The President Post 20th

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As one of the country’s finest sons, Juwono Sudarsono leads a very rich life, playing key roles in serving his country. He has made his marks with many achievements and contributions intended for the betterment of the nation.

PLN Chief Slams Industrialists for Not Using Common Sense Dahlan Iskan, president director of state electricity company PT PLN, has accused Indonesian industrialists of being spoiled and not using their common sense in rejecting the new basic electricity tariff for industry.

“They just want to keep their own industries alive and leave the electricity industry in distress. They keep on wanting to be pampered and lulled to sleep by lullabies,” Iskan said in a press release issued by PLN last week.

Dahlan Iskan Dahlan`s statement was issued two days after the chairman of Indonesian Employers Association (Apindo) Sofjan Wanandi said last Thursday that the industrial sector was considering to switch business to importing goods from overseas instead of producing them in light of the power rate hike for the industrial sector.

J

uwono devoted much of his time to the country’s education sector.

Juwono served as Minister of Education and Culture in President BJ Habibie’s Cabinet of Reformation (May 1998-October 1999), he is a professor at University of Indonesia since 1998, he taught at The School of Public and International Affairs, Columbia University, New York City from 1986 to 1987 and he did a three-year stint as vice governor at the National Defense Institute (Lemhannas) from 1995 to 1998.

Prof. Juwono is the youngest son of the late Dr. Sudarsono, a prominent diplomat and former social affairs minister, minister of home affairs, and Indonesia’s ambassador to Yugoslavia.

After completing primary school in India, he studied at a junior high school in Cikini, Jakarta, and went to England to finish his high school.

Juwono graduated from University of Indonesia, Jakarta (B.A., M.S.); Institute of Social Studies, The Hague, Netherlands; University of California, Berkeley, USA (M.A.) ; and The London School of Economics, UK (Ph.D).

During President Soeharto’s New Order regime Juwono served as State Minister of Environment (1997-1998), Minister of Defence under President Abdurrahman Wahid (October 1999 August 2000), he was assigned as ambassador to the United Kingdom during President Megawati Soekarnoputri’s administration (June 2003 - October 2004), and again served as Defence Minister during President Susilo Bambang Yudhoyono’s first term as president (21 October 2004 - 20 October 2009).

This year, Prof. Juwono is reengaged in the education world.

He has been appointed as Chairman of President University Foundation.

Prof. Juwono is one of the founders of President Universi-

Juwono Sudarsono:

The keys to success are innovation, implementation and commercialization through partnership with private companies ty Foundation, which conceptual plan as President University was formulated in September 1997

by Setyono Djuandi Darmono, President Director of PT Jababeka Tbk., and Prof. Donald W. Watts, who was at the time President of Bond University, Queensland, and Vice Chancellor of Curtin University, Australia.

As the Chairman of PU Foundation, “I will emphasize on the importance of training future managers and lecturers by stressing on planning and transparent financial management. This is crucial,” said Juwono.

According to him, “a university should offer an attractive teaching method, alluring, and in line with social reality. There should be a balance between imagination and an ability to act, so that the brain and the ability to act can induce exhilarating spirit of lecturers, students, PU staff. Excellent graduates can only spring

out from campus members who are proud of those elements.”

Universities also need to help the government to reduce unemployment rate by continuously providing jobs in the manufacturing sector. One of the advantages offered by PU is its location. It is located in the heart of the largest industrial area in Southeast Asia.

Prof. Juwono attributed Japan’s, South Korea’s, China’s and India’s robust economic growth to their leaders’ vision and awareness on the importance to build world class universities.

“10% of the workforce in those countries transformed themselves from agriculture-based to science and technology-based. Their economic structures changed from secondary industry researchbased into economies based on research, technology science and services. The keys to this success are innovation, implementation

and commercialization through partnership with private companies,” said Juwono.

With regards to problems in Indonesia’s education sector in general, Juwono said the most fundamental problem is access to basic, intermediate, and high education that can further unite Indonesians.

“President University is a college of multi-ethnic, interfaith, cross-regional, interracials and inter-civilization. PU is not marked by a certain religion, tribe or a a particular region. PU has 5 dimensions: local, provincial, national, regional and international,” he explained.

On Indonesia’s preparations to compete in the free trade era, Juwono said we should “strengthen PSM education (professional science management) so that everyone in echelon 2, 3, and 4, the public in general and the private sectors can understand the im-

Garuda to Purchase 11 New Planes this Year National flag carrier Garuda Indonesia plans to buy 11 new planes this year with the first delivery expected in February or March.

The planes consisted of nine Boeing 737-800s and two Airbus 330-200s, Garuda Indonesia Technical Director Hadinoto Soedigno said here on Thursday, Antara reported.

The nine Boeing 737-800s would be delivered in stages starting February or March, and the two Airbus 330-200s would be delivered in April and October, he said on the sidelines of a roadshow for the airline`s initial public offering.

He said Garuda, which currently has a fleet of 87 planes, expects to operate 130-150 planes in the next five years.

With the targeted fleet of 130-150 planes in 2015, Garuda would buy a minimum of 10 planes in each of the next five years, he said.

THE ECONOMY

BUSINESS

Government to Reduce Unemployment by 0.5% in 2011

IDR 20,000

Garuda is expected to list its shares with the Indonesia Stock Exchange on February 11. The company`s chief financial officer Elisa Lumbantoruan said on Wednesday about 80 percent of the proceeds of the IPO would be spent on expanding the airline`s fleet and 20 percent to finance its

State Companies Control 26% of Stock Market Capital

The government has set itself the target of reducing the unemployment rate by 0.5 percent from 7.5 percent in 2010 to 7 percent this year.

Seventeen state-owned companies listed at the Jakarta Stock Exchange (BEI) control 26 percent of the market`s total capital, State Enterprises Minister Mustafa Abubakar said.

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capital expenditure.

Hadinoto said Garuda would operate its Boeing planes to serve its domestic flights such as Jakarta-Gorontalo via Surabaya and Makassar, Surabaya-Balikpapan, and Surabaya-Ampenan.

Meanwhile, the Airbus planes would be used to serve its regional routes which would be opened soon, including Jakarta-Manila and Jakarta-Taiwan, he said.

“If we are asked whether we are interested to take over the routes left by Mandala, the answer would be yes,” the company`s marketing vice president Don Jusuf Palito said on the sidelines of the launching of Boeing 737800NG here on Saturday.

PT Garuda Indonesia is interested in flying the routes abandoned by Mandala which recently suspended its operations due to financial problems.

Garuda on Saturday started operating New Boeing 737800NG with 156 seat capacity to serve the route to Kuala Lumpur, Malaysia, twice day.

“We see good market potentials in Malaysia. Garuda also plans to expand to Penang, Johor and other destinations in Malaysia,” Don said.

TECHNOLOGY

ECONOMIC REVIEW

Mandala routes

Getting Ahead: How Indonesia is Using ICT to Boost its Standing Among its Neighbours

Government to Boost Manufacturing, AgroIndustry Sectors in 2011

SThe Indonesia’s government believes that IT is an essential driver of competitiveness and national economic growth.

This was announced recently by Minister of Development Planning and Chairperson of Bappenas who is upbeat about the government’s ability to spur growth this year.

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portance of having competitive products on the basis of technical understanding, quality and prices that will change with innovations. Having PSM educationequipped echelon 2, 3 and 4 are more important than any agreements clinched by ministers, director generals or CEOs of private companies.”

“Now the situation has changed because not all overseas graduates are better than home graduates. It highly depends on what university they graduated from and their own characters,” he elaborated.

Furthermore he added, “most important is whether or not those graduates can create a job for themselves and help to create jobs for others. But in facing global competition that leads to science-based economy, technology, knowledge and services, PU has already mapped out Indonesia’s economic structure for the next 20-30 years.”

Finally, Juwono hoped that access to basic education can be enjoyed by children across the country, from Aceh to Papua, North Sulawesi to East Nusa Tenggara.

Wanandi claims producing goods domestically had become more costly due to the high price of electricity after the lifting of the 18 percent ceiling on electricity tariff hike by PLN. Dahlan said other industries whose number is bigger have paid electricity tariff on normal rates without asking for a special treatment such as ceiling for any hike to be introduced by PLN. “If the argue the lifting of the ceiling would diminish their competitive edge, then why are similar industries that have paid electricity on normal rates remain competitive?” he wondered.

Dahlan goes on to say that if the pampering of the industrialists is not opposed, then the Indonesian people would never be able to progress.

He adds that the industrialists opposing the ceiling have also been voicing an impression that the entire industrial sector as a whole would be affected by the hike ceiling lifting, which he insists is not true.

President, PLN chief meet President Susilo Bambang Yudhoyono and state electricity company PT PLN President Director Dahlan Iskan did not discuss the electricity rate capping issue at their meeting at the State Palace on Monday.

“The president will go to Asahan on Tuesday, and PLN is building a power plant in Asahan but the meeting had nothing to do with the capping issue,” Coordinating Minister for Economy Hatta Rajasa said on Monday.

Hatta added that on the capping issue, he had asked energy and mineral resources (ESDM) minister and state minister for state enterprises (BUMN) to avoid a polemic and to have the issue settled.

“There has been no revocation. I have asked ESDM and BUMN ministers at a coordination meeting to resolve the issue,” Hatta said.

President Susilo Bambang Yudhoyono summoned state electricity company PT PLN President Director Dahlan Iskan to the State Palace on Monday morning for a closed door meeting.

Presidential spokesman Julian Aldrin Pasha said that at the brief meeting with President Yudhoyono, Dahlan only reported about the progress of PT PLN.

1,000 New Motorbikes Flood Jakarta Every Day About 1,000 new motorcycles hit Jakarta`s streets every day due to the city`s high economic growth, Jakarta Governor Fauzi Bowo said here this week in remarks at the opening of a Young Entrepreneurs Forum here.

He said Jakarta`s fast economic growth was related to its residents` purchasing power, but the increasing numbers of cars and motorbikes could have a negative effect in contributing to the city`s traffic problems, Fauzi said.

He said the city administration could not make any policy without considering matters related to the increasing number of motorbikes.

The President Post

A2 January 17, 2011

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Viewpoint Reviving Indonesia’s Maritime Spirit

By Ir. Martono Yuwono

REGOM (reinventing government administration) is a reform movement and transformation of city administration management introduced by the United States government as a development breakthrough to boost efficiency, effectiveness and government management performance.

T

he approach was later introduced to other countries, both developed and developing countries.

REGOM consisted of three approach principles, (1) de-bureaucratization; (2) financial, organization and management restructuring and (3) privatization.

In developing a city, many advanced nations adopted this principle on areas with certain characteristics that have strong selling points, such as core city areas, hearts of the city, old ports, areas with historical backgrounds, waterfronts and more. The reason being, the locations are deemed to have strategic values, offering certain gimmicks/genus loci which are non-renewable, highly controlled, priceless, such as heritage value, waterfronts, harbor fronts/harbor sides, inner downtowns, main street corridors and more. The movement is also often linked to prestigious missions that carry themes such as “awakening”, reflecting on past glo-

ries that can instil a development spirit with terms like revitalization, rebirth, renaissance, regeneration, reshaping and more.

The success of this movement is usually contributed by a driving factor. In England, for example, it is associated with a privatization policy breakthrough which was massively launched by Margaret Thatcher through Action for Cities, which was aimed to restore pride to the city (to discover the sense of civic pride).

Action for cities targets is to reorganize inner cities with the REGOM approach as a ”participatory” strategy that involved all ”stakeholders” in city development. To achieve the goal, Thatcher formed an action group which consisted of action men and established the Urban Development Corporation, an independent body that runs core city areas in six cities, including London, Liverpool and Thyne.

The facilities created to support the programs were: (1) urban programs that regulated government-private sector-public cooperation: (2) urban development grants to help fund development of old city areas; (3) urban regeneration grants to help private sectors to develop former industrial areas; (4) derelict development grants to help the private sector in purchasing abandoned industrial estates; (5) land registers to provide information on abandoned

estates in cities and other regulations. London Dockland in London and Albert Dock in Liverpool, England, were two success stories of this approach.

The REGOM movement synergy, which is aimed at strategic areas in city development, was a new phenomenon launched by a visionairy utopian, who efficiently motivated developments that generated wide participation, including triggering a national movement. Participation and transparancy, as elements to support democracy in development, carried a strategic meaning that could potentially create a sense of belonging to all players involved in the development process. The effectiveness of REGOM highly depended on all factors mentioned above.

The same spirit was also adopted by Yayasan Pelestari Budaya Bangsa (YPBB), which carried out a pilot project for Indonesia to reorganize Bandar Nusantara. Bandar Lama Sunda Kalapa was chosen as a pilot model. The first step was to design a master plan to accommodate common aspirations by reaching a consensus among development executors by involving development consultants and NGOs to serve as advocates in every aspect of the development in a partnership environment: (1) government sector, with consultancy team (development consultant as fa-

cilitator) for city areas; (2) private sector: KWB Sunda Kelapa business community; (3) community sector, with non governmental organizations as community facilitator, in this case Kampung Nelayan Tradisional Luar Batang as the pilot model. The “Kampung Luar Batang” community development program was a nine-year project (1988-1997), which could be categorized as an initial step to participatory development which grew purely from the grassroots in Jakarta.

The establihment of a special body in the development of PANTURA area which carried ”The Revival of Jayakarta” as its theme, could potentially lift the area or parts of it with a specific value, as a pilot model in the implementation of REGOM. The project was funded by the Bremen Overseas Research Development Agency (BORDA) as was proposed by the Yayasan Pelestari Budaya Bangsa.

A globalization spirit indicates an urgent need for an anticipatory policy strategy that emphasizes on empowerment of city external functions. A counter strategy which requires professionalism and modern city management quality is supported by strong political will to build a ”fortress of maritime spirit” of Bandar Nusantara from Sabang to Marauke in response to the upcoming global era as the main target.

Bandar Nusantara is waiting for a touch of participative development as stated above. The rebuilding of Sunda Kelapa reminds us of the Baltimore revival efforts during the economic recession. The initiative launched

by Jakarta can serve as a lesson for other Bandar Nusantara pilot projects from Sabang to Marauke that displayed an effort by a city administration to implement structural reforms as a survival strategy to overcome urbanization pressure and to preserve culture.

The Genderang Bahari was formed as a task force that carried a patriotic mission called ’Kebangkitan Semangat Bahari Indonesia’ or the Rediscovery of the Indonesian maritime spirit under a theme ’A decade of achievements 2010–2020’, with Bandar Nusantara as a symbolic ”light house” to welcome the challenging global era in 2020.

The Genderang Bahari was formed as a task force that carried a patriotic mission called ’Kebangkitan Semangat Bahari Indonesia’ or the Rediscovery of the Indonesian maritime spirit under a theme ’A decade of achievements 2010–2020’, with Bandar Nusantara as a symbolic ”light house” to welcome the challenging global era in 2020.

The birth of Genderang Bahari was spontaneous and took place during the 65th commemoration of Proclamation of the Republic of Indonesia at Sultan Hotel, Jakarta, initiated by maritime advocates driven by the awareness and the need to revive the maritime spirit as a mandate which is believed to have the power to guide younger generations to face the future with aplomb.

The idea was written down during the commemoration of Hari Nusantara on 13 December

2010 and is expected to touch our hearts as citizens of an archiplegic nation to reach the future with greatness and glory of our marine predecessors.

The writer is secretary general of Genderang Bahari, a task force with ‘a patriotic mission to rediscover the Indonesian maritime spirit’.

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The President Post

A4 January 17, 2011

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The Economy ECONOMIC UPDATES RI, S. Korea agree to double bilateral trade

Hatta Rajasa

Indonesia and South Korea have agreed to double their bilateral trade over the next five years.

The agreement was reached during a bilateral meeting between President Susilo Bambang Yudhoyono and his South Korean counterpart Lee Myung-Bak on the sidelines of the Bali Democracy Forum here last month.

Trade between the two countries is at around US$20 billion.

2.5 million tons Target of Rice

Coordinating Minister for Economic Affairs Hatta Radjasa said South Korea had also expressed its wish to increase its investment in Indonesia.

He said the decision to increase investment would only be known next year after the establishment of a special team to identify investment potentials in Indonesia that South Korea could exploit.

The Government has set a target of rice production amounting to 30.9 million tons of dry grain for January–April. Bulog will absorb 2.5 million tons of rice from farmers until May 2011.

RI migrant workers’ remittances reach US$5.03 billion Bank Indonesia (BI) reported that per September 2010, Indonesia`s migrant remittances totaled US$5.03 billion, up 2.44 percent from US$4.91 billion US dollar in last year`s same period.

Difi A Djohansyah, a spokesman of the central bank, said last month that per September 2010, Indonesia has sent 427,000 workers abroad, down 12 percent from 479,000 workers in the same period in 2009.

With the additional workers, the total number of Indonesian workers abroad in September 2010 reached 4.32 million people.

Since 2005, Bank Indonesia in cooperation with the manpower and transmigration ministry and the National Agency for the Placement and Protection of Overseas Labor`s (BNP2TKI), has monitored the placement of Indonesian workers abroad.

Sultan Thaha to become international airport in 2012 Sultan Thaha Airport of Jambi Province is being developed into an international airport in 2012.

“There will be major developments for the airport in 2011, initiated by designing some facilities required for the airport,” the Head of Transportation Office of Jambi Province, Benhard Panjaitan said last month.

The fund for the airport development and construction will come from State Budget, Regional Budget and the budget of PT Angkasa Pura.

The runway, which will be 30 meters wide and 2,220 meters long, will be expanded to 45 meters and 2,400 meters respectively.

The runway expansion is urgent as the airport planned to serve for big airliners which require a runway with a width 35 meters and a length of 2,400 meters.

“One of the important facilities to realize the international airport is an Instrument Landing System (ILS) to guide airliners while landing in bad weather,” Benhard said

Two power plants in Jayapura to operate in 2011 Two power plants which have been built in recent years by state electricity company PT PLN`s Jayapura region will start operation in mid-2011, director of PT. PLN, Dahlan Iskan, said here last month.

“It is hoped that in mid-2011 Holtekamp thermal power plant and Orya hydropower plant will become operational,” he said.

“When these two power plants have become operational, PLN Jayapura region will save tens of billions of rupiahs a month or half a trillion rupiahs a year,” he said.

The Holtekamp thermal power plant is located in Muara Tami sub district, Jayapura city and the Orya hydropower plant in Genyem sub district, Jayapura district with a capacity of 200 megawatt each.

Photo: The President Post/Nandi Nanti

RI Upbeat on 2010 Economic Performance By 2030, Indonesian per capita income would be US$17,000 based on the robust Indonesian economy that has sustained consistent growth since 1970

C

oordinating Minister for Economy Hatta Rajasa said last month that Indonesia`s economy is ranked 16th in the world, above previous projections.

“The prospect of Indonesian economy will be better than previously projected,” said Minister Rajasa.

Citing Bank Indonesia data, he said that the Indonesian economy grew 6.0 percent in 2010 and was expected to grow 6.5 percent in 2011.

By 2030, Indonesian per capita income would be US$17,000 based on the robust Indonesian economy that has sustained consistent growth since 1970, he said.

China has been reported to become interested in making an investment in ports in Papua.

“On January 5, 2011, a Chinese representative mission will meet the Papua administration in Jayapura,” Transportation Minister Freddy Numberi told the press prior to an economic evaluation meeting at the economic coordinating ministry here last week.

Freddy said China was in-

gas processing industries will experience an above-target growth rate,” Hidayat said at year-end press conference here last week.

MS Hidayat

Indonesia`s industrial growth in the third quarter of 2010 was recorded at 4.69 percent, boosting confidence that the target figure of 4.65 percent for the whole year will be easily surpassed, Industry Minister MS Hidayat said last week.

“Considering the continuous positive trend in industrial growth until the 4th quarter of 2010, we believe non-oil/non-

The recovery of the global economy is seen by the performances of industrialized countries such as the United States and Japan as well as regional economic giants China and India, all of which brought positive im-

pacts to their trading partners, including Indonesia.

However, Minister Rajasa admitted that the positive development on the economic sector had not had a positive impact on poverty reduction in all regions of Indonesia.

“Therefore, there should be a way out (to deal with poverty issues), something that the central government and regional governments must address,” he said.

Poverty and unemployment rates could not yet be reduced significantly over the past years.

In 2005 poor people in Indonesia amounted to 118 million, or 53.8 percent of the total population.

China Interested in Building Ports in Papua terested in port projects in Papua and West Papua.

He said the meeting discussed Chinese investment opportunities in Papua and West Papua.

The Papua governor will also brief the Chinese mission on the potentials in Papua.

Freddy said cooperation with China is covered by a government`s plan to promote public private partnership (PPP).

Freddy added the meeting will be attended by nine companies to

Industrial Growth in 2010 Expected to Surpass Target The highest growth achievers in the industrial sector were transportation vehicles, machinery and their spare parts that grew 8.47 percent, fertilizer, chemical and rubbergoods products (4.82 percent) and other industrial goods (3.83 percent).

“At the end of this year, the per capita income will already reach US$3,000. This figure is beyond the target of the government,” he said.

In addition to strong domestic demands, the positive Indonesian economy had also been influenced by the recovery of the global economy as reflected by the growth in export since the fourth quarter of 2009.

He said the non-oil/non-gas processing industry sector had grown significantly in 2010 compared with 2009 when it grew only 1.54 percent.

Industrial growth in 2010 had also moved closer to the national economic growth figure which was recorded at 5.82 percent in the third quarter of 2010.

“This shows that the industrial sector has become a sufficiently high source of growth in the overall gross national product,” said the minister.

The highest growth achievers in the industrial sector were transportation vehicles, machinery and their spare parts that

grew 8.47 percent, fertilizer, chemical and rubber-goods products (4.82 percent) and other industrial goods (3.83 percent).

The industrial sector made 68.8 billion US dollars from export of manufactured products, or 62.07 percent of the overall earnings from exports, and 34.10 percent higher than a year ago.

Investment in the industrial sector was registered at 17.03 trillion rupiahs for domestic investment (PMDN) and 2.5 billion US dollars for foreign investment during the period.

The manufacturing industries sector in 2010 employed 14.4 million people, or an increase of 386,640 from the figure in 2009.

witness the potentials in Papua.

Besides companies having to do with ports, he added, those engaged in cement and mining had also become interested in the meeting.

He said China was also interested in developing airports there.

“The airports in Manokwari, Jayapura, Sorong, and Biak will be revived like in Mimika,” he said.

He added that Papua will have

new ports in Jayapura, Sorong and Biak.

“The three areas are being prepared to have new international ports,” he said.

At present, he said, the construction of basic infrastructure has already started. He said the coastal area will be reclaimed with funds from the State Budget.

“We are hoping China would take part in the development of the region,” he said.

Banking Loans Grow 22% The amount of banking loans extended in the year up to the second week of December 2010 reached Rp1,708.15 trillion, up 22.76 percent year-onyear, Bank Indonesia (the central bank/BI) said.

In the past week alone, the amount of banking loans reached Rp7.22 trillion consisting of Rp4.04 trillion in rupiah and Rp3.18 trillion in foreign currency, BI spokesman Difi A Johansyah said last week.

Difi A Johansyah As such, the amount of banking loans rose Rp277.95 trillion or 19.43 percent year-todate (ytd) and Rp316.73 trillion or 22.76 percent year-on-year (yoy), he said.

The increase in the amount of banking loans in foreign currency originated from four groups of banks (private banks, branches of overseas banks, joint venture banks and regional government-owned bank), he said.

However, state-owned banks recorded a Rp0.15 trillion decline in the amount of banking loans in foreign currency.

The central bank noted that during the reporting week the amount of banking loans in foreign currency rose US$0.36 billion with branches of overseas banks recording the highest increase of US$0.12 billion.

2011 Micro Credit Target at Rp20 Trillion The government is targeting the disbursement of Micro Credit Support (KUR) in 2011 to total Rp 18-20 trillion, up from Rp16.4 trillion in 2010.

“Each year the amount is increasing,” State-owned Enterprises Minister Mustafa Abubakar said in Jakarta last weekend.

This year the government has chosen six state-owned banks, Bank Negara Indonesia, Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Tabungan Negara, Bank Bukopin, Bank Syariah Mandiri and 13 regional banks to distribute the micro credit.

BRI recorded the biggest credit distributor last year with 9.7 trillion, or half of

Mustafa Abubakar

the total KUR. Bank Mandiri distributed Rp1.7 trillion during 2010. Half of the total loans were taken out by those in the agriculture and animal husbandry sector with 42,000 debtors, while more than 35% of those loans were taken out by those in the trade sector, with more than 12,000 debtors.

According to Mustafa, since KUR allocation began in 2007,

total credit received by micro entrepreneurs amounted to Rp33.4 trillion.

Soft loans were taken out by more than 3.8 million debtors, which employed 6.7 million workers.

The limit of the loans without collateral varied to a maximum of Rp20 million per debtor, an increase from the previous Rp5 million.

Microcredit is expected to increase the number of Indonesian entrepreneurs, which is only 564,000 people or 0.24 percent of 163 million people of working age.

“We need at least 4 million new entrepreneurs because we want to increase competitiveness,” said Coordinating Economic Minister Hatta Rajasa.

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January 17, 2011 A5

The Economy Govt to Reduce Unemployment by 0.5 percent in 2011 The government has set itself the target of reducing the unemployment rate by 0.5 percent from 7.5 percent in 2010 to 7 percent this year.

P

resident Susilo Bambang Yudhoyono made the statement when giving the targets of national development in the 2011 government plan of action before all cabinet ministers, governors, district heads, and mayors at a working meeting here last week.

President Yudhoyono also said the government would also reduce the poverty rate from 13 percent to about 12.5 or 11.5 percent this year.

In connection with financial resources, the head of state said 2011 state budget rose by 9.2 percent from the last year`s budget to Rp1,229.6 trillion this year.

But the president added that the rise of state budget was balanced by an increase in state revenue.

“Our state revenue rises 11.3 percent from that in the previous year and it can reduce budget deficit,” the president said.

Meanwhile, Finance Minister Agus Martowardojo said early this year that budget deficit in 2010 state budget reached only Rp39.5 trillion or 0.62 percent from previous estimation of Rp133 trillion or 2.1 percent.

He also said the remaining budget financing (SILPA 2010) was Rp47 trillion and corrected a prediction of Rp23.2 trillion that he made a week ago.

Indonesians have been warned to beware of global crisis issues that could have a serious impact on its economic growth, President Yudhoyono said.

“We have to beware of three crises that could trigger disputes among global countries. They are food supply, energy and water,” the President said.

The government would reduce the poverty rate from 13 percent to about 12.5 or 11.5 percent this year, said President Yudhoyono at a working meeting here last week.

In the backdrop of the still uncertain global economic and financial conditions the board of governors of Bank Indonesia still believed the country`s economy could grow 6.0 percent in 2010.

ing is `Fair and Just Economic Growth Acceleration Supported

by Determination on Management and Synergy between Central and Regional Governments.

The achievement was boosted by economic growth in the fourth quarter of 2010 which was predicted to reach 6.1 percent or higher than in the previous quarter.

“RI more successful in development in 2011”

“For the year 2011, we need to be optimistic that our development programs will be much more successful. There are four factors that enables us to boost our country`s development,” he said.

President Yudhoyono said the first factor was related to the country`s ongoing growth momentum.

The second factor is Indonesia’s great potential to be an ad-

RI to Boost Non-Oil/Gas Exports to Cover Trade Deficit In 2010, Indonesia exported non-oil and gas product 10.6 billion US dollars, while imported non-oil and gas products 16.59 billion US dollars.

Indonesia intends to export more non-oil/non-gas commodities in 2011 to cover its swelling trade deficit with China, a trade official said.

“The deficit can be lowered by increasing exports, coupled with efforts to improve the quality and added value of the products,” Vice-Trade Minister Mahendra Siregar told the media after accompanying Trade Minister Mari Elka Peagestu in a press briefing on export-import performance at Trade Ministry last week.

Siregar added that non-oil/non gas trade imbalance with China in the 10-month period of 2010 had surged compared to the same period 2009 when the figure was 3.91 billion US dollars.

The soaring non-oil/gas trade deficit with China in JanuaryOctober 2010, he said, was predominantly caused by imports of raw materials valued at 3.1 billion US dollars and capital goods valued at 1.7 billion US dollars.

If compared to non-oil/gas trade deficit in the January-October 2008 period of 6.1 billion US dollars, he said, the deficit over the same period in 2010 is lower as export was recorded surging more than imports.

Siregar also said that non-oil and gas export to China during January-October 2010 period was up 56 percent compared with the same period of 2008 when import increased only 23 percent.

Total trade between Indonesia and China in 2010 amounted to 28.2 billion US dollars, surging 40.6 percent compared to 2009 which was registered 20.07 billion US dollars.

Non-oil and gas trade was the largest which was valued at 26.52 billion US dollars.

In 2010, Indonesia exported non-oil and gas product 10.6 billion US dollars, while imported non-oil and gas products 16.59 billion US dollars.

Overall, Indonesia underwent a trade deficit 4.9 billion US dollars, a 152-percent increase over the deficit in 2009 which was valued at 1.9 billion US dollars, according to the Central Bureau of Statistics (BPS).

Hatta: Climate, Oil Price Changes Greatest Challenge in 2011 Coordinating Minister for Economic Affairs Hatta Rajasa said climate change and oil price fluctuations would pose the biggest challenge for the Indonesian economy in 2011.

“Global climate change will affect food and energy,” he said at a new year press conference here last week.

“The government would continue stabilizing the price of food through market operations and increase stocks,” he said.

He said the government would in the near future issue two pres-

idential instructions relating to food price stabilization efforts.

One of the presidential decrees would give flexibility to the National Logistics Agency to procure rice and the other one to the agriculture minister to take actions to overcome the impact of climate change such as with regard to fertilizer and seed supply.

“Economization in fuel consumption would also be done.

So efforts will be made not only in the supply but also in the demand side,” he said.

He said fuel subsidy would still

Bank Indonesia believes the country`s economy will remain strong with its gross domestic product in 2011 and 2012 growing by 6.3 percent driven by strong domestic demand, especially investment.

The central bank`s governor, Darmin Nasution, said here last week the Indonesian Balance of Payment (NPI) in 2011 was predicted to record a relatively big surplus although it would be lower than in 2010.

“Exports would still grow high but import growth would be higher in line with increasing domestic demand to make the surplus Darmin Nasution in the current account lower. On the other hand, the financial and capital current account is predicted to still record a high surplus, driven by huge inflow of funds in the form of portfolios or direct investment,” he said.

Beware of global issues affecting RI`s economy: President

Floods that hit Australia the size of Germany and France recently is a sign of climate change.

It affected agriculture, mining, and other economic sectors in Australia and also have a serious impact on the global economy, Yudhoyono said.

Other global issues that might have an impact on the global economy are world peace and security, global poverty, terrorism and extremism, climate change, and natural disasters, he said.

“We live in a dynamic world.

Therefore, we should be keen in anticipating, gaining opportunities, and facing challenges and obstacles,” he said.

The meeting was attended by ministers, governors from all Indonesia`s provinces, and also district and municipality heads.

The Gubernatorial Working Meeting has been held four times since Yudhoyono took office in 2009.

The theme of this 2011 meet-

BI Governor: RI Economy Remains Strong

continue but it would be aimed at the right targets.

“Limiting fuel consumption is a must while raising a fuel price is not an option,” he said.

Agriculture minister Suswono meanwhile said several countries especially Thailand and Vietnam have issued a warning that they would reduce exports of rice which will certainly spur international price of rice.

“However if our rice production could reach 68.8 million tons it will not be necessary for us to import rice,” he said.

vanced country.

The third factor related to Indonesia`s success in handling the impacts of world`s financial crisis in 2008 and 2009.

The fourth factor was confidence that Indonesia could resolve problems and challenges that it faced well, he said.

By considering the four factors, the head of state said there were no reasons for the government not to remain confident in gaining a success in its development programs this year.

“For the year 2011, we need to be optimistic that our development programs will be much more successful.

There are four factors that enables us to boost our country`s development.”

The growth is driven by strong domestic demand especially household consumption and investment. The country`s economic progress is also boosted by quite solid external performance.

“The foreign currency reserves until the end of December 2010 were recorded at US$96.2 billion or equal to 7.1 months of imports and payments of government foreign debts,” he said.

The President Post

A6 January 17, 2011

www.thepresidentpost.com

The Region East Asian Economy and Asean 2011 Objectives

By Atmono Suryo

It is becoming increasingly clear that the global economy needs a strong Asian economy.

The world expects that Asia should move more quickly to the epicenter of the global economy. Asia should exist side by-side with the Americas and Europe.

E EAST ASIA

ast Asia with China in the lead is widely considered as a region on the fast track during the last two decades. Asia has recovered from the economic and financial crisis in a significant way, much faster than other countries in the global economy. Thanks to China, real GDP growth in developing East Asia is poised to increase from 7.0% in 2009 to 8.7% in 2010.

According to World Bank data, East Asia has emerged stronger from the global crisis. More importantly, rapid growth will be possible in the coming years even in a weakened global economy.

Hence, Asia is heading towards a promising era as of 2011, particularly in the economic and business area. Such a positive developments in Asia will be of special interest to ASEAN, especially Indonesia.

The political and security areas, however, are still in an unstable and precarious state. There are quite a number of issues to worry about concerning not only the north- eastern part of Asia because of the Korean Peninsula issue but also in the southeastern region with the problem of the South China Sea. In ASEAN’s view peace and prosperity goes hand-in-hand.

Without peace and political stability there will be no prosperity. And the other way around, without prosperity there will be no peace. It is therefore regrettable that ARF (Asian Regional Forum) has continued to be in a limbo. Yet all the stakeholders, the big powers and all the countries in the region are members of the ARF. The area of economics and business in Asia are in a much more promising state. Asia is heading towards an era filled with both tough challenges but

also new opportunities, particularly in the area of trade, finance and services. The big historical thrust is that the time has come for Asia to move from the periphery to the center of world economic gravity.

ASEAN 2011

The year 2011 will be a highly important year for Indonesia as it will assume ASEAN’s chairmanship. The ASEAN Summit of the ten ASEAN leaders will be held in April 2011 while the second ASEAN Summit and East Asia Summit (EAS), often called ASEAN+8, is scheduled to be held in Bali in October 2011.

These summit meetings will give an opportunity for ASEAN, with Indonesia in the chair, to demonstrate its continued capability to remain in the driver’s seat in Asia’s developments.

A cabinet meeting was held on the 17th of December to prepare for the forthcoming important meetings. The cabinet meeting was attended by the ASEAN Secretary General.

Some important clues have been given after the Cabinet meeting by President Susilo Bambang Yudoyono, Foreign Minister Marty Natalegawa and ASEAN Secretary General Surin Pitsuwanwith with regards to some of the issues which may

come up during ASEAN 2011.

• To go global The main theme for ASEAN 2011 would be “ASEAN Community in a Global Community”. This theme implies that ASEAN will not only be active in Asia but also assume a higher profile in world affairs.

• Integration There is the need to establish the ASEAN Community by 2015 supported by three important pillars: Political-Security, Economic and Socio Cultural.

• People-centered ASEAN Under Indonesian chairmanship the objective would be to bring ASEAN closer to the people: to transform ASEAN to become a “people-centered Association”.

• Politics and Security The East Asian Summit should discuss and analyze political and security issues in Asia. The Summit includes powerful or prominent countries such as China, the United States, Russia, Japan, India, South Korea, Australia, New Zealand and ASEAN. • Diplomatic Capital Indonesia will aim to develop Jakarta into ASEAN’s “diplomatic capital”.

It is good to see Indonesia’s

strong commitment to make ASEAN 2011 a success. After all it is often said that Indonesia is losing interest in ASEAN. ASEAN and East Asia would need Indonesia’s pro-active role in Asia.

On the other hand it is in Indonesia’s interest to see a stronger ASEAN. It is of strategic importance for ASEAN to establish and realize the grand design c, namely political-security, economic and the socio-cultural. A more integrated ASEAN would strengthen its position in East-Asia, particularly vis-à-vis the two giant countries China and India.

The ASEAN+3 grouping (ASEAN plus China, Japan and South Korea) are the core countries for the development of the East Asian economy. The process of economic integration in ASEAN should pave the way for a more integrated East Asian community. As the Asian Development Bank (ADB) stated in one of their main research documents, part of Asia’s success story is also growing integration.

It is becoming increasingly clear that the global economy needs a strong Asian economy. The world expects that Asia should move more quickly to the epicenter of the global economy.

Asia should exist side by-side with the Americas and Europe.

The high-income countries are expected to grow by 2.4% in 2011 and by 2.6% in 2012, while East Asia and Pacific will grow by 8.5% in 2011 and 8,7% in 2012, three times faster than the highincome countries. East Asia is thus catching up with the West.

The rapid growth of Asia is not only an economic necessity for the growth of the global economy. It also reflects the historical call to Asia to implement the shift of global power from the West to the East. “Asia is returning to the center stage it occupied for eighteen centuries before the rise of the West”, Kishore Mahbubani stated in his book “The New Asian Hemisphere”.

Therefore, it It makes sense if Indonesia would like to see ASEAN together with the countries of Asia to go global. ASEAN Community in a Global Community is the proposed theme for ASEAN 2011. ASEAN with a strong Asia alongside would be able to play its positive part in the global community of nations.

Internally, within ASEAN, there is the need for people’s involvement in the growth of the South-Eastern part of Asia. People often cynically ask, “what is the meaning of ASEAN for us”.

There are still many frictions and rivalries among the countries in the region. This should come to

The rapid growth of Asia is not only an economic necessity for the growth of the global economy.

It also reflects the historical call to Asia to implement the shift of global power from the West to the East.

an end.

ASEAN, as an integral part of Asia, should become a pro-people-centered ASEAN that would bring peace and security, prosperity and welfare to the people, providing them with greater employment opportunities.

It is of strategic importance for East Asia and the Pacific to have a strong and solid ASEAN in their midst, with Jakarta as ASEAN’s diplomatic capital, as proposed by Indonesia.

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

The President Post

www.thepresidentpost.com

January 17, 2011 A7

ASEAN ASEAN: To Develop a New Economic Momentum

By Atmono Suryo

Photo: www.kompas.com

ASEAN, as a regional economic entity, is becoming a significant economic force in East Asia beside China, Japan and India. It has become the 5th largest economy in the world. In terms of numbers ASEAN, with its total population of 584 million people, $1,5 trillion GDP, ample human and natural resources and with a record of significant growth, ASEAN has the potential to become another economic force.

A

ASEAN ECONOMY

s the East Asian economy is moving ahead quite strongly with China and India in the lead, there is the need for ASEAN to develop a new economic momentum to surge ahead in the regional and global economy. In order to revitalize ASEAN there is the need to develop new paradigm in some key areas.

Firstly, to strengthen and integrate ASEAN’s economy to become another “powerhouse” in East Asia, and secondly to alleviate its position and role in the global economy not only in East Asia but also in the wider global economy. Such an objective is in line with the ASEAN 2011 theme “ASEAN Community in the Global Community”.

With Indonesia in the chair, ASEAN intends to boost its external political-economic relations not only with the countries in the ASEAN+3 grouping (ASEAN plus China, Japan and South Korea), but also with the countries belonging to the EAS (East Asia Summit) which now includes India, Australia, New Zealand , Russia and the United States.

To put it in more popular terms, ASEAN will not only “go regional”; it also intends “to go global”. Such strategy would be for the interest of the ASEAN economy and ASEAN’s image and standing in the world. It will also support the expanding East Asian economy with China and India in the lead and in the broader context to serve the interest of the global economy.

ASEAN, as a regional economic entity, is becoming a significant economic force in East Asia beside China, Japan and India. It has become the 5th largest economy in the world. In terms of numbers ASEAN, with its total population of 584 million people, $1,5 trillion GDP, ample human and natural resources and with a record of significant growth, ASEAN has the potential to become another economic force.

As can be seen from the below statistics (Figure 1) within ASEAN Indonesia has the largest GDP, the largest population and the largest land area. Its Per Capita GDP, however, is lower than that of Singapore, Brunei Darussalam, Malaysia and Thailand. It is expected that Indonesia should continue to play a leading and positive role in ASEAN. Not only in terms of population and economic size, much of ASEAN’s credibility and attraction to the outside world is being built on a number of developments, which include among others the following factors: • It is ASEAN’s continued objective to achieve peace, security and stability in the South East and East Asian region. This is an important objective for the development of the greater Asia-Pacific region.

• ASEAN continues to promote cohesion among the South Eastern countries notwithstanding the fact that ASEAN faces diversity and divisions in the region in the area of politics as well as economics.

• ASEAN is part of the Developing East Asian region which has come out stronger with output expanding at near precrisis rates and private investment on the rise.

• ASEAN is in the midst of building up the grand-design ASEAN Community 2015 supported by three pillars. An integrated ASEAN would be an attractive region for world investors and traders.

There is the urgent need for Indonesia to work harder on various matters. Not only in the area of the free flow of goods and services, but also in the flow of capital and investment and in particular in the area of the free flow of skilled labor.

Indonesia is still lagging behind other emerging countries in the area of competitiveness.

Indonesia’s world scoring is still very low. In fact, among ASEAN countries Indonesia is considered to be on the low side. It will not be easy for Indonesia to change this unhappy situation.

Accordingly, there is a great deal of uneasiness in the Indonesian community, including in the business community. It is feared that Indonesia will not achieve the goal of ASEAN Economic Community by 2015. But Indonesia as an important leading country in the Association cannot afford to lag behind.

SINGLE PRODUCTION BASE

ASEAN is moving to create a single market and also a single production base. A positive trend to mention is the performance of ASEAN’s total trade which grew by 6.2% despite the global financial crisis in 2008 It appears that ASEAN is most successful in the area of electronics (Figure 2). The output and trade in electronics is by far bigger than the other priority areas.

Next in line comes textiles and apparels, the automotive industry and agro-based sector. Rubberbased, wood-based sectors and the area of fisheries, which are of particular importance to Indonesia, are still at the lower end.

ASEAN ECONOMIC COMMUNITY

According to the AEC score card, for the period 2008/2009 ASEAN has achieved the rate of 80.9%. On paper there is the possibility that the 100% rate can be achieved on time, but there is still some doubts on this matter.

Judging from the observations made at a recent ICWA seminar held at the Financial Club, one gets the impression that the progress made in Indonesia to prepare for the implementation of the ASEAN Economic Community is not too impressive. There is even a great deal of pessimism in the air.

An area that is most likely not known is skilled labor, which covers the following groups: architects, engineers, accountants, surveyors, medical practioners, including dentists and nurses. The ASEAN Economic Community will provide for the free flow of skilled labor in areas which are covered by Mutual Recognition Agreements.

After 43 years of existence the time has come for ASEAN to develop a new momentum:

Single Production Base Value in million US$

2000

2001

2002

2003

2004

2005

2006

2007

2008

375,000

300,000

225,000

150,000

75,000

0

Agro-based

Automotive

Electronics

Fisheries

Rubber-based

Textiles & Apparels

Wood-based

Source: ASEAN Trade Database

ASEAN Population, Territory, and Economy (2008) Country

Brunei Darussalam Cambodia Indonesia

Total land area (sq. km)

Total population (thousand)

GDP at current market prices (US$ Mn)

(in US Million PPP$)

GDP per capita (US$)

(PPP$)

5,765

397

14,147

19,133

35,623

48,180

181,035

14,656

11,082

27,986

756

1,909 3,943

1,860,360

228,523

511,174

901,139

2,237

Lao PDR

236,800

5,763

5,289

13,868

918

2,406

Malaysia

330,252

27,863

222,057

383,059

7,970

13,748

Myanmar

676,577

58,510

27,182

68,203

465

1,166

Philippines

300,000

90,457

166,773

317,215

1,844

3,507

Singapore

710

4,839

182,103

238,765

37,629

49,338

513,120

66,482

273,729

546,320

4,117

8,218

Thailand Vietnam

331,212

86,160

90,701

242,697

1,053

2,817

ASEAN

4,435,830

583,651

1,504,236

2,758,385

2,577

4,726

CLMV

1,425,624

165,089

134,253

352,753

813

2,137

ASEAN6

3,010,207

418,562

1,369,983

2,405,632

3,273

5,747

The output and trade in electronics is by far bigger than the other priority areas. Next in line comes textiles and apparels, the automotive industry and agro-based sector.

• To bring ASEAN closer to the people, it must be transformed from a bureaucratic association to become a more “people-centered “ association to get the full support of the people.

• The entire ASEAN community must be informed and support ASEAN’s objectives, including the question of ASE-

AN Community. The people in the region must know of the objectives and advantages of closer economic integration.

• ASEAN, together with the other emerging countries, deserve to be in the forefront to reshape and revitalize the global economy through the G20, WTO, UN agencies and other

international forums.

• ASEAN has gone very far in developing various visions and schemes, a multitude of roadmaps and other directives. The time has now come for on the ground actions and implementation.

Throughout 2011 Indonesia

will have a golden opportunity to show the world of its firm leadership to revitalize ASEAN, and that ASEAN is apt and ready to play a positive and effective role in the regional and global economy.

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

The President Post

A8 January 17, 2011

www.thepresidentpost.com

Education GLOBAL EDUCATION:

Key to Global Competency in a Global Society

By Jhanghiz Syahrivar

Education does not only encourage personal development, it also offers general growth of an entire community by providing a place for people to interact, socialize and to unify their societies.

E

ducation is one of the most frequently discussed issues in the world. Shaik Baksh, the Minister of Education of Guyana, argues that education is the backbone of all sectors of the economy and the delivery of quality education to a nation’s children remains a top priority.

So, how do we define education? Perhaps some people believe that true education can only be attained in a formal educational institution. Others believe that education comes in many different forms and environments. A definitive answer to that question

might not exist at all. Now, try to leap ahead by thinking the real purpose of education towards our nation.

Many people believe that the real purpose of education towards a nation is to educate youths to be responsible citizens.

Some, like Shaik Baksh, believe that it is to develop individuals, as well as society, in order to ensure a society’s economic success. Few others simply argue that the real purpose of education has nothing to do with the nation and is simply focused on developing individual talents and intelligence.

Even though their answers may differ, they certainly agree that

education is a basic human right.

When that right is granted, the growth and development of the society as a whole is more likely to prosper.

In 1990, UNESCO launched EFA, the movement to provide quality education for all children, youth and adults by the year 2015. This quality education may refer to the establishment of formal and non-formal educational institutions that adhere to global needs and requirements, such as English speaking competency, global perspectives, technology literacy, and many others.

In an attempt to bridge some of the gaps that prevent Indonesian youths to compete with those from developed nations, President University was established in 2001. The University’s big goal is to be a world class learning institution that produces leaders in their respective fields and communities by educating

future generations through the transfer of skills and knowledge in order to build character and wisdom.

The goal is supported by several strategies that aim to reduce some of the well-known gaps that prevent people from becoming a global community, namely communication, human competency, cultural difference, and technology literacy; First, President University knows the significance of communication in today’s globalization era—failure in communication may lead to dramatic multidimensional issues, such as the class of cultures and religions.

Therefore, the University implements English, the language of the world, as the daily medium inside and outside campus.

Hopefully, local students will be able to interact with and understand their foreign counterparts.

Second, President Universi-

ty provides a two-semester internship program that enables students to work in more than its 1,500 global affiliates and to grasp so-called ‘real-life working experiences’ so that they can compete globally. Thanks to the program, it is hard to find its students unemployed more than six months after they graduate.

Third, President University comingles local and overseas students in one classroom to develop knowledge and understanding of other cultures and/or religions.

Every year, the University also conducts a Cultural Night as an introduction to a nation’s literature, music, folklore, visual arts, and popular culture. The event could be used as a comparative approach to help students understand similarities among cultures as well as the distinctive qualities of societies. In the university, global and international studies are integrated and folded with

some courses, such as cultural diversity.

Lastly, President University provides greater access to technology to its students and narrows the ever-widening digital divide by granting internet access in every corner of the campus. In many ways, the most basic access to technology can serve as a valuable educational tool. Individuals who are denied this access are at a disadvantage when trying to grasp opportunities to make life better for themselves, their families, and their communities.

All in all, global education is important because the dayto-day lives of average citizens around the world are influenced by burgeoning international connections. The goods we buy, the work we do, the cross-cultural links we have in our own communities and outside of them, and increased worldwide com-

munication capabilities all contribute to the imperative that responsible citizens understand global and international issues.

Education itself, in its essence, is the foundation for the success of any given society. Numerous studies have shown that there is a correlation between education and lower birth rates, lower infant mortality rates and fewer maternal deaths. A more educated population will also result in higher personal incomes as they all have more access to financial opportunities. Education does not only encourage personal development, it also offers general growth of an entire community by providing a place for people to interact, socialize and to unify their societies.

Jhanghiz Syahrivar is a Senior Education Consultant and an Assistant to Lecturer of Faculty of Economics, President University

Disparity in Education Sector Needs Comprehensive Treatment

By Widya Sanjaya

T

o unravel the problem of education in Indonesia, we need to first identify categories of problems facing this nation that is the category of policy, implementation, capacity, facilities, absorptive, and competition.

Simplistically it can be seen that education policy has only produced graduates who form a pyramid—on top there are very few graduates but way down to the bottom there are so many.

According to Deputy Minister of Education Prof. Dr. dr.

Fasli Jalal, there are currently 52 million students from all levels throughout Indonesia, covering about 4.5 million in college and university level, 22.5 million at the high school, and the rest at the level of primary school and kindergarten.

Meanwhile, not more than 350,000 students graduate each year from universities. These figures prove that it is not easy for Indonesian students to pursue higher education.

The biggest obstacle is financial difficulty due to low family income levels while the cost of education at universities cannot be lower because of the need to improve quality amid an increasingly tight competition.

On the other hand, the pressure from new registrants entering kindergarten, elementary, and secondary school continues to grow every year.

The consequence that cannot be overcome is low level of graduates’ employability both in quantity and quality. In terms of quantity, many graduates cannot “sell” their expertise to industry so it is difficult to get a good job.

In terms of quality, many employers have laid off their workers as there is increasing demand for world-class human resources and not the ones they have.

million teachers in Indonesia, more than 1.3 million still do not have a minimum educational qualification of S1 or D4. Up to 71 percent of teachers are not yet certified.

Policy implementation is another problem. No matter how good the policy, it will not produce maximum results when implemented by human resources that are not capable.

Nevertheless, there is now some home because the government of President Susilo Bambang Yudhoyono has begun to implement a teachers certification program for improving the quality of teachers at various levels.

Education Minister Prof. Dr. Mohammad Nuh said the government needs to certify 50,000 teachers every year to fill the gaping need for qualified teaching personnel.

The minister said, out of 2.6

The next issue to be tackled is capacity or capability of Indonesian families to educate their children. This is closely related to per capita income level that has not been uniformly strong.

As a result, it is not easy for children from poor families to continue their education to college, without scholarship support from the government and the private sector.

The government needs to encourage more national companies (especially SOEs) and foreign corporations to provide scholarships through their corporate social responsibility (CSR) programs.

The President Post

The number and types of scholarships from local governments in 33 provinces also must be multiplied in order to fill the scarcity of skilled human resources at the provincial and district levels.

Locally-owned companies need to be encouraged to provide scholarships to strengthen the capacity of human resources and provide opportunity for local workers to build their respective regions.

Another factor that causes disparity in education is the issue of educational facilities that have not been spread evenly throughout the country.

In big cities, many schools have modern facilities to support the teaching-learning process, but in isolated areas, it is the opposite.

In urban areas many high school and college campuses are

connected to the Internet so they are very rich in data and information. School and university students never lacked data and information; instead, they can accumulate more than they need.

But in others areas, adequate library resources remain a problem. Such a situation has a direct impact on the outcome of education.

In general, university curriculum has never been properly synergized with the needs of businesses that create jobs. Consequently, many university graduates have difficulty getting in.

On the other hand, industries do not “talk” with universities so they do not understand what is being taught in universities.

A number of private universities in Indonesia have began using faculty members from developed countries like the United

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States, Canada, European countries, Australia, and some prominent countries in Asia, including India, Japan and the Philippines.

Their presence also provides a new culture in the academic world in Indonesia. They have also brought along a variety of best practices to be implemented in Indonesia.

However, in line with that, the cost of education that must be borne Indonesian students will increase because foreign expatriates’ presence is costly.

All these factors influence the progress of education in Indonesia. What is needed now is concerted efforts to create competitive advantages for the country that is growing fast in all sectors. Due to that the government needs to apply a comprehensive strategy to elevate Indonesia’s human resource potential to a higher level.

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State Companies Control 26 pct of Stock Market Capital

BUSINESS BRIEFS Production level of PT Pusri over two million tons PT Pusri in Palembang has reached a production of 2,050,000 tons, said President Director of PT Pusri Ir Arifin Tasrif in Palembang, South Sumatra, last month.

He said the fertilizer production has faced many disruptions as stocks had been accumulating forcing the factory to lower its production capacity.

The storage facilities are already full, and transportation by Musi river has become inefficient, while the use of fertilizers was below the target set by the agriculture ministry, he said.

In the meantime, the long and incessant rains in addition to the switch of the planting season had a serious effect on the use of fertilizers.

Chandra Asri to build butadiene plant PT Petrokimia Butadiene Indonesia (PBI), a subsidiary of petrochemical producer PT Chandra Asri, will soon build a butadiene plant, the first of its kind in Indonesia.

“We have set aside $100 million to build a (butadiene) plant with a capacity of 100 thousand tons per year,” PT Petrokimia Butadiene Indonesia Director Suhat Miyarso said last month.

The plant will be built on 40,000 square meters of land in the PT Chandra Asri factory compound in Cilegon, Banten province, he said.

“We are currently preparing a bidding process to decide an EPC contractor,” he said.

He said PT Petrokimia Butadiene Indonesia has extended an invitation to a number of companies in South Korea, Japan and Italy, to file a bid for the project until March 2011.

Photo: www.tradenote.net

Butadiene

B

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State Enterprises Minister Mustafa Abubakar considered the control of 26 percent of the stock market`s capital by the state-owned companies as very good in view of the fact that the number of state-owned companies in the market comprised only four percent of the total number of companies listed at the BEI (421).

S

eventeen stateowned companies listed at the Jakarta Stock Exchange (BEI) control 26 percent of the market`s total capital, State Enterprises Minister Mustafa Abubakar said.

“Until December 29, 2010, the total value of market capital reached Rp3100 trillion and Rp819 trillion of it or 26 percent are controlled by state-owned companies,” he said at a year-end press conference at his office here on Friday.

He said communication operator Telkom held the biggest share in the stock market`s capital at Rp161.2 billion, followed by Bank Mandiri (Rp137.1 billion), Bank Rakyat Indonesia (Rp129.4 billion), Perusahaan Gas Negara (Rp106 billion), Bank BNI (Rp71 billion), Semen Gresik (Rp56.6 billion) and Bukit Asam coal mining company (Rp52 billion).

Most of the 17 state-owned companies recorded positive share movements in the past year with construction company Adhi Karya recording a price growth of 122 percent, Wijaya Karya (112.3 percent) and Bank BNI (103.1 percent).

Only two state-owned companies recorded negative share price growth in the past year, namely telecommunication company PT Telkom at 15.3 percent and pharmaceutical company Indo Farma minus 3.6 percent.

Mustafa said the price of Telkom shares dropped because the company was also listed in New York and therefore the price of the company`s shares was also affected by the crisis that hit capital markets in Europe and the US. Mustafa considered the control of 26 percent of the stock market`s capital by the stateowned companies as very good in view of the fact that the number of state-owned companies in the market comprised only four percent of the total number of companies listed at the BEI (421).

Communication operator Telkom held the biggest share in the stock market’s capital at Rp161.2 billion.

In addition, he said, seven of the state-owned companies were among the 20 listed companies with the greatest amounts of capital.

Nine state firms suffer losses this year

Nine state-owned companies suffered a total loss of Rp483 billion this year, Abubakar further said.

“The figure fell from 22 the year before,” he said.

The nine state firms are plan-

tation company PT Perkebunan Nusantara XIV, paper producer PT Kertas Kraft Aceh, shipbuilder PT PAL Indonesia, aircraft maker PT Dirgantara Indonesia, textile producer PT Industri Sandang Nusantara, insurance firm PT Asuransi Kredit Indonesia, shipping company PT Pelni, state publisher PT Balai Pustaka, and paper producer PT Kertas Leces, he said.

“In 2011 we aim to reduce the number of state firms suffering losses to 4-5. In 2012 all state

firms are expected to make profit,” he said.

The State Enterprises Ministry was committed to restructuring state firms suffering losses by involving state asset management company PT Perusahaan Pengelola Aset (PPA) and the stateowned companies concerned, he said.

“So far, we have managed to rescue a number of state firms including Merpati and Semen Kupang. Both of them have now made a profit,” he said.

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B2 January 17, 2011

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Business Conoco Phillips prepares To drill in Aru Islands

Fuel Restriction BPH Migas deploys a special team to control the implementation of the restriction policy on fuel and gas subsidies consumption as of April 2011.

Photo: The President Post/Nandi Nanti

REI: Property Sector to Grow 15 percent in 2011 REI estimated that up to December 2010 realization of welfare houses by its members across the country reached 120,000 units with most consumers using housing credits from BTN Bank.

Real Estate Indonesia (REI) is optimistic the property sector will grow by up to 15 percent in 2011 compared to 10-12 percent this year.

“The key to the property sector`s growth for middleand low-cost houses is in regulations and next year the problem is expected to be finished while the macro-economic condition would also be good. So we are optimistic the sector will grow that high,” REI`s general chairman Setyo Maharso, told newsmen here last month.

He said the development of middle- and high-cost houses meanwhile would fully depend upon market mechanism and the condition of the country`s macroeconomy.

Referring to several macroeconomic indicators such as the stable rupiah exchange rate at around Rp9,100 per US dollar and controlled rate of the SBI despite high inflation Setyo said he was optimistic the predictions would be met.

“The 4.5 percent growth in 2009 was already enough to

bring stability on the property market. Now in 2010 the economy is projected to grow up to 5.90 percent. This is even better. The World Bank meanwhile predicts Indonesia`s economy will grow 6.2 percent in 2011,” he said.

He said the banks that distribute house credits (KPR) have also varied and provided affordable interest rates for consumers.

For the middle and low class the government meanwhile has provided a Housing Financial Liquidity Facility.

“So if the regulations are al-

ready in place what should we wait. This is certainly positive,” he said.

REI estimated that up to December 2010 realization of welfare houses by its members across the country reached 120,000 units with most consumers using housing credits from BTN Bank.

Realization of houses built using subsidized and non-subsidized credits from BTN until September 2010 reached 107,673 units with payments reaching Rp7.4 trillion.

Pertamina Needs New Technology to Meet Production Target After exceeding this year’s production target, PT Pertamina EP was ready to increase oil production from 130,200 barrels per day in 2010 to 132,000 barrrels per day next year.

To boost its production in 2011, PT Pertamina EP, a subsidiary of state oil and gas firm PT Pertamina, needs not only to find new reserves but also a new exploration concept and technology, an analyst said.

“In theory, there are two conditions Pertamina EP must meet to achieve its production target for 2011, namely new potential gas and oil blocks or basins and breakthrough in oil and gas exploration technology,” Dr Iskanda Zulkarnaen, a geotechnology analyst at the Indonesian Insti-

tute of Sciences (LIPI), said here last week.

He said the conventional exploration technology used so far could not optimally explore oil and gas basins in Indonesia.

“There are 60 basins in Indonesia but only few of them hold viable oil and gas reserves. But with new technology it will be possible to find reserves not only in basins but also in existing subbasins,” Iskandar said.

Therefore, a new exploration concept was essential for Pertamina EP to find hidden oil and gas

potentials in the basins, he said.

However, new technology might not be cheap and is kept by certain parties to gain more profit from the oil and gas sector, he said.

Previously, after exceeding this year’s production target, PT Pertamina EP was ready to increase oil production from 130,200 barrels per day in 2010 to 132,000 barrrels per day next year.

Its president director, Salis Aprilian, said that crude and condensate production in 2011 was expected to reach 132,000 bar-

rels per day or a rise by 1.4 percent from 130,000 barrels per day in 2010.

“However because of a natural decline of 18 percent, production actually increased by 20 percent,” he said.

The quite steep drop happened because most of the oil wells were old and some of them had even produced 30 percent less, he said.

Moreover, Salis said, gas production in 2011 was expected to reach 1,095 million cubic feet per day (MMSCFD) up from 1,054 MMSCFD in 2010.

PT. Conoco Phillips is preparing to do exploratory drilling in the offshore Amborit block 6 in Aru Islands district, a local energy official said.

The foreign oil company had already installed its drilling equipment with its exploration activity scheduled to start at the end of December 2010, Bram Tomasoa, the head of Maluku`s energy and mineral resources office, said.

He said his office, a PT.Conoco Phillips team and the Oil and the Gas Regulatory Agency (BP-Migas) had conducted a familiarization meeting on the development of the Amborit block 6 for the local community in Dobo, Aru Islands district`s capital, last December 10, 2010.

“The familiarization effort was made in cooperation with Maluku`s legislative council and the Aru Islands`s district regional task force as well as local community leaders and people at the drilling location in South Aru Tengah sub-district in order to build an understanding for investment activities which require large budget,” he said.

Bram said the funds for the exploration drilling was to be provided by PT.Conoco Phillips in compliance with the provisions and conditions stipulated by the central, provincial and district administrations.

“I was told the Aru Islands district administration had received more than Rp32 billion for various arrangements ahead of the exploration drilling under an Energy and Mineral Resources Ministry license,” he said.

Bram said the funding also came from the contribution of PT Conono Phillips which had obtained a permit from the Energy and Mineral Resources Ministry for exploration drilling in the Arafura Sea block in North Aru Selatan sub district which was scheduled to begin in January 2011.

“So if the exploration drilling turns out to have economic value, the Aru Islands district administration will receive a great share of the oil and gas produced,” he said.

Local firms to take over Siak block from Chevron A number of regional government-owned companies (BUMDs) in Riau province plan to take over the management of Siak oil block from PT Chevron Pacific Indonesia whose contract will expire in 2013.

“There have been several BUMDs expressing interest in managing the Siak Block after Chevron`s contract expires in 2013,” spokesman for the Upstream Oil and Gas Executive Agency (BP MIgas) Elan Biantoro said last month.

Chevron, formerly Caltex, signed a 22-year production sharing contract for the operation of the oil block in 1991.

The company earlier operated the block under a contract of work signed in September 1963. The block currently produces 2,000 barrels per day.

He said BUMDs had a wide chance to manage the block the more so because the central government had been committed to giving priority to BUMDs. To date, there are two BUMDs in Riau managing oil blocks taken over from Chevron. They are PT Bumi Siak Pusako-Pertamina Hulu which manages Coastal Plain Block in Pekanbaru and PT Sarana Pembangunan Riau which manages Langgak Block.

He said the BUMDs had a wide chance to take over the oil block since Chevron had not applied for the extension of the contract until mid 2010. However, the company still could apply for the extension of the contract until 2011 at the latest.

The President Post

www.thepresidentpost.com

January 17, 2011 B3

Investment INVESTMENT BRIEFS Australian investor to build 50 villas in Lombok An Australian company plans to build 50 villas of international standard in South Lombok marine tourism resort in West Nusa Tenggara province, a local official said.

“The Australian company will build villas in Seger Kuta beach and Benang Kelambu natural tourist resort in North Batukliang subdistrict,” Central Lombok District Head H.M.Suhaili FT said last month.

The construction of the villas will employ Singaporean architects who are accustomed to designing building structures in the United States and China, he said.

Rising Property Turnover

Minister sees capital inflow for direct investment rising

Hatta Rajasa

Chief economic minister Hatta Rajasa said he believed foreign capital inflow for direct investment would rise this year.

“In 2011 it will increase by more than US$12 billion,” he said here last week.

He said in 2010 the capital inflow for direct investments reached US$12 billion and for portfolios US$16 billion.

On the government`s plan to limit consumption of subsidized fuels, the minister said limiting fuel oil consumption was not the same as raising its price.

“A fuel price hike only affects fiscal matters. If it is done it will impact all people, including the poor,” he said.

Hatta said the government would approach the issue in fiscal as well as sense of justice terms so that the policy to be adopted would only affect selected segments of the people.

“If only a fiscal approach is used it will be enough to just raise the price.

The law however states that the government should continue to subsidize the economically weak segments of the population,” he said.

SE Sulawesi province, private sector to build nickel plant

Nur Alam

The Southeast Sulawesi provincial administration established cooperation with foreign and national companies to build a nickel processing plant in the region.

“The cooperation is contained in a memorandum of understanding between Jilin Horoc Nonferrous Metal Group Ltd of China and PT Billy Indonesia on December 15, 2010,” Southeast Sulawesi Governor Nur Alam

said here last month.

Nur said under the MoU, Jilin will keep $100 million at Bank Pembangunan, Southeast Sulawesi office, before building a stainless steel plant.

Ministry of Public Housing estimates the turnover of property in 2011 will rise by about 12% to Rp 100,8 trillion, up from 2010’s projeced figure of Rp 90 trillion.

Photo: The President Post/Nandi Nanti

Investments in Mining in 2010 Reach US$2.2 b

I

nvestments in the mineral and coal mining sector in 2010 reached US$2.282 billion, according to the ministry of energy and mineral resources.

The ministry`s director general of minerals and coal, Bambang Setiawan, said here last month the realization was above the target set at US$2.119 billion.

“General mining performed well,” he said.

He said the realization of minerals and coal investments until November 2010 was US$1.865 billion.

It came from working contract investments totaling US$1.07 billion, coal mining working agreement-based investments (PKP2B) US$0.756 billion, mining authorities including stateowned companies such as PT Timah Tbk, PT Antan Tbk, and PT Bukit Asam Tbk, US$0.038 billion.

Until the end of December 2010, investments rose to

US$2.282 billion. It consists of investments from working contracts US$1.479 billion, PKP2B US$0.764 billion and from stateowned companies US$0.038 billion.

Investments in mining service business reached US$904.82 million in 2010, making total investments in the sector to be US$3.186 billion.

Bambang said the total investments did not as yet include those for mining activities whose licenses are produced by regional governments in various regions.

Three Investors to Build Hotels in Denpasar

RI Hopes Singapore’s Investment to Rise 50% Indonesia hopes Singapore’s investment in Indonesia will rise by up to 50 percent in 2011, chief economic minister Hatta Rajasa said here last week.

“Singapore’s investment in Indonesia in 2010 was recorded at around five billion US dollars. We hope it will increase up to 50 percent,” he said after meeting with Singapore`s minister of trade and industry Lim Hng Kiang.

He said investment was one of the issues discussed by the working group in the framework of economic cooperation between the two countries.

The two countries have agreed to focus their cooperation on the fields of infrastructure, connectivity, ports and manufacturing sectors.

“Singapore as an international financial hub is expected to promote investment opportunities in Indonesia,” he said.

The working group that has

been set up by the two countries also deals with development in Batam, Bintan and Karimun, air transportation, human resources development and agribusiness.

Hatta said the development in Batam, Bintan and Karimun has shown progress while obstacles in licensing, customs and others had been reduced.

“We have agreed to increase the promotion of the region so that it could become an investment destination. This must become a success story,” he said.

On air transportation, Hatta said the Association of Southeast Asian Nations (Asean) would issue a connectivity blueprint in the framework of establishing an ASEAN economic community.

He said an agreement has also been reached with regard to improving the skills of the Indonesian human resources in Singapore.

“In the agribusiness Singapore meanwhile will keep increasing supply of vegetables from Indonesia. It is expected to grow 20 percent,” he said.

Photo: www.foggodyssey.com

HK allocates $50 m for investment in RI The Hong Kong government has allocated US$50 million for its investment in Indonesia until next year, an Indonesian diplomat said here.

“Indonesia must be able to provide various facilities so that the investment funds will not go to other countries instead,” Teguh Wardoyo, Indonesian conTeguh Wardoyo sul general in Hong Kong, told Antara last month.

He said that up to now about $34 million had been absorbed with the remaining $16 million put on hold.

Two of the hotels will be built on the Sanur beach and the other in the heart of Denpasar city.

Three investors are planning to build hotels in Denpasar, Bali, which are expected to overcome a shortage of 1,600 hotel rooms in the past two years, a tourism official said.

“There are three investors

applying for permits to build new hotels,” Head of the Denpasar City Tourism Office Putu Budiasa said last month.

One of the investors comes from Poland, he said without elaborating on the total investment of the three hotels.

He said the local authorities are still processing the applications from the three investors.

If they meet requirements the tourism office would soon issue in-principle approval to them so they could begin the construction of the hotels in 2011, he said.

“But we still have to consider their financial capacity first. Let`s wait and see the further developments,” he said.

Two of the hotels will be built on the Sanur beach and the other in the heart of Denpasar city.

“Hopefully, the presence of the three new hotels will overcome a shortage of 800 hotel rooms in Denpasar,” he said.

The city administration had set itself the target of raising the number of hotel rooms by 1,800 in 2010 and 2011.

He said 1,000 of the targeted 1,800 hotel rooms had been built this year.

Singapore`s investment in Indonesia in 2010 was recorded at around five billion US dollars.

The President Post

B4 January 17, 2011

www.thepresidentpost.com

Markets FISCAL POLICY

Time to Reduce Interest Payment Costs

By Helmi Arman

The prudent fiscal policies in which the government has held dear for so long are finally bearing fruit. The opportunity has risen to put things further to our advantage. Now is the time to take it.

I

n the midst of rapid capital inflows and improving perceptions on the economy lies an opportunity to enhance the country’s strategy on fiscal financing.

Capital inflows are likely to remain a very warm issue for next year. Given the unsustainable debt levels in the developed world, as well as the uncertain growth outlook thereat, emerging markets will continue to be a haven for cross-border investment and yield seeking.

In 2010, Indonesia saw breathtaking amounts of capital inflows. During the first three quarters of the year, for example, foreign direct investment and financial market capital inflows reached a record high US$23 billion (or around 3 percent of the size of the economy).

Accordingly, the portion of local currency bonds owned by foreign investors continues to rise and, at around 30 percent, is currently the highest in the region.

Given Indonesia’s shallow financial markets, there is obviously a scarcity of available local currency financial instruments, especially when it comes to the huge influx of foreign funds.

Of course, on one hand this condition leaves us prone to high levels of volatility, not to mention asset price bubbles. But on the

brighter side, the scarcity of instruments also gives the government (as a key supplier of bonds) an upper-hand in the markets.

Bond yields are at historical lows and selling debt has become a much easier task. The government now has more freedom when it comes to issuing papers for financing the fiscal deficit. This change in landscape is actually giving room for us to revisit the traditional paradigms in managing budget finances.

Honestly, although debt management has seen many improvements in the way it is run, things haven’t been exactly perfect.

At the end of every fiscal year, a good portion of the funds raised from bond financing ends up unused.

At the end of 2008, for example, funds raised in excess of what was needed reached a staggering Rp 80 trillion. This was repeated in 2009 with Rp 40 trillion, and probably another significant amount this year.

Over-financing is very inefficient and wasteful, as taxpayers must pay a fortune to cover interest payments on an idle loan.

For example, the average yield on bonds issued in 2008 was around 11 percent per annum.

We can easily calculate that from a principle of Rp 80 trillion, the redundant interest payments can potentially reach trillions annu-

ally, equaling the annual cost of putting hundreds of thousands of impoverished children through school.

This tendency to over-finance stems from many structural reasons; one is a chronic tendency to underachieve the spending target on infrastructure. To fix this requires addressing many structural problems, such as land acquisition, which could take some time.

It’s high time for this to change.

The government should, first, reconsider its strategy of frontloading and second, start using more short tenor bills (that mature within the fiscal year) to minimize interest payments.

However, what we can realistically aim for 2011, in regard to reducing the likeliness and cost of over-financing, is to add more

flexibility to the financing side.

We can see the extent of overfinancing all this time has been made worse by the government’s debt management strategies to mitigate the so-called refinancing risk; i.e. the possibility of being unable to borrow and repay existing debt.

The refinancing risk was indeed a big issue five or 10 years ago in the years of recovery from the 1998 financial crisis. In order to reduce this refinancing risk, the government’s rule of thumb on debt management has been to issue bonds with a maturity of as long as possible, as soon as possible.

Under the so-called strategy of “frontloading”, huge amounts of debt are sold in the early months of every year. Longer tenor bond issuances have also become a high priority over shorter tenor bonds.

The average maturity of the government’s bond portfolio has been maintained at around eight years, which looks high even at regional standards.

According to data from the Asian Development Bank, peer countries such as China, South Korea, Malaysia, the Philippines and Thailand all have more outstanding short-tenor debt (one to three years) than they do longtenor debt (more than 10 years).

Only in Indonesia does the reverse apply.

Of course, this doesn’t mean we must follow everything the others do. But considering Indonesia’s chronic and wasteful excess financing problem, continuously prioritizing the sale of long-term bonds increasingly looks like a costly strategy.

It’s high time for this to change.

The government should, first, reconsider its strategy of frontloading and second, start using more short tenor bills (that mature within the fiscal year) to minimize interest payments.

A lot has changed since 2005.

The refinancing risk should no longer be the major concern as Indonesia’s fundamentals have improved, and investment grade status is within a couple of years’ reach. All this is leading to an era of easier access to financing.

Generally, the government should no longer be too concerned about the prospect of being locked out of the markets and unable to fund the budget deficit.

In this regard, the additional cost incurred from issuing long tenor instead of short tenor is starting to look less justifiable. Given the current shape of the yield curve, issuing a one-year bill in place of a 20-year bond can reduce the annual interest payment by a staggering 3 percentage points.

The issuance of more shortterm T-bills should also be taken

in the context of deepening the market. Local banks have hundreds of trillions in excess liquidity that the government could tap into. Cooperation with Bank Indonesia in using T-bills as a monetary instrument (which has stalled for years) should again be restarted.

The government can even go further to introduce very short tenor T-bills, with a maturity of less than a year, for bridging the seasonal financing gaps that stem from time differences in spending and revenue collection.

For example, issuing one- and three-month T-bills instead of long-term bonds to bridge the early-year cash shortage would likely be much more efficient. Not only are T-bills cheaper in cost, they could also be timed to mature in April when money from tax collection fills up the government’s coffers. This way the chances of paying excessive interest on idle money just might be significantly reduced.

The prudent fiscal policies in which the government has held dear for so long are finally bearing fruit. The opportunity has risen to put things further to our advantage. Now is the time to take it.

The writer is an economist at Bank Danamon Indonesia. The views expressed herein are personal.

The President Post

www.thepresidentpost.com

January 17, 2011 B5

Technology Getting Ahead

How Indonesia is Using ICT to Boost its Standing Among its Neighbours “If IT infrastructure in the larger parts of the country can be improved, good education can then be delivered through e-learning to the remote areas and isolated islands, so that the gap on the quality of education among different parts of Indonesia can be reduced.” - Sutanto Hartono (President Director PT Microsoft Indonesia)

T

he Indonesia’s government believes that IT is an essential driver of c ompet it ivene ss and national economic growth. ICT initiatives

by Indonesia’s government: Establishment DETIKNAS (National ICT Council) to create ICT based framework and blueprints as a foundation for every government agencies to collaborate with more efficiency, better transparency and better collaboration, Palapa Ring program in ICT that would connect many big cities inter-island (national network) via fiber optic cable.

The technology of the network is circuit switch or IP based network.

Microsoft concurs that IT plays a significant role and as the world’s largest software company, we have the global experience and innovative technology to partner with the government to advance national priorities and in turn accelerate our business.

Microsoft contributes to people development through teacher and student education programs, partner education, local IT software industry development, innovation centres and training.

Some of our “mindshare competitors” have made significant foreign direct investment in line with their manufacturing business model, however we want to move the conversation away from physical investments to the importance of developing Indonesia’s human capital.

According to President Director PT Microsoft Indonesia, Sutanto Hartono, Indonesia has infinite potential to increase its national competitiveness. First, being one of the most stable economies in the region, Indonesia has the economic capacity to create a

high standard of living for its citizens. Second, it has an extensive high quality labour force, so it has the human resources needed to support innovation. Thirdly, it has abundant natural resources, especially in oil, gas and minerals. All these factors support the nation’s quests to be more competitive in the regional and global level. In spite of these advantages, Indonesia is still facing a lot of challenges. One major challenge faced by Indonesia is its digital divide – due in part to the dispersed geography and wide gap in socioeconomic levels.

Around 40 million Indonesians use the internet, and yet internet penetration is still low, at 17 percent. The Indonesian government wants to push that figure to 50 percent by 2015. This year, The Center for Rural Telecommunication and Informatics (BTIP) of Directorate General of Postel, US$38 million in an effort to connect the country’s 72,000 villages with broadband internet cabling.

Technology providers are playing a key role in the digital inclusion effort. Through technological milestones and strong partnerships with governments, NGOs, educators and academics, Microsoft has come up with the Citizenship ‘Unlimited Potential’ programme, an initiative focused on delivering solutions in education, innovation and job opportunities – three interrelated areas that are fundamental to economic growth. In other words, Microsoft is tapping the unlimited potential, or in Bahasa Indonesia, the ‘potensi yang tak terbatas’ of technology, to bridge the digital divide and boost Indonesia’s competitiveness.

For example, Microsoft has been working hand-in-hand

with the government and other key stakeholders to transform education in the country. “Indonesia is spread out in 17,000 islands and IT infrastructure development has been focused in the big cities and towns of Java Island and some key cities in out of Java Islands. If IT infrastructure in the larger parts of the country can be improved, good education can then be delivered through e-learning to the remote areas and isolated islands, so that the gap on the quality of education among different parts of Indonesia can be reduced,” said Hartono. By ensuring standardized high quality education across Indonesia, the nation would therefore increase its national competitiveness.

Microsoft proposes the following steps to help bridge the education divide using IT: Cloud computing for students

Affordable solutions for going digital have been provided with online portals like Live@ edu – a cloud computing Software as a Service from Microsoft, which is a free online suite to enable collaboration and communication among students, teachers and parents. It has an email system, Office Web Apps, webmessenger, blog and online storage systems. In 2009, more than 130,000 Indonesian students enjoyed the benefits of Live@edu.

There has been an approximately 70 percent increase in Indonesia this year, with more than 220,000 students now using Live@edu in schools.

One main benefit on the Live@edu cloud computing service is that the school don’t have to invest and manage the IT infrastructure to provide all of these services. All school have to do is to customize the domain name

(to reflect the school name), which could be free or very low cost (as low as US$ 9/annum).

The other main benefit for the student is that the student can own the email id even after he/ she graduated from the school.

Access to high quality developer suites for High Schools, Vocational Schools, and Higher Education

Free technology has been given to students, such as through DreamSpark program, an initiative which provides free-of-charge Microsoft software to students.

Within 2009-2010, 118,000 students in Indonesia were given access to these tools. We will target in 2011, another 120,000 students to be exposed, bringing the total number of students that have access to the software tools to 238,000 Student-2-Business and IT Academy programmes have also provided technology training to more than 10,000 students in Microsoft Innovation Centres (MIC) located in five universities: University of Indonesia (UI), Bandung Institute of Technology (ITB), Gadjah Mada University (UGM), Tenth of November Institute of Technology (ITS) and Pelita Harapan University (UPH). MICs have also provided students with access to learn about the latest Microsoft technologies.

Entrepreneurship program for Post Graduation

Opportunities for entrepreneurship have been enabled with the provision of accessibility to Microsoft software and technology. This has been achieved through the BizSpark and WebsiteSpark programmes.

The initiative provides technology training through the BizSpark camp programme, as well as

business readiness through Spark Gathering activities. In addition, it works hand-in-hand with other institutions, such as the United States Agency for International Development (USAID), to provide additional business support through business competition and relationships with investors.

IT Capacity Building Program For teachers

To support digital literacy proliferation, teachers have been introduced to Information and Communication Technologies (ICT). For instance, IT-Capacity building for teachers and students, which entails ICT and Digital Literacy trainings, has been provided through peercoaching. Since its implementation, the programme has trained 22,000 teachers, which in turn creates a multiplier effect that embraces around13 million students in 12 provinces in Indonesia.

For example on December 2010 Microsoft have conducted IT training for teachers around the Community Technology Center (CTC) in Cirebon. The CTC in Babakan, Cirebon is one out of the ten CTCs that TIFA Foundation established with the Microsoft CTSP grant last year.

Starting with only 5 PCs, there have now 22 PCs in the CTC and its IT training are certified by the local Diknas (Department of National Education as to have a standard of national curriculum for IT training. With this certificate, participants are able to enhance their IT skills and get a job.

There are many schools in Cirebon who do not have any computer labs therefore some teachers take their students to the CTC for their IT class. Students can use the PCs in the CTC for free. Based on this experience,

President Director PT Microsoft Indonesia, Sutanto Hartono.

Microsoft organized a training for teachers in the CTC surroundings. The first training was attended by 60 teachers and they will receive a certificate of basic IT training. For this pilot project, there will be 60 teachers participating in the training. They will be divided into 3 groups and the teachers will receive a certificate of basic IT training.

According to master teacher of Partners in Learning, Rima Malfiensy from Raffles Consultancy, teachers were very enthusiastic to follow the training.

“Teachers who was participating in the training have really understood the importance of information technology in teaching and learning.”Through continuous knowledge transfer process, the Master Teachers can provide their abilities in creating and developing digital teaching content to other teachers. It started in 2003 with 50 Microsoft-donated PCs to train 350 teachers and then 500 teachers in the second year and 800 teachers in the third year. The number of PCs used for the program has also increased to 100 units.

Other efforts have also been made to bridge the digital divide and increase competitiveness, particularly in the areas of rural computing to enable jobs and opportunities, said Hartono. By collaborating with local governments, businesses and local NGOs, Microsoft seeks to address the marginalization of farmers and workers through the Community Technology Skills Programme (CTSP). As of to-

day, Microsoft has built over 120 Community Technology Centres (CTC) throughout Indonesia to introduce IT to communities in the hope of “widening their horizons and empowering them to make informed choices”.

One such community is in Bantul, Yogyakarta. Through IT, the community has learned to search for information in the internet and explore methods of organic farming. “The sales value of 100% organic rice is higher compared to ordinary rice, so the people have decided to intensify their organic production,” said Hartono. Such valuable information would help to bridge the income gap between the rich and the poor, and as a result facilitate Indonesia’s goal of achieving national competitiveness.

Another initiative takes place in Cilacap, where education in email, instant messaging and video conferencing has connected overseas migrant workers to their families and hometowns in Central Java.

With these programmes set in place, the road is paved for more e-government services in the future – something that can greatly boost Indonesia’s national competitiveness. “The use of ICT can reduce costs significantly in e-procurement, e-clearance and improve efficiency through remote services and e-commerce,” said Hartono. This could change the entire social, economic and political landscape of Indonesia.

The opportunities are infinite – and this is only the beginning.

The President Post

B6 January 17, 2011

www.thepresidentpost.com

Property Outlook Steady for 2011 Jakarta Property Market Recognizing the prospects for continued growth in population size and wealth demographics in Jakarta, the retail sector is expected to see further new foreign retailers entering the market in 2011, as well as the opening of additional outlets by existing players. Food & Beverage retailers are expected to continue dominating leasing demand within the Greater Jakarta area.

I

RI’s economy to grow by 6.5%

ndonesia’s central bank raised its 2011 economic growth forecast to as much as 6.5 percent from an earlier forecast of 6 percent as signs of accelerating consumer spending continue. Bank Indonesia projects that 2011 growth will be a continuation of this year’s third and fourth quarter trends, which reached 5.8% and 6.1% (projected) respectively.

The Rupiah strengthened 14.6% percent during 2010 as foreign funds sought to take advantage of Indonesia’s strengthening economy. 2011 inflation is projected at between 4 to 6 percent, similar to 2010 year-end levels.

The SBI 1-month rate remained stable at 6.5% throughout the 2nd half of 2010 and Investment Credit decreased slightly from 13.5% at the end of 2009 to 13.4% by the end of 2010.

Given the continued improvement of the overall business and economic environment Indonesia’s property market appears set for further improvements in 2011.

Improving demand for CBD Offices in line with continued economic growth

Demand is expected to increase over the next 2 years in line with projected improvements in the economy and overall business climate. Office space absorption within the Jakarta CBD office market over the 4th quarter of 2010 is expected to build on its strong first nine months performance, continuing its recovery from the effects of the global financial crisis and market downturn in 2009. In line with the higher national economic growth in 2010, total annual absorption is projected to have doubled from 2009’s figure to over 200,000 sq.m, with occupancy rates likely to remain stable at 85%.

Average rentals are not forecast to see further adjustment, as most landlords already increased their service charges at the beginning of 3Q 2010. A likelihood of further increments is expected however, with a number of buildings already planning to raise their quoting rents for prospective new occupiers and their lease renewal offerings for existing tenants.

This is in line with continuing demand recovery, rising occupancy, and the economic growth projections for 2011, despite the forecasted new supply.

A further 56,500 sq.m within two office projects in the CBD area, is expected to enter the market before the end of 2010, being Sentral Senayan 3 and SCBD Lot 18 Office tower 1. As of the end of 2010, the total cumulative supply of Jakarta CBD office space will reach 4.13 million sq.m. Other major office projects completed within the CBD area during the year were: Equity Tower (83,600 sq.m) in SCBD and Bakrie Tower (60,000 sq.m) in Rasuna Epicentrum. Both of these projects are strata-title office buildings, and were representative of the current health of the Jakarta strata-title office market, which experienced strong demand for strategically located and sensibly priced projects from reputable developers during the year.

The cumulative sales rate of existing strata-title office projects stands at approximately 91%, with largely local based companies looking at strata title office ownership as an alternative to

their current rented accommodation. As of the end of 2010, the strata-title office supply will represent around 15% of total office supply in the Jakarta CBD office market.

The CBD office market will see additional supply of about 253,000 sq.m in 2011. This new supply will include office projects such as Tempo Scan Tower, K Link Tower, Multi Vision Tower, Allianz Tower, AXA Tower and Office 8. Only Tempo Scan, K Link and Allianz Towers are office buildings purely for lease, with the remainder being stratatitle projects (either partly for sale or fully for disposal).

Further new foreign retailers set to open outlets

Recognizing the prospects for continued growth in population size and wealth demographics in Jakarta, the retail sector is expected to see further new foreign retailers entering the market in 2011, as well as the opening of additional outlets by existing players. Food & Beverage retailers are expected to continue dominating leasing demand within the Greater Jakarta area.

No further retail projects are scheduled for completion through to the end of 2010. An additional 33,000 sq.m new supply will come from the completion or extension of existing centers in the fourth quarter, such as Epicentrum Walk and Tanah Abang Blok B. The total cumulative supply as of the end of 2010 will reach 3.56 million sq.m; comprising (67.7%) retail centers for lease and (32.3%) strata-title retail centers. New retail centers completed during the first three quarters of 2010 included 2 strata-title projects, namely Jakarta Gems Center Rawabening in East Jakarta and Tanah Abang Blok B in Central Jakarta; 3 specialist / supporting retail centers, such as Epicentrum Walk (CBD Jakarta), Menteng Central and C’One Plaza (Central Jakarta); and 1 one-stop retail center, Gandaria City (South Jakarta).

Though the active leasing market during 2010 brought the average occupancy to 78%, a temporary decline in occupancy is expected in 2011, pending retailers in large-scale retail centers completing their fit-outs and commencing trading. In the year ahead, the Jakarta retail market will experience further additional supply of large-scale centers within mixed-use developments, such as Kuningan City (55,000 sq.m), Grand Paragon (40,000 sq.m) and Kemang Village (56,000 sq.m).

As the performance of stratatitle retail centers in Jakarta has not seen improvement, it is likely that there will be limited further supply of strata-title retail centers in the future.

As strong competition in the retail market continues, rentals are expected to remain stable and landlords will remain cautious in escalating their rentals. Service charges will likely to increase following on from the increase of the electricity tariff in July 2010.

Trend towards condominium living in the Jakarta CBD to stimulate demand

The move to high-rise living in Jakarta within both owner-occupied condominiums and rental apartments is set to continue, given limited land availability and the practicality of vertical living.

Condominiums in the heart of the city are also a solution to the increasing traffic congestion and

Market Highlight

Market Outlook 2011 Leasing/Sales Activity

Property Sector

CBD Offices

Permintaan meningkat di kawasan CBD Jakarta sesuai pertumbuhan ekonomi

Retail

Beberapa peritel asing akan masuk

Condominiums

Trend menuju bermukim di kondominium di Jakarta CBD akan memicu permintaan

Rental Apartments

Permintaan meningkat di tengah persaingan ketat

Industrial

Tahun yang baik bagi kawasan industri

lengthening commute times. Despite this, buyer motivations in the Jakarta CBD remain equally divided between investment returns and owner-occupation (as primary or secondary homes).

By the end of 2010, total cumulative supply of condominium units in Jakarta is forecast to be approximately 80,700 units.

9 projects will have been completed during the year, namely Gandaria Heights, Centro City (Tower A), Tamansari Sudirman, Pakubuwono View, Central Park (Alaina Tower), Green Central, Seasons City, Masion @ Kemang, and Gading Nias (Emerald), while the total number of proposed condominiums being sold in the market and projected to complete within the next two years amounted to 50 projects with a total of approximately 19,000 units. Despite the quantum of this future supply, the current pre-sales rate of these projects is already around 56%.

Occupancy/Sales Rate

ment and purpose-built rental apartment sectors as they compete with the flexible terms offered by the condominiumsfor-lease owners. Some serviced apartments however, especially those with better quality operators, may start to increase their asking monthly rental rates due to the increase of their operation costs following on from the increase of the electricity tariff in July 2010.

will have experienced decreasing supply during the year (of 52 units) due to conversion of rental units to strata-title condomonium units in Menara Budi and Residence at Puri Casablanca.

Purpose-built rental apartment supply in 2011 will largely come from serviced apartments or ‘condotel’ units.

By end of 2010, the cumulative supply of rental apartments will have increased by about 7%, over 2009, bringing the cumulative supply to 39,300 units.

This additional supply mainly came from condominiums-forlease of about 2,500 units, while both purpose-built rental apartments and serviced apartments

2010 is projected to have recorded the largest demand for vacant industrial land in the last 5 years and also seen significant additional supply of over 700 Ha, mostly within existing industrial estates (IE’s) in the Bekasi and Karawang areas, which remain the sought after industrial estate locations.

A positive year for industrial estates and looks set to continue

Rental rates/Sales Price

Unlike previous years, in 2010 there was no particular industry which dominated the market demand, however several business lines including automotive and steel related industries, were notably active. With the relatively stable political situation and more positive economic conditions, 2010 also saw a number of overseas industrial occupiers, especially from Japan, re-enter the

market and these foreign companies are expected to be the major demand generators in the short to medium term.

A combination of increasing demand and the strengthening of the Rupiah against USD is expected to result in achieved land prices growing by over 10% and 15%, in Rupiah and USD respectively during the year (to about Rp. 700,000 per sq.m or about USD 80.00 per sq.m).

With new supply unlikely to be ready for immediate construction and overall limited good quality stock, land prices are expected to continue their upwards trend in 2011. Whilst the market is projected to remain strong in 2011, it is unlikely to reach the demand levels of prior to the monetary crisis in 1997, but nevertheless will continue in its current positive direction.

Media Contact: Dharmesti Sindhunatha dharmesti.s@ap.cushwake.com tel. 021 2550 9500 / 0812 10 13 512

Cushman & Wakefield Research Arief Rahardjo

Associate Director

0811 909 711

Kepala Peneliti

Wira Agus

Associate Director

0813 1122 3347

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Soany Gunawan

Senior Manager

0812 104 4978

Ritel

Nurdin Setyawan

Assistant Manager

0811 1905 252

Perkantoran

Elizabeth Tanti

Analis Senior

0818 732 393

Apartment & Kondominium

Future condominium supply will mostly be within the middlesegment, representing some 60% of the total proposed supply. The market will see new supply within mixed-use complexes in the Jakarta CBD, such as in Kuningan City, Ciputra World, Rasuna Epicentrum, Kota Kasablanka, and Thamrin City. Meanwhile, the prime residential area will continue to target the upper-segment, as has been the case over the last few years.

In the current competitive market, the developer’s commitment to on-time project delivery and meeting the promised development quality will become increasingly important in ensuring a successful sales performance.

With the expected reduction in mortgage rates, the appetite of condominium buyers is expected to grow in 2011, with those condominium projects offering a unique concept, extensive support facilities, and strategic location, able to command higher prices.

Improving rental apartment demand but still strong competition

In the Rental Apartment leasing market, the higher level of leasing inquiries towards the end of 2010 will likely lead to an increase in leasing transactions and a modest improvement in occupancy starting in early 2011. The physical occupation of condominium-for-lease units completed in 2010 is also expected to see an improvement as we move into the 2nd half of next year, as a minimum of 6 months is required to hand-over, fit-out and market the units. Local tenants are expected to generate increased demand, especially for condominiums-forlease which are in close proximity to work places or universities.

The predicted economic growth in Indonesia in 2011 is also expected to have a positive impact on expatriate arrivals. Demand from oil and mining, and telecommunication companies is predicted to remain active, together with a return to higher demand from banking & finance related companies.

A more competitive rental market may be likely however, given the high competition from strata-title condominium owners offering their units to the rental market. This may also see the offering of shorter term leases such as weekly or even daily rates, being offered in the serviced apart-

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The President Post

B8 January 17, 2011

www.thepresidentpost.com

Executive Highlights Finance Minister Agus Martowardojo said it would provide letters of guarantees to three priority infrastructure projects under the public private partnership (PPP) scheme. The projects are the US$3 billion, 2x1000 MW coal-fired power project at Pemalang, Central Java; the US$750 million railway project linking Manggarai station, Jakarta with Soekarno-Hatta international airport; and the US$250 million water treatment facility at Umubulan, East Java. Agus said the risk coverage for the three projects would be more extensive than existing guarantees provided for power projects under the 10,000 MW power acceleration program. He said the new guarantees would include coverage against license cancelation and operational risks over construction, land clearing and supply of electricity and coal. The minister said there were seven potential investors from three countries looking to place bids for these three projects, though he declined to provide further details.

Agus stated that two projects under the government’s PPP scheme would not be provided with letters of guarantees: the US$450 million toll road linking Medan and Kualanamu airport in North Sumatra; and the US$40 million Tanah Ampo cruise ship terminal at Karang Asem, Bali.

high inflows. Most analysts see the central bank’s moves as a positive step to manage excess liquidity, although it will likely hit lenders’ profitability and could cause a substantial increase in the cost of foreign currency loans.

The Djarum Group has purchased Rp3.5 trillion worth of shares in Bank Central Asia (BCA)

Bank Mandiri said it was looking to raise up to Rp14 trillion from its rights issue

to boost its stake in the lender by 2.3% to 50.2%. The shares were bought at a price of Rp6,700/ share from undisclosed investors in a deal facilitated by Credit Suisse. Djarum used proceeds collected from a 39% stake sale in telecom tower operator Sarana Menara Nusantara in early December - a deal worth Rp3.3 trillion - to help fund the BCA share purchase, reflecting a portfolio shift into the banking sector from telecom. BCA has accumulated Rp6.8 trillion in profits for the first nine months of 2010, up 17% from the year earlier period. New loans increased by 8% for January-September 2010 to Rp119 trillion. As of end-September 2010, BCA had a loanto-deposit ratio (LDR) of 50.6%, significantly lower than Bank Indonesia’s recommended LDR range of 78-100%. BCA’s capital adequacy ratio (CAR) for this period was 18.7%.

scheduled for this February, and announced an indicative price range of Rp4,000-6,150/share for the deal. Like the secondary offering in November last year for Bank Negara Indonesia (BNI) the government, which has a 66.7% stake in Mandiri, will not take up its entitlement of shares.

This will enable institutional shareholders not currently shareholders in the bank to purchase a stake in Indonesia’s largest lender.

Bank of America Merrill Lynch, Deutsche Bank, Danareksa Sekuritas and Mandiri Sekuritas have been appointed to manage the deal. Bank Mandiri has stated that it plans to use the proceeds from the rights issue to strengthen its capital structure to support loan growth and general business expansion. The deal will reduce the government’s stake in Mandiri to 60% and raise the lender’s publicly floated shares to 40%, qualifying it for a 5% corporate tax rate reduction provided under Indonesian tax laws.

Eddie Chin said the deal was in Australia’s Kangaroo line with its growth strategy and provide significant synerResources has entered would gies with the firm’s other assets. into a US$277 million scrip deal with Bayan Resources to acquire U.S. Commodities giant a majority stake in the Cargill has acquired Pakar coal project Indonesian industrial starch and sweetener in East Kalimantan. Upon completion of the deal, Bayan will producer Sorini Agro acquire a 57% stake in Kangaroo. As part of the agreement, Asia Corporindo in a Bayan will also incorporate nine US$244 million deal. coal concessions near its Tabang mines in East Kalimantan into Kangaroo. Bayan said Pakar and the nine coal concessions combined would have coal reserves of around 116 million tons and coal resources totaling 3.8 billion tons. Kangaroo managing director Mark O’Keeffe said the deal would reposition the company as a world-scale Indonesian coal producer, allowing it to unlock its Indonesian assets by leveraging Bayan’s skills and experience.

He added that with Bayan’s support Pakar and the other concessions could start production this year. Bayan president director

Selected Instant Indicators GDP GROWTH (%)

%

Index* 2000=100

By Quarter

Year on Year 8

Bank Indonesia kept its benchmark rate at a record low of 6.5% For the 18th consecutive month following its 6 January meeting, despite mounting inflation pressures. Consumer prices hit 7% year-on-year in December, 100 basis points above the upper end of the central bank’s 2010 inflation target. The bank did, however, take a more hawkish stance in its board of governors’ statement, asserting that it was fully aware of inflationary pressures that could increase in the future. Central bank executives have previously stated that they were prepared to raise rates at any time if conditions warranted it. At the same time, Bank Indonesia governor Darmin Nasution said current inflation pressures still stemmed largely from volatile foods and rising commodity prices, and indicated that raising rates now would have limited impact. He noted that core inflation, which strips out volatile foods, remained relatively modest at 4.2% year-on-year. The governor asserted that Bank Indonesia’s main focus now was to manage surging capital inflows.

These efforts, however, prevent the rupiah from strengthening, perhaps helping exports, but also keeping rupiah prices high.

Flagship carrier Garuda Indonesia has signed a deal to restructure nearly US$500 million in debt after five years of negotiations. The creditors included the European Credit Agency, France’s Compagnie Française d’Assurance pour le Commerce Extérieur, Germany’s Euler Hermes and more than a dozen commercial lenders. As part of the deal, Garuda chief executive officer Emirsyah Satar said both sides agreed to extend the maturities of unpaid loans to mid-2016 with repayments to be made in installments of US$45-60 million a year. He said the debt restructuring agreement would pave the way for a US$300-400 million initial public offering planned for later this year to fund its expansion. The carrier is looking to bring the number of planes in its fleet to 120 aircraft from 84 currently. The chief executive also remarked that the deal would open the door for cheaper loans from domestic banks, and make it easier for Garuda to add routes to Europe and fly to new destinations such as India.

A consortium led by global private equity firm Texas Pacific Bank Indonesia Capital (TPG Capital) announced new has acquired a major measures to deal with stake in Indonesian the influx of foreign mining services firm portfolio inflows.

Delta Dunia Makmur Under the new rules, commercial banks will be required to hold 5% of their total third-party foreign currency deposits in reserves at the central bank starting from March, up from 1% at current levels. This will be subsequently raised to 8% starting in June.

Bank Indonesia governor Darmin Nasution said the new regulation was expected to drain US$3 billion in excess liquidity.

He said the central bank has also reinstated a cap on commercial banks’ overseas borrowings of 30% of their capital starting this month to try and minimize the risk of sudden capital outflows.

The governor asserted that the emphasis now was to manage capital inflows by adjusting reserve requirements, deepening the capital markets and keeping a close eye on global financial volatility. He added that with these measures, Bank Indonesia would be able to avoid tougher capital controls to discourage

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5

135

4 3

125

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115

1

105

0

95 05

07

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09 Q1 08

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2006

Index

Q3 Q2

Q1

Q4

Q3 Q2

2007

Q1

Q4

Q3 Q1 Q2

2008

Q4

2009

Q3 Q2 2010

INFLATION 66 CITIES 107.0

General Food WPI

104.9 103

100

97 Des 09 2009

J 10

F

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S

O

Nov

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S

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Nov 10

2010

EXPORT AND IMPORTS (US$ Million) Exports

16,000

Imports

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Nov 09

D 2009

Jan 10

F

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in a US$400 million deal. Ashish Shastry, TPG Capital’s head for Southeast Asia, said the deal was one of the largest equity investments in Indonesia, though he declined to provide further details. TPG Capital partnered with Singapore sovereign wealth fund, Government of Singapore Investment Corp. (GIC), and Chinese sovereign wealth fund, China Investment Corp. (CIC), for the acquisition. Although CIC has previously funded major deals in Indonesia, including a US$1.9 billion debt deal last year with top coal miner Bumi Resources, it is the first equity investment in Indonesia for the Chinese investment fund. Shastry said the latest deal reflected its confidence in the long-term prospects of Indonesia’s coal sector. Delta Dunia is the country’s second-largest coal mining contractor through its wholly owned subsidiary Bukit Makmur Mandiri Utama.

COMMODITY PRICES

Sumatran Light US$/barrel

Mal$ per metric ton $91.3

Crude Oil-LHS Palm Oil-RHS

88

4,000 M$ 3,814 3,750 3,500

83

3,250

$79.4

3,000

78

2,750 73 2,500

M$ 2,578 68 Des J 09 10 2009

2,250 F

Mar

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D 10

potential of Indonesia’s healthcare sector as economic growth and wealth generation drive demand for quality healthcare. He added the deal would offer the trust a foothold to expand across other locations and medical facilities in the country. As part of the deal, Lippo Karawaci will act as master tenant of the hospital properties. First REIT will have first right of refusal to acquire new healthcare facilities that Lippo Karawaci develops. According to Lippo Karawaci president director Ketut Budi Wijaya, First REIT could potentially purchase 25 hospitals that the firm plans to build over the next five years to meet growing demand for healthcare services in Indonesia.

State power utility PLN has secured a Rp1.1 trillion syndicated loan to help finance construction of its transmission lines on Java.

Nestle Indonesia said it plans to invest US$100 The bank syndicate comprised million to build a new Bank Mandiri, BCA, BNI and BRI. The loan was guaranteed by production facility in the Indonesian government and has a 10-year tenor with a three- West Java year grace period. PLN president director Dahlan Iskan said the deal meant the firm has secured its financing needs to build its transmission infrastructure as part of the first phase of the government’s 10,000 MW power acceleration program. The chief executive remarked that, once completed, the upgraded transmission infrastructure would help PLN save up to Rp3 trillion per year. The planned transmission lines will support the 3x200 MW coal-fired plant in Banten that came on line last year and the 3x300 MW coal-fired plant in Indramayu, West Java and 3x300 MW coal-fired plant in Rembang, Central Java that are both scheduled to start operating this year.

Mitsubishi Corp. Has extended a US$120 million loan to Medco Energi International to support the financing Singapore’s first Real of the Donggi-Senoro Estate Investment LNG project Trust (REIT) has acquired two in Central Sulawesi. Mitsubishi and Medco are partners in the Indonesian hospitals in project, together with Pertamina. Mitsubishi has a 51% stake a US$160 million deal in Donggi-Senoro, with Medco with Lippo Karawaci. holding a 20% interest and Pertamina 29%. Funds from the loan will help finance Medco’s portion of the project. The loan carries an interest rate of London interbank offered rate (LIBOR) + 3.75-4.75%. The loan was extended despite US$3.5 million in fines imposed on Mitsubishi, Medco and Pertamina by com-

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Cargill Asia-Pacific president Bram Klaeijsen said Sorini was a business with an attractive asset footprint, solid customer base and broad product portfolio.

He asserted that the acquisition would support future growth of Cargill’s businesses in Indonesia and South East Asia. Sorini’s products are used by consumer goods companies like Nestle and Unilever as components for the production of toothpaste, vitamin C tablets, chewing gum, soft drinks and ice creams. The firm currently operates two starch sweetener plants and five starch plants in East Java and Lampung.

Cargill purchased 85% of Sorini from chemicals distributor AKR Corporindo and securities firm UOB Kay Hian Pte Ltd. It plans to hold a tender offer for the remaining Sorini shares held by the public next month.

petition watchdog (KPPU) earlier this year for allegedly violating competition rules over Donggi-Senoro. The KPPU ruling specially stated that the project should continue, and senior government officials like oil and gas director general Evita Legowo have also stated that the project would proceed this year despite the ongoing dispute.

The hospitals are the Siloam Hospitals Lippo Cikarang in Bekasi, West Java and the Mochtar Riady Comprehensive Cancer Center in Jakarta. First REIT senior executive Dr. Ronnie Tan said the acquisition underscored the huge

to serve growing local demand for its cereal and milk products.

The factory is slated for commercial operations by 2012 with a 15-hectare complex for the production of Cerelac infant cereal and Milo chocolate milk drinks.

Nestle Indonesia currently imports its Cerelac and Milo products from Malaysia. The company said another investment was earmarked for 2013 to expand the planned West Java facility to produce other product categories such as breakfast cereals and value-added liquid milks. Frits van Dijk, vice president for Nestle Asia, Oceana and Africa, said the latest investment marked the firm’s drive to expand its business in Indonesia. The West Java expansion marks the second major investment made by Nestle in the country, following a US$100 million investment last year to expand the production capacity of its milk processing facility in Kejayan, East Java.

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

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Photo: The President Post/Nandi Nanti

Rising Honda Production

AHM Indonesia produces 20% of the total production of Honda motorcycles around the world amounting to 15 million units, making Indonesia the second largest production base of Honda motorcycles.

Government to Boost Manufacturing, Agro-Industry Sectors in 2011

By Dewi Savitri

In an effort to propel economic growth this year, the government of President Susilo Bambang Yudhoyono is moving on to reinvigorate the manufacturing and agro-industry sectors as the major non-oil-and-gas contributors to state treasury.

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his was announced recently by Minister of Development Planning and Chairperson of Bappenas (the National Development Planning Agency) who is upbeat about the government’s ability to spur growth this year.

“For 2011, our plan is to accelerate economic growth that is fair to all and this shall be made possible by implementation of better management and synergy between the central and regional governments,” she says.

Her optimism is apparently based on the growth momentum of 2010 which she says needs to be maximally tapped to generate further growth this year. And to realize this, the government intends to focus on boosting the manufacturing and agro-industry sectors which are being relied upon as good revenue generators and altogether absorbers of big numbers of jobseekers.

She explains that the strategy of bolstering these two sectors is meant to create multiplier effects for other sectors of the national economy because these sectors

are closely linked with development of other sectors.

For instance, by boosting the manufacturing industry, myriad opportunities will be created for down-line employment and in the process the sector shall be strengthened by participation of more people on the production chain.

A clear example is as follows: Boosting the automotive manufacturing industry shall lead to spare parts industries sprouting up everywhere along with automotive garages, leasing and car rental business, intercity travel service, audio accessory and car décor businesses and many others. These will all absorb many skilled workers who cannot otherwise find proper job elsewhere.

The same is true for the agro-industry sector where, for instance, development of an oil palm plantation will lead to creation of various job opportunities down the line, not to mention revenue generation opportunities resulting from further development of the derivatives of palm oil.

The interaction between all the stakeholders on the produc-

tion chain shall create complementarity to ensure survival of this sector.

“Other sector shall follow if these two sectors can be developed well,” the minister says, adding that with such industrial development strategy, the government hopes to see a greater number of employment opportunities created henceforth.

As of December last year, according to government statistics, the agriculture sector had absorbed 41.5 million workers while the manufacturing sector employed 13.8 million workers.

The trading sector that stands between these two areas absorbed a total of 22.5 million workers.

The trading sector is an area in which many Indonesians even with low levels of education can earn a living. In fact, it is here that most families in urban areas get their main source of income, because every single line of the manufacturing and agro-industry activities ends up here. It also employs millions of people from upstream to downstream levels, from producers to retailers and even street vendors.

Based on these facts, the government is optimistic about being able to create significant numbers of new employment opportunities through reinvigoration of manufacturing and agroindustry sectors.

“That’s why we need a driving force to bolster these two areas though it means further invest-

“For 2011, our plan is to accelerate economic growth that is fair to all and this shall be made possible by implementation of better management and synergy between the central and regional governments.”

Armmida S. Alisjahbana Minister of Development Planning and Chairperson of Bappenas

ment and further provision of infrastructure,” she remarks.

In a related development, Suryo B. Sulisto, Chairman of Kadin (the Indonesian Chamber of Commerce and Industry), says that if the government

wants to see industry grow strong this year, it needs to lower bank interest rates to an average of 10 percent, otherwise, domestic industries will have difficulty competing against foreign players in the market.

“The government needs to have a strong commitment to lower interest rates below 10 percent this year,” the Kadin chairman says, “because our foreign competitors have lowered theirs to below 10 percent, in Japan it is even zero percent.”

Energy Sector

Suryo emphasizes that for this year industry players need a lot of support from the government in order to realize the dream of elevating industrial sector as the backbone of the economy.

“According to Kadin’s prediction, our economy can grow by 5.8 to 6.5 percent this year, perhaps even higher, provided that the investment climate remains conductive and the government’s credibility remains intact in the eyes of international investors,” he cautions.

One way to do this is to encourage production of gas-fueled cars and this certainly needs fresh investment in the automotive manufacturing sector. This policy was made public by Budi Dharmadi, the Director General for High-Tech Industry at the Ministry of Industry.

“For this year the government will emphasize production of gasfueled cars. The ministry is ready to supply gas-fueled vehicles and we have received orders from provincial governments as well as the Ministry of Transportation,” he says.

Throughout this year, the government will increase by 10 percent the supply of gas to fuel cars knowing that this is a more economical and environment-friendly option to take.

In line with the official’s explanation, Industry Minister MS Hidayat says that the government has prepared relevant policy packages to be implemented this year. He says that the automotive

This can actually be realized if the government and Kadin sit down together to phase out some of the problems faced by business players such as the need to reorient development strategy toward strengthening of high-yielding manufacturing sector be it in foodstuff or mining. This shall sever Indonesia’s heavy reliance on imports and at the same time eliminate the tradition of relying on raw material exports.

In the energy sector, meanwhile, the government is busy this month socializing the need to use gas-fed cars to relax the public’s heavy reliance on gasoline. This is logical because unlike in the past when Indonesia was a net oil exporter being a member of the Organization of Petroleum Exporting Countries (OPEC), the country is now a net oil importer, so fuel subsidy is now a source of headache for the government whoever the President is.

sector is part of the six priority industrial development categories to be focused on this year.

The government will encourage the growth of domesticallyproduced components industry, facilitate development of automobile design industry, and facilitate development of vehicles that are environmentally friendly and affordable to domestic buyers.

The government will give various incentives for developing this sector throughout 2011, the minister promises. Among the incentives is a tax exemption policy for luxury goods, tax holiday for capital goods, raw material, and components needed by locallybased manufacturing industries.

But as the government moves to discourage the use of subsidized fuel this year, business analysts say that this policy should not be implemented rigidly, lest it could cause people to turn to bicycles which need no fuel.

Prihadi chairman of AIPI, the Indonesian Association of Bicycle Producers, says that fuel subsidy removal is not linked to the growth of bicycle industry, but it is not bad for it either, as the bicycle industry is expected to grow by over 10 percent this year, up from over six million units sold last year.

“Whether or not the government will remove fuel subsidy does not make much difference to us because the fact is, more and more people are turning to bicycles these days, because they don’t need to buy fuel in order to ride their bicycles,” he theorizes.

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Economic Review Government Sets 11 Priority Programs for 2011

By Widya Sanjaya

Photo: www.presidensby.info/Abror

President and his Cabinet ministers have defined 11 priority programs to be implemented this year.

These 11 programs are basically pro-job, pro-poor and pro-environment in nature.

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espite being criticized by his political opponents, President Susilo Bambang Yudhoyono is optimistic about Indonesia’s chances of making further progress in 2011.

In an annual address to the nation’s top leaders, including ministers, chiefs of high ranking state institutions, governors, mayors, and regents recently, the President said that his optimism was based on what he defined as four logical reasons as follows: First, the momentum for recovery is taking place, like it or not.

Second, Indonesia still has great potential in terms of its abundant natural resourcesthat are yet to be tapped.

Third, Indonesia has by now learned valuable lessons from local and global economic crises and thereby knows better how to manage them in the future.

Fourth, Indonesians are basically optimistic people who always have ways to overcome problems no matter how heavy they may be.

In order to justify his optimism about the prospects of Indonesia’s further growth, the President and his Cabinet ministers have defined 11 priority programs to be implemented this year. These 11 programs are basically pro-job, pro-poor and pro-environment in nature and are summarized as follows:

layers of society.

Fifth is upgrading of food selfsufficiency. Indonesia used to be self-sufficient in rice to the extent the United Nations Food and Agricultural Organization (FAO) bestowed the nation with an FAO medal of recognition back in 1984. Such is no longer true today as imports of foodstuff have become so common in response to lack of supply and rising domestic need.

To eradicate poverty, the SBY government will this year focus on better distribution of rice for poor segments of society as well as promotion of social security network to embrace a larger portion of the population.

In education, as rightly defined

by Minister Muhammad Nuh, the government will introduce a morality-based curriculum in order to promote good character among students, so that when they grow up they will become responsible citizens with good character and integrity. This will in turn help reshape the nation’s character as a whole, says the minister.

Education observers say if this had been implemented long time ago, perhaps Indonesia would not have seen so many of its scholars being dumped in jail for corruption and various other forms of bad conduct.

The sixth priority program the SBY government is focusing on this year is provision of transportation infrastructure and better level of passenger safety, be it on land, at sea, or in the air. Nevertheless, there was no mention of how to ease traffic jams in the capital city.

The seventh priority program this year is improvement of business and investment climate through streamlining of regulations and promotion of investor confidence through ensuring legal certainty.

In the sector of healthcare, the Family Planning program will be revitalized to involve more young families which are still in productive age category.

Priority number eight is better provision of electricity across the archipelago and diversification of energy through the launching of new geo-thermal projects. Indonesia is very rich in this subsector of energy being a country situated along the equator but geothermal and solar energy utilization for industry has yet to be popularized.

First is the program to thoroughly implement bureaucratic and management reform. “I want all of you to move forward in implementing reform,” the President emphasized.

The 9th priority program is replanting forests that have been denuded for industrial purposes. Also important is reclamation of mangroves along coastal areas in order to create a better eco-system to support economic activities.

Second is upgrading the quality of education as only through better education can Indonesia have the ability to produce better quality human resources to run the economy.

The government’s priority number 10 this year is promotion of coordination between the rich and poor regions including outerlying regions bordering neighboring countries.

Third is upgrading of healthcare services including better provisions of medicine for people at large.

The last priority program to be implemented this year is promotion and preservation of arts and local cultures in an effort to maintain national identity and promote a national sense of belonging especially among the younger generation.

Fourth is reduction of poverty through concrete programs directly aimed at the most fragile

The government will this year put much emphasis on disaster management and intensification of rehabilitation programs. Also on the agenda are action plans for handling climate change in order to ensure sustainable living environment that is conducive to further economic growth.

President Yudhoyono is optimistic about Indonesia’s chances of making further progress in 2011. The President said that In an annual address to the nation’s top leaders, including ministers, chiefs of high ranking state institutions, governors, mayors, and regents recently.

Especially in the sector of people’s welfare, the government has also underscored its programs in order to ensure satisfactory results. This comes under the auspices of nine ministries being supervised by Coordinating Minister Agung Laksono.

The ministers involved are Minister for Environment Gusti Muhammad Hatta, Minister for

Social Affairs Salim Segaf Al Juprie, Minister of Education Prof Muhammad Nuh, Minister for Culture and Tourism Jero Wacik, Minister of Health Endang Rahayu Sedyaningsih, Minister for Empowerment of Women and Child Protection Linda Gumelar, Minister of Public Housing Suharso Monoarfa, Minister of Sport and Youth Andi Mallarangeng, and Minister of Reli-

gious Affairs Suryadharma Ali. These ministers have produced a priority agenda to promote social welfare throughout 2011, covering five areas namely education, healthcare, poverty eradication, preservation of the environment, disaster management and promotion of cult ure, as well as promotion of creativity and technology innovation.

This FP program has not produced a very satisfactory result because despite intensive campaigns in the past, population growth still can’t be controlled in the way the government wants to see. Rapid population growth brings along heavier economic burden to every family and worse, contraception being used in FP programs are being misused for the wrong purposes.

For instance, under Family Planning program the government encouraged families to use contraceptives in order to prevent pregnancy but later people used condoms for free sex. This is an unwanted byproduct that is a nuisance to both the education and religious affairs ministers.

Perhaps the most cumbersome issue for the government is the negative impact of rising commodity prices on many families across the country. Despite the President’s claim that Indonesia’s per capita income has risen to US$3,000, and the economy has grown markedly in statistical figures, pressure on families has not come down these days.

Economic observers say that in all fairness, President SBY performed quite well last year as was evident in overall economic performance; and this year he appears to be a lot more serious in “whipping” state apparatus to perform better. One simple example was evident recently when the president reprimanded government officials who fell asleep or play with their mobile phones while listening to his speech.

This could have been the reason why former President Megawati Soekarnoputri recently urged the government to correct its social-economic policies in order to raise people’s standards of living.

For President SBY, somehow, it is not easy to translate ideas into reality unless all components of national leadership from the capital city down to regency level work hand in hand with a common vision that is sincere promotion of people’s living standards.

Economic observers say that in all fairness, President SBY performed quite well last year as was evident in overall economic performance; and this year he appears to be a lot more serious in “whipping” state apparatus to perform better. One simple example was evident recently when the president reprimanded government officials who fell asleep or play with their mobile phones while listening to his speech.

“It is not good for people around the country to see you fall asleep on television, or play with your mobile phone! Anybody doing this should leave this hall,” the President said, bringing the rather noisy hall to total silence, as some in the audience guiltily put their devices back onto the table and began to pay attention.

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January 17, 2011 C3

Economic Review National Economic Commission: Investment to Grow 13.4% in 2011

By Widya Sanjaya

Photo: www.inilah.com

Meanwhile, the President also expects world oil prices to stabilize around US$80 per barrel with Indonesia’s output level of 970,000 barrel per day. A higher world oil price would not be conducive to Indonesia’s national budget because the country is now a net-oil importer.

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o amplify President Susilo Bambang Yudhoyono’s optimism over Indonesia’s 2011 economic outlook, Komite Ekonomi Nasional (KEN) or the National Economic Commission has said that investment will grow by at least 13.4 percent this year, thanks to sustained political stability and increasingly positive macro-economic indicators.

Even as early as August 2010, President Yudhoyono had said he expected national economy to grow 6.3% in 2011 under which inflation will remain checked at 5.3%, Bank Indonesia’s threemonth benchmark SBI rate to float at 6.5% and national currency rupiah to stabilize around Rp9,300 per US dollar.

Meanwhile, the President also expects world oil prices to stabilize around US$80 per barrel with Indonesia’s output level of 970,000 barrel per day. A higher world oil price would not be conducive to Indonesia’s national budget because the country is now a net-oil importer.

Due to this, every time world oil prices increase by an average of one US dollar above the ceiling stipulated in state budget, the government reportedly incurs additional subsidy worth Rp2.67 trillion.

If the macro-economic situation develops favorably in this direction, there is good reason for the government to see sound growth in investment during 2011 as was rightly predicted at the start of this year by the National Economic Commission.

The Commission says though the year 2010 only saw investments grow by an average span of 7-9%, this year will see investment soar to 13.4% due to greater investor confidence and better domestic business climate—though the growth will be gradual in nature.

The Commission also predicts that uncertainty on global economic map will somehow decline, causing greater optimism for foreign and domestic investors to either expand their operations or open new ventures in Indonesia.

In terms of portfolio investment, the Indonesian Stock Exchange (ISE) has in recent years performed so well that there is now a bigger number of foreign and domestic investors pouring their funds into it.

The ISE was even rated as the best capital market in this region during 2010 given its rapid growth and stability. This has propelled Indonesia’s investment reputation to a higher plateau and the country is now approaching a global investment grade.

Rp124.6 Trillion for Industry Growth

For Indonesia to reach such lofty goal, the industry sector needs fresh investments totaling Rp124.6 trillion during 2011, according to Industry Minister MS Hidayat. With that, the industry sector is expected to grow 5.66.1% requiring a big chunk of investment funds going into the non-oil-and-gas processing subsector.

Such magnitude of industrial growth will generate employment for almost 15 million workers, the minister says, apparently because this includes investments in labor-intensive real sector projects.

Minister Hidayat also predicts positive growth in the export of non-oil-and-gas industrial products during 2011. He expects this

category of export to generate at least US$92.26 billion in revenue this year.

The minister says the government will focus on six priority areas, namely labor-intensive, small and medium-scale industries, capital goods, natural resource based, high-growth, and special priority industries.

His optimism about 2011 investment prospect is based on the fact that in 2010 investment realization far exceeded 4.65%, the target set by the government at the start of last year. That itself was an impressive growth from 2009 performance of only 1.54%.

The industry minister explains that means of transportation, machinery, and industrial equipment experienced the highest growth of 8.47%, followed by fertilizer industry, chemical, and rubber-based products which grew 4.82%, whereas the growth of other manufactured goods was 3.83% during 2010.

However, the biggest contributor to national industry growth was food and beverages plus cigarette products which made a total of 34.35% growth, while means of transportation, machinery and equipment made 28.13%, fertilizers registered 12.44%, textile, leather-based products and footwear contributed 8.71% while wooden and forestry products contributed 5.75% to national industry growth.

Of the many industrial sub-sectors attracting foreign investors, one is worth mentioning for its unique nature: shrimp culture. There was good news at the start of this year that investors from mainland China were planning to invest up to 10 billion RMB to boost shrimp culture projects in Indonesia.

Shrimp Farming Investment

Of the many industrial subsectors attracting foreign investors, one is worth mentioning for its unique nature: shrimp culture.

There was good news at the start of this year that investors from mainland China were planning to invest up to 10 billion RMB to boost shrimp culture projects in Indonesia.

News reports say that investors from Guolian in Zhanjiang, wanted to revitalize a shrimp project in West Nusa Tenggara and a similar project in Kendal, Central Java.

The fund is said to have remained idle in China for some time and therefore they want to use it to upgrade shrimp projects in those two Indonesian provinces, according to Martani Huseini, the director general for processing and marketing of fishery products at the Ministry of Maritime and Fishery.

Guolian has China’s largest integrated shrimp culture center with an annual production capacity of 1.2 million tons. Indonesia, on the contrary, has not even been able to produce 350,000 tons of shrimp per year, he says.

The government is hoping that Chinese investors will come with

worthwhile path to pursue.

Another source of optimism is the floating of an even bigger number of market derivatives which allow investors from all levels to participate in the business theater. Many companies, big and small, have benefited from the robust climate due to which they can expand business without relying on bank loans.

Chairman of National Economic Commission Chairul Tanjung. Komite Ekonomi Nasional (KEN) or the National Economic Commission has said that investment will grow by at least 13.4 percent this year, thanks to sustained political stability and increasingly positive macro-economic indicators.

transferable technology that will bolster domestic shrimp production and teach Indonesians to develop by-products of the commodity for export. A delegation from China will visit Indonesia in late February this year to finalize the investment plan.

Ironically, the Chinese are increasing investment in Indonesia’s shrimp farming sector soon after three local companies have gone bankrupt laying off more than 6,000 workers, not to mention 13 other such companies which reduced their output due to difficulties in marketing.

Thomas Darmawan, chairman of the Association of Indonesia’s Fishery Processing and Marketing Companies, says that a total of 16 shrimp farming companies reduced their output from 2008 to 2010 and three of them were closed down. Today there are 133 such companies still in operation.

He blames lack of supply of raw material for the decline in shrimp output which exacerbates marketing woes.

Investment in Energy and Mines

Investment in this sector will pick up this year as there are many foreign players wishing to step in if only the government eases regulations to facilitate business.

Hariara Tambunan, chairman of the energy development commission of the Indonesian Chamber of Commerce and Industry (Kadin), says that the government needs to ease regulations in order to facilitate the entry of more foreign investors in this sector especially for coal business.

He says Indonesia does not have a good supply of coal so the government should explain what it plans to do during 2011 to overcome the shortage. The irony, he says, is that this country is very rich in coal and it does not have enough supply!

This shortage is caused by the government’s slow response to the rising need, he argues. With more than 70 billion tons of coal, Indonesia has Asia’s largest coal deposit yet to be brought to surface.

Another annoying issue is the arduous bureaucracy in licensing process which causes uncertainty and lack of investor confidence.

The daily Rakyat Merdeka once accused Energy and Mines Minister Darwin Saleh of being “too slow a mover”, undermining the sector’s performance and disappointing potential investors.

The newspaper says that his slowness was the reason why Japanese Energy Minister Hiroyuki Ishige and Nigeria’s veteran Energy Minister Rilwanu Lukman cancelled their plans to meet him some time ago.

Likewise, Senior Vice President for Asia Pacific of Total E&P Indonesia, Jean Marie Guillermo, had to cool his feet for hours before being allowed to see the minister.

Nevertheless, many officials at his ministry say the minister has performed well so far and is doing better this year.

“In terms of success rate, it is unethical for us to evaluate ourselves; let others do so,” says the minister’s special assistant, Kardaya Wardika.

Portfolio Investment

A better barometer for evaluating Indonesia’s investment prospect this year is the performance of the Indonesian capital market.

The market’s composite index has in recent years soared steadily in rhythm with rising market capitalization mainly involv-

ing foreign investors holding for a long time the bullish industry stocks.

The number of share issuers has continued to grow in line with steadily rising number of corporations floating stocks, causing even greater optimism that portfolio investment is indeed a

In terms of investment participation, the market has now seen new generation of investors, especially young executives which comprise a significant portion of the middle class.

In rhythm with rapid expansion of the middle class, the size of local investors’ participation in the capital market will also become bigger and bigger in the years ahead.

So vigorous is the investment climate that President Susilo Bambang Yudhoyono has deemed it necessary to open the ISE trading himself in early January, which drew enthusiastic response from international investors.

Market analysts say that now is the best time to enlarge investment participation in the Indonesian capital market. This bullish period will last until 2013 when domestic political temperature will start rising ahead of Indonesia’s presidential election.

The President Post

C4 January 17, 2011

www.thepresidentpost.com

Tourism Yogyakarta Tourism Regains Vibrancy

Post Merapi Eruptions Photo: The President Post/Nandi Nanti

The recent volcanic eruptions of Mount Merapi not only claimed more than a hundred lives but also displaced tens of thousands of people who lived on the slopes of the mountain. Aside from causing property damages, the volcanic eruptions had also brought Yogyakarta’s vibrant tourism sector to a temporary halt.

M

ount Merapi, which first erupted on October 26, 2010 and went on for about three weeks, had significantly caused substantial losses on the local tourism sector, hurting hotels and restaurants as tourists decided to put their trips to the region on hold.

“Losses on the tourism sector grew further after Transportation Ministry’s Directorate General of Civil Aviation decided to temporarily close Adisutjipto International Airport, Yogyakarta,” said Yogyakarta Tourism Promotion Board Chairman Deddy Pranowo.

It is time for Yogyakarta tourism sector to revive and get back on its feet now that the eruptions have subsided to avoid a protracted decline.

Indonesia Hotels and Restaurants Association Chairperson Yanti Sukamdani Hardjoprakoso said the image of Yogyakarta’s tourism industry should be restored immediately.

Yogyakarta is the second most favorite tourism destination in Indonesia after Bali and therefore the tourism sector should not be left in limbo for too long, she said.

She said hotel occupancy rate in Yogyakarta had dropped to 20% due to the eruptions. The condition was further aggravated by news from media that scared off tourists.

Embrace media to promote tourism

Efforts to revive Yogyakarta’s tourism industry were conducted by all elements in the region through various ways. All these efforts were aimed to bring back tourists, both domestic and foreign.

One of the efforts to restore Yogyakarta’s tourism image was by embracing the media, both domestic and international media houses.

“To restore image of Yogyakarta’s tourism industry after the Mount Merapi eruptions, we had to embrace the media, both international and national,” said Association of the Indonesia Tours and Travel (Asita) Chairman Edwin Ismedi Himna.

BOROBUDUR After being closed down due to the volcanic ash from the Mount Merapi eruption, Borobudur is now ready to welcome visitors.

The Borobudur temple was built around the 8th century by the Syailendra Dynasty.

About 2000 tourists both international and domestic visit Borobudur every day.

Asita Yogyakarta also tried to convince committees of national and international events to bring back their events to Yogyakarta which were canceled or transferred to other cities.

Meanwhile, a ceremony was held to welcome the first arrival of international passengers when the Adisutjipto Yogyakarta International Airport was reopened.

The welcome ceremony included the handing out of batik scarves to passengers who disembarked from the plane that flew from Singapore.

ists had asked, either via email or phone, about Yogyakarta and we provided them with the latest situation here,” said Yogyakarta Tourism Agency Tazbir.

He explained that Mount Merapi is still active but the danger zone had been reduced to respectively 10 kilometers and 15 kilometers from the summit for west Kali Boyong and east Kali Boyong.

According to him, Yogyakarta is safe because it is located 40 km away from Mount Merapi’s summit.

Yogyakarta is Safe to Visit

A number of tourism attractions including Ngayogyakarta Hadiningrat, Prambanan Temple, Borobudur Temple, Taman Sari, Malioboro and others are

Tourist attractions in Yogyakarta have been reopened and are safe to visit.

“After the eruptions, tour-

Sastro Al Ngatawi, Head of Lesbumi, organizer of “Borobudur Recovery Art”, said the volcanic eruptions were a test but that it should not demoralize the society. “The people should bounce back and recover from their sufferings,” he said.

situated outside the danger zone and are therefore safe for tourists to visit.

“Social activities in Yogyakarta have returned to normal and Yogyakarta is ready to welcome tourists once again, “said Tazbir.

“Borobudur Recovery Art “, Part of Efforts to Restore Tourism

An event called “Borobudur Recovery Art” was held in the parking lot of Borobudur Temple, Magelang, Central Java, recently. The event was part of the efforts to restore the tourism industry after the Merapi volcanic eruptions.

“This activity was an attempt to convince the public and the tourism world that Borobudur

temple is a safe place to visit,” said Central Java Disaster Mitigation Agency Logistics and Equipment Chairman Putu Adi Sutrisno in Magelang.

“Other tourism supporting industries that are hit by the volcanic eruptions are travel agencies, restaurants, hotels and souvenir vendors,” he said.

He added now that the volcanic activities have subsided and the government has lowered Merapi’s alert status, it is time for the real sector and art and culture sectors to revive.

Sastro Al Ngatawi, Head of Lesbumi, organizer of “Borobudur Recovery Art”, said the volcanic eruptions were a test but that it should not demoralize the soci-

ety. “The people should bounce back and recover from their sufferings,” he said.

He added that aside from organizing a cultural event and art performances, Borobudur Recovery Art also promoted tree planting activities in Kenalan Village, subdistrict of Borobudur.

“Planting trees could serve as reforestation and efforts to prevent erosions in the future,” he explained.

Foreign tourists who visited the Borobudur temple during the cultural event were also welcomed with garlands which were handed out gracefully by dancers. A mass prayer led by interfaith leaders was also conducted.

The President Post

www.thepresidentpost.com

January 17, 2011 C5

Pictorial Events Bakrie Micro Credit without Collateral PT Bakrie Microfinance Indonesia (BMF) launched microcredits which are mainly for women. BMF is a charity program and adopts the concept and philosophy of Grameen Bank, a microfinance bank in Bangladesh founded by 2006 Nobel Prize Winner Muhammad Yunus.

BMF officially started to operate in Desa Kalangsari, Karawang, Jawa Barat.

Text & Photos by Nandi Nanti

The Financial Club Breakfast Dialogue The Financial Club held the regular Breakfast Dialogue themed “Management in the New Economy” last December, featuring Sutanto Hartono the President Director of PT. Microsoft Indonesia.

Text & Photos by Nandi Nanti

Schenker New Sales Office at Cikarang Text & Photo by Nandi Nanti

Indonesia Australia Business Council IABC held a gathering participated by businessmen and professionals, among others Nick Fenton from Nusa Prima Persada International Consulting, Jeff Tutticci – Aurecon, Catherine Eddy from Nielsen Indonesia, Malcolm Llewellyn from Boral Indonesia, Robert Lemmey from Triangle Pase Inc., Terry Moore from JDA, Indonesia, Steve Young from Siemens Indonesia, and Ms. Rizka An Nisa from Benchmark Recruitment.

Text & Photo by Nandi Nanti

PT. Schenker Petrolog Utama opened its sales office at Cikarang, Jababeka.

President Director of DB Schenker Hauns Hauptmann attended the event.

The New Country Head and CEO of HSBC

EMO HANNOVER 2011 Text & Photo by Nandi Nanti

Michael Young has been appointed the new Country Head and CEO of The Hongkong and Shanghai Banking Corporation Limited in Indonesia. Currently Deputy Chief Executive Officer and Chief Technology and Services Officer for HSBC Turkey, he will succeed Rakesh Bhatia, who will move to Hong Kong as Global Head of Trade and Supply Chain.

Emo Hannover 2011, the machine industry exhibition, will be held at Hannover Germany, 19-24 September 2011. The press conference was held at Jakarta and attended by Jan Roennfeld from Ekonid, Martin Thiem from Deutsche Messe AG and Christop Miller from Emo Hannover.

The President Post

C6 January 17, 2011

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Living The 10 most significant gadgets of 2010

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If you’d told us in December 2009 that we’d be using the word “iPad” every day without giggling, well, we would have giggled at you. But there it is: There’s no getting around the fact that the iPad, silly name and all, has completely and successfully redefined what a “tablet computer” could be.

Kindle 3 With a brighter, higher-contrast screen and a svelte, understated design, Amazon has finally nailed the Kindle. There’s still room to debate the virtues of E Ink (long battery life, paperlike readability) versus LCD screens, but on balance, if it’s reading you’ll be doing, the Kindle is tops.

Canon S95 You might be thinking, “What’s a point-and-shoot doing on a top-10 list?” That’s how good Canon’s PowerShot S95 is: It’s a camera that gives amateur shooters pro-baller status.

This pocketable cam packs a 10-megapixel sensor, a 9.5mm (diagonal) sensor, the latest DIGIC 4 processor (which is lightning fast), optical image stabilizer, face detection, the ability to shoot RAW images and HDMI output.

Samsung Galaxy Tab The first Android-based tablet to be a credible contender to the iPad, the Galaxy Tab is a remarkably usable tablet that’s got a lot going for it. It’s considerably smaller than the iPad, with a 7-inch diagonal screen compared to the iPad’s 9.7 inches. But with an almost identical 1024 x 600 pixel resolution, it’s got just as much screen real estate -- and it’s a good deal more portable.

MacBook Air Steve Jobs called the new MacBook Air the future of computers, and we like where this is going.

Coming in 11and 13-inch flavors, the MacBook Air weighs less than 2.5 pounds, with a wedge shape that thins down www.thekindlechronicles.com to just a tenth-ofan-inch.

Most importantly, it ships with a flash drive, which makes the

Air a surprisingly zippy performer for its size. And at an attractive starting price of $1,000, who wouldn’t consider one of these as their next notebook? iPhone 4 Reviewers sang praise for the device’s gorgeous “retina” display, which makes reading from a digital screen as pleasing as a glossy magazine page. Add to that a front-facing camera for video chat, a fast A4 processor and iOS 4, which enables multitasking, and the iPhone 4 is a killer upgrade. iPhone 4 was Apple’s hottest iPhone yet, selling 14 million units in just one quarter.

Sprint Evo 4G It’s bigger, beefier and more badass than almost any other phone we’ve tested this year. And thanks to its 4G connection, 4-inch screen and ability to beam out a Wi-Fi signal, the Sprint Evo makes an excellent traveling companion.

Windows Phone 7 on Samsung Focus In the wake of the iPhone revolution, Microsoft’s Windows Mobile OS tanked in market share, and the software giant decided in 2008 to scrap everything and start over.

Based on a fresh tile-based interface, Windows Phone 7 is an impressive start. It shines brightly on the lightweight Samsung Focus smartphone, which has a beautiful AMOLED screen and a solid overall construction.

Air Rage: Is Reclining Your Seat a Right?

If you’re the passenger who feels uncomfortable when someone in front of you puts their seat back, you can ask whether they plan on being reclined for the whole flight, in which case you might start looking for a different seat The passenger in seat 9C was ready for a nap after takeoff, so he pushed the button on his armrest and reclined – straight into the path of someone who apparently wouldn’t have it.

Tensions grew quickly on the American Airlines flight from Los Angeles to Denver on November 22, court papers show.

The incident adds fuel to a debate that seems to divide air travelers into two camps: those who say that reclining their seat on a plane is a right that comes when they buy a ticket and those who believe it’s a privilege that shouldn’t be abused.

As Brian Dougal leaned back on the Denver-bound flight late last month, he felt someone bump his seat, according to a criminal complaint filed in the U.S. District Court of Colorado.

“Are you serious? My knees are up against the seat,” said the man behind him, identified as Tomislav Zelenovic, according to the complaint.

Dougal suggested that Zelenovic also recline, slide into an empty seat next to him or move his legs to the side. Dougal told the man in 10C that he paid for his seat and was going to recline it.

ply hate it when the person in front of me shifts their seat as far back as it will go,” Collins recently vented in a blog entry titled “Ban the reclining seat on planes.”

“I regard the invasion of the person’s space sitting behind me as an unfortunate, but easily tolerated, side-effect of my attempt to achieve a modicum of comfort while flying,” wrote travel guru Arthur Frommer in his blog this year.

So, is reclining your seat on a plane a privilege or a right?

Neither, said Lizzie Post, etiquette expert, author and spokeswoman for the Emily Post Institute.

Photo: www.bing.com “It’s not a right; it’s not a privilege; it’s a function Zelenovic then shook the back of the seat that you purchase,” of Dougal’s seat and grabbed his Post said. right ear, pulling it back and down If you want to recline your with enough force to knock Dougal’s glasses off his face, accord- seat, there is no obligation to ing to the complaint. turn around and assess whether the person behind you would be Steve Collins, an Australian cramped, Post said. broadcaster who runs the blog If you’re the passenger who Grumpy’s Getaway Guide, ar- feels uncomfortable when somegues that he shouldn’t have to put one in front of you puts their seat up with passengers who lean back back, you can ask whether they and invade his personal space. plan on being reclined for the “I don’t recline my seat, pri- whole flight, in which case you marily because I have respect for might start looking for a different the person behind me, and I sim- seat, she advised. (CNN)

www.dvice.com

Here, then, are the 10 gadgets that were most significant in 2010.

Microsoft Kinect Combining a visible-spectrum camera and an infrared sensor, the Kinect offers the most advanced real-time 3-D scanning and rendering we’ve seen in a commercial product. It’s also got built-in face recognition. The upshot: Your Kinect can recognize you, and you can control it simply by waving your hands and moving your body.

Berkeley Bionics eLEGS The feel-good gadget story of the year, without a doubt, was a lightweight exoskeleton from Berkeley Bionics that can help paraplegics walk again.

At the company’s press confer-

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ence, a person who’d been paraplegic for 18 years demonstrated the eLEGS by walking around onstage.

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iPad The tablet’s beautiful 9.7-inch screen opens new possibilities for content creators to make money by selling apps through the App Store, but every so often Apple cracks the whip, demanding programmers to follow the company’s vaguely stated but stringently applied rules.

Apple sold 4.2 million iPads during the tablet’s first quarter of existence, claiming the title of fastest-adopted gadget in history.

(WIRED) www.hitechreview.com

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January 17, 2011 C7

Living The Future of Cars:

Drivers Not Needed It’s conventional wisdom in the auto industry, but the rest of us may be a bit shocked to find out that cars of the future likely will drive themselves.

In some ways, they already are.

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$100,000 car from Mercedes aims to give the human foot a rest in traffic jams. It senses how far away other cars are – and then speeds up and slows down accordingly. No need to turn off cruise control and hit the brake. You just steer. (Wired Magazine, which tested the car, called this a “magically scary experience.”)

And tech companies are pushing car automation even further.

In October, Google announced it had developed a fleet of cars that use various sensors and maps to feel out the roadway. “They’ve driven down Lombard Street, crossed the Golden Gate bridge, navigated the Pacific Coast Highway, and even made it all the way around Lake Tahoe. All in all, our self-driving cars have logged over 140,000 miles. We think this is a first in robotics research,” the company said on its blog.

The latest edition in this trend comes from General Motors,

which showed off a self-driving car last week at the Consumer Electronics Show in Las Vegas.

The EN-V (pronounced “envy” and short for “Electric Networked Vehicle”) combines two ideas about how to teach cars to drive – using sensors like cameras and sonar to keep the car from hitting pedestrians; and network technology that lets cars talk to each other.

This “car internet” lets the cars link up wirelessly and follow one another in a sort of wirelessly linked train. If one EN-V needed to pull out of the line, it could.

The pod-like cars, which are just prototypes for now (GM says they could be on the market by 2030 at a cost of $10,000), look somewhat like large scuba-diver helmets, or smushed dust busters.

They roll on two wheels, which are aligned like the front two wheels of a car, not like a bicycle. GM partnered with Segway, maker of those futuristic-looking transporters, to create technology that allows the car to balance.

“It’s basically a dynamically balanced skateboard,” said Chris Borroni-Bird, GM’s direc-

tor of advanced technology vehicle concepts.

The EN-Vs are just as wide as they are tall, measuring 5 feet cubed. Two people fit inside comfortably, but there’s not much room for anything else. A bubble of glass sits close in front of the driver’s face. “You can probably pack 5 or 6 times as many of these EN-Vs in a parking lot as you could conventional cars,” Borroni-Bird said.

Even though the cars can communicate with each other and drive themselves, drivers can take control if they choose. That’s important, Borroni-Bird said, both for safety reasons and so drivers can get some sense of enjoyment from the vehicle.

3-D isn’t going away – Disappointing sales of TVs have not deterred technology and media companies from pursuing 3-D products.

We saw 3-D TVs, laptops, cameras, movies, games, portable devices and picture frames.

Three-dimensional TVs were a huge theme at last year’s CES, too, although cost, shortage of 3-D content and those bulky special glasses made consumers wary. This year, we saw big steps in 3-D big-screen viewing without glasses, though little in the way of solidified products.

But in case the home 3-D craze falls completely flat, television makers are betting another trend may help them sell new TV sets or accessories. We saw all kinds of “smart TV” systems that connect the big screen to the content of the Web. Following the blazing success of Apple’s iPad, practically every manufacturer with any kind of expertise in building screens, gadgets or software unveiled their own touchscreen tablets at CES. Mobile industry watchers expect Google to repeat its success with the Android operating system for smartphones in the tablet category as well. The company demoed Honeycomb, its new Android 3.0 operating system for tablets, at CES to good reviews.

More than just fun and games at CES One prototype Honeycomb tablet, Motorola’s Xoom for Verizon Wireless, got perhaps the biggest buzz. LG Electronics offered the GSlate for T-Mobile, which also runs Honeycomb, but the company had nothing to show at CES besides a video.

There were dozens of other tablets running older versions of Android or a tablet-optimized version of Microsoft’s Windows 7 operating system.

Or, in Lenovo’s case, both.

One disappointing trend, from a tech reporter’s perspective, was the companies’ reluctance to let the public handle tablets in person.

Many devices were waved about on stage or displayed behind glass but not made available for show attendees to play with.

Celebs are great for hawking gadgets – What better way to promote an otherwise dull piece of equipment than with a familiar face?

Rapper Ludacris was in town to promote his upcoming line of headphones. Fellow musician T-Pain was hawking a microphone. And 49ers football legend Jerry Rice was scheduled to attend CES – but bailed days before – to promote a video game where his character competes against dogs. (No, that’s not a joke.)

Lady Gaga, the official creative director for Polaroid (also not a joke), arrived about 40 minutes fashionably late to her event at the camera company’s booth.

The pop star demonstrated a portable photo printer she said she designed herself, which she carries in her purse, and a bulky pair of sunglasses with a camera built in. Gaga encouraged the audience to buy the sunglasses and bring them to her concerts.

If Polaroid wanted to make a splash, it worked: Gaga’s appearance produced a massive crowd, swarms of paparazzi and countless headlines. Whether anyone will actually buy the sunglasses is another matter.

Gimmicky things can get buzz-Acer’s Iconia, a laptop with two touch-screens instead of a keyboard, won a gadget competition despite not demonstrating a working version of the product onstage.

The Iconia appears to face some

Here are three things you should never buy unless you’re rich enough to stop working: Timeshares It never makes sense to buy a timeshare, even if you vacation in the same place every year. Timeshare sellers will tell you that the rooms are bigger than those in a hotel, and come with more amenities. What they don’t tell you is that the glut of timeshares has made it easy to rent one at a fraction of the cost of buying one.

You could rent a timeshare every year for the next decade and spend less than you would if you had you bought it. And you wouldn’t be stuck with maintenance fees.

Boats

The EN-V (Electric Networked Vehicle) by General Motors

Drivers use a joystick of sorts to steer and throttle the vehicle, which can spin in place and accelerates rather quickly.

Still, Borroni-Bird says, there are a number of obstacles that need to be hurdled before something like the EN-V hits the market.

The wireless signals that let the vehicles communicate are problematic because hackers, in theory, could access them and send

The Consumer Electronics Show, a showcase of cutting-edge gadgets, took over the Las Vegas Convention Center last week.

of challenges. It has the heft of a laptop without the convenience of being able to type on physical keys.

Chinese computer maker Lenovo got some attention for its laptop hybrid with a removable touchscreen tablet – despite the fact that the company showed off basically the identical gadget at CES 2010.

And several companies introduced home appliances – refrigerators, ovens and washing machines – with internet connections and touchscreens. Your oven, for example, can send you a text message when your roast is about done.

Of course, declaring something a gimmick before it’s had ample time to be accepted or rejected by consumers is probably not fair. Who knows? Maybe people will really want to tweet from their fridge.

Gadget ‘Transformers’ – Sometimes being a really good phone, laptop or Web-connected entertainment center isn’t enough. Take Motorola’s Atrix 4G , for example. It’s all three.

The Android smartphone is superfast, with a dual-core processor inside. But like in the hit “Transformers” movie, the big reveal comes when this truck becomes Optimus Prime.

The Atrix can dock to a laptop shell or monitor to become a sort of Android desktop computer, complete with Firefox for full Web browsing. Hook it up to a TV, and the videos and music stored on the device can be played on the big screen using a media-center system.

Samsung’s Sliding PC 7 Series laptop starts out as a touch-screen Windows tablet. But users can pull out a hidden keyboard, similar to the ones on slider phones, which turns the tablet into a sort of netbook.

(CNN)

3 Expensive Things You Shouldn’t Buy Many people’s financial troubles begin when they buy an expensive toy or a vacation home. The buyers assume they’ll save money because they’ll own the items instead of renting them. While that might be true short-term, it rarely works out that way in the long run.

The EN-V runs on battery power and plugs into a wall – giving it a max speed of about 30 miles per hour and a range of about 30 miles. That’s not far or fast, but it’s enough to make the EN-V useful for cutting down congestion in urban settings, particularly high-density cities in China and India, BorroniBird said.

The car also aims to improve safety, since human drivers don’t have a sterling record on that front. An estimated 1.3 million people die in trafficrelated accidents each year, according to the World Health Organization.

The Things We Learned at CES After tapping dozens of greasy touchscreens, getting our ears pinched by 3-D glasses and braving crowds that would make a penguin claustrophobic, we members of the tech media said goodbye Sunday to the Consumer Electronics Show.

While the planet’s biggest technology companies box up their prototypes and disassemble their grandiose booth displays, we’re reflecting on the past week and what it could mean for the year ahead.

Here are the things we learned at CES:

Photo: www.gagagadget.com

cars off track; and because a lost wireless connection could cause the automated system to lose control of the car.

“It’s one thing if a computer goes down, but it’s another thing if it happens here,” he said.

But he sees a bright future for the concept.

“For the last 100 years the car really hasn’t changed in a fundamental sense,” he said.

Self-driving cars may buck that trend. (CNN)

There’s an old saying that the two happiest days for boat owners are when they buy the boat and when they get rid of it. Boats are a great way to throw money down the toilet because they cost so much to maintain. There are repairs, docking fees, gas and insurance. You could rent a much nicer boat on the days you want to spend at sea for much less than buying one.

Recreational vehicles Some people think vacationing in an RV will be cheaper than staying in a hotel room, but that’s only true if you’re retired and live in the RV. If you buy a modest vehicle for $50,000 and use it 30 nights a year for 10 years, you’ll have spent $167 a night. That can get you a nice room in most places in the U.S. That doesn’t include the costs to fuel, store and insure it.

If you want to take a trip in a RV, rent one. You could also spend less by staying in a four-star hotel.

The President Post

C8 January 17, 2011

www.thepresidentpost.com

Health WAYS TO NEVER GET DIABETES These simple steps may be all it takes to stay healthy and stop worrying about sugar problems.

These are just a few of the good-for-you habits that can reverse prediabetes and ensure you never get the real thing, which can mean a lifetime of drugs and blood sugar monitoring, an increased risk of heart disease, Alzheimer’s disease, and other scary health threats. ber are overshadowed by the addition of refined grains, added sugar, or cholesterol-raising fats.

5 www.trainbodyandmind.com

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Nudge the Scale Shedding even 10 pounds can significantly slash your

risk.

Even extremely overweight people were 70% less likely to develop diabetes when they lost just 5% of their weight—even if they didn’t exercise. If you weigh 175 pounds, that’s a little less than 9 pounds! Use our calorie calculator to see how many calories you consume—and how many you need to shave off your diet—if you want to lose a little.

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Pick the Right Appetizer Eating greens with a vinaigrette before a starchy entrée may help control your blood sugar levels.

In an Arizona State University study, people with type 2 diabetes or a precursor condition called insulin resistance had lower blood sugar levels if they consumed about 2 tablespoons of vinegar just before a high-carb meal. “Vinegar contains acetic acid, which may inactivate certain starch-digesting enzymes, slowing carbohydrate digestion,” says lead researcher Carol Johnston, PhD. In fact, vinegar’s effects may be similar to those of the blood sugar—lowering medication acarbose (Precose).

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Ditch Your Car Walk as much as you can every day. You’ll be healthier—even if you don’t lose any weight People in a Finnish study who exercised the most—up to 4 hours a week, or about 35 minutes a day—dropped their risk of diabetes by 80%, even if they didn’t lose any weight.

And Chinese researchers determined that people with high blood sugar who engaged in moderate exercise (and made other lifestyle changes) were 40% less likely to develop full-blown diabetes.

4

Be a Cereal Connoisseur Selecting the right cereal can help you slim down and steady blood sugar.

A higher whole grain intake is also linked to lower rates of breast cancer, type 2 diabetes, high blood pressure, and stroke—and cereal is one of the best sources of these lifesaving grains, if you know what to shop for.

Some tips: Look for the words high fiber on the box; that ensures at least 5 g per serving. But don’t stop there. Check the label; in some brands, the benefits of fi-

Indulge Your Coffee Cravings If you’re a coffee fan, keep on sipping. The beverage may keep diabetes at bay.

After they studied 126,210 women and men, researchers at the Harvard School of Public Health found that big-time coffee drinkers—those who downed more than 6 daily cups—had a 29 to 54% lower risk of developing type 2 diabetes during the 18-year study. Sipping 4 to 5 cups cut risk about 29%; 1 to 3 cups per day had little effect.

Caffeine in other forms—tea, soda, chocolate—did. Researchers suspect that caffeine may help by boosting metabolism. And coffee, the major caffeine source in the study, also contains potassium, magnesium, and antioxidants that help cells absorb sugar.

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Go Veggie More Often Women who ate red meat at least 5 times a week had a 29% higher risk of type 2 diabetes than those who ate it less than once a week, found a 37,000-woman study at Brigham and Women’s Hospital. And eating processed meats such as bacon and hot dogs at least 5 times a week raised type 2 diabetes risk by 43%, compared with eating them less than once a week. The culprits? Scientists suspect the cholesterol in red meat and the additives in processed meat are to blame.

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Spice Up Your Life Cinnamon may help rein in high blood sugar.

German researchers studied 65 adults with type 2 diabetes who then took a capsule containing the equivalent of 1 g of cinnamon powder or a placebo 3 times a day for 4 months. By the end, cinnamon reduced blood sugar by about 10%; the placebo users

improved by only 4%.

9

Unwind Every Day Chronic stress can send blood sugar levels soaring.

When you’re stressed, your body is primed to take action.

This gearing up causes your heart to beat faster, your breath to quicken, and your stomach to knot. But it also triggers your blood sugar levels to skyrocket. “Under stress, your body goes into fight-or-flight mode, raising blood sugar levels to prepare you for action,” says Richard Surwit, PhD, author of The Mind-Body Diabetes Revolution and chief of medical psychology at Duke University.

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Get a Perfect Night’s Rest A Yale University study of 1,709 men found that those who regularly got less than 6 hours of shut-eye doubled their diabetes risk; those who slept more than 8

hours tripled their odds. Previous studies have turned up similar findings in women. “When you sleep too little—or too long because of sleep apnea—your nervous system stays on alert,” says lead researcher Klar Yaggi, MD, an assistant professor of pulmonary medicine at Yale. This interferes with hormones that regulate blood sugar.

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Keep Good Company Diabetes is more likely to strike women who live alone.

Women who live alone are 2.5 times more likely to develop diabetes than women who live with a partner, other adults, or children, according to a study published in Diabetes Care. Researchers examined what role household status played in the progression of impaired glucose tolerance to diabetes among 461 women, ages 50 to 64, and found higher risk among women living alone.

www.methodistcollege.edu

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Have a Blood Test A simple blood test can reveal whether sugar levels put you at risk for the condition. People with prediabetes—slightly elevated blood sugar levels, between 100 and 125 mg/ dl—often develop a full-blown case within 10 years. Knowing your blood sugar levels are a little high can put you on a track to steadying them—with simple diet and exercise changes—before diabetes sets in and medications may be necessary.

Everyone 45 and older should have their blood sugar levels tested. Younger people who have risk factors such as being overweight, a family history, and high cholesterol and blood pressure should ask a doctor about getting tested sooner. If results are normal, get tested again within 3 years. If you have prediabetes, blood sugar should be tested again in 1 to 2 years. (www.prevention.com)

6

Ditch the Drive-Thru You might get away with an occasional fast-food splurge, but become a regular “fast feeder” and your risk of diabetes skyrockets.

That’s what University of Minnesota scientists found after they studied 3,000 people, ages 18 to 30, for 15 years. At the start, everyone was at a normal weight.

But those who ate fast food more than twice a week gained 10 more pounds and developed twice the rate of insulin resistance—the two major risk factors for type 2 diabetes—compared with those who indulged less than once a week.

Doctor: We can change the world with human embryonic stem cells Welcome to Our Pediatric Ward!

By Dr. John McDonald

This year marked what just a decade ago many believed would be an impossible feat - the first human has been injected with cells from human embryonic stem cells (hES). hES cells, and embryonic stem cells in general, are one of the greatest scientific tools for discovery of the 21st century.

The clinical trial brings together the best we have to offer in central nervous system research to address the difficult problem of spinal cord injury.

It is a phase I open label safety trial. To be included, individuals have to have suffered a complete thoracic spinal cord injury, which means no movement or sensation below the injury level. The injury to the spinal cord must have occurred between the third and 10th thoracic neurological levels, and the individual has to be injected with the stem cell therapy, called GRNOPC1, within seven to 14 days after the injury.

Following this initial safety

trial, it will take three to five years to complete a trial that evaluates the effectiveness of this approach. If successful, a FDA-approved cellular treatment for spinal cord injury could be developed and on the market within five to seven years.

Although this trial is evaluating transplantation of hES cells, the greatest effect of these cells will not be as a direct treatment. It will be from the use of hES cells as a scientific tool of discovery, accelerating progress across multiple fields and leading to effective repair and recovery. The human genome sequencing project is similar to the tools offered by hES cells, and like the human genome project, hES cell tools will change our world.

What we collectively decide today will affect our children and generations to come. This is an awesome responsibility, and one that requires risk and investment. The primary risk is of the unknown, and this is not new or unique to hES cell technology. Remember the similar fears surrounding the idea of sequencing the human genome? Imagine where we would be today if we made the wrong decision out of fear or from personal ethics?

We must not fear knowledge. We must be decisive and clear in purpose and allow science to benefit from all of its tools. (CNN)

Located on the fifth floor of the hospital, our pediatric ward has officially opened in April 2010. We have created an inpatient pediatric service that provides comprehensive care for children requiring hospitalization.

Our pediatric ward environment has cheerful playing atmosphere designed to make your visit to our hospital less scary and fun through out your healing process.

Our friendly pediatric team of health professionals is committed to provide you and your child a positive experience and the best possible health outcomes. We strive to achieve open communication with parents and families to involve them in treatment and diagnostic decision.

We have many pediatrician as well as pediatric subspecialists including experts in child growth and development, cardiology, children surgery, hematology, neurology, psychology, children-dentistry and nutritionist.

We also provide special care unit: NICU (Neo-natal Intensive Care Unit). Our NICU is headed by Neonatologist - pediatric doctors who have undergone subspecialty training in management of critically ill newborn babies.

Brawijaya Women & Children Hospital provides a child friendly environment by creating a Patient EduTainment Program. This program offers many educational and entertainment activities such as: dedicated Kids TV Channel, Clown Visit, Art & Craft, Visit by Your Favorite Characters, Story Telling, Puppet Show and Music & Play Session.