds of millions of people, most of them with very good education and expertise, will enter the middle class in China, India and other countries in Asia.

The upcoming Asian human resources will become the new business innovators, and at the same time serve as the expanding emerging markets.

Business confidence The third determining factor concerns consumers and business confidence. The confidence of consumers stimulates demand.

Large numbers of confident consumers will multiply spending, and this should in turn trigger higher production (if the business conditions are conducive).

The Economist says that no visitor to the emerging world can fail to be struck by its prevailing optimism. Some 94% of Indians, 87% of Brazilians and 85% of Chinese say that they are satisfied, their country’s economic situation is good, expect conditions to improve further and that their children will be better off.

Nations’ optimism and positive mindsets and spirit are the driving forces, and yet another engine of growth for the developing world. Can we say in earnest that such a positive spirit also prevails in Indonesia? Is Indonesia on the right track; has it politically matured and is it showing the innovative mindset as shown

by Brazil, India, China, South Korea, South Africa and other up and coming leading countries such as Vietnam?

NEW OPPORTUNITIES It is expected that 70% of world’s growth over the next few years should come from the developing world, especially from Asia.

This will open up new opportunities for the countries in the region to increase their production and expand their markets and become important world players in the global economy.

Supported by their “innovations powers” (business, indus-

“

There are at least three factors which stand out, namely a) business innovation b) emerging markets and c) consumers and business confidence, all of which are important as engines of growth.

trial, technological and management innovations) and coupled with the right national will and spirit to march ahead, they are set to achieve greater welfare for their people.

The Economist rightly reminds the developing world what the famous world leader Winston Churchill once says years ago: ”TO SEE OPPORTUNITIES IN EVERY DIFFICULTY RATHER THAN EVERY DIFFICULTY IN EVERY OPPORTUNITY”.

The writer is former ambassador to the EU.

The President Post

A6 October 12, 2010

www.thepresidentpost.com

ASEAN ASEAN: Trade in Services

By Atmono Suryo

A

SUBSTANTIAL INCREASES SEAN is in the process of creating the ASEAN Economic Community (AEC) by 2015, with the aim of transforming ASEAN into a single market and production base. It would involve not only the free flow of goods but also the free flow of services, investment and capital. On top of it there will be the free flow of skilled labor.

The exports and imports of commercial goods are very well known to the countries in Asia. It has been their traditional way of life. However, it must be noted that in this era of globalization, trade in services has become of increasing importance. In recognition thereof, ASEAN Member States signed the AFAS (ASEAN Framework Agreement on Services) in 1995 to enhance the liberalization of trade in services.

According to ASEAN Secre-

figure 1: ASEAN Exports and Imports of Services

US$ Billion

Trade in commercial goods is well-known in Indonesia, but trade in services is obviously less known. Not much data is available on this subject. The impression is that Indonesia’s external trade in services is on the very weak side with perhaps a few exceptions such as tourism.

figure 2: Export of commercial services, 2007

200 180 160 140 120 100 80 60 40 20 0

Myanmar Philippines 5.2% 0.2% Malaysia 19.1%

Following the 16th ASEAN Summit in Hanoi and the successful negotiation to host the next ASEAN Summit in 2011 (and APEC Summit in 2013), Indonesia is moving closer to displaying regional leadership. But that is cosmetics of a political public relations nature; the substance will hold true if Indonesia could dictate the future directions of global demands that are thrown at developing countries.

This calls for a well-planned, well- aligned political communications coupled with Indonesia’s positioning that will serve the country’s economic purposes.

The Charter and Indonesia’s Readiness The ASEAN Charter for ASEAN people is designed to provide the legal and institutional framework for ASEAN to become from a government-oriented organization to a rule-based, effective and people-centered organization gearing towards ASEAN Community by 2015. However, a reality check shows so far gov-

Singapore 45.4%

Cambodia 0.9%

1997

1998

1999

2000

2001

2002

2003

2004

2005 Export

2006

2007

tariat data, ASEAN exports and imports of services have scored substantial increases (Figure 1).

The services sector has become one of the fastest growing sectors in the ASEAN region, even surpassing the annual growth of the manufacturing sector.

It should be noted that three ASEAN countries have been in the lead in trade of Commercial Services. They are Singapore, which takes up 45.4% of ASEAN exports, followed by Malaysia 19.1% and Thailand 19.1% (Figure 2).

Indonesia, however, is on the lower side, far behind the three countries with only a 5.3% share.

The Philippines with 5.2% and Vietnam 4.1%. Laos, Cambodia, Myanmar and Brunei Darussalam have the lowest shares (below 1%).

INDONESIAN SERVICES SECTOR Trade in commercial goods

is well-known in Indonesia, but trade in services is obviously less known. Not much data is available on this subject. The impression is that Indonesia’s external trade in services is on the very weak side with perhaps a few exceptions such as tourism.

According to the ASEAN Secretariat, Indonesia is indeed still an importer of services as seen in the chart (Figure 3). With the percentages of import at 13.2% and exports at 5.0%, the deficit in trade of services is rather high.

Trade in services is complex and covers a very large area, and Indonesia is still lagging behind.

Based on WTO (World Trade Organization in Geneva) classification, the Services Sectors and Sub-Sectors include the following: Business services Professional services

ernments never had the real intention to involve the people in deciding ASEAN’s development; it remains highly bureaucratic to the extent of being a secretive organization.

Despite the various successes that Indonesia have had at resolving ASEAN-related issues, the real act of leadership and contribution that Indonesia can give is to help ASEAN transform itself from a bureaucracy into a more transparent and trusted organization that will have a degree of credibility in the international community.

Indonesia as the largest in ASEAN geographical map needs to step up and provide guidance to ASEAN towards inhibiting the required insights that are still not forthcoming.

Hosting the forthcoming summit is another internal challenge for the Indonesia government.

Logistics issues aside, the essence of the summit will be the way the agenda is drafted (currently confined only to various officials and ministers, devoid of private and public input). A poorly drafted agenda will result in misplaced opportunity to display the current government’s depth of leadership and control over the regional architecture. The ASEAN Summit is a stepping stone towards the drafting of the agenda for the APEC Summit in 2013.

There needs to be alignment of strategies, messaging, well-targeted political communications guidelines as the framework for political communications mani-

fested at least until the 2014 election.

The major constraint will be for ASEAN and Indonesia to deepen its integration, a prerequisite to meet future challenges.

ASEAN cannot become a real community, and it cannot play a leading role in East Asia. Furthermore, it cannot take the necessary decisions to face the immediate challenges of the financial and economic crisis. On that note, Indonesia as the largest in ASEAN geographical map needs to step up and provide guidance to ASEAN towards inhibiting the required insights that are still not forthcoming.

Rhetoric will not work; the free trade agreements and other bilateral or multilateral agreements could drive the region into a territory where they would merely become a puppet amidst global demands.

In sum, Indonesia is well placed to further instill leadership in ASEAN; the 2011 ASEAN Summit creates a momentum for Indonesia to foster good neighbor policies, drive East Asia and trans-Pacific institutions along with the G20 agenda while pursuing her own interests in bilateral relations, regional institutions such as the ARF, APEC, G20, UN, APT and EAS. Moving forward, it may be necessary for Indonesia to organize a summit to deliberate strategic issues that include security with the participation of the United States. The period of depending on ASEAN alone should be over. All this should be supported by a sound political communications strategy that could leverage Indonesia’s leadership and contribution to ASEAN at the international stage.

The writer is Senior Regional Advisor on Policy & Political Communications & President Director at ASEAN OUTREACH Consulting.

Singapore 40%

Lao PDR 0.1%

Cambodia 0.4%

Brunei Darussalam 0.5% Vietnam 4.1%

Import

Source: WTO Secretariat, ASEAN Secretariat’s calculations

Philippines 4.1%

Malaysia 15.5%

Indonesia 13.2%

Indonesia 5.3%

By M.Shanti Shamdasa

M

Myanmar 0.3%

Lao PDR 0.2%

Indonesia’s Strategy in the Global Architecture: the Asean Summit uch has transpired since the onset of bilateral, multilateral dialogues of Indonesia and other countries. Today, Indonesia is at a juncture that is rather vulnerable to the deliverance of the forged agreements. Doubts amongst Indonesian and foreign businesses in Indonesia remain at the heart of the government’s commitment to safeguard national interest while it pursues global glamour.

The fact of the matter the fact here is the gist of the leadership directions: a proper and wellaligned political communications strategy that allows Indonesia to hold control of the global and regional remapping, becoming a curator of the future amidst global demands and not merely a recipient of the global agenda.

figure 3: import of commercial services, 2007

Thailand 19.1%

Source: WTO Secretariat ASEAN Secretariat’s calculations

Computer-related

Brunei Darussalam 0.6% Vietnam 4.0%

Thailand 21.7%

Source: WTO Secretariat ASEAN Secretariat’s calculations

Libraries, archives

Real estate

Sporting, recreational services

Rental/leasing

Tourism and travel

Transport services Maritime services

Health – social services Distribution services

Air transport Space transport Rail transport Road transport Financial services Insurance Banking Education Construction, engineering Environmental services Communication services Postal services Telecommunication Courier Recreational, cultural, supporting services Entertainment News agency

It is not clear what each sector or sub-sector would in reality cover, and how it relates to each other and be counted as Indonesia’s Trade in Services. According to some informal information, most of the services sector is still in the hands of outside interests group.

NEED TO STRENGTHEN THE SERVICES SECTOR Indonesia is still placed in the low ranks for many aspects of trade (Including trade in services). Indonesia still suffers from a large number of impediments that hinder the improvement of trade in general, such as inadequate supply of infrastructure, re-

strictive labor regulations, poor work ethics in the national labor force, crime, and poor public health. These factors are in addition to the problem of inefficient government bureaucracy, corruption and policy instability.

One of the key problems facing the country is the lack of infrastructure. Indonesia still needs massive improvements in this strategic sector. It is important, because with a good quality of infrastructure, it will increase efficiency in implementing business undertakings.

Due to the many impediments, there is the likelihood that the Indonesian import of services will increase quite significantly. Unfortunately, it will be difficult for the country to increase its exports.

There are some points that require the attention of the private sector. First of all, it concerns the improvement of the infrastructure which is needed to increase efficiency in the business sector.

This needs the fullest attention of the public and private sector. The public or government sector does not have the financial means to undertake large scale infrastructure projects.

Secondly, the private sector has to seek opportunities from various sources to obtain the needed investment to enhance their own capacity to engage in trade in services.

Last but not least, the private sector has to be able to explore more thoroughly the opportunities to expand their trade in the

services sector. The services sector has a wide dimension, ranging from the business and financial sector, to transport and communication, to construction, health and tourism.

Despite these impediments, the AEC’s aim to transform ASEAN into a single market and production base by 2015 could still become a reality. It will not be easy, however, but the possibilities are there. It should be known that Indonesia is formally committed to achieve that goal.

It implies that there will be the free flow of commercial services across the Southeast Asian region. According to ASEAN Secretariat, ASEAN export and import of services have already shown a strong growth, rising from US$183 billion in 2003 to US$329.5 billion in 2007.

Intra-ASEAN trade in goods more than doubled, from US$166.8 billion in 2000 to US$458 billion in 2008. IntraASEAN FDI (foreign direct investment) has also grown significantly.

Obviously there is the need in Indonesia to make the required adjustments to be part of the projected growth of ASEAN as a single market and production base.

Apparently there is no indication yet that the political mood in the country is nearing the point of realization: namely to make the necessary preparation to meet the proposed “deadline of 2015”.

The writer, a career diplomat, is a former ambassador to the EU.

The President Post

www.thepresidentpost.com

October 12, 2010 A7

Around Jababeka Better Infrastructure for Better Industrial Development The development of Jababeka Industrial Estate and surrounding areas has resulted in rising exports and imports, increasing the volume of logistics flowing in and out of Cikarang and Cibitung Bekasi.

This requires the provision of infrastructure such as transportation (highway, vehicle carrier) that adequate.

The current condition is considered inadequate since it still relies on highway facilities. Lack of roads and a very large volume of vehicles often lead to delays which of course result in additional costs.

PT Jababeka Tbk is officially

working with PT Kereta Api Logistics for the provision of access to railroad lines for export import logistics traffic, along with the operation of integrated customs facilities, Cikarang Dry Port (CDP).

The cooperation was marked by the signing of a memorandum of understanding (MoU) between the two sides represented by Hyanto Wihadi (Director of PT Jababeka Tbk), Hadi Rahardja (Vice President Director of PT Jababeka Tbk) and Yayat Rustandi (President Director of PT Kereta Api Logistics).

It is the first in Indonesia, where the use of alternative rail-

way lines to transport export and import goods from or to the Jababeka industrial area and other areas in Bekasi to Tanjung Priok port in North Jakarta.

PT KA Logistics warmly welcomes the cooperation, and will provide railway infrastructure in the areas of Cikarang Bekasi– Lemah Abang (Jababeka Area) by trains.

As for the railway infrastructure outside these areas, it will be synergized with the development of railways by the government. Hopefully this program will be in line with the infrastructure development in Jakarta and

surrounding areas such as the improvement of single- to doubletrack and other forms of infrastructure development.

In addition, Jababeka also works closely with Telkom to form a joint venture company to manage services and infrastructure of ICT (Information Communication Technology), which aims to streamline the exchange of information between regions.

This cooperation is expected to accommodate the needs required to achieve e-Logistics system and to provide convenience to the industry resulting in a positive impact on the industries in Indonesia. (JFS/TPP)

From left to right: Hyanto Wihadi (Director of PT Jababeka Tbk), Hadi Rahardja (Vice President Director of PT Jababeka Tbk) and Yayat Rustandi (President Director of PT Kereta Api Logistics).

Jababeka CEO Business Gathering of Mould & Dies Industry 2010 Takahashi Makoto, Chairman of Indonesia Mould & Dies Industry Association (IMDIA), told a business gathering at Jababeka Golf recently that there are huge opportunities for the mould industry, especially press mould type that produces stamping dies.

Around 60% of all mould companies in Indonesia are in the press mould type, as many daily necessities and household electronic equipment in Indonesia are made of stamping parts.

For this specific product, mould technology is relatively simple and its investment value is not high.

Damianus Alam, President Director of PT Rekatama Alam Mandiri (a mould & dies company), said that the mould & dies business industry will continue to grow in line with the thriving domestic automotive market.

“The government should be involved in enhancing our competitiveness by preparing among others skillful and ready-to-use labor, accelerating the growth of the automotive and components industries as well as transfer of technology, eliminating import duty for moulds that cannot be manufactured in Indonesia and imposing import duty on moulds that can be made here,” said Damianus.

Takahashi Makoto, Chairman of Indonesia Mould & Dies Industry Association IMDIA

Damianus Alam, President Director of PT Rekatama Alam Mandiri

The President Post

A8 October 12, 2010

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Education Executive Education and Other Mills and Riddles Dr Walter G Tonetto

“I don’t think we’ll get rid of schools any time soon, certainly not in my lifetime, but if we’re going to change what’s rapidly becoming a disaster of ignorance, we need to realize that the school institution does not ‘educate’; that’s inherent in the design of the thing. It’s not the fault of bad teachers or too little money spent. It’s just impossible for education and schooling ever to be the same thing.” – John Taylor Gatto (New York Schools’ Teacher of the Year 1982)

I

have always had immense difficulty thinking of myself as a teacher; not only because the relationship between subject and object (if, in the age of Quantum Mechanics and indeterminability there is still any meaning in that anyway) was always a fraught one for me.

For me the extension to the currently fashionable idea of “life-

long learning” is a natural one, even though I would resist the thought of having to go through the perversely rigorous routines that pass under the name of ‘education’ in most countries.

When you ask an educator what we are in pursuit of, you get the usual melange of moralistic mumbo-jumbo that makes no sense. It reminds me of one of the most exquisite perceptions

in the Tao Te Ching (or Book of Changes) that the Tao, which can be expressed, is not the Tao. Likewise, the routine that adjudges the relative merits of a subject — never mind how sophisticated and seemingly meaningful and rational the model might be — is never doing justice to the subject thus judge. Like in any quantum experiment, it is neither wave nor particle, but somehow both, and neither. Confused? If so, that would be an excellent start! Let me add another layer: I am convinced that I can ‘teach’ more effectively in a room of fitful silences than by jumping onto a soap-box and turning out golden-tongued oratory.

ers never reach: by not judging his students. Here is the rub and huge difficulty for those educators who always want to quantify and classify: for ‘marking’ the subject of your attention is ensuring, often, that nothing truly ‘re-markable’ ever occurs, because the judge becomes caught in his prison-house of prejudices and judgments of methods never deeply examined. If examined they will show as having no more utility than highly transitory models, snapshots in time that never define the subject “under attention”. They don’t even get close to it. What they do define is the person or system employing the modeling.

I wanted to open with Gatto by making a subtle, but to those with ears, a most meaningful distinction between education and schooling. Gatto, whom I hugely admire for being a maverick, is a teacher who starts where oth-

This is enormously important, if not to understand, then at least to get some measure of.

Otherwise, we will keep running into walls, or making the Muse of Learning into a Whore. Gatto and his ilk go back to the great

German educators like Johann Heinrich Pestalozzi and Rudolf Steiner, who always had ends in mind that served not the outer needs, but that looked to the inner life. Pestalozzi so famously declared that ‘personality is sacred’; that the educator’s role was merely to ensure that that little seed of potentiality shall not be disturbed on its journey towards full development!

stood the motions of the heart.

So what was the mainspring of this notion of the educator as mere assistant? Pestalozzi always said that love of those we would educate is “the sole and everlasting foundation” in which to work. “Without love, neither the physical not the intellectual powers will develop naturally”. Any form of thwarting or hindering the evolution of the natural gifts of the subject were thus anathema to Pestalozzi and those who had similar insights into the human condition and who under-

We should extend this sense of freedom to children and young adults by not always seeking the pragmatic ends of their endeavours; it would be like unearthing a seedling every other day to see how it was “progressing”!

If I were to say that executive education and formalized lifelong learning make sense from an individual’s perspective, I would be lying, maybe pandering to commercial motive, just as pharmaceutical companies are coming up with new “diseases” in or-

I recall from my own experience once failing English in a class-room in Germany, yet when set free later to roam by a loving teacher at a school in Australia, I achieved the top mark in state-wide competitive entrance exams. What was the difference here? Love, and the freedom it carried and inspired.

der to sell the toxins they have manufactured. Understand me well here: it is not that the acquisition of knowledge is a bad, it is a very good thing indeed, but since most people have vague ideas, at best what constitutes knowledgebased excellences (with the exception, say, of highly precise scientific contexts), we should seek freer and opener ways of learning. But try telling that to HR Departments, many of whose senior staff were themselves hired from degree-mills, and who want to perpetuate this silly cycle. No, deepest knowledge comes from inner enquiry, and needs no noisy classrooms or public plaudits: we need an education of more silences.

Dr Walter G Tonetto can be contacted at tonetto@ carbonfuture.org. He is the representative of Strategic Relations Consulting, a Viennabased consulting firm.

Revolutionizing Indonesian Higher Education Paradigm

By Jhanghiz Syahrivar

This article aims to examine conventional teaching systems implemented in many universities in Indonesia which, if not dealt with immediately, may produce a long line of unemployed people in the future.

‘T

ri Dharma’ of Indonesian higher education is education, research, and community service. Education is a process of facilitating the students with the means and atmosphere conducive to improve students’ competencies in academic and nonacademic activities so as to create morally good Human Resources (HR) useful not only for themselves but also society at large.

Research is a process of finding a systematic knowledge or investi-

gation on a matter to form a fact.

The main objective of research is to discover, interpret, and develop a method and system for the advancement of human knowledge in scientific matters of our world and the universe.

If students have obtained education and conducted some research during their studies in universities, it is hoped they can devote and implement their knowledge to society at large.

The basic concept of ‘Tri Dharma’ of Indonesian higher education suggests that our graduates are directed towards becoming

a researcher and/or a scientist.

However, it is necessary to ask ourselves: how many of the graduates who, after graduating from universities, wish to devote their life as a researcher or a scientist?

Indonesia currently faces a variety of economic challenges from inside and outside the nation. The application of AFTA since 1st January 2010 only means one thing: not only will foreign branded goods enter the domestic market, but also foreign human resources as well. If our manpower is not prepared to deal with their foreign counterpart, it is feared that our unemployment will increase exponentially and the gap between the rich and the poor will continue to widen.

obtained during one’s learning period in a university and the requirements demanded by corporate headhunters. Poorly focused subjects taught in most universities in Indonesia contribute to this downturn; graduates are often left confused when the competence they possess do not fulfill the criteria required by companies.

As such, there should be a readjustment towards the ultimate goal of training students for taking university- level education.

The ultimate goal involves the creation of true human resources needed by the market, who not only have the ability to do research work, but also have specific skills to be applied on many sectors of the nation’s economy.

Therefore, current university graduates should be able to demonstrate not only theories learned in the class but also the appro-

One of the reasons behind the increasing number of unemployment in Indonesia is the mismatch between the knowledge

The President Post

priate technical skills in order to guarantee future employment.

Technical skills are related to the internship program that aims to synergize what is taught in the classroom with what is actually found in the field. Apart from that, throughout the internship program, students are given an opportunity to learn practical skills and to obtain ‘inside information’ from the companies in which they serve their internship to complete their thesis or research normally conducted in the last semester. Unfortunately, the program is not compulsory in most universities in Indonesia. As a result, graduates find out about the real world after they graduate, which might be just too late.

Regrettably, most Indonesians tend to equate good universities with the facilities they possess: a luxury building with a swimming pool, indoor sports are-

na, gyms and many other luxury amenities. In fact, universities in India are far from luxurious: old buildings without air conditioners and often with makeshift amenities.

Remarkably, some of them are ranked among the 100th top universities in the world and their graduates are on a par with graduates of many prestigious wellequipped universities in the world such as Harvard University. Indians tend to emphasize the quality of education (interior) than the facilities (exterior), because the main product of a university is the quality of education, not its facilities!

This article aims to examine conventional teaching systems implemented in many universities in Indonesia which, if not dealt with immediately, may produce a long line of unemployed

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people in the future. As such, unemployed graduates would not be able to implement the third point of the ‘Tri Dharma’ of Indonesian higher education, namely community service.

By way of this article, the author wishes to emphasize that there are three important things that must be possessed by today’s universities graduates, especially in facing the challenges in this globalization era: proficiency in foreign languages (including English), practical work experience gained during the internship program, and last but not the least, a good character.

John Wooden, a coach at UCLA, once said, “Ability may get you to the top, but it takes character to keep you there.”

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B

BUSINESS BRIEFS BRI maintains interest rates until late 2010

Bank Rakyat Indonesia (BRI), the country`s second largest lender, plans to keep its deposit and credit interest rates unchanged until December while studying the impact of a 3% rise in the primary reserve requirement.

“We will study in depth the extent to which it (the primary reserve requirement) will have an impact. We may conduct cost efficiency or raise turnover. But we will not change the interest rates at least until December,” BRI President Director Sofyan Basyir said here last month.

He said the impact of the new primary reserve requirement which increases to 8% from 5% of deposits could be anticipated by reducing net interest margin (NIM) or carrying out overhead cost efficiency.

“It (the decline in NIM) may reach 1%”, he says.

Aircraft Technician: A technician and a Lion Air plane at the Soekarno-Hatta airport.

The airline requires hundreds of airline technicians to maintain the its aircraft.

INCO to pay dividends worth US$200 million Publicly-listed nickel mining firm PT International Nickel Indonesia Tbk (INCO) plans to pay interim dividends totaling US$200 million or US$0.02 per share on Oct 22 this year.

The dividends would be paid to shareholders put in the list of shareholders issued on Oct 8, 2010, INCO corporate secretary Indra Ginting said in a press statement last month.

The dividend payments would be based on the middle rate set by Bank Indonesia (the central bank) on Oct 8, he said.

“The decision to pay an interim dividend of US$0.02 per share was made after considering the company`s performance in the first semester of 2010 and its good financial conditions at this moment,” he said.

Chinese steel firm Guo Feng to move plant to Indonesia China’s state-owned steel company Guo Feng Iron and Steel plans to move its factory from Tangshan, China, to Indonesia with a total investment of US$1 billion, a government official said.

Guo Feng will team up with PT Gunung Garuda to produce steel in Indonesia with blast furnace technology next year, Gunung Garuda chief commissioner Jamaludin said.

Jamaludin said Guo Feng chose Indonesia because of the availability of iron ore in abundance in the country. The factory to be reassembled in the country will have the capacity to produce 3 million tons of steel and will need over 2 million tons of coal per year.

Photo: The President Post/Nandi Nanti

BRI`s Plan to Acquire Bukopin Approved BRI said it was ready to control a 51% stake in Bukopin as part of its long-term investment.

T

he government has given the green light to Bank Rakyat Indonesia (BRI), the country`s second largest state lender, to acquire state-owned Bank Bukopin.

Both BRI and Bukopin had the same core businesses, State Enterprises Minister Mustafa Abubakar said on Friday commenting on state labor insurance

The new Maserati Quattroporte Sport GT S sets another milestone in terms of sportiness in the high performance luxury sedan segment. It offers sporty handling which further enhances the Quattroporte’s already optimal dynamic balance.

It features the evolution of sporty automatic gear-shifting software, designed to win over committed and demanding drivers, seeking an exciting driving experience. It also equipped with the “Sport” button, makes it possible to deploy the full power of the engine and produce a deeply enveloping and throaty exhaust note.

The Quattroporte Sport GT S’s engine has been developed to favor maximum power output.

Main technical data: • Displacement: V8 4,691 cc • Power: 323 kW (433hp) @ 7,000 rpm • Torque: 490 Nm ( 361 lb/ft) @ 4,750 rpm • Max engine speed: 7,200 rpm

company PT Jamsostek`s wish to get a stake in Bukopin.

Jamsostek`s business was totally different from that of Bukopin, he said.

“I have given the green light to BRI to acquire Bukopin because they have the same core businesses,” he said.

The minister said Jamsostek`s wish to get a stake in Bukopin was merely a means of investment.

“Admittedly, we have encour-

Quattroporte Sport GT S is equipped with an automatic sixspeed transmission developed with sportiness of a new and specific gear-shifting strategy: the MC-Auto Shift mode, Manual Mode, and Manual Sport mode.

• “MC AUTO SHIFT” mode: In order to optimize standing starts, the automatic gearbox offers the MC Start Strategy, which functions with the MSP off. The driver should press and hold the brake pedal, then start pressing the accelerator and releases the brake pedal only when the optimum revs are reached (between 23002500 rpm). This fast start strategy, recommended only for use on the race track and in a situation of complete safety, reduces the 0 to 100 Km/h (0-62 mph) time from 5.3 seconds to 5.1 seconds.

• “MANUAL MODE”: In manual mode the gear-shift is directly controlled by the driver, allowing the engine to reach its top speed.

• “MANUAL SPORT”/”AUTO SPORT” mode:

aged Jamsostek to make investment but not in Bukopin. I myself have banned them (the management of Jamsostek) from running a bank. Jamsostek must focus on its business,” he said.

Both BRI and Jamsostek have competed with one another to get a stake in Bukopin since it intended to release 51% of its shares.

BRI said it was ready to control a 51% stake in Bukopin as part of its long-term investment. Jam-

sostek meanwhile said it wanted to acquire Bukopin in order to develop the bank.

Bukopin is currently 42.71% owned by All-Indonesia National Logistics Board (Bulog) Workers Cooperative (Kopelindo), 17.32% by the government, 12.19% by Bina Kesejahteraan Warga Bulog (Yanatera Bulog) foundation, 6.7% by Koperasi Perkayuan Apkindo 6,7%, and 20.99% by the public.

When down-shifting, the throttle blip is matched with the SPORT-mode exhaust sound to facilitate maximum driving enjoyment.

Exterior New 20” Multi Trident Silver wheels are fitted as standard, together with red brake calipers and Dual Cast technology brakes.

The exterior body color range includes all 19 colors available for the Quattroporte and the Quattroporte S. Interior The sporty look of the interior features new M-design seats with perforated Alcantara® and leather upholstery.

The interior configuration range features 10 leather colors (Avorio, Sabbia, Cuoio, Marrone Corniola, Grigio Ghiaccio, Grigio Medio, Blu Navy, Rosso Corallo, Bordeaux, Nero)

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Business First Media to Invest US$75 mln in HDTV 100 HDTV channels will be made available in the next two to three years and the number will be increased to 200 in the next five years.

PT First Media Tbk, publicly-listed internet and pay-TV broadband access provider, said last month it has set aside US$75 million to develop high definition-based broadcast (HDTV).

“The investment is used to expand the market,” First Media President Director Hengkie Liwanto said in a press statement.

To date, First Media has an estimated 350,000 subscribers and more than half of them also subscribe to pay-TV broadcast which offers 100 channels.

The channels will slowly but surely be upgraded from standard definition to high definition or HDTV, he said.

By the end of 2010 First Media will

bring another 12 HDTV channels, he said. He said 100 HDTV channels will be made available in the next two to three years and the number will be increased to 200 in the next five years.

The subscribers are mostly found in Jakarta and environs, Surabaya and Bali.

PT First Media chief commissioner Peter F Gontha said the company will first concentrate its services in Jakarta and environs which have a population of 18 million during daytime, or more than five times compared to that of Singapore.

“If 20 percent of the population subscribes to pay-TV that will be a large market. In the regions we can

team up with local pay-TV operators to provide HDTV services,” he said.

First Media plans to launch commercial HDTV broadcast at the end of this year by providing 12 high devision channels such as ESPN and HBO. To provide HDTV and video on demand (VoD) services, First Media will allocate a bandwidth of 320 Mbps, he said.Commercial HDTV services will begin at the end of 2010.

To provide pictures of good quality, bandwidth of 12 Mbps will be needed for HDTV and 8 Mbps for VoD, he said.

“In each area we have eight channels with a capacity of 40 Mbps each,” he said.

Indonesia: Outlook for Australian Business

By Chris Barnes

To summarise, the business outlook for Indonesia is very positive. Indonesia has weathered the GFC well and the growth prospects are good, with more work needed to be done on infrastructure and skills development to capitalise on the current momentum.

A

sia does not just comprise China and India. There are other markets in Asia and the World. But sometimes the media and commentators focus just on mega markets China and India.

However, despite the attractiveness of Indonesia as a target for both trade and investment, it still only ranks as Australia’s 13th largest trading partner.

Why is this? And what can we do about it? How can we deepen the economic partnership between Australia and Indonesia?

Business Outlook Indonesia posted 4.5 per cent GDP growth for 2009 and is forecast for 5.5 to 6 per cent increase for this year.

Analysts are now talking about “ChinIndonesia”. Or as the second “I” in “BRIIC”. Indeed, Indonesia’s stock market has been one of the best performing in the past few years.

In a strong signal of foreign investor confidence, Orica recently announced an USD550m investment in the construction of an industrial grade ammonium nitrate plant in Indonesia (East Kalimantan) with PT Kaltim Nitrate Indonesia.

The New York Times recently had a headline: “After Years of Inefficiency, Indonesia Emerges as an Economic Model”. In glowing praise it stated: “After years of being known for inefficiency, corruption and instability, Indonesia is emerging from the global financial crisis with a surprising new reputation – economic golden child”.

Fauzi Ichsan, Senior Economist for Standard Chartered in Indonesia is quoted in the article saying: “In Asia there is a feeling that after you invest in China and after you invest in India, where are you going to invest? It’ll have to be Indonesia. It’s a natural destination.”

But whilst I share some of Fauzi’s enthusiasm, the communiqué from the Australia Indonesia Bilateral Conference held in Sydney in February last year was less sanguine: “It is not that Australian companies don’t want to invest in Indonesia, it’s just that Indonesia makes it so hard. International investors have alternative markets.”

This is borne out by the investment figures. Indonesia is not getting the level of foreign direct investment (FDI) commensurate with an economy of its size (USD8.3bn last year). And according to the World Bank Ease of Doing Business Report, Indonesia ranks 122 out of 181 countries (up from 129 last year).

On the positive side, Indonesia has: Good economic leadership, Political stability, Large internal market Large labour market (quality and quantity), High performing service culture, Strategic position in the Asian shipping routes, and Abundance of natural resources.

But on the negative side: Poor infrastructure (social and physical) Poor utilities (electricity, water, sewerage, telephony), Legal enforcement Regulation/decentralisation (contradictory regulation),Security issues and Corruption.

The AIBC for the second year has partnered with our members and AFG Venture Group to conduct an Indonesia Perceptions Survey to assess the attractiveness of Indonesia as a business destination (comparing it to other economies in the region). Respondents are also asked to identify the main barriers to doing business in Indonesia. Note that we are measuring perceptions.

Firstly, a “substitution effect” in the attractiveness of some countries. There were big drops in the commercial attractiveness of China and India – whilst Indonesia remained at the same level as last year.

Secondly, there was a marked increase in support for a Free Trade Agreement (FTA) between Australia and Indonesia.

The Economic Barometer Survey of senior Indonesian business executives released last month by PricewaterhouseCoopers found that: “Overall the outlook for the next 12 months tends toward even more positive growth projections, despite continued concerns over regulatory and legislative uncertainty.”

According to the PWC Survey: “Uncertainty regarding regulations and laws is still ranked by senior executives as the top barrier to the growth of their companies in Indonesia over the next twelve months, followed by concern about taxation rules and their application.”

These results (and the concern about corruption) are consistent with previous surveys including the AIBC’s Indonesia Perceptions Survey. However, one interesting new finding is the concern from

senior executives about competition “which is seen as well and truly alive in all sectors” and the consequent shortage of qualified workers. This seems to be a direct consequence of the positive economic growth.

ing business. And that is why the AIBC has been urging both Governments to commence negotiations on a free trade agreement (FTA) or as we prefer to call it an Economic Partnership Agreement (EPA).

I would also like to see Australian and Indonesian companies seeing each other less as competitors and more as partners in the global supply chain. What is wrong with surf wear being designed on the Gold Coast, manufactured in Bandung and then sold in department stores around the world?

Such an agreement is crucial so that both Indonesian and Australian businesses can work together with the Indonesian and Australian Governments to clearly identify and eliminate the main barriers to doing business. The agreement should address more than just trade barriers; it should also cover investment and deal with the difficult “beyond the border” issues that frustrate business. But most importantly, it should also deliver significant capability transfer initiatives.

I would also like to see Australian and Indonesian companies seeing each other less as competitors and more as partners in the global supply chain. What is wrong with surf wear being designed on the Gold Coast, manufactured in Bandung and then sold in department stores around the world? What is wrong with cattle being bred in Australia, slaughtered in Indonesia and then sold in Malaysia and the Middle East?

Both the Australian and Indonesian Governments have recognised that there are barriers for both Australian and Indonesian companies. And one of the major tasks for the AIBC over the next year or so is to identify and lobby for the removal of barriers to do-

The AIBC would also like to see cross-sectoral issues addressed such as harmonisation of business practices and mutual recognition of standards.Once negotiations proceed, the strategy and positions will be reviewed and sectoral working groups established to develop detailed positions. We will also engage with government and business in Indonesia.

“

This will send a strong message that Australia and Indonesia are committed to deepening our economic partnership.

The EPA is as much about the development of a framework for engagement, as it is about the outcomes. It provides a formal (and also hopefully an informal) mechanism for the Australian and Indonesian business communities to engage on the opportunities for partnership between the economies.

Indonesia is not only Australia’s closest neighbour, it is one of the most attractive business destinations in the global economy at the moment. Whilst there are several Australian companies that have successful investments in Indonesia, the trade and investment statics show that the current economic relationship is “underweight”.

I propose three initiatives to deepen the economic relationship: • Economic Partnership Agreement • Enhanced Trade and Investment Promotion and • Education of our Business Leaders For the EPA to work, we require a change in attitude amongst both business communities. We need to approach these negotiations as partners in the global economy, identifying first the opportunities and then addressing the barriers.

At all times, we must emphasise that the objective is about developing closer economic partnerships in the global economy,

not merely about market access in an old-fashioned bilateral trade negotiation.

Secondly, there is a critical need for a different approach to trade and investment promotion and facilitation. Despite the recent favourable media coverage, Indonesia is still not on the radar for many Australian businesses.

And if it is, the perceptions do not match the reality.

The old days of generic trade missions are over. We need to have the Government economic development agencies taking a more pro-active approach in assisting business to identify opportunities and potential partners.

Finally, one of the fundamental ingredients to deepening the business relationship is education of our business leaders.

To summarise, the business outlook for Indonesia is very positive. Indonesia has weathered the GFC well and the growth prospects are good, with more work needed to be done on infrastructure and skills development to capitalise on the current momentum.

But the current economic relationship between Indonesia and Australia as measured in the trade and investment statistics is “under done”. Recent interest in Indonesia by Australian corporations does augur well, but there is more that can we do to encourage greater business engagement.

The writer is National President of AIBC. The articles is his speech to the Indonesian Studies Group, Australian National University, 15 September, 2010

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October 12, 2010 B3

Investment INVESTMENT BRIEFS Caterpillar set to build US$500 m plant US heavy equipment maker Caterpillar Inc. plans to build a heavy equipment factory in Java with an investment of up to US$500 million.

It would be the first heavy equipment manufacturer in the country, Gita Wirjawan, head of the Capital Investment Coordinating Board (BKPM) said.

Production facilities currently operating in the country for heavy equipment including Caterpillar are all assembly plants.

Growth

Government mulls tax holidays The Finance Ministry is mulling the idea of providing tax holidays to attract more investment, a senior tax official said.

“The finance minister has set up a team of officials. The team is working right now,” Director General of Taxation Mochamad Tjiptardjo said last month.

The model of the tax holiday would be known after the team had completed their study, he said.

“This has to do with the effort to harmonize the investment law with the income tax law. The team is still studying the appropriate model of tax holiday,” he said.

Asked when exactly the tax holiday would be introduced, he said ideally, it would start in January next year.

Telkom shuns main shareholder status in Flexi-Esia merger

Telekomunikasi Indonesia (Telkom) will not become the majority shareholder of Flexi and Esia merger, said State Minister of State-Owned Enterprises Minister Mustafa Abubakar.

“Telkom wants to merge but does not want to become a majority shareholder because of the Supervisory Commission of Business Competition (KPPU) rules,” said Mustafa.

Flexi and Esia both provide Code Division Multiple Access (CDMA) telecommunication service to 15.1 million and 10.6 million subscribers respectively.

The merger between both companies will create a company with the fourth highest market in the country.

“The spectrum is small and the merger will be good for both and offer a winwin solution,” said Telkom President Director Rinaldi Firmansyah.

The merger between Flexi and Esia will not be done through rights issue as it will require costs.

Elnusa secures US$24.48 m project in Papua

Elnusa (ELSA) secured a sixth-month Transition Seismic Acquisition project on two oil and gas blocks in West Papua worth US$24.48 million from a Frenchbased company.

“The project will be carried out with a geoscience multinational company from France,” said ELSA Corporate Secretary Heru Samodra in a press release.

Heru said ELSA will be involved in the procurement of equipment or recording and cable, support vessel, land transportation and all land surveys.

“Our portion in this project is bigger compared to other projects that we’ve done,” he said.

Heru added that the contribution of the zone transition and marine seismic business is the biggest in its geoscience division contract that reached US$89 million in the first half of 2010 or accounting for 60%.

ELSA posted a sharp decline in first half net profits of 94.18% to Rp27.096 billion from Rp465.597 billion in the previous year. The profit plunge is caused by delays of several projects.

KADIN: Take over expired foreign oil, gas contracts Noting the work contracts of certain foreign companies on a few oil and gas blocks are to expire in 2011, a Kadin executive called on the government to let domestic companies take over the blocks.

Riqwan Hisjam, the Indonesian Chamber of Commerce and Industry (Kadin) vice chairman for organizational affairs, said last month, the contracts of Kodeco Energy and Conoco Pillips on the Western Madura offshore blocks would expire in March, 2011.

Therefore, he called on the Oil and Gas Regulatory Body (BP Migas) to use the momentum to give domestic oil and gas companies a greater share in the development of the country`s fossil fuel resources.

“Although a regulation enables regional administrations to take part in oil and gas development deals through the 10% participation interest concept, domestic companies should be given a bigger chance to operate oil and gas blocks,” he said.

He said the first oil and gas blocks that should be given to national companies to operate were those in the western Madura offshore region as soon as the foreign companies` contracts on them expired in March 2011.

Jasa Marga, Telkom to form new businesses Jasa Marga (JSMR) is collaborating with Telekomunikasi Indonesia (Telkom) to develop a business in optic fiber by

Two workers put the final touches on buildings in Jakarta.

The Minister of Finance estimates the number of jobs in 2011 could grow by around 2.5 million people.

Photo: The President Post/Nandi Nanti

State to Take Over PT Inalum The government`s technical team for PT Inalum estimates Indonesia will earn an annual profit of US$120 million from Inalum if it takes over the company fully in addition to fulfillment of domestic needs.

T

he government intends to nationalize PT Indonesia Asahan Aluminium (Inalum) and become the company`s sole sharehold-

er when the company`s contract ends in 2013, State Enterprises Minister Mustafa Abubakar said.

“If I were a shareholder, I would wish 100% of the shares belonging to Indonesia,” the minister said last month.

Mustafa believed Indonesia is able to manage Inalum technically or financially. He said the intention to nationalize Inalum is not a bluff but is a serious one after thorough consideration.

He said the government is still discussing the intention with the parties concerned.

Mustafa said the government had already prepared a number of state-owned companies that would play a role in the takeover bid.

He mentioned PT Aneka Tam-

bang as a state company responsible for the technical aspects of Inalum management.

With regard to funding, he said the government plans to cooperate with PT Danareksa, PT Perusahaan Pengelola Aset and PT Bahana Sekuritas.

He said the state enterprises ministry would discuss again the plan with the ministry of industry. After that the officials of the two ministries would report it to the coordinating minister for economic affairs in a coordination meeting forum.

The government`s technical team for PT Inalum estimates Indonesia will earn an annual profit of US$120 million from Inalum if it takes over the company fully in addition to fulfillment of do-

mestic needs.

It however also warned of the negative impact of the takeover referring to, among others, the cash need of US$120 million for the bid, outflow of Indonesia funds to Japan worth US$723 million and the loss of potential new investment worth US$367 million offered by Japan for the purification expansion and new 150MW power plant development worth US$300-500 million.

Japan has proposed for the continuation of the cooperation for 30 years more with expansion plans such as in aluminium production from 250,000 tons to 317,000 tons a year and with an additional investment of US$367 million and an offer of a power plant development project.

Indonesia is able to manage Inalum technically or financially.

The intention to nationalize Inalum is not a bluff but is a serious one after thorough consideration.

Mustafa Abubakar State Enterprises Minister

Mandiri Appoints Underwriters, CIMB Niaga Postpones Rights Issue Plan Bank Mandiri (BMRI) has appointed Mandiri Sekuritas and Danareksa Sekuritas as lead underwriters for its Rp14 trillion rights issue plan.

Bank Mandiri Finance & Strategy Director Pahala Nugraha Mansury said in a press release that the appointment of the state se-

curities companies was made through a selection process which was participated by eight securities companies.

“Bank Mandiri wishes to maintain and sustain the growth momentum. That’s why we took the initiative to strengthen our capital to enable us to seize any business opportunity in the future,” he explained.

setting up a special company.

JSMR President Director Frans Sunito said the business is in the middle of being set up.

Aside from developing fiber optic business, the company is also looking to design property business model which is located close to JSMR’s toll road.

“We cannot give the details of the property business because it is still in the middle of being formulated. But basically we will build a new unit for property and we will cooperate with competent parties,” he explained.

The company will set aside Rp400 billion for expansion of non toll business development.

Jasa Marga hopes that by establishing new units, the company can boost revenue income to Rp200 billion by 2013 from Rp50 billion this year.

BNBR appointed to handle Kepodang-Tambak Lorok project The government has reappointed Bakrie & Brothers (BNBR) to handle a 200-kilometer piping project from Kepodang steam power plant to Tambak Lorok after canceling its appointment on Petronas.

Oil and Gas Downstream Regulatory Body (BPH Migas) Chairman Tubagus Haryono said BP Migas and the Directorate General of Oil and Gas had concluded that the Petronas-owned Kepodang field development will adopt a downstream scheme and therefore decided BNBR to build the pipes.

“After several discussions, we finally agreed that Bakrie will handle it,” said Tubagus.

Tubagus explained that the downstream scheme is chosen because the government will get bigger profits if

The bank hopes to carry out the rights issue at the end of the fourth quarter with the number of shares issued expected to reach 2.35 billion shares, which accounts for 10.13% of the total shares allocated after the rights issue.

strengthen capital, expand credit and for business expansion.

In the meantime, Bank CIMB Niaga had decided to postpone its rights issue plan which was initially set for end of this year but will issue bonds of the same value, which is Rp1 trillion.

Bank Mandiri plans to use the proceeds from the rights issue to

Previously CIMB Niaga Arwin Rasyid said they would issue

the development of the pipes that will carry 120-200 million standard cubic feet per day (MMSCFD) is done by BNBR. “The toll fee is 0.37 US cents,” he said.

Provinces hampering investment face government sanctions The government has threatened to impose a stern sanction on regional administrations that create complicated investment process.

The government will soon issue a government decree to support Law No.25/2009 on public services, which will include sanctions for regional administrations that have yet to implement an investment program dubbed One Stop Integrated Service (PTSP).

State Minister for the Empowerment of State Apparatus E.E. Mangindaan said the sanctions will apply to head of regional administrations that refuse to issue investment permits or that don’t revoke permits when they have expired.

“There will be sanctions and it will be stipulated under a government decree,” said Mangindaan.

Meanwhile, Investment Coordinating Board (BKPM) is confident that investment realization could reach Rp180 trillion by the end of the year or exceeding the government’s target of Rp160.1 trillion.

“Investment target is still on track and could reach Rp180 trillion or US$20 billion,” said BKPM Chairman Gita Wirjawan.

He added that investment realization in the third quarter of 2010 could reach 55% of the initial target with composition of 70% for foreign investment and 30-40% for

bonds before the end of the year.

Arwin added that bonds and rights issue plans part of the company’s agenda but the company needs to choose which one can be issued this year.

“We will issue both. We need a lot of capital to keep CAR at above 14%. We have issued our first subdebt worth Rp1.3 trillion,” Arwin elaborated.

domestic investment.

Home Affairs Minister Gamawan Fauzi said so far only 360 regencies/cities have implemented PTSP from a total of 524 regencies/cities recorded in the ministry’s data.

JGC, Sinarmas join forces on coal business Japan-based company Emeritius of JGC Group will make a US$40 million investment on liquefied coal fuel business. The company will set up a joint venture with Sinarmas with share composition of 80% for Emeritius and 20% for Sinarmas.

Emeritius Chairman Y. Shigehisa said Indonesia is the world’s biggest coal producer but 80% of its coal productions were of low quality.

“We want to make the coal useful through liquid coal and the product is almost the same with palm oil,” said Shigehisa after meeting with Vice President Boediono.

Emeritius and Sinarmas plan to build a plant in Karawang with production capacity of 10,000 tons per year.

Meanwhile, Vice Presidential Spokesperson Yopie Hidayat said Emeritius will develop technology powered by liquid fuel from coal.

“They will use fuel of 3,000 calories. Low calorie coal has low market demand and the price is also cheap,” he said.

The investment will likely be realized in 2011 as it is currently still being tried out.

Yopie added that the new fuel alternative can replace diesel oil used by state electricity company PLN in its power plants.

“The price is 40% cheaper than diesel oil and this can be sold to power plants,” said Yopie.

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B4 October 12, 2010

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Property Retail Business Expected to Grow in 2010 Property Market Overview on 2nd Quarter 2010 Photo: www.skyscrapercity.com

By sector, the growth pace was supported by trade, hotels and restaurants sectors which recorded the highest growth among all sectors.

Rice harvest during the quarter also boosted the growth of the agriculture sector.

Inflation Rate Inflationary pressure is starting to rise driven by food prices as the end of the rice harvest pushed up the price of staple food. In May 2010, the inflation rate reached its highest level in a year at 4.16% (y-o-y).

At the end of the year, Bank Indonesia has predicted that inflation rate remains within its target range around 4% to 6% Interest Rates Bank Indonesia decided to maintain its benchmark interest rate at 6.50% as of May 2010.

Lowering inflation in order to stimulate positive economic growth is a key decision to maintain the 6.5% interest rate.

Exchange Rate The Rupiah exchange rate maintained its appreciating trend against US Dollar during second quarter 2010.

Despite negative sentiment on global financial markets triggered by the fiscal crisis in some European countries, continuous positive growth of domestic economy was supported by the strengthening of the Rupiah during the quarter.

As of June 18, 2010, the Rupiah was trading at Rp. 9,135 to US$1.00.

Investment & Property Investment Indonesia recorded a decline in realized domestic direct investment in first quarter 2010, while foreign investment recorded a positive growth in comparison to the same period in 2009.

This shows that the impact of the global financial crisis is likely to ease further and investors are already back to Indonesia due to a positive economic growth and future outlook of the Indonesian economy.

Domestic Investment Indonesia recorded a 21% decrease in the realization of domestic investment in the first quarter of 2010.

Total value of domestic investment was recorded at Rp 6,690.7 billion, lower than the same period last year at Rp 8,497.9 billion.

Foreign Investment Indonesia recorded an increase of 34% in realized foreign direct investment in the first quarter 2010, increasing from $2,805.9 million of FDI realized in first quarter 2009 to $3,770.2 million in first quarter 2010.

Composite & Property Stock Index

For more Information: Dini Priadi, Vice President of Marketing & Communication and Franchise Coldwell Banker Indonesia (dpriadi@ coldwellbanker.co.id) Dwi Novita Yeni, S.T., Research and Consultancy PT. Citra Bahana Penilai (dnovita@coldwellbankerindonesia. co.id) Coldwell Banker Commercial Kawasan Bisnis Granadha, 12th B floor Jl. Jend. Sudirman Kav. 50 Jakarta 12930 Phone: 021-255 39 388 Fax: 021 255 39 399

Forecast Leased apartment market showed a positive growth during the second quarter of 2010.

The market indicates that the increased demand of leased apartments comes from corporations looking for units to rent for their expatriates. By region, these expatriates are dominated by those coming from Asia, confirming reports that the impact of the global financial crisis continues to abate.

NATIONAL ECONOMY Economic Growth As announced by BPS, the national economy posted a growth of 5.70% (y-o-y) during first quarter 2010, fuelled by robust domestic demand and improved exports and imports.

By sector, the growth pace was supported by trade, hotels and restaurants sectors which recorded the highest growth among all sectors. Rice harvest during the quarter also boosted the growth of the agriculture sector.

Bank Indonesia is optimistic that economic growth will surpass its earlier projection at 5.5% to 6.00%.

Retail centers in CBD locations were rented at between IDR 300,000 to IDR 1,125,000 per sqm monthly for ground floor space, and IDR 200,000 to IDR 650,000 per sqm a month for upper floors.

JABABEKA’S PROPERTY INDEX

SCBD, one of primary areas in Jakarta, Indonesia

July - September 2010 No.

Average occupancy level of office building in primary areas increased by 1.29% to 89.81%, while secondary areas improved by 0.23% to 86.23%.

Foreign capital inflow and improving liquidity on the stock market helped bolster the composite index during second quarter 2010. This performance was supported by macro indicators showing the Rupiah exchange stability, low inflation and high economic growth.

As of June 18, 2010, the composite index closed at 2,929.589 increasing by 4.25% from March 31, 2010 Exchange Rate as of 18 June’10 9,135 per USD Q on Q changes 141 bps

OFFICE SECTOR Leasable Sub Sector Cummulative supply of office space remained unchanged at 6,135,335 sqm, comprising of 3,830,765 sqm in primary areas and 2,304,570 sqm in secondary locations.

A total of 59,569 sqm of office spaces were absorbed during the quarter, slightly declining by 10.25% compared to the previous quarter. Despite that, the average occupancy level of office premises increased by 0.89% to 88.46%.

Average occupancy level of office building in primary areas increased by 1.29% to 89.81%, while secondary areas improved by 0.23% to 86.23%.

Rental rates remained firm, supported by the Rupiah appreciation against US Dollar during the quarter. On average, rental rates slightly increased by 0.62% in Rupiah and increased by 2.77% in US Dollar Strata-Titled Sub Sector Cumulative stock of strata-titled office accommodations increased to 858,497 square meters, consisting of 614,539 sqm in CBD locations and 243,958 sqm in secondary locations.

There is a growing trend for developers to build strata office premises due to its fast return as an investment tool. In the next two years, a sum of 403,688 sqm of strata office space is expected to be completed.

Total strata-titled office space sold as of second quarter 2010 increased to 739,371 sqm.

Take-up rate in CBD areas on average increased to 99.40%,

while secondary locations registered at 81.01%.

Massive new supply in this quarter decreased overall occupancy rate. Average occupancy rate in CBD area fell by 5.65% to 83.61%; while occupancy levels in secondary location plunged by 9.63% to 51.15%.

Selling price of strata-titled offices spaces remained stable during the quarter. In prime areas, selling prices were recorded at IDR 10.8 million to IDR 19.91 million per sqm or USD1,139 to USD2,100 per sqm. While those located in secondary locations were recorded at IDR 6.5 million to IDR 14 million per sqm or USD685 to USD1,461 per sqm.

RETAIL SECTOR Leaseable Sub Sector Cumulative leasable retail space remained at 3.49 million sqm as a result of zero new supply during the second quarter of 2010.

Retail leasing continued to grow with 14,051 square meters taken up during the second quarter 2010, lower by 32.08% in comparison to the first quarter 2010. Total leased space as of second quarter of 2010 increased to 3.07 million square meters.

Food and beverage retailers such as cafes and restaurants dominated the absorption rate of retail space during the quarter.

Average occupancy level of retail centers increased by 40 bps to 88.11%. Occupancy level of retail center in CBD area recorded an increase by 44 bps to 86.74% and occupancy level of retail centers in secondary locations improve by 17 bps to 93.83%.

Rental rate for retail space during the quarter decreased by 0.02% from the previous quarter.

Rental rates were recorded at IDR 384,924 per sqm per month.

Retail centers in CBD locations were rented at between IDR 300,000 to IDR 1,125,000 per sqm monthly for ground floor space, and IDR 200,000 to IDR 650,000 per sqm a month for upper floors.

Retail centers in secondary areas achieved a rental rate of IDR 200.000 to IDR 675,000 per sqm monthly for ground floor

space, and IDR 150,000 to IDR 550,000 per sqm a month for upper floors.

Strata-Titled Sub Sector Total stock of strata-titled retail in this quarter remained the same as the previous quarter at 2.413 million sqm.

Sales of strata-titled retail space during the second quarter 2010 decreased by 38.18% in comparison to the previous quarter, with a total of 3.261 sqm sold. Total strata-titled retail accommodation sold as of second quarter of 2010 reached 1.665 million sqm.

Overall, trade centers recorded an average occupancy rate of 68.47%.

Prices of strata-titled retail center remained stable, on average at IDR 42.876 million per sqm.

Offering price on existing trade centers ranged from IDR 12.5 million to IDR 125 million per sqm. Projects that are still under construction sold at pre-completion stage recorded prices at IDR 27.5 million to IDR 85 million per sqm.

Forecast Government has a plan to implement a new policy to raise the electricity cost in 2010 which will cause shopping centers to increase service charge. Despite that, retail business is expected to grow in 2010 supported by F & B outlets expanding to new shopping centers.

RESIDENTIAL SECTOR Condominium Sub Sector New supplies of condominium were added during second quarter of 2010 with a total of 1,276 units.

Cumulative stock of condominium increased to 70,580 units with 16,498 units in CBD area and 54,082 units in secondary areas.

Lower interest rates helped stimulate the absorption rate of condominiums during second quarter of 2010. A number of 1,718 units were sold, comprising of 475 units from existing projects, and 1,243 units from projects that are under construction.

The overall absorption rates of condominium remained stable at 81.47%. Absorption rate of existing condominiums was increased

slightly by 0.49 to an average of 94.88%.

Average selling prices of condominium units during second quarter increased slightly by 1.94% to an average of IDR 11,877 million. The growing demand supported by lower interest rates encouraged developers to make the price adjustment.

Selling price of condominium units in CBD area ranges between IDR 11.5 million to IDR 23.3 million per sqm. In secondary locations, condominium unit prices were recorded at 5.4 million to 15.6 million per sqm.

Forecast Lower interest rates and the availability of banking credit during second quarter 2010 helped trigger the demand for condominium units.

On the supply side, developers have started to launch new projects as the economic outlook is indicating better performance.

By segment, middle to low market segmentation remains the main target for developers.

Apartment Sub Sector No new supplies of apartments were added during second quarter 2010. Current stock remains at 11,616 units, consisting of 4,673 units in primary areas and 6,943 units in secondary locations.

Better outlook of domestic demand and the recovery pace of the global financial market affected the demand for lease apartments. This quarter recorded 161 units of apartment being leased in second quarter 2010, a growth of 3.87% in comparison to the previous quarter.

Average occupancy levels of apartments in prime areas improved by 1.89% to 75.64%, while secondary areas grew by 2.17% to 73.52%.

Rental rates during the quarter remained firm, mainly as a result of the appreciation of Rupiah exchange rate against the US Dollar. Rental rate was up 2.20% in US Dollar and 0.66% in Rupiah.

Apartment units within prime areas achieved rents in the range of USD7.22 to USD25.90 per square meter monthly, while units within secondary locations achieved rates between USD6.55 to USD21.91 per square meter monthly.

SEGMENTS

SIZE - M2 Building

PRICES

Land

RESIDENTIAL

The Veranda Town House

1

Veranda Deluxe

294

166

Rp. 2,008,000,000

2

Veranda Corner

306

288

Rp. 2,689,600,000

Simprug Garden

1

Green Pine

53

112

Rp. 517,000,000

2

Yellow Pine

70

139

Rp. 585,000,000

3

Golden Pine

90

136

Rp. 800,800,000

Orchid

1

Orchid Deret

53

120

Rp. 266,500,000

2

Orchid Corner

53

225

Rp. 382,600,000

3

Orchid Corner

53

206

4

Orchid Corner (Limited)

53

189

Tropikana Garden

1

Zelosa - Standard

114

119

Rp. 854,500,000

2

Axela Standard

159

160

Rp. 1,069,000,000

Axela Standard Plus

159

188

3

Ortiz - Standard

188

300

4

Axela - Corner (Land Plot)

228

5

Zelosa - Corner (Land Plot)

262

Rp. 766,700,000

6

Ortiz - Corner (Land Plot)

349

Rp. 1,021,500,000

Metropark Condominium Tower A

1

Deluxe , 2nd fl

27/1 Bdr

Rp. 218,950,000

2

Deluxe ,3rd fl

27/1 Bdr

Rp. 218,950,000

3

Deluxe, 5th fl

27/1 Bdr

Rp. 224,500,000

4

Deluxe , 7th fl

27/1 Bdr

Rp. 257,500,000

5

Premium, 7th fl

54/2 Bdr

Metropark Condominium Tower B

5

Deluxe , 2nd fl (view Metro Blvd.)

27/1 Bdr

Rp. 218,950,000

6

Deluxe, 3rd fl (view Metro Blvd)

27/1 Bdr

Rp. 218,950,000

7

Deluxe , 5th fl (view JCBD)

27/1 Bdr

Rp. 224,500,000

8

Premium, 6th fl (view JCBD)

54/2 Bdr

Rp. 462,600,000

9

Deluxe, 6th fl (view swim. pool)

27/1 Bdr

Rp. 261,900,000

10

Deluxe , 7th fl (view swim. pool)

27/1 Bdr

Rp. 261,900,000

Pavilion-Exclusive Boarding Houses

1

Grande-Corner

COMMERCIAL

Rp. 364,800,000 Rp. 424,600,000

Rp. 1,143,200,000

Rp. 1,595,500,000 Rp. 667,200,000

Rp. 463,050,000

221

216

Rp. 1,287,000,000

Hollywood Plaza 1

Commercial B - Module SFB

552

552

Rp. 3,838,500,000

2

Commercial B - Module SFB

682

552

Rp. 4,147,000,000

3

Commercial A - Module Studio

1,229

967

Pavilion Niaga

1

Block A3

100

2

Block A2

Ruko Sunter Niaga Mas

1

Rp. 7,209,500,000

50

Rp. 575,000,000

100

50

Rp. 575,000,000

Corner

165

71.5

Rp. 1,025,000,000

2

Standard

120

52

Rp. 750,000,000

3

Standard

120

44

4

Standard

120

53

Ruko Sentra Niaga Square

1

Standard 1 (4 x 11), 2nd fl

80

44

Rp. 508,000,000

2

Standard 2 (5 x 10), 3rd fl

150

50

Rp.715/727 Million

3

Corner (6 x 10) , 3rd fl

180

60

Rp. 891,000,000

4

Standard 1(4 x 11) , 2nd fl

80

44

Rp. 495,000,000

5

Standard 2 (5 x 10) , 3rd fl

150

50

Rp.715/727 Million

6

Corner (6x10) , 3rd fl

180

60

INDUSTRIAL

Rp. 700,000,000 Rp. 755,000,000

Rp. 891,000,000

SIZE - M2

Land

Factory

Office

1

Grand Standard Factory Building

2000-3500

830

115

start from Rp.4Bn

2

New 3-IN-1 Factory Building

576-1260

304

124

start from Rp.1,8Bn

3

Comercial Office Building

500

356

Rp. 1,700,000,000

4

Standard Office Building

425

160

Rp. 1,200,000,000

5

Land Plot

min 5000m2, $80

SALES and MARKETING OFFICE Jababeka Center, Plaza JB Jl Niaga Raya Kav 1-4 Kota Jababeka, Cikarang Baru Bekasi, West Java, Indonesia Ph. (+62 21) 893 4350 Fax. (+62 21) 893 4331 / 4038

Notes: The Above Prices are not Included: Tax 10%; PPAT; BPHTB fee; KPR/Notarial Fee and can be changed without prior notice

The President Post

www.thepresidentpost.com

October 12, 2010 B5

Corporation Beyond CSR

By A.B. Susanto

Images: www. online.wsj.com

CSR alone is not enough, as in reality it still has weaknesses. Many CSR activities only have short term impact and limited scale. They also often fail to solve the real problems of the targeted community.

C

orporate Social Responsibility (CSR) has been the topic of discussions in the past few decades, as there have been increasing demands from various stakeholders such as customers, employees, suppliers, communities, governments, and non-governmental organizations (NGO’s). They expect companies not to care only about financial performance, but also to contribute to the well-being of societies and the protection of the environment.

The European Commission defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.”.

CSR is directed toward inside and outside the company. Inside the company, CSR is directed to the shareholders and employees.

To the shareholders, a company should strive to maximize shareholder value. A company should also address the well-being of its employees. Thanks to their hard work, dedication, and sacrifice, the company is able to perform

why they engage in CSR, they claim it is to secure a better brand and reputation.

many activities and succeed.

Outside the company, CSR relates to the company’s contribution in paying taxes, creating employment opportunities, improving the well-being and competence of society, and preserving the environment for future generations.

For companies, CSR brings various benefits. First, support from communities. Companies that perform their social responsibilities consistently will win public support. Should there be accusations of any wrongdoing, the public will show their support. Second, CSR will help companies to minimize the risk of any crises. Tsoutsoura suggests three kinds of risks related to CSR, namely corporate governance, environmental aspects and social aspects. Companies that adopt CSR principles are more transparent and are less prone to bribery and corruption.

They will also implement stricter quality and environmental controls. Therefore, they run less risk of having to recall defective product lines and pay heavy fines for pollution. CSR also help companies reducing social risks.

Third, employee engagement

Hills and Gibbons introduce what they call corporate social leadership (CSL). In CSL, a company is demanded not only to perform its social responsibility, but to be a leading institution which inspires social change as well, hence the well-being of society will improve in the long run.

and sense of pride. Employees will feel proud since they work for a reputable company which consistently helps societies to improve their quality of life. Employees will feel more motivated to work harder for the company’s success. Socially responsible com-

panies will also be able to attract and retain best talents more easily, reduce turnover rate, and lower cost for recruiting new people.

Fourth, CSR will strengthen the relationship between a company and its stakeholder(s), since it shows the latter that the com-

pany cares for those who contribute.

Although CSR does not directly impact financial performance, it can strengthen corporate reputation. According to Minor (2009), when managers are asked

However, CSR alone is not enough, as in reality it still has weaknesses. Many CSR activities only have short term impact and limited scale. They also often fail to solve the real problems of the targeted community.

Companies often consider themselves of having the best information and knowledge regarding the needs of a community, while at the same time they view their targeted community as marginalized people who need assistance. This view stems from the company’s failure in understanding the characteristics of a community. Whereas such understanding is important in order to conduct CSR activities effectively, the right understanding regarding targeted community will make CSR activities more beneficial both for the community and for the company. Different communities require different approaches.

In addition, CSR activities are considered only for the purpose of positive reputation, instead of improving the well-being of community for the long run. There are even some companies which perform CSR activities to cover up their unethical behavior.

Therefore, it is not surprising if there are many people which are skeptical about CSR activities.

They argue that instead of helping, companies create more problems. Critics also say that the cost

of performing CSR activities is very high.

In dealing with such issues, Hills and Gibbons introduce what they call corporate social leadership (CSL). In CSL, a company is demanded not only to perform its social responsibility, but to be a leading institution which inspires social change as well, hence the well-being of society will improve in the long run.

In CSL, a company must realize that it is an integral part of a wider community. Hence, any problems within society will eventually affect the company.

Therefore, a company must treat its surrounding communities as partners.

In CSL, every program should be designed to empower community, which means that the community must have the resilience and be able to solve each problem with its own strength.

CSL programs can be implemented by various companies, regardless of their size. A company is not suggested to perform CSL activities that do not relate to its core business so that the cost can be lowered.

Of course, this does not mean CSR is no longer relevant. CSR is still important. However, companies should start to initiate their social leadership.

The writer is Dean of the Faculty of Economics, President University & Managing Partner of THE JAKARTA CONSULTING GROUP.

The President Post

B6 October 12, 2010

www.thepresidentpost.com

Leadership The Many Heuristics of Leadership Dr. Karan Singh MBA, DBA

A

Unlike algorithms, heuristics do not guarantee a correct answer to your problem every time, but they do offer a good place to start. And because each heuristic offers a different perspective on the problem, you get a different starting point with each heuristic.

n algorithm is a rule that produces a definite result—each time and every time. πr2, for example, will always deliver the area of a circle. A heuristic is a rule of thumb. It may or may not deliver a defined result each time, though it may, even most of the time, but not always. ‘He who works hard will definitely be successful’, is a heuristic and not an algorithm.

Problem solving is often accomplished by employing elementary rules called heuristics. These “rules of thumb” are picked up in our everyday experience or in the course of specialized training, such as engineering or medical school. A medical student may learn to diagnose a patient with gallbladder pathology based on a heuristic known in the trade as “The Four F’s”: fat, flatulent, female, and forty.

1 10 Thinking Deductive/Inductive Linear/Systemic

9

Unlike algorithms, heuristics do not guarantee a correct answer to your problem every time, but they do offer a good place to start. And because each heuristic offers a different perspective on the problem, you get a different starting point with each heuristic.

According to Van Seters, a well known expert in Change Management, the 1st Phase, or ‘Personality Era’, was from the late 19th century, and in particular included the work of Francis Galton. It was further subdivided into two periods; the ‘Great Man Period’ and the ‘Trait Period’.

In the former one the focus was on the personalities of great men and women leaders, and leadership was essentially about studying and emulating them. In the latter, the focus was on certain Traits being associated with effective leadership.

their behavior.

‘Socio-Technical Period’ – Brought the environmental and social influences together.

which adopted the idea that if a leader can create a strong culture in an organization, then people will in effect lead themselves.

5th Phase – ‘Contingency Era’, which is seen as a major advance in the evolution of Leadership theory where for the first time it was recognized that leadership was not found in any of the pure, unidimensional forms, but rather contained elements of them all.

9th Phase – ‘Transformational Era’ – with a focus on leader behavior during periods of organizational transition and on processes such as creating Visions of a desired future state and obtaining employee commitment to Change with two subdivisions: ‘Charisma Period’ – focuses on strong executive leadership which both creates the vision and empowers subordinates ‘Self-Fulfilling Prophesy Period’ – Emphasizes the way in which effective transformational leadership involve the building of positive expectations.

6th Phase – ‘Transactional Era’ which emphasizes the importance of transactions between leaders and subordinates and the leaders’ role in initiating and sustaining interaction.

7th Phase – had four parts: ‘Role Development Period’ – referred specifically to the relative roles of leader and subordinate and suggested that leadership could sometimes reside in a subordinate rather than the leader.

‘Anti-Leadership Era’ – The idea grew that there was possibly no valid concept called Leadership

1,9

9,9

Concern for People

5,5

3

1,1 1

2

9,1 3

4

5

6

7

8

9

HIGH

Concern for Results

Figure 1. Blake & Mouton Managerial Grid where attention was turned to the Context in which leadership was exercised and was subdivided into three periods: ‘Environment Period’ – focused on how leaders emerge in the right place at the right time to meet the needs of the hour.

‘Social Status Period’ – Looked at the Leaders’ and Subordinates’ mutual expectations of

Leadership Definitions “The ability to decide what is to be done, and then get others to do it”. - D. Eisenhower “Is the ability to get men to do what they don’t like to do and like it.” - Harry S. Truman “The wicked leader is he who the people despise. The good leader is he who the people revere. The great leader is he who the people say,’We did it ourselves’.” - Lao Tzu The Leadership Situation With a constant stream of inquiries, requests, problems, decisions and reports, people in leadership positions face unrelenting and conflicting demands on their time. The pattern of interaction with subordinates, peers, superiors and outsiders is determined by the aspects of the situation.

4

LOW

Communication High/Low Context Direct/Indirect Expressive/Instrumental Formal/Informal

4

Space Private/Public Power Hierarchy/Equality

5

Figure 2. Cultural Orientations to 10 Variables

6

1

3

6

7

2

Cultural Orientations to 10 Vraiables

Competitiveness Competitive/Co-operative

7

HIGH

5

Time Single-Focus/ Multi-Focus Fixed/Fluid Past/Present/Future

Individualism Individualistic/Collectivistic Universalistic/Particularistic

The 3rd Phase, ‘Behavior Period’, focused on what leaders actually do. Again subdivided into ‘Early Behavior Period’, which led to identification of two important dimensions of Leader behavior, a) Initiating Structure, or concern for the task, and, b), Consideration, or concern for individual satisfaction and group cohesion. The other subdivision was called the ‘Late Behavior Period’, which actually led to the development of the Blake & Mouton Managerial Grid (Figure 1). Also prominent in Phase 3 was Douglas McGregor’s Theory X and Theory Y. 4th Phase – ‘Situation Era’,

8

2

Action Being/Doing

Structure Order/Flexibility

8

The 2nd Phase, or the ‘Influence Era’, recognized that leadership is a process involving relationships between individuals, and was again split into two periods – ‘Power Relations Period’ - Sources of power and how it is used - and the ‘Persuasion Period’ in which Leaders were those who achieved dominance through the skills of persuasion.

9

Environment Control/Harmony/ Constraint

‘Ambiguity Period’ – When it was argued that Leadership existed only as a perception in the mind of the observer.

‘Substitute Period’ – Which focused on ways in which characteristics of the task and of the organization could act as substitutes for leadership in affecting performance.

8th Phase – ‘Culture Era’

Philip R. Harris and Robert T. Moran, authors of ‘Managing Cultural Differences’ say the following: “We are living in an era of rapid change. The perspective is now global. At risk is the survival of the organization and the security of the individual.

What will the successful organization look like in the year 2020?

What competencies and qualities will managers and executives need to run these businesses? If change is the constant, can much be said of the future?”

In the 90s, the Economist Intelligence Unit asked these questions and others to 10,000 senior executives in North America, Europe, and Asia. An analysis of responses found: • Management’s handling of diversity will be the most significant fac¬tor affecting corporate success in North America and Europe.

In summary, the huge amount of study and work conducted in the area of Leadership can be both compelling and confusing on the one hand, and rewarding and enriching on the other, though in all cases it has helped us human beings develop a rich collection of heuristics, a kind of pattern vocabulary, so to speak, giving us more confidence in making day to day decisions in our organizations.

• Senior executives must possess the attribute of leadership that com¬bines a blend of discipline and flexibility.

• In an era of constant change, corporate culture is a way to bring about organizational change.

Skillful global managers and executives understand the significance of the following statements.

They are convinced of the necessity to manage cultural differences and develop the skills necessary to participate effec¬tively in a global environment.

• Japanese culture promotes a sense of group identity. Creating ambi¬guity is an unconscious cultural process that often leads foreigners to draw false conclusions based on Japanese appearances.

• During the first business meeting in Saudi Arabia, one does not con¬duct business, but uses the time to become acquainted and build trust.

• In matters of recruitment and selection, Asian managers interview and often select family and trusted friends to fill positions, while Western managers use more impersonal measures of recruitment.

• When doing business in Indonesia, shaking hands with ei-

ther gender is acceptable, but using the left hand for taking food or giving a gift is unacceptable; in other cultures, handshakes are avoided, and some form of bow is preferred.

• Los Angeles has a diverse multicultural and multilingual population. Spanish and Korean are the second and third largest foreign-lan¬guage groups.

Cultural sensitivity greatly influences the success or failure of a product or service.

• The Business Council for International Understanding estimates that international personnel who go abroad without cross-cultural prepa¬ration have a failure rate much higher than those who had the bene¬fit of such training.”

The 10 Cultural Orientations (adapted) framework (Source © Training Management Corp.

(TMC), Doing Business Internationally: The Cross-Cultural Challenges, Seminar and Coursebook – Princeton, NJ, 1992) is particularly interesting and, I believe, an understanding of which is a must, for every modern day leader (Figure 2).

In addition to Cross-Cultural savvy, another topic that many authors and researchers have propounded as a necessity for effective Leadership is Emotional Intelligence. Robert K. Cooper and Ayman Sawaf in their book ‘Executive EQ – Emotional Intelligence in Leadership and Organizations’, 1997, have the following to say: “It all began with a series of studies on emotional intelligence indicating that people who are intellectually the brightest are often not the most successful, either in business or their personal lives.

Over the past several years, EQ has become widely accepted as a shorthand expression for the emotional intelligence equiva¬lent of IQ. And emerging research suggests that a technically proficient executive or professional with a high EQ is someone who picks up - more readily, more deftly, and more quickly than others the budding conflicts that need resolution, the team and organizational vulnerabilities that need addressing, the gaps to be leaped or filled, the hidden connections that spell opportunity, and the murky, mysterious interactions that seem most likely to prove golden - and profitable”.

The topic of Leadership is huge and almost never ending, though Gary Yukl effectively sums up his concluding thoughts in ten

points that Leaders: • Help Interpret the Meaning of Events • Create Alignment on Objectives and Strategies • Build Task Commitment and Optimism • Build Mutual Trust and Cooperation • Strengthen Collective Identity • Organize and Coordinate Activities • Encourage and Facilitate Collective Learning • Obtain necessary Resources and Support • Develop and Empower People • Promote Social Justice and Morality Adding to the above, Philip Sadler also offers mostly similar concluding views on Leadership: The following 12 propositions have been distilled from the mass of evidence - some of it contradictory.

Leadership makes a difference. Leadership does make a difference to the performance of individuals, groups and organizations.

Leadership is a three-way process. Leadership can be defined as a process of influence which brings about changes in people’s attitudes and/or behavior as a consequence of interaction between leaders and followers in a given context.

Leadership effectiveness exists at two levels. One is when leadership is deemed to have been effective once the attitudes and/or behavior of followers have been significantly influ¬enced.

Two is when, as a consequence of that influence, the group is enabled to achieve goals which otherwise would not have been capable of achievement.

Leadership and management are distinct. Management is supported by the authority and power that go with a position in a formal hierarchy.

Leadership is widely distributed. The study of leadership has been distorted by over-concentration on truly great world class leaders.

Leadership is not just about change. Because the most wellknown ‘heroic’ leaders in business and industry in recent years have been successful in bringing about organizational change the idea has grown up that the concepts of leadership and organizational transformation are inextricably linked.

Personal qualities do matter.

The persistent practice of producing lists of ‘leadership qualities’ is harmless but relatively unproductive. Nevertheless, it would be wrong to ignore the important part played by the perceived personal qualities of leaders in the interactive processes in which influence is exercised.

Behavior matters more. We learn more from studying the behavior of effective leaders than from trying to list their personal qualities. It is in any case easier to modify one’s behavior than to alter one’s personality. For example it is perfectly possible to learn how to listen properly or how to speak more effectively in public.

Leader behaviors which are generally cited as contributing to effectiveness include: • developing and articulating a vision; • listening; • empowering; • role modeling; • problem solving; • walking the job; • demonstrating confidence; • representing and protecting the group The situation is all-important. The effectiveness of leaders and of styles or patterns of leadership is contingent on the situation, and in particular on the following: • national culture; • corporate or work group culture; for example the pattern of effective leader behavior would differ in a theatre company, a building site, a research laboratory and a soccer team; • whether it is face-to-face leadership in a small work group or ‘institutional’ leadership of a complex organization; • whether or not a widespread sense of crisis exists at the time; • how experienced, well trained and competent the fol¬lowers are.

Selecting future leaders is difficult. The difficulties are at three levels. How to form a valid picture of the future environment within which leadership will be exercised; how to determine what leader attributes and behaviors to develop; how to tell which young people have the greatest potential to develop these attributes?

Learning to lead requires three essential ingredients.

These are: • Opportunities to practice leadership by being given early experience of real responsibility and challenge, partic¬ularly in circumstances where the individual is thrown back on his or her own resources of stamina, courage, initiative and judgment; • A high degree of self-awareness achieved through a combination of good quality mentoring, feedback, partic¬ularly from peers and subordinates and carefully selected psychometric instruments; • Opportunities, under guidance, to reflect on values and to develop a well-integrated set of values to serve as a template for use when making difficult decisions or choices. This issue of values is a neglected feature of most leadership development programs in business and industry.

Tomorrow’s leaders will need to be different. Changing social values will increasingly render the traditional ‘hero’ figure obsolete. The leaders of tomorrow will need to be less assertive, less dominant, less surrounded with the trappings of power.

In summary, the huge amount of study and work conducted in the area of Leadership can be both compelling and confusing on the one hand, and rewarding and enriching on the other, though in all cases it has helped us human beings develop a rich collection of heuristics, a kind of pattern vocabulary, so to speak, giving us more confidence in making day to day decisions in our organizations.

The writer is Management Development Director at President University, and Managing Consultant of PT King & Singh Consulting.

The President Post

www.thepresidentpost.com

October 12, 2010 B7

Human Capital John Vijayarangam Director & CEO Potentia HR Consulting

Executive Search I HR Consulting I Training

Assessing Your Human Resources

By John Vijayarangam

“Motivation is the art of getting people to do what you want them to do because they want to do it.”

- Dwight D. Eisenhower -

E

xcellence can be attained by focus on three basic enablers: people, process, and technology. The smart CEO know that the most critical is ‘ people’. It is your people who define the culture , the standards , and the performance standard – your Human Capital.

The value of your HC can change depending on the strategies used , the caliber of your HR Department , and the attitude of the CEO . With globalization and rapid change it is becoming increasingly clear today that the companies with smarter quality of human resources have the cutting edge in competition. They will always be one up on the competition, wave out to them and leave them way behind.

Improving quality we all know does not happened by chance it needs strategy and action.

Owners and top management need to balance between the three enables (people , process , and technology ) and spend the right amount of time and investment to have a closer look at Human Capital to understand, evaluate , and plan ahead if they want to be one up on the competition. The choices are clear – invent in people or be left behind.

It is sometimes shocking to see Top Management spending millions on technology and process but almost zero on people development.

What is Human Capital?

Simply stated it is the people in the organization - all levels, all functions, all categories. However there are two key aspects that are central to the value to the Human Capital idea :

countability depend on the three enablers—people, process, and technology—then it is useful, first and foremost, for the HR Department to have a clear and fact-based understanding of its human capital situation.

What approach can I take for a simple assessment of my Human Capital?

Before employing expensive consultants to step in to undertake an audit a simple checklist can be used for self-assessment.

This article is by no means an elaborate plan for audit of HR. It is just an outline of the Five important steps that can be taken to analyze and plan, implement change, evaluate and continuously improve HC.

Evaluate and improve

Analyze and plan

Implement change FIVE DIMENSION OF HUMAN CAPITAL SELF ASSESSMENT The five dimensions are a simple approach to self assessment of Human Capital and is designed for the busy CEO who may not have too much time for complicated research studies.

Few questions are suggested at the end of each dimension to start the ball rolling. Further brainstorming with the core team, review with consultants, review of the current organizational needs will help further refining before final implementation

People are Assets

• value can be enhanced • performance capacity can be improved

Alignment of Human Capital

• to meet company goals • policies to be designed to meet shared vision

People are Assets and as with any asset the value can be enhanced or reduced depending on how the assets are maintained.

Human Capital is a dynamic asset that can be refined, improved, and sharpened.

Second, an organization’s human capital strategy must be shaped and aligned to meet the vision and mission of the company. HR policies and practices should be designed, implemented, and assessed to check how effectively they contribute to helping an organization to achieve its goals.

In companies where the concept of Human Capital is ignored people are looked at as ‘expense accounts ‘ or as ‘ costs ‘ to be controlled or cut. However, high-performance organizations recognize that an organization’s people largely determine its capacity to perform.

Why do a Self Assessment of Human Capital?

Why do a master health check up? The answer is obvious, if you don’t know your basic health parameters and take preventive action chances are your productivity will go down and the worst case scenario is you kick the bucket. The same could happen to organization.

Part of the impetus for creating human capital organizations comes from the growing realization that improvements in HR can provide the competitive edge to business. CEOs who wake up to this reality reap the rewards.

Those who continue to slumber and resist change will sooner rather than later get sacked or replaced.

If high performance and ac-

The five parts of the human capital self-assessment framework are as follows (Figure 1): 1. Strategic Planning: Establish your mission, vision for the future, core values, goals and objectives, and strategies.

2. Talent Acquisition & Management: Ensure that your company keeps getting , retaining and grooming the best possible talent to achieve company goals 3. HRIS: Building a strong HRIS (Human Resource Information System) to monitor and manage growth of Human resources: 4. Organization Development: Implement a long term program for motivations, development, Learning to build a strong leadership team with back up for succession planning.

5. Performance Management: Cascading goals, clear KRA, and motivated employees 1. Strategic Planning If you do not know where you want to go it does not matter which road you take. Strategic planning is deciding where you want to go and by when. Future goals in terms of sales revenue, profits , products and services need to be defined. a) Shared vision. Does your company have a clearly defined and well-communicated “shared vision”—that is, a mission, vision for the future, core values, goals and objectives, and strategies? b) Human capital focus. Do you have a coherent human capital strategy—that is, a framework of human capital policies, programs, and

practices specifically designed to steer the agency toward achieving its shared vision? c) Facts and Figures - Does your company have sufficient data on past achievements, sales and revenue data, competitor information, market opportunities etc to be able to make a calculated guess about the future.

2. Talent Acquisition & Management: Recruit, Retain, and Motivate Companies spend a lot of time and energy to build strategic procurement departments for purchasing raw materials and machines. Surprisingly the same companies just leave procurement of its most critical resource to a middle level manager or sometimes just leave it to chance . High-performance organization demands a dynamic, results-oriented workforce with the competencies and skills to enhance value and to achieve its mission.

Smarter companies are alert to the changing characteristics of the labor market and maintain a competitive salary level. They work with experienced consultants to acquire best possible talents.

Several companies consciously think “Employment Branding”.

The same branding principles of attracting and retaining customers to attracting and retaining top employees. Efforts are made to identify the strengths, weaknesses in the organization culture that can help take corrective steps to attract and retain talent. The better your brand the better talent you will be able to attract and retain.

Key Questions 1) Does your company have a strategy to evaluate the competencies of existing middle to senior levels executives?

2) Does your company have a personality assessment graph or profile of the key managers?

3) Does your company work with experienced and knowledgeable HR Consultants to assist in acquisition of top level talents?

4) Do you have market information on the comparative salaries from your competitors on the compensation and benefits paid for critical talent?

3. HRIS (Human Resource Information System) As companies grow there is a need to continually monitor data and information relating to people. This can include personal information, salary history, performance appraisal data, achievement of individual targets, KRAs, job descriptions, training and development information. The larger MNCs spend a lot of money on PeopleSoft or Oracle and work with IT department to implement and maintain a system.

Key Questions 1) What is the current status of HRIS in your company?

Is there a system?

2) Does your company have a soft copy personal file for each individual with details of this personal data, competency assessment, training needs, coaching and counseling information?

3) Are the various sub-systems such as payroll, recruitment, competency assessment integrated and data available to top management as and when required on call?

4. Organization Development The overall efforts by the Human Capital Managers for Training and Development, Training Needs, Coaching and Counseling data, competency assessments needs to be integrated into one master OD (Organization Development) Plan. The plan will support the company’s vision and mission statement we have discussed earlier under Strategic Planning.

A committed senior leadership team is essential to fostering your organizations shared vision (i.e., its mission, vision for the future, core values, goals and objectives, and strategies), aligning organizational components so that the company can best pursue this vision, and building a commitment to the vision at all levels of the organization.

To become a high-performance organization, a company will need senior leaders who are drivers of continuous improvement and whose styles and substance are on par if not better than the competition. OD is a long terms process and the seeds need to be planted for the tree to grow. These goals can take years to achieve and therefore a long terms plan, succession planning, and a sustained commitment and continuity of leadership is essential for OD to work.

Key Questions 1) Do senior leaders pursue an explicit strategy to promote teamwork, communicate the agency’s shared vision in clear and consistent terms to all levels of the organization, and receive feedback from employees?

2) Ensuring continuity. Does your company have a written down agenda and plan to ensure reasonable continuity of leadership through executive succession plan-

ning?

3) Is there a budget for investments in training and development of the employees? Is the budget monitored for ROI and results?

4) Do the Senior Manager have formal meeting to discuss training needs and training plans for key executives?

5. Performance Management: Motivate employees with clear cut goal and reward them for achievement.

Performance Management is a cyclical process for ensuring achievement of Organizational Goals, Departmental, and Individual goals. The basic process would focus on a) achievement of KRA - specific business goals and b) Behavioural competencies. In addition there are discussions on the training and development needs, coaching and counselling plans.

Effective performance management solutions improve employee goal planning, career development, performance assessment and appraisal, compensation management and organizational alignment. With effective performance management software, you can automate performance management in your organization to improve employee engagement and empower employees.

By aligning your workforce

on key performance measures through performance management software, you can identify career paths for employees and create immediate access to developmental resources to encourage individual development and organizational performance.

Key Questions 1) Does your company have corporate goals clearly spelt out and linked to department goals , and further cascaded down to individual goals .

2) Are the individual KRA clearly written up and explained to each individual 3) Does the company have a formal system for monitoring performance, and providing feedback to individual?

4) Are managers and supervisors expected, prepared,

and trained to help steer the workforce toward the pursuit of the agency’s shared vision?

The value of human capital, while important to businesses, starts with the individual. If you study, or expand your experience as an individual, you’re increasing the value of your human capital.

This also increases your human capital value. Human capital is an intangible asset, in the same way as brand value.

Send in views and comments to johnvrangam@potentiahr.com.

Author is John Vijayarangam Director & CEO of Potentia HR Consulting. John has over 30 years of HR experience the Asia Pacific with leading multinational corporations . www.potentiahr.com

The five parts of the human capital self-assessment framework.

Strategic Planning Performance Management

Organization Development

Talent Acquisition & Management

HRIS

The President Post

B8 October 12, 2010

www.thepresidentpost.com

Executive Highlights The International Monetary Fund (IMF) is calling on Bank Indonesia (BI) to take a proactive approach to keep rising inflation pressures in check.

In its annual review of Indonesia completed earlier this month, the multilateral agency noted that inflation expectations for 2011 were currently at the top end of the central bank’s 4-6% target range and could move higher, suggesting the need to raise interest rates from their current historical low of 6.5%. So far, BI has opted to raise bank reserve requirements rather than hike rates to manage inflation. The IMF also highlighted the need for further financial sector reforms to reduce risks from a future global financial meltdown. It suggested the need to quickly pass legislation creating a new bank regulatory agency separate from BI and a financial system safety net law.

Both are currently under deliberation. The agency also reiterated the importance of reducing energy subsidies and reallocating government funds for infrastructure and social spending. Overall, the IMF said Indonesia has emerged strongly from the global financial crisis, and will continue to see strong, sustainable growth over the long-term if it pursued further reforms in the financial and fiscal sectors.

The influential Indonesian Chamber of Commerce and Industry KADIN elected Suryo Bambang Sulisto as its new chairman at its national congress over the past weekend. Suryo was previously head of Kadin’s advisory board. He is also currently president commissioner of top coal miner Bumi Resources and founder of the Satmarindo Group which has business interests in oil and gas, mining, steel manufacturing and palm oil. He was also formerly an ambassador at large for the Americas under President Habibie in the late 1990s. Following his election, Suryo underscored his intention to work with the government to pursue policies that would support the business community and regional and national economic growth.

The new chairman highlighted challenges the country needed to address to support growth, including the lack of infrastructure, rising energy demand, food security and globalization that has compelled local firms to be more competitive.

The Rupiah has been stable at Rp8,950Rp8,970/US$ over the past week ending 24 September.

The currency is up only around one percent over the past month despite continued inflow of overseas funds into the local bond and stock markets. Bank Indonesia has acknowledged its active intervention to stem the rupiah’s rise and to keep exchange rate volatility in check.

It said foreign reserves have risen 9% in the first three weeks of September alone to almost $90 billion—the fastest climb in recent history.

Top petrochemical producer Tri Polyta Indonesia will merge with Nchandra Asri in a US$1.2 billion share swap deal.

Both companies are majority owned by holding firm Barito Pacific, which has a 77.9% stake in Tri Polyta and a 70% stake in Chandra Asri. Under the deal,

Tri Polyta will issue 2.9 billion new shares to Chandra Asri’s shareholders in exchange for the firm’s assets. Following the swap, Barito will have a 71.6% stake in the merged company. Chandra Asri is Tri Polyta’s main feedstock supplier, producing 260,000 tons per year of propylene that it sells exclusively to Tri Polyta. Try Polyta produces around 400,000 tons per year of polypropylene.

The merger is aimed to provide better integration and cost efficiencies for Barito Pacific. The holding firm has appointed to Deutsche Bank and Singapore’s DBS Group as advisors for the deal. Barito Pacific is owned by industrialist Prajogo Pangestu.

Indofood Consumer Branded Products (CBP) raised Rp6.3 trillion (US$700 million) from its initial public offering earlier this month. The deal was nine times oversubscribed, with the bulk of demand coming from foreign investment funds. Credit Suisse and Deutsche Bank were joint global coordinators and bookrunners, while Kim Eng Securities was the domestic underwriter. Indofood CBP said 7080% of the proceeds from the offering would be used to repay debt with the remainder allocated for capital expenditures. The firm posted a full-year 2009 net profit of Rp1.1 trillion, up more than 200% from a year earlier. Revenues for 2009 totaled Rp16.3 trillion, up 36% from a year earlier. Indofood CBP is the instant noodle, dairy and food seasoning unit of diversified consumer products group Indofood.

The company’s shares will be listed officially on the Indonesian Stock Exchange (IDX) on 7 October.

Asam to 20 million tons by 2014 and 70 million tons by 2017 from current levels of around 15 million tons. The chief executive said the loan would have a 10 year term with a grace period of three years.

stake in the firm, were purchased by overseas buyers through Credit Suisse and JPMorgan Chase Bank at a price of Rp2,366/ share. The size of the deal was lower than the US$495 million initially targeted, due to Bumi’s inability to finalize a deal with sovereign wealth fund China Investment Corp (CIC). The latter, which has US$1.9 billion in loans extended to Bumi, was initially looking to acquire a 10% stake in the coal miner in a debtto-equity swap. A deal did not go through because CIC’s offering

earlier this month. Around 90% of the shares were sold to overseas investors, with the remainder going to local funds. Goldman Sachs managed the international portion of the deal, while Bahana Securities, Mandiri Sekuritas and Danareksa Securities handled the local portion of the sale.

Banpu said the divestment was part of a corporate restructuring and asserted that the firm was fully committed to its long-term investment in Indonesia. The sale will reduce Banpu’s stake in

Selected Instant Indicators EXCHANGE RATE 2009 - 2010 15,000

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planned for later this year.

Mandiri’s director of finance & strategy Pahala Nugraha Mansury said Deutsche Bank and BoA-Merrill Lynch would act as joint global coordinators, while Citigroup and CLSA would act as joint book-runners. Mandiri has previously appointed Mandiri Sekuritas and Danareksa Sekuritas as local underwriters. Pahala said proceeds from the rights issue would be used to strengthen Mandiri’s capital base and allow the bank to support strong loan growth over the next several years. The rights issue is also slated to dilute the Indonesian government’s shareholding in Mandiri to below 60%. This would enable the bank to satisfy tax rules for publicly listed companies for a reduction on its corporate tax rate. The government currently owns a 66% stake in Bank Mandiri.

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STOCK MARKET INDEX

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State railway operator Kereta Api Indonesia (KAI) has secured a Rp5 trillion loan from Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI) to support its expansion plans.

Company president director Ignasius Jonan said the funds would be used to expand its coal freight lines in Sumatra. The project includes upgrading an existing 416 km railway connecting Tanjung Enim in South Sumatra and Tarahan in Lampung, and building a new 308 km railway on the same route dedicated specifically for coal transport. The railway project will be developed jointly between KAI and its partners, China Railway Engineering and local firm Trans Pacific. Ignasius remarked that the project would help boost coal output from state miner Tambang Batubara Bukit

Indo Tambangraya to 65%. Indo Tambangraya is Indonesia’s third largest coal producer with output of 21 million tons per year from mines in South Kalimantan.

Coal contractor Bukit Leading coal producer Thailand miner Banpu Makmur Mandiri Utama Bumi Resources raised PCL divested an 8.7% (BUMA) announced heavy equipment US$362 million in a stake in its Indonesian purchases totaling share sale to private coal subsidiary Indo US$285 million investors.

Tambangraya Megah in to support its exploration activThe shares, equivalent to a 7.1% a US$392 million deal ities. BUMA executive Ariani

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Bank Mandiri has appointed Deutsche Bank, Bank of America (BOA)-Merrill Lynch, Citigroup and CLSA to support its US$1.5 billion rights issue

price was too low. Bumi spokesman Dileep Srivastava said proceeds from the recent share sale would be used to help repay up to US$800 million in debt by the fourth quarter of this year. Bumi Resources is controlled by the Bakrie Group.

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Vidya Sofjan said deals were recently signed with three suppliers: Hexindo Adiperkasa (US$40 million), United Tractors (US$45 million) and Caterpillar (US$200 million). BUMA is the country’s second-largest coal contractor with a 19% share of the market.

It has contracts with major producers such as Adaro Indonesia, Kideco Jaya Agung, Bayan Resources and the Banpu Group, and operates at 13 mining sites in East and South Kalimantan.

BUMA is a wholly-owned subsidiary of Delta Dunia Makmur, which in turn is majority owned by private equity firm Northstar Pacific Partners.

Japan’s Chubu Electric Power said it has reached an agreement to buy LNG from the Senoro-Donggi project in Sulawesi.

Under the deal, Chubu will buy one million tons of LNG per year starting in 2014. Financial details were not provided. The US$1.7 billion Senoro-Donggi LNG facility is a joint venture between Mitsubishi Corporation (with a 51% stake in the project), state-owned Pertamina (29%) and local oil and gas firm Medco Energi International (20%).

The project is currently under construction and is scheduled to come on stream in 2014 with an initial capacity of two million tons of LNG per year. The LNG facility will get the bulk of its gas from two nearby blocks, the Senoro field operated by Pertamina and Medco, and the Matindok field operated solely by Pertamina. The blocks have proven gas reserves totaling more than 2.3 trillion cubic feet (Tcf).

Pertamina is finalizing agreement to acquire a US$50 million deal small-sized local lender to acquire stakes in Bank Kesawan. two oil and gas blocks No financial details were providUnder the deal, Qatar Naowned by Japan’s Inpex ed. tional will be the standby buyer of a rights issue by Bank KesCorp. awan that will be finalized by the Pertamina will purchase a 7.3% stake in the Offshore Northwest Java (ONWJ) block and a 13.1% stake in the South East Sumatra (SES) block. Pertamina is already the operator at the ONWJ block with a 46% stake acquired from BP last year. The ONWJ block currently produces around 26,800 barrels/day (b/d) of oil and 205 million standard cubic feet (MMscfd) of gas. The SES block is operated by China’s National Offshore Oil Corp.

(CNOOC), which owns a 65.5% stake in the concession. The SES block currently produces around 41,000 b/d of oil. Pertamina president director said the acquisitions were part of an overall strategy to boost the firm’s output to 700,000 b/d of oil equivalent by 2014, up more than 60% from current levels.

Cellular services operator XL Axiata has secured a Rp2.5 trillion loan from Bank Mandiri.

The loan has a five year tenor with an interest rate of 1.4% above the Jakarta interbank offered rate (JIBOR). XL president director Hasnul Suhaimi said the funds would be used to support the firm’s business expansion. As of the first half of the year, XL’s subscriber base grew 43% from the same period in 2009. The first half also saw total revenues rising 35.4% to Rp8.5 trillion, with revenues from call services rising 40.1% to Rp4.2 trillion and revenues from non-call services rising 58.7% to Rp2.8 trillion. Net income increased by 87.4% to Rp1.3 trillion in the first half of 2010. XL Axiata is Indonesia’s third largest wireless telephone operator. It is owned

by Malaysia’s Axiata Group Berhad (66.7%), Emirates Telecommuni-cations (13.3%) and public share-holders (20%).

Qatar National Bank has signed an initial

first quarter of next year. Qatar National chief executive Shareef al-Emadi said the acquisition would support the firm’s strategy of focusing on international expansion to boost growth and diversify its sources of revenue. Bank Kesawan has total assets of around Rp2.3 trillion and operates 33 branches across the country. Qatar National indicated that it would utilize Kesawan to take advantage of Indonesia’s growing market for sharia investment products and to facilitate new investments from the Middle East. Qatar National Bank is the largest lender in Qatar.

Bank Tabungan Negara (BTN) is slated to launch Asset-Backed Securities (ABS) worth Rp750 billion next month.

The state controlled bank has appointed Trimegah Securities, Kresna Sekuritas and Andalan Artha Advisindo Sekuritas as underwriters for the issuance. BTN finance director Saut Pardede said the ABS would be backed by the lender’s home equity loans.

He remarked that the bulk of the proceeds would be used to support the bank’s credit expansion for home purchases. Home equity loans constitute more than 90% of BTN’s loans. Saut said the ABS would have a five year term with an annual coupon of 25-100 basis points above the benchmark treasury rate. He added that the issue could be raised to up to Rp1 trillion if demand for the debt is strong.

Business Highlights are contributed to The President Post

by CASTLEASIA/PT Jasa Cita from information supplied to members of their CEO Forum, the Indonesia Country Program.

They are reprinted here with permission. For more information about CASTLEASIA programs, please contact Juliette or Wijayanti at 62 21 572 7321 or email castle@castleasia.com subject CEO Forum

SECTION

The President Post

Mining

Display until November 12, 2010 /// N0. 17 www.thepresidentpost.com

C

A Nation that Remains Blessed with Rich Mining Resources

By Lely Samantha

Indonesia is the world’s 2nd largest producer of tin, 2nd largest thermal coal exporter, 3rd largest copper producer, and 3rd largest liquefied natural (LNG) exporter. Indonesia’s gold mining industry also has great potential with huge resources available in West, Central and East Kalimantan, while South Kalimantan is known to have the largest iron ore reserve in Indonesia.

I

ndonesia is richly endowed with natural resources, primarily oil, timber and minerals.

Located at the convergence of three tectonic plates—the Eurasian, Indian Ocean-Australian and Pacific Ocean—Indonesia has a unique geological structure with a rich energy and mineral resource base. Globally, Indonesia features among the ten leading mining industries in the world in terms of mineral and metal potential.

The mining industry is crucial to the Indonesian economy.

Testament to the sheer scale of the country’s resources, Indonesia is the world’s 2nd largest producer of tin, 2nd largest thermal coal exporter, 3rd largest copper producer, and 3rd largest liquefied natural (LNG) exporter. Indonesia’s gold mining industry also has great potential with huge resources available in West, Central and East Kalimantan, while South Kalimantan is known to have the largest iron ore reserve in Indonesia.

Indonesia used to be a world major crude oil exporter in the past but since 2004 it has become a net importer as its largest producing fields are aging and domestic demand surpassing oil production as oil has com-

Photo: www.coalinvestors.com

duction is predicted to reach 250 million tons, of which some 185 million tons will be sold overseas, according to data from the Ministry of Energy and Mineral Resources.

Indonesia expects to reserve 65 million tons of coal for the domestic market in 2009. Total coal production in Indonesia is expected to increase to 270 million tons in 2010, 321 million tons in 2015, 361 million tons in 2020, and 405 million tons in 2025.

Indonesia produces 230 million tons of coal per year of which 40% is used to meet domestic need.

prised an increasing proportion of energy generation in Indonesia over the past 10 years (OECD/ IEA 2008). As of 2007, Indonesia’s crude oil production was 838,000 barrel per day (b/d) and a proven crude oil reserves of 3.99 billion barrels.

According to a business intelligence report by Business Inside “15 Countries Sitting on a Fortune of Metals and Minerals”,

Indonesia has US$ 227 billion in metal and ore reserves, something that the country has been utilizing more and more to turn it to an economic powerhouse.

Asia Mining Congress 2010 went further to conclude that “a new era has dawned for the Indonesian mining sector”. As the country’s new mining laws come into effect to strengthen its mining infrastructure, new explora-

tion opportunities abound for foreign and local explorers and mining companies to leverage upon, it reported.

Coal and mineral mining have contributed significantly to the country’s economy and have become even more important in recent years. Indonesia produces 230 million tons of coal per year of which 40% is used to meet domestic need. Indonesia`s coal pro-

Price waterhou seC oopers (PWC) reported that mining activities in Indonesia contribute to government revenue and GDP at a higher rate than in other Association of Southeast Asian Nations (ASEAN) countries. Although the share of energy sector (oil, gas and mining) to Indonesia’s GDP is continuously declining, the mining sector still makes a huge contribution to the Indonesian GDP at 11.54%. Minerals and related products represented 19% of Indonesia’s total exports, with gold being the largest revenue earner.

The mining sector makes a huge contribution to the Indonesian economy by employing millions of people. Data as per September 2008 shows that it contributed 11.5% to the nation’s GDP amounting to Rp

142.1 trillion, according to Jakarta Post. Freeport copper mine alone contributed to almost 50% of Papua’s gross regional product in 2000.

Recently, Business Monitor International (BMI) forecasted the value of the mining industry to grow at a steady pace of 10-11% year-on-year in real terms between 2010-2014 to reach an estimated US$ 123 billion at the end of the forecast period, representing 11-12% of Indonesia’s GDP throughout the next four years.

As a matter of fact, Indonesia’s mining industry has the geological potential to reap benefits for another one hundred to 150 years, according to a renowned mining consultant Bob Parsons as reported by the Jakarta Globe.

However, he also noted that while Indonesia hosts operations by mining giants such as USbased Freeport McMoran Copper & Gold (which operates the world’s largest recoverable reserves of copper and the largest gold reserves) and Newmont Mining Corporation (the largest US gold producer), the entire domestic mining sector needs to ramp up efforts to identify giant mining deposits in order to drive continued on page C2

The President Post

C2 October 12, 2010

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Mining Oil Boom and Its Impact on the Indonesian Economy

By Ririn Margaretha

Indonesia has been an oil producer for over 100 years. After the nation’s independence in 1945, the Sukarno and then Suharto regimes managed what was once seen as a policy success story for an oil-producing nation.

T

he oil boom in the 1970s to 1980s was the crucial point of history in Indonesia’s march towards industrialization and modernization. During that period, the price of the “black gold” soared to bring in huge revenue from export of crude oil.

The oil boom that began in 1973 has made major oil-producing country like Indonesia—by then Southeast Asia’s biggest crude oil producer—very rich and shifted its policies toward foreign direct investment and trade in general.

As ample revenue from oil exports flowed to state-owned oil company Pertamina, other state enterprise began establishing new factories or increasing production capacity in such areas as oil refining, fertilizers, cement, iron, steel and aluminum. Indonesia joined the Organization of the Petroleum Exporting Countries (OPEC) in 1962—the only member from East Asia—and strengthened its status as one of the fastest-growing developing country.

But the oil boom is just a trigger that propelled the country to its new height. The country has had a long history in the field of oil exploration dating back to the Dutch colonial era. In fact, according to the Library of Congress, Indonesia’s oil industry is one of the oldest in the world.

Indonesia has been an oil producer for over 100 years. After the nation’s independence in 1945, the Sukarno and then Suharto regimes managed what was once seen as a policy success story for an oil-producing nation.

Under Suharto’s legion of technocrats, Indonesia successfully avoided Dutch Disease, an ailment common in resource-rich nation, in which an abundance of natural resources causes currency appreciation and makes alternate industries less competitive on the worl market, according to Norio Usui in Resources Policy (1997).

Oil in commercial quantities was discovered in northern Sumatra in 1883, leading to the establishment of the Koninklijke Nederlandsche Maatschappij tot Exploitatie van Petroleum-bronnen in NederlandschIndië (Roy-

end.

1962

Indonesia joined the Organization of the Petroleum Exporting Counries (OPEC)

al Dutch Company for Exploration of Petroleum sources in the Netherlands Indies) in 1890, which was merged in 1907 with the Shell Transport and Trading Company, a British concern that had been drilling in Kalimantan since 1891, to form Royal Dutch Shell. Royal Dutch Shell dominated colonial oil exploration for more than thirty years.

As outlined by Shannon Pallone in the Journal of International Policy Solutions, the first commercial oil was struck in East Sumatra’s Telaga Tungal in 1885 and the first refinery was constructed five years later. Shell Transport and Trading discovered oil in East Kalimantan two years later, securing Dutch oil interests in Indonesia.

By 1911 Royal Dutch Shell operated concessions in Sumatra, Java, and Kalimantan (then called Borneo), and Indonesian oil was almost 4% of total world production. Indonesia’s most important oil fields, the Duri and Minas fields in the central Sumatran basin, were discovered just prior to World War II by Caltex, a joint venture between the American companies Chevron and Texaco, although production did not begin until the 1950s. By 1963 the Duri and Minas oil fields, located in Riau Province near the town of Dumai, accounted for 50% of oil production.

The Japanese occupied the archipelago during World War II, leading some petroleum installations to be burned. After the Japanese defeat at the hands of the Allies, Indonesia, under the leadership of future President Sukar-

1968

Pertamin, Permina, and Permigan— were consolidated into a single operation, the National Oil and Natural Gas Mining Company (Pertamina).

no, declared independence in 1945. After several years of war with the Dutch, Indonesia was finally recognized as an independent state and Sukarno was sworn in as president in 1949.

The Indonesian government made oil agreements with several of the oil companies that had been in Indonesia since colonization: Stanvac, Shell and Caltex.

The post-independence government increased its control over the oil sector during the 1950s and 1960s by increasing operations of several governmentowned oil companies and by stiffening the terms of contracts with foreign oil firms.

Sukarno’s regime, however, eventually succumbed to economic crisis. By 1965, inflation has hit 500% with rice prices up 900%, due in part to Sukarno’s frequent printing of new money.

Oil exports has fallen so low that they were only half their level five years earlier. This was largely a result of Western nations halting oil purchases from Indonesia because of a fear that the nation would fall to communism.

General Suharto was given control of the country, and became president in 1968, inheriting the nation at a time when economic reform was the first priority. Suharto’s regime was dubbed Orde Baru, or “New Order” and lasted for 30 years. During this time Suharto ruled what has been labeled a “reformist autocracy”.

This type of regime is characterized by competent, autonomous leaders who rely heavily on the advice of technocratic elites.

1977

Annual oil production in Indonesia peake at over 600 million barrels

“

Indonesia still has a chance to make a comeback as oil exporter if it continues to seek new investment to boost exploration of new fields and production capacity.

Businessweek recently reported that Indonesia may return to net exporter status by 2020.

Suharto needed to improve the welfare of his state through economic growth, and used oil-sector rents to fuel growth in non-oil sectors. Indonesia under Suharto is often cited as an example of well-crafted fiscal policy that prevented Dutch Disease from negatively impacting society.

In 1968 government companies—Indonesian Oil Mining company (Pertamin), National Oil Mining Company (Permina), and the National Oil and Gas Company (Permigan)—

were consolidated into a single operation, the National Oil and Natural Gas Mining Company (Pertamina).

At this time, a new form of contract—the Production Sharing Contract (PSC)—was introduced. A production-sharing contract split total oil production between the contractor and the government, represented by Pertamina, and allowed the government to assume ownership of structures and equipment used for exploration and production within Indonesia. Indonesia’s contract terms were considered among the toughest in the world, with the government in most cases receiving 85% of oil produced once the foreign company recovered costs.

Annual oil production in Indonesia peaked in 1977 at over 600 million barrels. The official price of Minas crude was then about US$14 per barrel, a substantial rise from the 1973 price of about US$4 per barrel as a result of OPEC’s successful market manipulations. Prices continued to soar in 1981, reaching US$35 per barrel, and oil exports peaked at US$15 billion, or about 70 percent of total export earnings.

In 1982, however, production declined, reaching a low of 460 million barrels and the oil market began to weaken that same year, when Indonesia’s Minas crude was priced at US$29. The market collapsed in 1986, bringing the Minas price to below US$10 per barrel. Recovery of oil prices began slowly, and by 1989 Minas was priced at about US$18 per

2005

Indonesia become a net oil importer

barrel. Total production in 1989 was almost 500 million barrels, and oil exports were valued at US$6 billion.

Indonesia had proven oil reserves in 1990 equal to 5.14 billion barrels, with probable reserves of an additional 5.79 billion barrels. Throughout the archipelago there were sixty known basins with oil potential; only thirtysix basins had been explored and only fourteen were producing.

The majority of unexplored areas were more than 200 meters beneath the surface of the sea. Indonesia’s oil reserves were usually found in medium- and smallsized fields, so that continued exploration was vital to maintain production and known reserves.

In 1989 and 1990, the government eased some provisions for new contracts to stimulate exploration, particularly in frontier areas. Improved oil market conditions in the late 1980s also contributed to a surge in productionsharing contracts. Fifty-seven of the 100 contracts active in 1992 were signed from 1987 to 1991.

The newer contracts committed US$2.8 billion in exploration during the 1990s. Production from existing oil fields was still dominated by Caltex’s operations in Sumatra, which accounted for 47% of Indonesian oil production in 1990. Twenty foreign oil companies, primarily United States-based, were active producers in 1990.

W h i le its natural gas reserves remain significant, Indonesia has extracted threefourths of its oil. By 2005, it eventually become a net oil importer. Declining investment in Indonesia’s oil infrastructure has seen its output drop below a million barrels a day from about 1.5m in the mid-1990s.

Antiquated oil fields also contributed to the problem.

The government estimated that more than 85% of them have reached maturity, so it’s harder to extract oil, and the quality of the crude is falling. Indonesia now pumps about 950,000 bbl. a day, compared with the 1.7 million it was producing in 1977 and the 1.42 million it is allowed under OPEC quotas.

Four-fifths of Indonesia’s oil production is from depleting resources that are decades old. The oldest producing field, Talang Akar in South Sumatra, was discovered in 1921 and developed

by Standard Oil Co. of New Jersey, before being nationalized in 1956 and incorporated into the state oil company, according to a Pertamina document.

Over the past 16 years, Indonesia’s oil production has declined 1.5% a year, while consumption has grown at 5.4% annually. Today, Indonesia imports about 60,000 barrels of oil a day.

Nevertheless, Indonesia still has a chance to make a comeback as oil exporter if it continues to seek new investment to boost exploration of new fields and production capacity. Businessweek recently reported that Indonesia may return to net exporter status by 2020.

However, as the country entered the new millennia, the glory days of Indonesia’s oil industry seemed to have come to a gradual

Some of the money is already starting to flow. After four years of negotiations, the government on June 22 reached an agreement with Exxon Mobil Corp. to open up the $2.6 billion Cepu oil field in central Java. Under the deal, the U.S. giant will get 6.75% of the revenue from the $2.6 billion project, though the company’s share could rise to 13.5% if oil prices fall below $35. The field has as many as 500 million bbl. and is expected to produce at least 170,000 a day—which would turn the country back into a net exporter.

tion of gold results, and the widespread alteration, indicates that the mineralised system is potentially large and has bulk tonnage gold potential.

Also, there was Sumatra Copper & Gold’s move to take full control of five of its Indonesian gold properties in a deal with the minority interest. Earlier, it reported what it called bonanza grades at its Belinau project in South Sumatra province. The highest grade was 1.95m at 81.92 grams/tonne gold and 208 g/t silver.

Furthermore, BGF Equities has just put out a note on Sihayo Gold which it says can claim to have one of the best grades among ASX emerging gold producers with open pittable projects. This followed the company’s release of an upgraded resource at its Sihayo-Pungkut in Northern Sumatra. The grades at the main deposit have risen by 25% to 10.7 million ounces at 2.9 grams/tonne gold or 1.01 million contained ounces. The new figures have given a boost to its current feasibility study to pro-

duce between 60,000oz and 70,000oz a year with a mine life of eight years.

With regard to coal, Jakarta Globe reported on April 12, 2010 that miner Anglo American was looking “very closely” at “opportunities” in thermal coal in Indonesia, Australia and Colombia. Anglo wants to grow production of the fuel used by power stations, said Norman Mbazima, chief executive of the company’s thermal coal unit. Projects under review could double output to 140 million metric tons a year by 2020, he said, adding that he expected thermal coal prices to remain strong. The London-based company, the world’s biggest platinum miner, produces coal in South Africa.

Thus, it is fair to conclude that despite the challenges in global financial, environmental challenges and commodity prices, the forecast for Indonesia mining is still robust, reflecting the scale of resources that the country has.

A Nation that Remains Blessed with Rich Mining Resources from page C1

economic growth and create jobs.

Indeed, increase in exploration, discovery and development of new metal and mineral reserve is essential for sustaining the Indonesian mining industry in the long term. The country has vast areas that haven’t been fully explored with modern technology. This includes massive deposits waiting to be found in the eastern part of the archipelago, in particular the provinces of Papua and West Papua.

Considering its tremendous potential for both local and overseas mining companies, it is thus an irony that only 0.5% of the global funds in greenfield exploration are dedicated to the Southeast Asian nation, according to Indonesia Mining Report 2008. The low scale of exploration activity is of serious concern for the long-term success of the in-

dustry.

In addition, the growth potential of the sector is also significantly hampered by several challenges, the major one being conflicting policy and legal uncertainties.

According to an article “Mining Industry in Indonesia: Obstacles to Foreign Direct Investment”, allocation of mining permits and contracts of work in Indonesia is a highly decentralized process. All tiers of government—national, state and local—can give the required authorization to foreign investors.

Often, the regional regulations are not aligned with central laws and are, hence, subject to review and cancellation by the central government. These inconsistent legislative interpretations result in procedural delays and increase uncertainties for mining companies.

Complicating the matter are instances where the national government grants concession and permission without the consent of or compensation to the local communities that have for cen-

turies dwelled in their customary land thus creating land conflict which has often resulted in costly disruption of operation and violent clashes.

Not to mention the opposition from several environmental groups who accuse the extractive industry to be contributing to the environmental destruction and harmful effect on local livelihood.

In May 2010, Mining Advocacy Network reported seven mining firms to the environment minister accusing them of polluting farms and water supplies vital to hundreds of residents based near the companies’ operations, reported Jakarta Post.

In addition, rising nationalism also makes it difficult for foreign oil companies to do business in Indonesia, as many citizens are opposed to allowing foreign companies access to Indonesia’s natural resources, noted Shannon Pallone in the Journal of International Policy Solutions.

Last but not least, Indonesia’s weak infrastructure has also become a major impediment for

drawing more FDI, especially in areas such as mining which involve the transportation of large amounts of goods.

Nevertheless, the mining sector remains bright and promising as Indonesian government has recently announced its commitment to invest US$ 2.5 billion in the sector.

Investments in mining and geothermal are expected to reach US$ 3 billion in 2011, US$ 5 billion in 2012, US$ 4.6 billion in 2013 and US$ 7.4 billion in 2014.

Bambang Setiawan, the director general of mineral resources, coal and geothermal mining at

the Energy and Mineral Resources Ministry, told Antara that the government had increased its investment target from US$ 1.8 billion in 2009 due to the improving global economy.

He said investments this year would come from contract of work worth US$ 1.2 billion, coal production contracts US$ 860 million, mining concessions from state and regional enterprises US$ 43.5 million, and geothermal concessions US$ 382.5 million.

Investments in mining and geothermal are expected to reach US$ 3 billion in 2011, US$ 5 billion in 2012, US$ 4.6 billion in 2013 and US$ 7.4 billion in 2014.

Spate of good news recently have also heightened investors’ confidence of mining prospect in Indonesia. Australian-listed Arc Exploration Limited has reported that as part of its ongoing reconnaissance work on the Bima IUP exploration tenement in East Sumbawa, it has identified a new gold prospect. The company said “the grade and distribu-

The President Post

www.thepresidentpost.com

October 12, 2010 C3

Mining

New Mining Law Offers Solution but Loopholes Remain

By Lely Samantha

There is a high expectation that the new law will provide more legal certainties and spur more development in the sector. However, despite various investor-friendly provisions, it has so far received mixed reactions from the big foreign miners it nominally aimed to attract.

F

ollowing almost four years of legislative squabbling, Indonesia’s highly anticipated new mining law—Law Number 4/2009 on Mineral and Coal Mining—was eventually passed by the House, replacing its 1967 predecessor. Two new government regulations that guide the implementation of the law— Government Regulation Number 22/2010 on Mining Area and Number 23/2010 on Commercial Mining Activities related to Mineral and Coal—have since also come into effect.

The Government Regulation 22/2010 on Mining Area contains technical guidelines on determining state reservation area, mining commercial area, and local mining area. This government regulation also put (all) mining areas within the domain of the national land planning, rendering illegal all mining activities that fall outside of the above mentioned mining areas.

Government Regulation 23/2010 on Mining Commercial Activities related to Mineral and Coal guides companies and local people in obtaining commercial mining permits, auction procedures, and in reporting. Additionally, this government regulation also gives a guideline on the allocation of production – related to mineral and coal mining – to cater to the interest of national industry; and serving as a national technical guideline on the processing and purification of mining products.

The delay caused uneasiness among the business community that would not want to see an introduction of a new provincial regulation which works against their interest – bearing in mind that authorities at the provincial level have been keen on issuing new mining permits.

The Institute of Peace and Conflict Studies pointed out that as Indonesia moved towards greater regional autonomy, regions have demanded a bigger slice of the economic gains. In early 1999, the Indonesian government passed Law 22/99 on regional autonomy which covered revenue sharing with the national government. According to this new law, the provinces would be entitled to 15 percent of the returns from onshore oil production, 30 percent from on shore gas, 80 percent from mining, forestry and fisheries each and 20 percent from reforestation funds.

However, despite this appeasement by the Indonesian government, governing the mining industry has not gotten easier in the recent years. Apart from land-grabbing, there is also illegal mining which has caused many foreign companies to cease operations entirely. Foreign investors often find themselves subject to a whole gamut of levies and demands that were never mentioned in their initial contract of work. Thus such socio-political obstacles in addition to NGO’s taking issue with the environmental side-effects of mining, all contribute towards conditions that have made it hard for foreign companies in Indonesia to pursue their production process.

As a result, many conflicts in the mining sector have emerged in the last decade. In October 2003, Newcrest of Australia was forced to suspend operations after hundreds of locals occupied the site and demanded profits from their nearby, exhausted Gosowong gold mine.

In 2006, a group of 50 unidentified people wrecked a worker’s camp on the island of Sumbawa.

It was set up by one of the world’s largest gold producers, the USbased Newmont. Adding to the political instability was the fact that many local governments often take control of mining areas prematurely and the national

government hesitates to interfere or set matters straight to avoid a local political backlash.

In 2009, British energy firm BP was warned by the Tangguh Independent Advisory Panel (TIAP) against relying on Indonesia’s military as it developed a gas field in a remote, politically unstable area of the West Papua province.

Thus, there is a high expectation that the new law will provide more legal certainties and spur more development in the sector.

However, despite various investor-friendly provisions, it has so far received mixed reactions from the big foreign miners it nominally aimed to attract, wrote analyst Tony Sitathan in Asia Times Online.

The law, rather than providing greater certainty, transparency and accountability for mining investments, has triggered greater uncertainty and left investors who had relied on the previous Contract of Work (CoW) system of fixed contracts in a legal lurch, industry executives say. The CoW system provided foreign investors certain legal guarantees, including rights for as long as 30 years, but is now effectively obsolete with the new law’s passage.

“The new mining laws address up to 90% of the concerns of the mining community. There is still a gap of 10% which is not being addressed,” said Jeffrey Mulyono, chairman of the Indonesia Coal Mining Association (ICMA).

While the new mining law is still less than perfect a legal product, it has to some extent represented a significant improvement towards addressing foreign investors concern about provincial challenges to their centrally administered Contract of Works.

A survey on investor perception by PricewaterhouseCoopers (PwC) showed that many investors felt the new law would not facilitate clear solutions to longstanding problems plaguing Indonesia’s mining industry. The survey concluded that the law was adequate to encourage investors to take direct equity stakes in relatively small-scale projects, but that there was more uncertainty over large-scale affairs. Those concerns centered on the fact the new law fails to offer long-term protection of contracts granted under the previous CoW system.

Despite the shortcomings, industry analysts agree that the new law creates greater state-controlled regulations and through new checks and balances less reliance on regional governments, which often abused the KP regime. The new law makes clear that the central government can suspend or revoke locally administered IUPs if regulations are not followed. Jakarta can also impose criminal sanctions, with a maximum penalty of two years in prison, against regents who ignore or sidestep regulatory requirements.

Below are key points in the new bill, as outlined by Asia Law: • Abolishing the Contract of Work system for new foreign investment. The regulation of foreign investment in the mining sector has moved from the precious contract-based system (with contracts signed be-

tween investors and the central government) to a license-based system equally applicable for both foreigners and domestic investors. The licenses (Izin Usaha Pertambangan or IUP) are issued by central, provincial or regional government depending on whether the mining project crosses regional or provincial boundaries. Large foreign investors have criticized this move, because the bilateral nature of the contract system gives much more protection against future changes in law than the unilateral licensing system. The law preserves the validity of existing Contract of Work, but requires them to be amended and brought into line with the principles of the new law by January 12, 2010.

• Foreign investment open but with divestment. A foreign investor can hold 100% of an IUP concession. However within five years of the start of production, the government will require 20 percent of shares in mining companies entirely owned by foreign shareholders to be divested to local partners.

• Designation of mining areas within Indonesia. Under the new system, mining will only be permitted in areas which are designated as Mining Areas (Wilayah Pertambangan) by the central government, after consultation with the Indonesian parliament and regional governments. Under the previous system, mining could (with very limited exceptions) be carried out in any part of Indonesia.

• All new coal and mineral mining concessions must be granted by way of tender. To achieve higher degree of transparency, any award of an IUP must be made by way of a tender process, replacing the previous system of direct application.

Whilst the need for a tender prior to the grant of a concession may slow down the process for developing new mining projects, it should lead to a more level playing field for genuine investors, as it is designed to remove pure brokers from the equation.

• Larger areas and reduced term.

The maximum areas for IUPs have been significantly increased. Coal IUPs can be 50,000 hectares and 15,000 hectares for exploration and production phases respectively. For mineral IUPs, the maximum areas are 100,000 hectares and 25,000 hectares for exploration and production respectively. However, the term of production phase IUPs has been reduced to 20 years, with the possibility of two 10-year extensions. The predecessor production license was for 30 years, with two 10-year extensions.

• Onshore processing obligation.

To help develop the downstream refining and processing industries in Indonesia, the new law requires all mineral and coal miners to carry out processing and refining of the coal or mineral ores onshore. A five-year grandfathering provision exists for existing Contract of Work (foreign investment) mineral projects. But Indonesia does not have the refining or processing capacity to process all mineral ores currently being produced, so there is significant concern as to whether Indonesian miners will be able to find adequate processing facilities.

• Regulation of mining contractors. The new law specifically regulates the mining support services activities, and requires mining companies to use national mining contractors over foreign-owned contractors

The law, rather than providing greater certainty, transparency and accountability for mining investments, has triggered greater uncertainty and left investors who had relied on the previous Contract of Work (CoW) system of fixed contracts in a legal lurch Photo: www.id.88db.com

(which can only be used where no local contractors are available). Similarly there is an outright ban on a mining company using an affiliated mining services contractor, unless it obtains minister approval.

• Royalty. Under the new regulations, mining companies operating in so-called state reserve

areas must allocate 10 percent of their net profits to the government, 4 percent of which will go to the central government and 6 percent to local administrations.

• Regulations for mining operation. The law requires existing contract holders to submit a comprehensive plan for their

entire working area, otherwise they may lose part of their designated mining area under a capping provision stipulated by the newly endorsed law.

While the new mining law is still less than perfect a legal product, it has to some extent represented a significant improvement towards addressing foreign in-

vestors concern about provincial challenges to their centrally administered Contract of Works.

A Canadian mineral exploration company, East Asia Minerals Corporation, believes that the changes proposed under the new law are largely positive and considers it a globally competitive framework within which to operate.

The President Post

C4 October 12, 2010

www.thepresidentpost.com

Technology

Image: www.microsoft.com

Microsoft Released

Internet Explorer 9 Web Browser Photo: www.microsoft.com

The browser is designed to be the most trusted browser because it has a robust set of built-in security, privacy and reliability technologies that keep customers safer online.

M

The browser also introduces new functions, such as so-called Pinned Sites, a user’s favourite websites that can be accessed directly from the Windows Taskbar, without having to open the browser.

icrosoft Corp. announced the worldwide beta availability of its new Web browser, accompanied by over 70 top websites and global brands that created new experiences to show off the capabilities of Windows Internet Explorer 9, at the Beauty of the Web event in San Francisco.

“Internet Explorer 9 uses the power of Windows and the whole PC to bring you a better Web,” said Steven Sinofsky, President of the Windows and Windows Live Division at Microsoft.

“We’re proud to join our partners in releasing the beta of Internet Explorer 9, delivering a more beautiful Web to Windows customers across the globe,” he added.

Internet Explorer 9 has been re-architected to be the only Web browser to focus on bringing sites front and center through Windows 7, enabling a new class of experiences on the Web with partners such as Facebook, Red Bull GmbH, Quiksilver Inc., Rough Guides Ltd., eHow Inc., LiveStrong, Twitter, Dailymotion, the Wall Street Journal, CNN and

“

“The Web is about sites; your browser should be too.

Internet Explorer 9 is about making those sites shine, and we’re delighted that so many sites have come out with us today to create the kind of richness on the Web that wasn’t possible before.”

Dean Hachamovitch, Corporate Vice President of Windows Internet Explorer at Microsoft, at the Beauty of the Web event in San Francisco

Orbitz LLC, as well as top design studios such as Metia, Soleil Noir S.A.S. and Joshua Davis Studios.

“The Web is about sites; your browser should be too. Internet Explorer 9 is about making those sites shine, and we’re delighted that so many sites have come out with us today to create the kind of richness on the Web that wasn’t possible before,” said Dean Hachamovitch, Corporate Vice President of Windows Inter-

net Explorer at Microsoft.

IE9 puts the focus on the applications with a clean experience, Windows 7 integration, and more pixels dedicated to the website, not the browser, allowing sites to shine. Browser controls are reduced and framed in “glass” so that, while they are discoverable, people see their Web content first and foremost. In addition, the design principles in

Windows 7 carry through to Internet Explorer 9 so that sites appear more like native applications on the PC. The browser also introduces new functions, such as so-called Pinned Sites, a user’s favourite websites that can be accessed directly from the Windows Taskbar, without having to open the browser. And instead of clicking the “favourite” star or dragging

Dean Hachamovitch Corporate Vice President of Windows Internet Epxlorer at Microsoft

an icon to the bookmark bar, you can drag it to the Windows taskbar.

The new browser also supports forthcoming global web standards, such as HTML5, which allow web developers to create rich and immersive web sites with graphics and video. It is harnessing the power of the Graphics Processing Unit (GPU), reallocating much of the graphic pro-

cessing to the GPU instead of the CPU. By using the GPU, IE9 unlocks the 90 percent of the PC’s power that went previously untapped by Web browsers.

“Dailymotion is excited to take advantage of the new Internet Explorer 9 with the release of itsnewHTML5 Player Beta, delivering streaming video playback without the need for plug-ins,” said Olivier Poitrey, chief technology officer and co-founder, Dailymotion. “Internet Explorer 9 sets itself apart by supporting hardware-accelerated graphics and offering users a more app-like experience with its new pinned site capability, making our customer experience even better.”

The browser is designed to be the most trusted browser because it has a robust set of built-in security, privacy and reliability technologies that keep customers safer online. It provides Download Manager with integrate SmartScreen malware protection that uses reputation data to remove unnecessary warnings for wellknown files, and show more severe warnings when the download has a higher risk of being malicious. It also provides Addon Performance Advisor notifies users when add-ons are slowing down their browsing session and Tab Isolation - the automatic crash recovery and the new hang recovery that ensure users’ information isn’t lost and keep them browsing when a website isn’t working correctly. (JFS/TPP)

The Touch-Slider Smartphone:

BlackBerry Torch 9800 The new QWERTY touch slider is the first BlackBerry phone to be powered by BlackBerry OS 6 and to feature App World out-of-box.

R

esearch In Motion (RIM) last month launched the new Blackberry Torch 9800 Smartphone in Indonesia, the first country in the Asia-Pacific region where the device was introduced.

Gregory Wade, Managing Director RIM in Asia Pacific, reflecting on their previous success, stated that they have high expectation of the Indonesian market.

Blackberry users in Indonesia reach the number of 400 hundred people as of August 2009.

It is predicted that it will hit one million users by the end of this year.

In order to bosst sales, RIM provides 24 months of guarantee to Indonesian buyers that buy Torch at official distributors.

The new QWERTY touch slider is the first BlackBerry phone to be powered by BlackBerry OS 6 and to feature App World out-of-box.

The new home screen, web browser, social feed, gallery application with Wi-Fi sync and universal search are all default features of the device.

BlackBerry Torch 9800 has a 3.2 inch touch screen with 480 x 360 pixels resolution.

The typical Blackberry trackpad is placed under this screen.

There is a five mega pixel camera with auto focus, LED flash, 11 scene modes and VGA video recording.

BlackBerry Torch incorporates 512 MB of phone memory and 4GB inbuilt storage, which is expandable up-to 32GB using MicroSD card (4GB card included).

Other features of BlackBerry

Torch 9800 include built- in GPS with BlackBerry maps, 1300 mAhr removable battery, Bluetooth, Email and instant messaging, BlackBerry enterprise services, YouTube app, music player, 3.5 mm headphone jack and WiFi. Courtesy of BlackBerry 6 OS, the BlackBerry Torch receives a range of key upgrades in the software department.

A new full HTML Webkit browser offers tabbed browsing for accessing multiple web pages at the same time, and the browser supports the popular pinch-tozoom multi-touch gesture.

BlackBerry 6 also gives users a single view for social networking sites such as Facebook, Twitter and MySpace.

Furthermore, a next-generation messaging experience includes group messaging for up to 10 people and locations, while a new universal search is available throughout the BlackBerry experience.

Research In Motion (RIM) is a leading designer, manufacturer and marketer of wireless solution for the worldwide mobile communications market.

RIM provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranetbased applications.

RIM technology also enables a broad array of third party devel-

opers and manufacturers to enhance their products and services with wireless connectivity.

RIM’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world and include the BlackBerry® wireless platform, the RIM wireless Handheld™ product line, software development tools, radio-modems and software/hardware licensing agreements.

The company reports its net income for the quarter was $796.7 million, or $1.46 per share diluted, compared with net income of $768.9 million, or $ 1.38 per share diluted, in the prior quarter and net income of $ 475.6 million, or $ 0.83 diluted, in the same quarter last year.

Its revenue grew 31% over the same quarter last year to $4.62 billion.

BlackBerry subscriber account base grew approximately 56% or 4.5 million new BlackBerry subscriber accounts were added in the quarter over the prior year to over 50 million.

“RIM set another new record in the quarter by shipping over 12 million BlackBerry smartphones. This accomplishment and RIM’s solid financial result during the second quarter were driven by effective business execution and strong demand for RIM’sportfolio of BlackBerry

“

Blackberry users in Indonesia reach the number of 400 hundred people as of August 2009. It is predicted that it will hit one million users by the end of this year.

smartphones and services in markets around the world,” said Jim Balsillie, Co-CEO at Research In Motion.

He added, “We expect a continuation of this momentum in the third quarter as we extend the

rollout of new products including the BlackBerry Torch into additional markets and benefit from heavy promotional activities and increasing customer demand as we head into the holiday buying season.” (JFS/TPP)

Above:

Gregory Wade, Managing Director of RIM at Southeast Asia, introduces the New BlackBerry Torch Smartphone at the Ritz Carlton Jakarta.

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Pictorial Events Breakfast Dialogue at The Financial Club Jakarta The Financial Club Jakarta organized a monthly breakfast dialogue on the subject of “EU-Indonesia Relation: Opportunities for Business” with EU ambassador to Indonesia H.E. Julian Wilson as the speaker.

Present at the breakfast were prominent businessmen, professionals and journalists, among others, Juwono Sudarsono, Bob Sadino, Ali Basyah Suryo, Taufik Darusman, August Parengkuan, Rudi Pesik, Maxi Gunawan, R0n Mullers, Sujono Respati, and others.

Photos: The President Post/Rachmat Wirasena

Exploring Investment Outlook in Indonesia 2009-2014: Challenge and Opportunities in Portfolio and Direct Investments Photo: The President Post/Nandi Nanti

The event comprised of Delloitte Book Launch and the second Delloitte Talk show, and took place at JW Marriott.

It was opened by Vice Minister of Finance Anny Ratnawati and attended by professionals and economists among others, Danilo Alcantara, Chaly Mah as Delloitte Asia Pacific Leader, Wimar Witoelar, Dr. Moh. Chatib Basri, Vishnu Ward and Michael Tjajadi

Norton Breakfast Conference 2010 Photo: The President Post/Nandi Nanti

The breakfastconference with the theme of The Execution Premium Linking Strategy to Operations for competitive Advantage took place at the Ritz Carlton Jakarta.

As speaker was Matthew Tice, Managing Director Palladium Group.

Brazil Anniversary Night A dinner party to celebrate Brazil’s Independence Day was held

by HE Mannuel Innocencio de Lacerda Santos Junior.

The celebration was attended by representatives of Latin American countries, professionals and businessmen, among others Javier Sanz de Urquiza, Eduardo Calderon, Iwan Darmawan from Kadin, and Medco top executive Dedi Panigoro.

Photo: The President Post/Nandi Nanti

October 12, 2010 C5

The President Post

C6 October 12, 2010

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Travel

Jimbaran ITED S I V E R

Photos by Taufik Darusman

F

irst things first, an update on Bali: the island’s tourism officials have revised their 2010 target of foreign tourist arrivals, from 2,1 million to 1,8 million, over their concern with the impact of the global economic crisis, whose end is still nowhere in sight.

It remains to be seen whether the latest projected figures will become a reality. For last year, the very same officials envisioned 1,6 million tourists descending on Bali’s shores but in fact the final tally was 1,9 million.

In any case the drive to attract foreign tourists has gone into high gear. In March last year 68 Indonesian travel-related companies took part in a travel mart held in Berlin, Germany, during which they managed to close transactions worth about US$84 million.

“That is not the final outcome as some companies have yet given their sales figures to us,” Jordi Paliama, an official of the Department of Culture and Tourism in charge of foreign promotion, told Antara news agency.

In the meantime, hotels such as The Ritz-Carlton Resort & Spa and the Nusa Dua Beach Hotel & Spa continue to do well indeed.

“Our occupancy rate has been steady at 60-70% for the past months,” says Devina Hindom, Assistant PR Manager of the Ritz-Carlton Resort & Spa in Bali, the first upscale hotel-resort to operate in Jimbaran.

“Our marketing efforts are intensive and cover a wide geography. We are endearing to young Japanese and Korean couples because we offer privacy and quality facilities. In any case, Bali’s drawing power remains as strong as ever.”

Retto V. Terriani, the general manager of Nusa Dua Beach Hotel & Spa concurs, saying that “Bali has never lost its luster and continues to attract increasing number of foreign and national tourists.”

“We have a huge loyal clientele and have managed to attract quality tourists from Europe and the US.”

Once a sleepy village in Bali inhabited mostly by fishermen, Jimbaran is fast becoming a popular site on a par with the likes of upscale Nusa Dua, Legian and Seminyak.

Hotels are also targeting Indonesians, many of whom are victims of the economic crisis and as such shy away from overseas destinations and settle for Bali.

Last year a little over three million Indonesians came to Bali.

Most of them are ‘repeat’ visitors who have rediscovered Bali and have rekindled their passion for the island.

Nowadays, one of the markets eyed by Indonesian travel business players is Russia, whose people have lately come in droves to Bali at an increasing pace.

Last year 65,000 Russians visited Bali, an increase of 40% over 2007’s figures of 46,000.

“Russia is one of our major markets in East Europe,” Sapta Nirwandar, a senior official of the Department of Culture and Tourism, told newsmen on the sidelines of the 16th Moscow International Tour and Travel Fair last month.

The Indonesian delegation to Moscow consisted of 19 members representing major hotels and travel agencies.

They expect to see 90,000 Russians visit Bali this year, a figure that seems to make sense as in January alone already 9,300 Russians came to the island.

“Some of them, if not many, are unbelievably big spenders.

Russians know what the good life is and do not hesitate to pay good money as long as they get good quality,” says Devina.

(By the way, the Ritz-Carlton Resort & Spa has been renamed as Ayana Resort and Spa as of April 1, and will hence be managed by West Paces Hotel Group Asia.)

As testimony to the Russians’ fascination with hedonism, “a young couple from Moscow and their son recently spent three weeks in a bungalow at the RitzCarlton at US$8,000 a night,” says Devina.

“Moreover, they paid in cash.”

All Eyes on Jimbaran In recent times Russians have gravitated towards Jimbaran, which lies at the southern coast of Bali, some 10 minutes from the Ngurah Rai international airport.

The bombing that took place on October 1 four years ago at one of the village’s beachfront restaurants has not deterred foreign high-end tourists from coming there, least of all Russians, who are quite attuned to violent incidents.

In any case, they happen to be travelers who would ensconce themselves in luxury hotels or villas to relax and drink away their problems with expensive liquor.

What was before a quite jerkwater village inundated with fishermen in a stretch of land that is primarily a white limestone quarry, Jimbaran is now a prime real estate.

It has also become one of the most popular locations in Bali, not the least because of its posh hotels, cutting-edge seafood restaurants and trendy bars.

Rumors abound that most of the opulent villas are owned by US and European artists and politicians.

In fact, siblings of former strongman Soeharto used to have not one but two hotels, namely Bali Cliff Hotel and the Sheraton.

In the wake of his downfall, the former quickly became a shadow of its former glorious self, while the latter was taken over by media baron-turned-politician Surya Paloh, owner of Jakartabased Media Indonesia daily and Metro TV. In life there are limits, and this adage applies to the growth of hotels in Bali as well, including Jimbaran.

Last month the province’s officials put a halt on the development of new hotels and villas.

Behind the decision, which is set to put more pressure on the already dire employment situation in the island, is what officials have called “the ecological imbalance” as a result of the rapid growth of tourism.

“No more permits (to construct hotels and villas) will be issued as of April this year, and the ruling is valid for an indefinite period of time. But those who already have permits that we issued before April can proceed with their plans,” says Nengah Suarca, a senior official in charge the

“

It has also become one of the most popular locations in Bali, not the least because of its posh hotels, cuttingedge seafood restaurants and trendy bars.

province’s planning.

“In any case, the number of hotel rooms and villas has reached a saturation point. There is now 50,000 hotel rooms and villas in place, twice the number that the island can absorb.”

One of the last entrants to the high-end realm of private estates is The Edge, which is also a cliffside wedding venue and premier party site.

It is now still under construction but the management hopes it to see operational by the end of the year.

“We define it as an exclusive residence run and managed by butlers, offering the choice of three private villas or, when combined, a 10 bedroom private estate,” says Amanda Pummer, the senior executive of Restyle-International, which also owns Losari Coffee Spa and Retreat plantation in Central Java and the Grand Kemang Hotel Jakarta.

Perched high above the dramatic Uluwatu cliff, The Edge features a private spa, theatre, wine cellar and wine tasting lounge as well as state of the art in-villa kitchens and luxury event catering on land or sea.

No less intriguing is the Karma Jimbaran, which graces the sloping hillside of one of the most renowned beaches in the world,

“

Jimbaran also happens to be the place to be if you wish to witness this planet’s most beautiful sunset. And no place seem to offer you the best view than the vantage point at the Karma Jimbaran.

Jimbaran Bay. “We’d like to think that our 38 private luxury Bali villas offer the ultimate in luxury, style, and spaciousness,” says Sari Pambayun, Assistant Director of Sales of Karma Jimbaran.

Inspiring and beautiful, both the architecture and grounds of the resort combine contemporary style, functionality and luxury whilst retaining traditional Balinese-influenced décor and design. At the heart of the resort is Karma Steakhouse Restaurant, which hugs a 24-meter azure swimming pool.

Jimbaran also happens to be the place to be if you wish to witness this planet’s most beautiful sunset. And no place seem to offer you the best view than the vantage point at the Karma Jimbaran.

Reprinted by permission from Garuda Inflight magazine

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October 12, 2010 C7

Living

O

nline video has gotten a bum rap.

YouTube is often thought of as a home for juvenile idiocy, mindless narcissism and not much more.

The collective 80 million hours we spend watching it every day seems to some like a terrible waste of human attention.

But if you dig under the surface, you can discover something much more hopeful. Hidden among all the cute kittens and pirated TV shows, online video is driving astonishing innovation in thousands of different fields ranging from the ultra-niche to the sharing of truly world-changing ideas.

In my TED talk, just posted, I point to numerous examples of this innovation, such as the dance revolution exemplified by a dance troupe called the LXD who played the Oscars this year.

And I coin a term for it: crowdaccelerated innovation.

The term is new, but the process is old. Actually, this is pretty much the only type of innovation there has ever been.

Contrary to the romantic myth, innovation doesn’t suddenly emerge from lone geniuses and their eureka moments.

It emerges when groups of people spark off each other. In history, progress took off when people came together in cities, and the scientific revolution took off when people around the world could read about each others’ discoveries in print.

We’re a social species. We spark off each other.

One of the most significant aspects of the Web is that it has connected vastly larger groups than ever before in history, and thereby sparked massive new types of innovation. For example, the open-source movement that

The Secret Power of

Hang onto your luggage, Boeing wants to fly you into space -- at least into low-Earth orbit.

By Chris Anderson

Hidden among all the cute kittens and pirated TV shows, online video is driving astonishing innovation in thousands of different fields ranging from the ultra-niche to the sharing of truly world-changing ideas. created Linux and scores of other incredible pieces of software would not have been possible before the Web brought programmers together.

Similar explosions in innovation have happened in music, photography and animation, to name just three areas. But what these fields have in common is that people’s work output could be easily shared digitally -- via still photographs, MP3 files, and software programs, for example.

The reason online video is so significant is that it is now allowing the rest of the world’s talents to be shared digitally. It’s not just YouTube, of course, it’s all over the Web. In my talk, I explain that you need just three things in place for crowd-accelerated innovation to take off: a “Crowd,” “Light” and “Desire.”

Crowd: It can be any group,

small or large, of people who share a common interest. The bigger the group, the better the chance that it contains real innovators. But successful crowds also depend on lots of other roles like trend-spotters, cheerleaders, commenters, and even skeptics.

Light: You need to be able to see what the very best people in the crowd are capable of. And the amazing thing about the Web is that even when the crowd is in the millions, the best contributors can readily bubble up to the surface -- for example, by winning the most views or highest ratings on a website.

Desire: On the Web, this is provided through social recognition. If you can do something innovative and special, you get thousands of people viewing your work and talking about you.

It’s intoxicating. And it’s driving hundreds and hundreds of hours

Why Facebook is Blue The relatively private life of Facebook’s founder -- or at least a fictionalized version of it – has gone much more public.

A

movie called “The Social Network,” based on the life of Facebook’s sweatshirt-wearing cofounder, Mark Zuckerberg, hit theaters on October 1.

Truly biographical or not, the film is sure to thrust the 26-yearold Zuckerberg further into the spotlight, making him a household name if he’s not already.

His site, after all, is used by a half-billion people around the world.

We searched the internet for info about Zuckerberg and created this list of six fun and little-known facts about the man behind Facebook. Much of it is pulled from a notable profile of Zuckerberg in The New Yorker, which has had the internet buzzing since it published online earlier this month.

Take a look and let us know what you think. What choice details did we miss? You can leave us a note in the comments section, or send a reply to the @cnntech account on Twitter.

The king of public is private in real life Zuckerberg is a fan of saying that, with Facebook, he wants to make the world a more open and honest place -- where people share details about themselves with the world.

So it could be perceived as ironic -- if not hypocritical -that Zuckerberg keeps some details private on his own Facebook page.

In a recent profile of Zuckerberg, Jose Antonio Vargas of The New Yorker writes that the CEO of the world’s largest online social network is rather shy and private.

“He doesn’t like to speak to the press, and he does so rarely,” Vargas writes.

“He also doesn’t seem to enjoy

LET US FLY YOU INTO SPACE

the public appearances that are increasingly requested of him.”

The interests he lists on Facebook are bizarre From Shakira to “ending desire,” the interests Zuckerberg lists on his private Facebook page are certainly unexpected if not plain bizarre.

Under interests, he lists the following: “Eliminating Desire, Minimalism, Making Things, Breaking Things, Information flow, Revolutions, Openness.”

His favorite musicians include Daft Punk and Lady Gaga.

Among his favorite TV shows, he lists “The West Wing,” which, as The New Yorker’s profile of Zuckerberg points out, was written by Aaron Sorkin, the man who wrote the screenplay for the upcoming movie about Facebook.

He’s a classics buff with an “imperial tendency” Zuckerberg grew up in Dobbs Ferry, New York, and graduated from high school at Phillips Exeter Academy. There, he studied Latin and became a fan of the classics. At Harvard University, which he attended for two years before dropping out to pursue Facebook, Zuckerberg “was known for reciting lines from epic poems such as “The Iliad,’” writes Jessica Vascellaro in The Wall Street Journal.

Zuckerberg also built games with classical themes.

“The first significant program Zuckerberg ever designed was a game based on the living room classic Risk,” Michael Grynbaum, then of the Harvard Crimson, wrote in 2004.

“It was centered around the ancient Roman Empire,” Zuckerberg told the college paper at the time. “You played against Julius Caesar. He was good, and I was never able to win.”

A friend told The New Yorker that Zuckerberg has an “imperial tendency.”

‘Zuck’ has at least a few nicknames Friends and co-workers call him “Zuck.” For proof, check out this memo on Facebook’s blog, called “Working with Zuck,” in which Facebook software en-

gineer Andrew Bosworth (or “Boz”) rattles off a bunch of notes about what it’s like to work with Zuckerberg. “Zuck expects debate ... Zuck isn’t sentimental ...

Zuck pushes people,” and so-on, the blog post says.

But Zuckerberg has earned other nicknames, too. The Wall Street Journal says his mom used to call him “Princely” when he was young. When he joined the Alpha Epsilon Pi fraternity at Harvard, his friends took to calling him “Slayer,” writes Rebecca Davis O’Brien, who attended Harvard with Zuckerberg and wrote a piece about him in The Daily Beast.

The reason Facebook is blue: Zuckerberg is colorblind According to The New Yorker, Zuckerberg is red-green colorblind, which means the color he can see best is blue. That also happens to be the color that dominates the Facebook website and mobile app.

“Blue is the richest color for me,” he told the magazine. “I can see all of blue.”

Money doesn’t matter much to Zuckerberg Zuckerberg doesn’t seem to care that much about money.

One big piece of evidence to support this idea: Zuckerberg hasn’t sold Facebook despite the fact that he’s reportedly been offered at least $1 billion for it.

Terry Semel, the former CEO of Yahoo! who reportedly offered Zuckerberg that sum, told the New Yorker that he’d never met a person who would turn down a $1 billion offer.

“He [Zuckerberg] said, ‘It’s not about the price. This is my baby, and I want to keep running it, I want to keep growing it,’” Semel said, recalling his conversation with Zuckerberg in 2006.

“I couldn’t believe it.”

The Harvard newspaper picked up on the same sentiment.

“That’s just like not something we’re really interested in,” he told the paper in 2004, referring to offers from companies wanting to buy Facebook. “I mean, yeah, we can make a bunch of money -that’s not the goal.”

(CNN)

of effort from potential innovators across the globe.

The rise of online video has vastly expanded the Crowd, shone a brighter Light on the best talent, and dialed up the Desire by offering participants a form of global fame. Someone sees a video with 50,000 views and thinks, “That’s awesome, I’ll copy it and take it to the next level.” They emulate, then they innovate, and the bar gets raised again and again.

We’ve noticed it on our website http://www.ted.com/. Ever since we started posting TED talks online, speakers have started raising their game. They could see what great TED talks looked like. And they had a greater motivation to shine.

So the amount of preparation going into each talk rose dramatically. But the phenomenon is everywhere, and it has the potential to transform any organization and give an amazing platform to

any individual.

I’m convinced that the latest iteration of crowd-accelerated innovation, fueled by Web video, is about to ignite the biggest learning cycle in human history. There are huge implications for the future of global education. Tomorrow’s best teachers will be global stars reaching literally millions of kids. And talented students around the world will no longer have their potential destroyed by lousy teachers. They can learn directly from the world’s finest.

My talk ends with an incredible video shot in Africa’s biggest slum, which turns out to be teeming with innovation, innovation that in past years would have simply remained invisible to the rest of the world. If we’re in an age where the TED audience can learn from residents of a slum and vice versa, there’s reason to be hopeful for our future.

The aerospace company and a Virginia company have reached a preliminary agreement to sell seats on Boeing commercial crew spacecraft to individuals, companies, nongovernmental organizations, and U.S. federal agencies, Boeing said in a news release.

The price of flights hasn’t been decided but will be announced when full-scale development gets going.

Virginia-based Space Adventures Ltd. has already successfully contracted and flown seven people on missions to the International Space Station, Boeing said.

“By combining our talents, we can better offer safe, affordable transportation to commercial spaceflight customers,” said Brewster Shaw, vice president and general manager of Boeing’s Space Exploration division.

The partnership still needs NASA and its international partners in the International Space Station to sign on, because that’s where the space tourists would go.

Such flights would meet NASA’s intent to promote space commerce in low-Earth orbit, Boeing said.

Meanwhile, the aerospace company is pushing ahead on the design for its CST-100 spacecraft, which can carry seven people.

The spacecraft can fly on multiple launch vehicles and is expected to be operational by 2015, Boeing said.

“We are excited about the potential to offer flights on Boeing’s spacecraft,” said Eric Anderson, co-founder and chairman of Space Adventures.

“With our customer experience and Boeing’s heritage in human spaceflight, our goal is not only to benefit the individuals who fly to space, but also to help make the resources of space available to the commercial sector by bringing the value from space back to Earth.”

Space Adventures says it offers terrestrial weightless flights to orbital missions and flights to the edge of space and has sent customers on more than 2,000 hours in space, traveling over 35 million miles.

CNN

Photo: www.myopera.com

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C8 October 12, 2010

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Health EFFECTIVENESS OF STATINS IS CALLED INTO QUESTION

Photo: www.optimalfunctioning.com

Statins appear to drive down the risk of heart attack or stroke by lowering the levels of fatty deposits circulating in the bloodstream.

A

s the world’s most-prescribed class of medications, statins indisputably qualify for the commercial distinction of “blockbuster.”

About 24 million Americans take the drugs — marketed under such commercial names as Pravachol, Mevacor, Lipitor, Zocor and Crestor — largely to stave off heart attacks and strokes.

At the zenith of their profitability, these medications raked in $26.2 billion a year for their manufacturers. The introduction in recent years of cheaper generic versions may have begun to cut into sales revenues for the brand-name drugs that came first to the market, but better prices have only fueled the medications’ use: In 2009, U.S. patients filled 201.4 million prescriptions for statins, according to IMS Health, which tracks prescription drug trends. That’s nearly double the number of prescriptions written for statins in 2001, four years after they arrived on the American pharmaceutical landscape.

But in recent months the drugs’ touted medical reputation has come under tough scrutiny.

Statins were initially approved by the Food and Drug Administration for the prevention of repeat heart attacks and strokes in patients with high cholesterol who had already had a heart attack. And used for that purpose — called “secondary prevention” — the drugs are powerful and effective medications, driving down patients’ risk of another heart attack or stroke by lowering their levels of LDL (or “bad”) cholesterol.

“There’s a conspiracy of false hope,” says Harvard Medical School’s Dr. John Abramson, who has co-written several critiques of statins’ rise, including one published in June in the Archives of Internal Medicine.

“The public wants an easy way to prevent heart disease, doctors want to reduce their patients’ risk of heart disease and drug companies want to maximize the number of people taking their pills to boost their sales and profits.”

“

posits circulating in the bloodstream. Research suggests that the drugs dampen inflammatory processes that can prompt deposits of plaque to break away from blood vessel walls and cause sudden blockages of arteries leading to the heart or brain.

And yet, the relationship between cholesterol-lowering and heart disease is not perfectly understood, and the precise role of inflammation in heart disease is also uncertain.

Statins were initially approved by the Food and Drug Administration for the prevention of repeat heart attacks and strokes in patients with high cholesterol who had already had a heart attack.

Heart patients and their physicians are not the only ones to pin their hopes on statins. The drug companies that brought statins to the market have explored the medications’ benefits in prevention or treatment of such conditions as Alzheimer’s disease, rheumatoid arthritis, prostate and breast cancer, kidney disease, macular degeneration and diabetic neuropathy. Although clear proof that statins could forestall or treat any of these diseases might bring in millions of new, paying customers, results have largely been mixed, inconclusive or disappointing.

Statins certainly decrease rates of heart attack in people who have clear signs of cardiovascular disease, but it’s not so clear they work that way in people who are healthy. In spite of that uncertainty, statins’ use for primary prevention has skyrocketed.

That’s the issue in the latest round of debate, which spilled onto the pages of the Archives of Internal Medicine in late June: whether statins prevent, safely and at a reasonable cost, the development of cardiovascular disease in people who are still healthy but are considered to be at high risk of a heart attack or stroke.

Statins appear to drive down the risk of heart attack or stroke by lowering the levels of fatty de-

In the first of three studies published in the Archives last month, medical researchers found that,

New Procedure Shows Promise for Treating Brain Tumors A new procedure using magnets, ultrasound and minuscule drug-coated particles may be an effective solution, according to a study on rats published in last month’s edition of the journal Proceedings of the National Academy of Sciences.

P

atients with brain tumors don’t have m a n y good options — surgery and radiation can damage crucial parts of the brain, and chemotherapy drugs don’t easily cross the bloodbrain barrier.

A new procedure using magnets, ultrasound and minuscule drug-coated particles may be an effective solution, according to a study on rats published in last month’s edition of the journal Proceedings of the National Academy of Sciences.

The researchers, led by Dr. Kuo-Chen Wei of Chang Gung University in Taiwan, injected tiny magnetic beads called nanoparticles, coated with a chemotherapy drug, into the rats’ tails. They used ultrasound to open up a small region of the blood-brain barrier and a magnetic field to attract the particles to a precise location in the brain.

When they applied the treatment to rats with brain tumors, the tumor growth was slowed and the rats lived two-thirds longer than untreated rats.

“The technology’s not very

Image: www.howstuffworks.com

difficult,” Wei said, “but the idea is novel.”

Clinical trials in human beings are at least four to five years away, he added.

Brain tumors are difficult to treat with traditional drug delivery methods because the brain is insulated from circulating blood.

Focused ultrasound — similar to, but much stronger than, the ultrasound technique used on pregnant women — temporarily disrupts the barrier, allowing drugs to enter.

Once the drugs get into the brain, they should ideally be delivered to a precise location to cut down on the damage to healthy tissue. This report is the first in which magnetic targeting was combined with ultrasound to attract the nanoparticles — and their drug passengers — to a specific part of the brain.

“The method has significant

clinical potential,” said Dr. Kullervo Hynynen of the University of Toronto Medical School, who conducts similar research but was not involved in the new study.

Wei and his team are working to improve the treatment so they can apply it to human patients. He said they needed to try additional chemotherapy drugs and nanoparticle types, as well as improve the ultrasound and magnetictargeting technology.

Still, some scientists worry that opening the bloodbrain barrier to allow powerful chemicals into the brain is too dangerous.

“The potential for toxicity in normal brain regions could cause all kinds of problems,” said Allan David, a drug delivery researcher at the University of Michigan.

“I think it’s an interesting study, but it’s still far from clinical studies.”

Some of the danger of opening the blood-brain barrier may be avoided by combining Wei’s approach with a type of drug that is activated only upon reaching the tumor, David said, so that healthy brain tissue is left unharmed.

(Los Angeles Times)

contrary to widely held belief, statins do not drive down death rates among those who take them to prevent a first heart attack.

A second article cast significant doubt on the influential findings of a 2006 study, called JUPITER, that has driven the expansion of statins’ use by healthy people with elevated blood levels of C-reactive protein, a measure of inflammation. A third article suggested potential ethical, clinical and financial conflicts of interest at work in the execution of the JUPITER study and concluded the widely hailed trial was “flawed” and raises “troubling questions concerning the role of commercial sponsors.”

Statins still have ardent admirers, including cardiologist Steven Nissen of the Cleveland Clinic in Ohio. For many patients on a clear collision course with heart disease but not there yet, he said, statins make a difference.

And even though recent studies question whether statins reduce heart attack deaths, Nissen added, many patients’ lives are clearly improved by pushing a heart attack further into the future.

The stakes of this debate are big and continuing to grow. As many as three-quarters of patients currently taking statins haven’t

In the first of three studies published in the Archives last month, medical researchers found that, contrary to widely held belief, statins do not drive down death rates among those who take them to prevent a first heart attack.

yet had a stroke or heart attack; they have diabetes or high LDL cholesterol, conditions widely thought to put them at high risk of having one.

Those patients largely joined the ranks of statin consumers after 2001, when the National Heart, Blood and Lung Institute adopted guidelines on the treatment of patients with high cholesterol. The guidelines, updated again in 2004, suggested that as many as 36 million Americans

should take statins — essentially tripling overnight the potential American market for the drugs.

Of the nine experts involved in drafting the cholesterol treatment guidelines, the National Institutes of Health later acknowledged that eight had substantial financial ties to statin makers — links that may have predisposed them to view evidence of statins’ benefit in its most positive light.

Said Abramson, the author of “Overdosed America: The Bro-

ken Promise of American Medicine”: The best way to drive down the risk of developing cardiovascular disease in the first place is to exercise regularly, not smoke, drink in moderation and eat a healthy Mediterranean-style diet.

But, he added, “this message gets drowned out by the commercial interests” of pharmaceutical companies who stand to benefit from increased sales.

(Los Angeles Times)

For further information: Vibriani Damaris Marketing Promotion Sahid Sahirman Memorial Hospital Jl. Jenderal Sudirman No.86 Jakarta 10220 phone : (021) 578 53 911 ext 3121 HP : 087 888 01 777 5

Prevent Obesity for a Better Life Overweight and obesity are major risk factors for a number of chronic diseases, including diabetes, cardiovascular diseases and cancer.

Once considered a problem only in high income countries, overweight and obesity are now dramatically on the rise in low- and middleincome countries, particularly in urban settings.

tains a balanced nutrition.

40%-50% carbohydrate, 15%20% protein, and 20%-30% fat.

Treatment for obesity: The best food contains a balanced nutrition. 40%-50% carbohydrate, 15%-20% protein, and 20%-30% fat.

The definition of obesity in general is a chronic condition defined by an excess amount body fat. A certain amount of body fat is necessary for storing energy, heat insulation, shock absorption, and other functions.

The normal amount of body fat (expressed as percentage of body fat) is between 25%-30% in women and 18%-23% in men. Women with over 30% body fat and men with over 25% body fat are considered obese.

Overweight and obesity are major risk factors for a number of chronic diseases, including diabetes, cardiovascular diseases and cancer. Once considered a problem only in high income countries, overweight and obesity are now dramatically on the rise in low- and middle-income countries, particularly in urban settings.

The calculation of body mass index (BMI) has also been used in the definition of obesity. The body mass index (BMI) equals a person’s weight in kilograms (kg) divided by their height in meters (m) squared. Since BMI describes body weight relative to height, it is strongly correlated with total body fat content in adults.

“Obesity” is defined as a BMI of 30 and above. 23-29 is called Overweight,

and 18-23 is in normal weight.

What Causes Obesity?

The balance between calorie intake and energy expenditure determines a person’s weight. If a person eats more calories than he or she burns (metabolizes), the person gains weight (the body will store the excess energy as fat). If a person eats fewer calories than he or she metabolizes, he or she will lose weight. Therefore, the most common causes of obesity are overeating and physical inactivity.

Treatment for Obesity According to Sahid Sahirman Memorial Hospital’s dr. Samuel Oetoro, people who are obese should remember that the food they eat must equal to their physical activities.

Obese people should hold a diet by considering these three important points: • Amount of Food → do not eat too much, stop eating before you feel full, and reduce the portion little by little.

• Schedule of Eating → if you usually eat 3 times a day, maintain that schedule or otherwise the body’s metabolism will decline.

• Type of Food → the best food con-

Good carbohydrate is pure carbohydrate that has not been over-processed, such as vegetables, fruits, high-fiber rice (brown rice), potatoes with its skin, wheat cereals, and oat meals. Over-processed carbohydrates are made from flour (noodles, bread, cakes, etc) Choose healthy fat which comes from cod, olive oil, coconut oil, and soybean. Furthermore, avoid bad fat which comes from saturated fat (fried foods, butter, cheese, etc), high cholesterol food (egg yolk, squids, shrimps, scallops, innards, meat, muttons, duck meat, chicken skin, coconut milk, etc).

Physical activity is also a key point for obesity treatment. The more you move your body, the more calories you burn. To lose a kilogram of fat you need to burn 8,000 calories (1 pound of fat = 3,500 calories). Walking slowly is a good way to start increasing your physical activity if you are obese. The most important is exercise with low intensity but over a long period of time (at least more than 30 minutes).

In addition, try to find activities which can fit into your daily routine. Anything that becomes part of your daily life or is weaved into your existing lifestyle is more likely to become a long-term habit. If you use an elevator, try getting off one or two floors before your destination and walking the rest of the distance. You could try the same when driving your car or taking any form of public transport - get off earlier and walk a bit more.

(JFS/TPP)