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Yudhoyono: No More New Regions Speaking to the press after his meeting with leaders of seven main state institutions in Bogor, West Java, the president asserted he had had enough of seeing the birth of new provinces JAKARTA (TPP) – President Susilo Bambang Yudhoyono last week came out firmly against any plan to create new adminstrative regions such as provinces, regencies and cities, pending what he said to be “an overall review on the ruling itself as well as the results and performances of the newly established state entities.” Speaking to the press after his meeting with leaders of seven main state institutions in Bogor, West Java, the president asserted he had had enough of seeing the birth of new provinces, while at the same time more regencies and cities are being set up with no end in sight. He has the figures to back up his complaint: in the past 10 postreform years, seven new provinces (from 26 to 33), 164 regencies and 34 cities have been established (from 293 to the present total of 491). “Clearly, we can’t let this go on forever unless we can come up with a new concept,” he said. The head of state further said the government is currently assessing the regions that have been newly established as spin-offs of already existing provinces or regencies. Pending the evaluation process, he said, “the government has put a halt on expanding regions (into new provinces or regencies).” President Yudhoyono explained that the evaluation will look into whether the new regions have achieved the targetted results or have in fact undermined the quality of life of the surrounding communities. “There will be no more expansions until we know the results of the evaluation,” the president said. “We will be decisive on this matter.” Separately, Coordinating Min-

ister of the Economy Hatta Radjasa noted that “many regions that should not have been expanded in the first place were actually expanded.” He added that the government is currently preparing “a new design” on the ideal number of provinces, regencies and cities for the nation. “The Home Minister is working on it, but in the meantime the current PP (government regulation) on regional expansion will be tightly controlled,” said Hatta. Hatta does not rule out the possibility that expanded new regions will be reverted to their original form “as the regulation allows that to happen.” As things stand now, Indonesia (size: 1.9 million km2) comprises 33 provinces, 398 regencies and 93 cities. (By comparison, the US covers 9.3 million km2, or nearly five times Indonesia’s size, and has 50 states, or only 50 percent more than the number of Indonesia’s provinces.) High on the president’s mind is the huge funds, most of which come from the state budget, and resources required to prop these new state entities as they need to have offices, governors, vice governors, regents and the usual oversize bureaucracies. Even higher on his mind,as the president himself pointed ouit, is that the bulk of their budgets is used to maintain officials’ facilities and inspection trips instead of on efforts to improving the people’s welfare. In 2006 the government proposed a moratorium on new provinces and regencies, but it did little to prevent the House from approving new autonomous regions. As it turned out, many of the

President Susilo Bambang Yudhoyono talks to the press after the Bogor meeting.

new regions did not only have the human resources to manange them, they also relied solely on central government financial handouts to sustain themselves. According to figures compiled by the state-run statistics body BPS, if in 2000 (the year new regions started to sprout) the government allocated Rp 32.9 trillion to keep them afloat, in 2008 the amount jumped to Rp 250,34 trillion. To be sure, expanding the number of provinces goes back to the early days of post-indepen-

dence Indonesia. But at the time management imperatives over the country’s cumbersome geographical spread dictated more administrative regions than the original seven provinces (Sumatra, West Java, Central Java, East Java, Kalimantan, Sulawesi and the Lesser Sunda Islands). In post-reform era the measure took a life of its own as often enough governments came under strong pressure from local leaders who wish to have their own kingdoms.

Jakarta, Beijing Explore Coop in Defense Industry The two countries have agreed to strengthen their already good relations through cooperation in the field of security and defense industries The Indonesian and Chinese governments are seeking possibilities in forging bilateral cooperation in the field of security and defense industries. “The two countries have agreed to strengthen their already good relations through cooperation in the field of security and defense industries,” vice presidential spokesman Yopie Hidayat said here last week. Hidayat made the statement after Vice President Boediono had received Chinese Coordinating Minister for Political, Legal

and Security Affairs Dai Bingghuo.

of Indonesia-Chinas bilateral relations, “there would be no more freezing of diplomatic relations”. Indonesia-China diplomatic relations once soured, but both sides hope “there will be no low tide in the 60th year of bilateral relations,” Hidayat said.

The vice president on the occasion was accompanied by Coordinating Minister for Political, Legal and Security Affairs Djoko Suyanto and Foreign Affairs Minister Marty Natalegawa. Hidayat said China regarded Indonesia as an important and strategic partner, and as such wants to help Indonesia develop its security and defense industries. “China also asked that the

good relations between the two countries would continue to be stepped up for mutual benefit,” Hidayat said. He pointed out that as this year marks the 60th anniversary

Hidayat said that the subject of China offering arms to Indonesia was not discussed at the meeting of Vice President Boediono and Bingghuo. “The vice president and his guest only discussed political and security matters besides other issues related to the improvement of cooperation in various fields,” Hidayat said, adding that Bingghuo had invited Boediono to make an official visit to China.

VIEWPOINT

FEATURES

BUSINESS

TOURISM

Coastal Zones and Small Island Management of Indonesia

Betting on the Future

Matahari Department Store Up for Grabs

Borobudur, Prambanan Temples Set to Become More Attractive

Indonesia alone could lose about 2000 small low-lying islands by 2030 if the sea level continues to rise, and no sufficient mitigation and adaptation efforts are being taken. PAGE 2

The Indonesian film industry is still in its infancy but it won’t be long before it starts to really take off; we are at the crucial time when the government can help the industry grow.

PAGE 7

Vice President Boediono

Matahari Putra completed an ownership restructuring of MDS to Pacific Utama, which changed the name to Matahari Department Store in December 2009. PAGE 9

As an organiser of tour packages, TWC BP & RB wanted to inform potential buyers about the forthcoming attractions of these tourist destinations. PAGE 13

Photo: www.presidenri.go.id

And more often than not, the ‘proposals’ came with more than a subtle hint on secession should their demand not be granted. Although such threats would unlikely become a reality, the very idea of it was enough to make past governments succumb to their demands. When Mardiyanto was Home Affairs Minister during President Yudhoyono’s first term, he said that a report on 48 new administrative regions shows that “they have had no impact on raising the welfare of local people”.

Ironically, that is one of the very reasons why new regions were allowed to exist in the first place. In as much as the president’s concern over new regions is valid,there is also no constitutional way he could prevent the establishment of new regions in the future. So long as Law No. 32/2004 on Regional Governments remains in place and House members continue to allow themselves to be wooed by regional local leaders to have their ways, it is

likely that new regions will continue to come to being. As the Yogyakarta-based Gajah Mada University scholar Sutoro Eko correctly pointed out, “unless the government and the House sit together and revise the exisiting law, pressure to set up new regions will continue unabated as the law allows people in the regions to propose such an idea.” By Eko’s reckoning, “80% of all the new regencies and cities have become poorer than they were before.”

20 Indonesians Receive Australian Endeavor Awards This year six Australians also won Endeavor Awards to conduct research in Indonesia.

Australian Ambassador to Indonesia Bill Farmer last week honored 20 high-achieving Indonesian recipients of the Australian Government Endeavor Awards for 2010. According to an Australian Embassy media release, the recipients included two winners of The Prime Minister`s “Australia Asia Endeavor Award”, a prestigious scholarship newly announced by Prime Minister Kevin Rudd. “Australia is very proud of these high-achieving Endeavor Awardees,” Farmer said, adding that the recipients of these prestigious Awards would continue to strengthen research and professional linkages between Australia and Indonesia and enhance their professional careers in their chosen field. A recipient of the Prime Minister`s Australia Asia Endeavor Award, Agustian Sutrisno, National Program Officer for UNESCO, said that furthering studies at a PhD level in Australia will refine his educational management skills by conducting research based on actual educational management practices.

“Qualified researchers in the field of education are very rare in Indonesia and, by completing my PhD, I will be a researcher and an academic who is able to provide evidencebased inputs and advice on the development of our educational sector,” Sutrisno said.

Bill Farmer

The Endeavor Awards are an internationally competitive, meritbased scholarship program providing opportunities for leading researchers and professionals to undertake short or long term study, research and professional development in a broad range of disciplines.

Agnes Sumargi, a senior lecturer at Widya Mandala Catholic University in Surabaya, is also a recipient of The Prime Minister`s Australia Asia Endeavour Award and plans to research the effect of parenting education programs on parenting skills in Indonesia. Australia has been providing scholarships to Indonesia for almost 60 years. The Endeavor Awards are an internationally competitive, merit-based scholarship program providing opportunities for leading researchers and professionals to undertake short or long term study, research and professional development in a broad range of disciplines. This year six Australians also won Endeavor Awards to conduct research in Indonesia.

The President Post

January 28, 2010

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Viewpoint Coastal Zones and Small Island Management of Indonesia Indonesia alone could lose about 2000 small low-lying islands by 2030 if the sea level continues to rise, and no sufficient mitigation and adaptation efforts are being taken. By Prof Dr Hasjim Djalal, MA

Background

ndonesia is very concerned with the management of coastal zones and small islands in view of the destruction caused by human activities and global climate change. The human activities have the general tendency to exploit resources, legally or illegally, without proper consideration for the sustainability of resources and the environment. The global climate change causing global warming and sea level rise would certainly affect Indonesia, which consists of thousands of small and low lying islands with thousands of miles of coastlines. Some Indonesian scientists have already calculated that by 2050 Indonesia may lose 30,120 km2 of land area due to the sea level rise of 0,56m, and by 2100, the sea level rise of 1,1m may cause Indonesia to lose some 90,260 km2 of land in low-lying coastal areas (Media Indonesia, 30 Oct 2009). Jakarta’s Soekarno–Hatta international airport in Cengkareng could be under water by 2030 or even before that. The rising temperature in Java

President Susilo Bambang Yudhoyono, since taking office at the end of 2004, has seen the need to protect the oceans within the context of climate change and its influence on Indonesian coastal areas and the survival of the Indonesian coral reefs.

will increase the incidence of floods, storms, and landslides; will affect water supply quality in ways that cause more areas to have salty water; will severely impact the country’s agricultural sector; and spread the risk of contracting widespread communicable diseases such as diarrhea and malaria (Jakarta Post, 4 Nov 2009). Surely the sea level rise would also cause the destruction of coastal ecosystem, the lost of habitats and marine species and the reduction of productivity of agriculture and fisheries. On the global scale, it is common knowledge now that the earth is getting warmer and the ice in the Arctic and Antarctic, Himalayas, Alps, and even in Kilimanjaro (Africa) and Puncak Wijaya (Papua) are diminishing and will maybe completely vanish in the next 50 years or so. If the current trends are not abated, it is possible that global temperature may get higher by 2oC by 2050. This would cause damage and loss of some US$28 trillion to some of the 136 biggest port cities in the world. Over the past 25 years temperatures have gone up at a rate of 0.19oC per decade, placing Earth on track for global mean warming of as high as 7oC this century. (Strait Times, 25 November 09). On the other side of the spectrum, some lakes would dry up. The surface level of the Dead Sea in the Middle East, for instance, has been plunging by about a meter a year and could dry out by 2050 (Strait Times, 25 November 09). Along with the increasing warming of the earth, the sea level is rising, the coral reefs are threatened, fisheries resources are affected, and the coastal areas and its environment, particularly of the small low lying islands, are increasingly threatened. Indonesia alone could lose about 2000 small low-lying islands by 2030

if the sea level continues to rise, and no sufficient mitigation and adaptation efforts are being taken. Some countries in the Pacific, like Tuvalu and Kiribati, and in the Indian Ocean, like the Maldives, are facing serious problems. Indonesia and other participants to the “Workshop on Managing Potential Conflicts in the South China Sea” are now informally developing cooperative programs to study sea level rise and climate change in the context of promoting cooperation in the protection and the preservation of the marine environment in the South China Sea. The UN Convention on the Law of the Sea (UNCLOS) 1982 oblige states “to protect and preserve the marine environment” (article 192), to “protect and preserve rare or fragile ecosystem as well as the habitats of depleted, threatened or endangered species and other forms of marine life” (article 194), to “cooperate in formulating international rules for the protection and preservation of the marine environment” (article 197), and that developing states shall be assisted in protecting and preserving the marine environment (article 202 and 203). Indonesian Initiatives

In view of the above, President Susilo Bambang Yudhoyono, since taking office at the end of 2004, has seen the need to protect the oceans within the context of climate change and its influence on Indonesian coastal areas and the survival of the Indonesian coral reefs. In this context, Indonesia has committed itself to cut its greenhouse gas emission by 26% by 2020, using its own state budget, and may slash the emission by 41% from the energy and forestry sectors with the aid of rich nations (Jakarta Post, 4 Nov 2009).

Indonesia has enacted Law No. 27 of 2007 dated 17 July 2007 on the Management of Coastal Zone and Small Islands. “Sustainability” is one of the basic principles of this law, in that the utilization of natural resources must not exceed their regeneration capacity and must not sacrifice the needs of the future generation, while at the same time applying caution and supported by sufficient scientific research. Indonesia is very concerned about these matters, especially because it strides the so-called highway of the Ocean, between the Indian and the Pacific Oceans. So do other countries in the area which are also rich with the coral resources (the Philippines, Malaysia, Timor Leste, PNG and Solomon Islands - The Coral Triangle Countries). The coral triangle region covers only about 2% of the surface of the world’s oceans, yet it contains some 76% of all the coral species on earth. The area is about 5.7 million square kilometer. It is the global center of marine biodiversity with more than 600 coral species and some 3000 fish species, and about 50% of the world reef fish species. It is populated by some 120 million people who are dependent upon fisheries for their livelihood and income. The area is also one of the most critically threatened areas, mainly from climate change, over-fishing and illegal fishing activities, unsustainable coastal development and pollution, both from land and sea based sources. In this context, President Yudhoyono also sent a message to the Biological Biodiversity Conference in Brazil in 2006 expressing the importance of conserving biodiversity and announced Indonesia’s commitment to achieve 10 million hectares of Marine Protected Areas (MPA) by 2010 and 20 million hectares of MPA by 2020. Significantly, dur-

ing the World Ocean Conference (WOC) in Manado in May 2009, Indonesia achieved and declared 13.4 million hecatres of Marine Protected/Conservation Areas, the last being in Sawu Sea, thus surpassing the target for 2010. He also announced the intention of Indonesia to organize the World Ocean Conference in Manado, North Sulawesi, which eventually took place in May 2009. In his message to the APEC meeting in Sydney in September 2007 he proposed an initiative to promote cooperation of the 6 Coral Triangle Countries. The APEC Meeting later on welcomed the CTI in its Declaration in 2007. During the 13th COP (Conference of Parties) of the United Nations Framework Convention on Climate Change (UNFCCC) in Bali in December 2007 the Coral Triangle Initiative (CTI) as suggested by Indonesia was also discussed. Indonesia also proposed that the 6 Coral Triangle Countries have a summit meeting during the Manado Ocean Conference in 2009 to give the highest possible political commitment to protect the corals in the six countries. World Ocean Conference

The World Ocean Conference (WOC) was organized in Manado on 11-15 May 2009, and was widely regarded as very successful. The Conference produced the Manado Ocean Declaration (MOD), expressing commitments by the participants to protect and preserve the marine environment of the oceans. It also welcomes the efforts of the CTI and suggested that the 15th UNFCC Conference in Copenhagen consider how coastal and ocean dimensions could be appropriately reflected in their decisions.

It is also interesting to note that academic symposiums on oceans have also taken place during the WOC. Hundreds of papers written by Indonesian as well as foreign scientists were discussed as side events. Indonesia also took the opportunity to increase the awareness of the Indonesian people on ocean affairs by organizing a writing competition on ocean matters. 320 articles were written by 56 national and provincial journalists, plus 86 articles by 61 non-journalist writers from 30 provinces in Indonesia. CTI

At the end of the WOC, a Summit Meeting of the 6 Coral Triangle Countries was held on 15 of May 2009. The Summit produced the CTI Declaration on coral reefs, fisheries, and food security, and emphasized the need for collaborative actions. They also agreed on CTI Regional Plan of Actions to conserve and sustainably manage coastal and marine resources within the Coral Triangle region, and agreed to establish the Secretariat for the cooperation in the CTI. The CTI has been positively received particularly by the USA, Australia, World Bank Global Environmental Fund (GEF), Asian Development Bank, various non-governmental organizations particularly the Conservation International (CI), The Nature Conservancy (TNC), World Wildlife Fund (WWF) and other supporters. Some financial contributions have been committed by the CTI countries and their supporters to implement the CTI Regional Plan of Actions. IUU Fishing

Indonesia is also concerned with the increasing problems of IUU Fishing in the region. On this matter, Indonesia has been cooperating in the context of Arafura and Timor Sea Experts

After enacting the Law No. 27 of 2007, the government further issued Government Regulation No. 60/2007 on November 16th, 2007 with regard to the Conservation of Fisheries Resources, and Government Regulation No. 20/2008 dated Sept 17th, 2008 on the Utilization of Small Islands and Its Surrounding Waters. Forum (ATSEF) and in SuluSulawesi Marine Eco-Region (SSME). Indonesia also took the initiatives to join various Regional Fisheries Management Organizations (RFMO’s) such as the Indian Ocean Tuna Commissions (IOTC) and the Commission for the Conservation of Southern Bluefin Tuna (CCSBT). In May 2008 the Indonesian Parliament also ratified the UN Fishstock Agreement of 1995, implementing the UNCLOS 1982 provisions on the management of straddling fish stocks and highly migratory species, like tunas. Hopefully, Indonesia would also ratify in the immediate future the Honolulu Convention 2000 establishing the Western and Central Pacific Fisheries Commission (WCPFC). Along with the increasing warming of the earth, the ice in the Arctic and Antarctic are diminishing and the sea level continues to rise, Indonesia alone could lose about 2000 small low-lying islands by 2030

Photo: www.ecowanderer.wordpress.com

It is to be regretted that while Indonesia was instrumental and very active in negotiating the

1995 UN Fish Stocks Agreement and the 2000 Honolulu Convention and the establishment of the WCPFC, she is now the only West Pacific country that has not joined the WCPFC. It should be noted that tuna resources, one of the most important marine fisheries resources in the world, are also facing global over fishing worldwide. Tuna fish are highly migratory species and fished in many seas and oceans. In 1950 about 600,000 tons of tuna were caught worldwide. In 2008 the figure hit nearly six million tons a year. For instance, stocks of Southern Bluefin Tuna around Australia had fallen over 90% since 1950 and continue to drop (Time Magazine, November 9 2009). As tuna production rises, the breeding stocks have plunged: 40% in the West Pacific Big Eye Tuna from 1988 to 2008; 60-65% of Indian Ocean yellow fin tuna between 1988 and 2006; and about 90% of Southern blue fin tuna between 1950 and 2007. National Actions

On its own, after enacting the Law No. 27 of 2007, the government further issued Government Regulation No. 60/2007 on November 16th, 2007 with regard to the Conservation of Fisheries Resources, and Government Regulation No. 20/2008 dated Sept 17th, 2008 on the Utilization of Small Islands and Its Surrounding Waters. The Minister of Marine Affairs and Fisheries has also issued regulations on these matters. Conclusion

In conclusion, Indonesia, particularly under the leadership of President Yudhoyono, has been paying and continue to pay serious attention to the Protection of the Coastal Zones and Small Islands, especially as they may be affected negatively by human activities, either at sea or in coastal areas, such as illegal fishing, destruction of mangrove forests, sand mining, and others, and by general climate change, ocean warming and the sea level rise. Some lessons that could be learned from Indonesian policies could be: • The importance of national initiatives to be endorsed by the highest levels of government in the country • The significance of national, regional and international awareness and cooperative actions to protect the marine environment, their ecosystems and the resources based on, particularly, UNCLOS 1982, not only for the current generation but also for future generations • The need to support developing states, particularly the seriously-threatened coastal zones in many low-lying areas • The need for cooperation of all stakeholders, the government, the local authorities, non-governmental organizations and initiatives as well as business communities to take concerted actions, either formally or informally, to deal with coastal zones and small islands management • In this context, the possibility of exploring and exploiting ocean energy, using scientific and technological development such as from currents, waves, ocean thermal energy conversion (OTEC), solar, winds, etc., maybe further explored and exploited to reduce the use of fossil energy and others that have caused climate change, ocean warming, sea level rise, coastal zone destruction, and other problems The writer is an expert in sea law and is a retired career diplomat who once served as ambassador to Canada.

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January 28, 2010

The Region T

GLOBAL DEVELOPMENTS

he global trend suggests that the global economy looks set to make a recovery in 2010. But it is going to be a sluggish and uneven recovery. With a great deal of uncertainties. The trend of employment and credit will remain strained. The forecast on economic growth is still diverse; but the general trend is up. With no contractions or negative growth. The preliminary forecast for a limited group of key countries shows the following:

The Emerging “South” As stated by UNCTAD (United Nations Conference on Trade and Development, Geneva), the South is growing in importance as a producer, trader and consumer in the global economy. The South’s share in global trade has grown from 20% in mid-1980”s to 30% at the present time. By Atmono Suryo

Growth Trend 2010 World economy to grow by

: 2 - 3%

Developing economies

: 5 - 6%

USA

: 2 - 2.5%

: 1 - 1.5%

Japan

: 0 - 0.5%

Developing economies

: 5 - 6%

China

: 8 - 9%

India

: 7 - 8%

Brazil

: 5 - 5.5%

Source: various

The above indicators suggests that the growth of developing countries are higher than the advanced countries. This trend is expected to continue for a number of years, at least for the years 2010-2011. ”THE SOUTH” (DEVELOPING COUNTRIES)

The world recession of 200809 is expected to have its longerterm impact. It is expediting the changing trend which has been going on in the global economy. Namely the increasing importance of the countries of the “South” (the developing countries). The growing importance of the South will in turn affect the trend in international economic relations. As stated by UNCTAD (United Nations Conference on Trade and Development, Geneva), the South is growing in importance as a producer, trader and consumer in the global economy. The

South’s share in global trade has grown from 20% in mid-1980”s to 30% at the present time. Over 40% of developing country exports, including basic commodities and manufactures are destined to other South Countries. South-South trade is increasing at an annual rate of 11% or nearly twice the growth rate of total world exports. South-South trade in services is also on the rise, offering significant possibilities for developing countries to diversify the composition of exports which is still dominated by the exports of goods. In addition, there is an increase in South-South investment and the transfer of technology. According to UNCTAD outward investment from developing countries to other developing countries is growing faster than investment from developed to developing countries. It will be recognized, however, that the development in the developing world is not even. There are still many developing countries which are still in the category of the LDC’s (the least developed countries). They will gradually follow the up-trend of the more advanced developing countries. An increasing number of developing countries are called the emerging countries. Some of them belong to the BRIC group

(Brazil, Russia, India and China). Indonesia, South Africa and Turkey are still in the “waiting list”. Some 9 countries including Indonesia belong to the G20. Among the 20 largest economies in the world almost half it are countries from the South. INVESTMENT FLOWS

In addition to trade, investment is of cardinal importance for the developing countries. According to UNCTAD statistics China is the largest recipient country in Asia. Indonesia is among the lowest (Figure 1). With regard to the attractive locations for FDI in the world context, China and India are on top; better than the developed countries such as the United States, Germany and the United Kingdom (Figure 2). Trade and investment will be two components which will accelerate the growth and development of the South. SOUTH-SOUTH RELATIONS

A trend to be recognized is that South-South economic relations will increase in the years ahead. Many of the developing countries will move ahead at a faster rate than the advanced countries. The South will increase in size and the South will in time become another power house. Side by side with the Advanced Countries of the West. Indonesia: It is most unfortu-

nate, however, that compared to other developing countries, including in ASEAN, Indonesia’s real economic position has been on the decline. It is the country’s own making – it is its own fault. With all its potentials the country’s internal developments (including political) have not been conducive to make Indonesia a great country which it deserves. And as the international community has been hoping for. Within ASEAN, Indonesia’s position has declined and is on the 4th place in some important areas as production, trade, investment and technology. Indonesia is trailing behind Singapore, Thailand and Malaysia. In the area of FDI (foreign direct investment) Vietnam which was once ravaged by war has now overtaken Indonesia.

assuming an increasing role. As it now looks Asia will be in the forefront. Side by side with Latin America with Brazil as one of the leaders. Africa will follow.

Economic geography: One can predict that in the years ahead the South will continue to be on the rise. A new economic geography is emerging and reshaping the global economic landscape. As rightly stated by UNCTAD the South is gradually moving from the periphery of global trade to the centre. A similar pattern is emerging in the international flows of investment and services. The global trend suggest the possible emergence of a new geography of international economic relations. With the South

The current ACFTA (ASEAN-China Free Trade Area) is a clear case of Indonesia’s shortcomings in the area of trade.to be informed or to know what is happening in the country’s world or regional economic relations. Although the agreement was prepared some 10 years ago, it is only now that it is being realized what it all means. How the reductions of tariffs will affect the Indonesian economy. And how to cope with it. Also, how Indonesia can take advantage of the opening of large markets such as China.

G77: As I recall some decades ago Indonesia was one of the key leaders of the South and of the G77 (Group of 77 Developing Countries) together with Brazil, Mexico, India, Nigeria,Ghana and Egypt. At that time Widjojo Nitisastro and Ali Alatas stood out as important leaders of the G77 and the South. As the South will move to the Center of the Global Economy, the question is: will Indonesia be then counted again among the leading countries? That will be the big question and the big challenge for Indonesia. It is up to Indonesia to “make it or break it”.

ASIA: top 10 recipients of FDI inflows,* 2006-2007 (Billion of Dollars) 83.5 72.7 59.9 45.1

China Hong Kong, China Singapore India Thailand

2007 2008

Malaysia Taiwan Province of China Indonesia Vietnam Pakistan 0

10 12 14 16 18 20 22 24 26

Source: UNCTAD, FDI/TNC database (www.unctad.org/fdistatistics) and annex table B.1. * Ranked by magnitude of 2007 FDI flows

The most attractive locations for FDI in the next three years (Response and comparison with the 2007-2009 survey responses) Economies

2007 - 2009 Survey

Economies

2008 - 2010 Survey

China

India

United States

Russia Federation

Brazil

Vietnam

United Kingdom

Germany

Australia

Indonesia

Germany

Australia

Mexico

Canada

Poland

Mexico

United Kingdom

Source: UNCTAD, 2008b

The President Post

January 28, 2010

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The Economy ECONOMIC UPDATES Goverment still has chance to issue US$1 bn samurai bonds The government still has a chance to sell Samurai bonds of up to US$1 billion in the Japanese capital market this year, its chief economic minister said. “The finance minister told me that the amount is about US$750 million to US$1 billion,” Coordinating Minister for Economic Affairs Hatta Rajasa told a press conference held on the sidelines of a recent meeting of the Indonesia-Japan Joint Economic Forum here. The amount was guaranteed by the Japanese Bank for International Cooperation (JBIC), he said. Hatta Rajasa Indonesia and Japan signed a guarantee deal during the special ASEAN+3 Finance Ministers meeting in the Thai resort island of Phuket last year. Under the deal, Japan through the JBIC would provide financial support of US$1.5 billion to guarantee the issuance of the bonds. The deal also stipulates if the bonds fails to attract Japanese investors and the yield is too expensive for the Indonesian government to bear, Japan can convert the fund into ordinary loans to help cover Indonesia`s budget deficit.

Government to revise 2010 state budget The government will immediately submit an application for a 2010 budget revision to the House of Representatives (DPR) to maintain the effectiveness of all cabinet`s priorities, Finance Minister Sri Mulyani Indrawati said recently. She said the fast change was needed to speed up the pace of the cabinet`s activities which have always been hindered so far by budget revision Sri Mulyani Indrawati after the first semester. Several macro-economic assumptions in the 2010 state budget will be changed such as the price of oil which at US$65 per barrel will be changed to US$80 per barrel while the rupiah exchange rate will be changed from Rp10,000 against the US dollar to Rp9,500. The inflation rate, initially set at 5%, will be revised to 5.5% while the assumed rate of the three-month key interest rate from 6.5% to 6.8%. With the changes, the budget for subsidy for energy such as fuel oils will rise by Rp28.1 trillion from Rp68 trillion to Rp96.1 trillion while for electricity by Rp15.4 trillion from Rp37.8 trillion to Rp53.2 trillion and rice as well as fertilizers from Rp51.3 trillion to Rp59.5 trillion.

ASIA ON THE MOVE:

ASEAN, China Take Center Stage Today Asia is a region to watch; much will be happening in this vast region in the years to come. Asia is making a dramatic turn-about. The old continent is becoming the ‘New Asia” with a different profile. By Atmono Suryo

THE CHANGING ASIA

n more recent times people in advanced countries of Europe or the Americas would not have foreseen that Old Asia could ever change, or that somewhere in the East extraordinary developments could ever happen in this 21st century. But the world is not standing still, especially as Asia is now moving to the center stage of the global economy. There are numerous factors and developments which allowed Asia to make a turning point. Among the many factors, three are of considerable importance, namely the establishment and integration of ASEAN, the spectacular rise of China and the emergence of India (which also belongs to the South Asia region). The three could be considered as the giants of Asia in terms of GDP and population.

Economy

Presidential decree to expedite 2nd phase of 10,000-mw project The government recently issued a presidential decree to expedite the second phase of its 10,000 megawatt power development project, Electricity and Energy Utilization Director General J. Purwono said. “The second phase of the megaproject will involve private parties as developers of the power generating The megaproject comprises 37 power generating plants,” he said. plants With regards to private parties in the project, the government would provide limited guarantees in the form of payment subsidy to PLN so that the state company can pay its debt to the private parties, Purwono added. The second phase of the 10,000 megawatt power project was expected to help meet domestic need for electricity starting in 2014. The megaproject comprises 37 power generating plants with a total capacity of 9,700 megawatt scattered in 10 areas in Java island and 27 other locations outside Java.

Asia is a region whose size is enormous in terms of population and geography. It is a region with a wealth of human and natural resources, of wide diversity and large trade potentials. Through the development of “building blocks” Asia would eventually need an effective platform of Asian regionalism. The President of the Asian Development Bank (ADB), Haruhiko Kuroda, in the ADB Publication “Emerging Asian Regionalism”, stated: “Asia today is an economic dynamo. But Asia’s success story is about more than rapid development, poverty reduction, and an

Population (million)

China

Average Growth (1986-2006)

GDP 2007 ($ billion)

1,321.5

3,241

9.7

0.4

1.5

Cambodia

14.2

8.5

Indonesia

225.4

433

5.2

5.8

6.0

Malaysia

27.2

187

6.4

Myanmar

57.0

5.2

Philippines

88.7

145

4.1

Singapore

4.6

161

7.0

Thailand

65.7

246

6.1

Vietnam

86.4

7.0

Brunei Darussalam

The Indonesian government again issued state debentures in foreign denomination worth US$2 billion to help finance its national budget. The director general of debt management of the ministry of finance, Rachmat Waluyanto, said here recently the issuance of the state debenture was part of the Global Medium-Term Notes (GMTN) program upsized on January 5, 2010. “The offer includes one tranche worth US$2 billion for a 10-year period to be due in March 2020 with a six percent yield, a price of 99.044 percent and a coupon of 5.875%,” he said adding that the transactions had been oversubscribed 2.3 times or Rp4.5 billion, Barclays Capital, Citi and Credit Suisse meanwhile are the joint lead managers and joint book-runners of the transactions.

REGIONAL COOPERATION

Gross Domestic Product (GDP) $ billion

With the changes the deficit in the 2010 budget will rise from Rp98 trillion or 1.8 percent of the Gross Domestic Product to Rp128.7 trillion or 2.2 percent of the GDP. The additional finance in the revised budget will be taken from the 2009 budget remainder of Rp38 trillion, she said.

Government issues US$2 billion worth of bonds

Today Asia is a region to watch; much will be happening in this vast region in the years to come. Asia is making a dramatic turnabout. The old continent is becoming the ‘New Asia” with a different profile.

Lao People’s Democratic Republic

figure 1: ASEAN EXPORT MARKET 2008 Hong Kong Taiwan Australia India 1.9% 1.1% 3.4% 3.8% Republic of Korea 4.0% Others 12.2%

ever-expanding middle class. It is more than the production and distribution networks that place Asian goods, within reach of consumers around the globe. It is more than labor-intensive industries, high production of intermediate goods, or the final products assembled in Asia’s myriad plants and industrial estates. Part of Asia’s success story is also growing integration ….. The trend toward integration is gaining momentum …..Emerging Asian regionalism offers a new platform for economic development …. The evolving approach is marketfriendly, multi-track, and multispeed, allowing for a healthy dose of pragmatism …” ACFTA (ASEAN-China Free Trade Area)

A ground-breaking development took place on 1 January 2010 when China and six ASEAN countries (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) launched the biggest free trade area in the world. Cambodia, Vietnam, Myanmar and Laos will join by 2015. The AC-FTA applies zero tariffs on 6,682 tariff lines in 17 sectors, including 12 in the manufacturing sector, five in agriculture, mining and maritime sectors. This largest free trade area in the world covers nearly 2 billion people. According to ASEAN Secretariat data, ASEAN’s main export markets are ASEAN members, EU, Japan, USA, and China at 9.7% in 2008. ASEAN-China trade increased significantly since 1990. According to earlier statistics during the period 1990 to 2005 ChinaASEAN trade grew at an average annual rate of some 20%. Total trade reached US$130 billion in 2005: China’s export to ASEAN was US$55 billion while its imports US$75 billion. Figure 3 shows China-ASEAN Trade in 2008 amounted to US$231.12 billion, with Malaysia as the largest trader, followed by FIGURE 2: FOREIGN DIRECT INVESTMENT IN ASEAN BY SOURCE COUNTRY 2000-2008

China (1.5%)

ASEAN 27.6%

USA 11.5% Japan 11.9%

Japan (14.1%)

ASEAN (13.1%) All Others (19.2%)

Instead of only increasing their exports to Indonesia, perhaps China should be persuaded to strengthen and to invest in the Indonesian manufacturing sector. increases in China’s investments in ASEAN. Instead of only increasing their exports to Indonesia, perhaps China should be persuaded to strengthen and to invest in the Indonesian manufacturing sector, especially in the areas which will be affected by the inflow of China’s goods. Another sector of importance is the development of processing and value-added industries for domestic consumption or for exports, including to China. The writer is a retired career diplomat and former ambassador of Indonesia to the EU.

FDI (Foreign Direct Investment)

Foreign direct investment is not included in the trade deal. It is important, however, to look also at the flows of investment. Indonesia’s needs for investment are very considerable. China’s FDI to ASEAN during the period 2000-08 is still small but the trend is up. One can expect large

Japan

China

India Myanmar Vietnam Thailand Laos Philippines Cambodia Malaysia Brunei Singapore ASEAN New Partners Indonesia Prospective Partner

figure 3: china - asean trade in 2008 Unit: $ billion

% change y-o-y

ASEAN

231.12

Malaysia

53.47

Singapore

52.44

Thailand

Indonesia

31.52

28.58 19.46

Myanmar

2.63

Cambodia

1.13

Laos

0.42

Brunei

0.22

14.0%

15.2% 10.5

18.9%

41.25

Vietnam New Zealand (0.2%)

EU (27.3%)

EU-25 12.8%

The implementation of ACFTA has brought considerable concern and protests on the side of the Indonesian private sector, particularly in the ailing area of manufacturing (which represents 27.9% of the country’s GDP). The country’s competitive position in some segments of this sector has weakened considerably. Yet, during the ten years of preparation for the AC-FTA and the other free trade agreements, no effective measures have been taken (especially by the sectors concerned) to restructure the ailing sectors. It is obvious that the government must continue to honor and be committed to the trade deal. Nevertheless, it is now submitting a proposal for the delay of tariff reduction on 228 items. It is by now already a public secret that Indonesia is the only country seeking a separate deal with China.

Philippines

Australia (0.8%) Asian Canada NIEs (1.1%) Other Europe (6.1%) (5.9%)

India USA (0.4%) (10.2%)

China 9.7%

Singapore, Thailand and Indonesia with US$31.5 billion. Indonesia still lags behind in ASEAN trade with China. This is significant as ASEAN-China FTA is one the building blocks towards Asia’s regional integration.

25.7%

6.7% 28.8%

26.4% 21.3% 57.5%

39.1% Source: ASEAN

Source: ASEAN

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January 28, 2010

The Economy

Breaking the Logjams Economic Highlights and Yield Curve Outlook By Anton Gunawan, Helmi Arman and Anton Hendranata

ndonesia has passed the test of 2009, having weathered the global financial crisis with its GDP growth figure still intact at above 4% and concerns over foreign debt repayments proven unjustified. However, the country’s relative resilience seems now to have been mostly priced-in by the markets. So the second test involves whether or not Indonesia can move up the ladder; i.e. the economy growing above 6-7% in a sustainable manner. Whereas this year’s GDP growth will likely be close to 5.2%, it is the dynamics below the headline that is crucial. Namely, how fast will the manufacturing sector recover? And will the country succeed in attracting investments into non-resource based sectors? Macroeconomic risks appear to be far less harmful this year compared to that of 2009. With electricity tariff and fuel price adjustments put on hold, the rebound in inflation would be relatively tame, e.g. towards 5.3% by our estimates. In this regard the odds are rising for the BI rate to stay at 6.50% this year, which paves the way for a smoother recovery of commercial bank credit growth. With Asia (particularly China) leading the global recovery, Indonesia may see a rise in natural resource-related exports. This means the recovery in exports may not require as much imported raw materials were it to be led by higher value-added manufactured goods. This should somewhat reduce concerns that the trade surplus could sharply narrow following the implementation of the China-ASEAN Free Trade Agreement. Considering low global interest rates and the recently strong trend of portfolio capital inflows, there could be further pressure on the local currency to strengthen towards Rp9,000/US$ in the near term. However, we fear that the balance of risks can easily tilt back to the upside towards the

Figure 1: Real GDP growth by expenditure

Indonesia: Selected Economic Indicators

7.5 % y-o-y

% y-o-y

7.0

Investments (RHS)

6.5

KADIN Tower

2008

2009

2010E*

2011E*

7.0

GDP growth

6.5

6.0

5.5

5.0

4.5

National Accounts Real GDP (% y-o-y)

6.3

6.1

4.3*

5.2

5.9

Domestic demand ex. inventory (% y-o-y)

6.0

9.1

3.4*

6.9

7.0

4.5

Real Consumption: Private (% y-o-y)

5.0

5.3

5.1*

5.0

4.8

4.0

Real Gross Fixed Capital Formation (% y-o-y)

9.2

11.7

3.9*

8.0

10.0

3.5

GDP (US$bn) — nominal

433

507

532*

635

708

1,925

2,227

2,309*

2,721

2,996

9.8

8.6

9.9*

9.8

9.5

3.0

Private Consumption

2.5

Sep-04

Sep-05

Sep-06

Sep-07

2.5 Sep-09

Sep-08

GDP per capita (US$) — nominal Open Unemployment Rate (%)

Source: BPS, CEIC

External Sector

Figure 2: Real GDP Growth by Main Sectors

Exports, fob (% y-o-y, US$ bn)

18.3

-19.0*

11.0

16.0

Imports, fob (% y-o-y, US$ bn)

15.4

36.8

-26.7*

15.8

18.0

Trade balance (US$ bn)

32.8

22.9

27.6*

26.5

28.8

2.5

0.1

1.8*

0.5

n/a

Central government debt (% of GDP)

35.1

32.0

29.9*

28.2

26.3

International Reserves –IRFCL (US$ bn)

56.9

52.1

65.7

74.9

85.0

6.2

5.4

9.4*

9.0

8.7

% y-o-y

GDP: Tertiary Sectors

Current account (% of GDP)

8 6

GDP: Secondary Sectors

Merchandise import cover (months)

Currency/US$ (Year-end)

9,419

11,120

9,403

9,750

n/a

Currency/US$ (Average)

9,163

9,767

10,356

9,576

n/a

BI policy rate (% year end)

8.00

9.25

6.50

7.50

Consumer prices (% year end)

6.60

11.20

2.78

5.30

5.90

Fiscal balance (% of GDP; FY)

-1.3

-0.1

-1.6

-1.5

-1.0

S&P's Rating -FCY

BB-

0 -2

GDP: Primary Sectors Data uses 2000p base year from Mar-04 Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

Source: BPS, CEIC

end of the year, as expectations of global interest rate hikes intensify. On a trade-weighted basis, and after accounting for inflation differentials with trading partners, the rupiah appears to be already on the lower boundaries of its historical average—it is no longer cheap. In this regard, we think a year-end exchange rate forecast for the rupiah at Rp9,500/US$ looks more justifiable compared to the recent range of Rp9,100– 9,250/US$. Of course 2010 must be viewed from both sides of the coin. With political risk on the rise, the gov-

ernment has started to adopt a “play it safe” attitude. The widely-cheered delay in administered price hikes was actually the first toll on reform. This delay could even mean harsher adjustments may be forthcoming in 2011. There is also risk of the government running a camouflaged fuel price hike this year—in the form of rationing or price discriminations—which has the potential to go awry. Helmi Arman,at economist Treasury & Capital Markets,PT Bank Danamon Indonesia, Tbk, can be reached at helmi.arman@ danamon.co.id

Kadin More Upbeat on Economy in 2010 The Indonesian Chamber of Commerce and Industry (Kadin) is optimistic on the country`s economy in 2010, raising its maximum projection of growth to 6.5%. “We have revised our projection figures up, as the growth of the world`s economy and our economy growth this year may

2007

7.5

be better,” the head of Kadin`s Economic Research, Assessment and Development, Faisal Basri, said here recently. The optimism also came from the projection of the world`s economy by the IMF, which rose from minus 1.1% in 2009 to 3.1% in 2010.

The improving macro-economic condition, in which the rupiah exchange rate against other foreign currencies is good and the country`s foreign exchange reserves are also relatively good, has also made Kadin adjust its projection. He however reminded that the government should not be complacent as the goal to achieve would not be mere economic growth. “Growth must be higher, if not then it is useless to have a new leader. The people`s welfare is the main goal,” he said. Kadin`s vice general chairman for industry, technology and marine resources, Rahmat Gobel, warned that Kadin`s optimism must not make the government complacent. He said the government`s homework must be finished immediately such as infrastructure development, supplying electricity at a fair price and protecting domestic manufacturing industries with supporting policies. “In any case the government must strengthen the industrial structure because after all the industry will contribute a lot to the economic growth if it is strong,” he said. He hoped the government would start with the simple one namely implementing the national standard (SNI) on all products to increase their competitive power in the global market. Kadin in its road map has projected the country`s economy will grow 5.4% to 5.9%.

Other

Source: CEIC, *Danamon Estimates

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January 28, 2010

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Investment Garuda Indonesia Set to Expand Fleet National air carrier Garuda Indonesia has launched visa on arrival application service on board of its planes last week to boost the number of foreign tourists to Indonesia. National air carrier Garuda Indonesia President & CEO Emirsyah Satar said last week in in Tokyo that the airline is set to expand its fleet, from 67 to 120 aircraft by the end of 2014.

Garuda Indonesia airline is set to expand its fleet, from 67 to 120 aircraft by the end of 2014.

Photo: www.nifty.com

Chinese Investor to Build Cisumdawu Highway A Chinese investor is ready to build a toll road access to the Purwakarta-Bandung-Cileunyi (Cisumdawu) toll road in West Java, the province’s governor, Ahmad Heryawan, said here recently. “The development of the Cisamdawu is soon to be realized. A memorandum of understanding has already been signed with a Chinese investor,” he said. He said the presence of the Chinese investor was a step for-

ward with regard to the development of the toll road as it would open an access to, and synergize with, the West Java international airport or the Aerocity area in Kertajati, Majalengka. “They are ready to develop and invest in the Cisumdawu toll road but they wanted the regional administration to conduct land clearance. The regional administration has set a budget for it,” he said. The compensation payment for

the land to be used for the project is impending, and is expected to be finalized this year, he said. “The Cisumdawu toll road is very strategic with regard to the development of the eastern part of the region, including possible relocation of industries to the Kertajati Aerocity ared. The prospect of the development of the area is very good,” he said. The Chinese investor is also interested in developing the Pas-

Investment in Cellular Telecom Projected at US$2.2 billion Investment in the cellular telecommunications industry in Indonesia in 2010 is projected to reach US$2.2 billion, with the market estimated to grow by 11%. Telkomsel Corporate Communications Manager for Pamasuka area Jowvy Kumala said here last week that efficiency that will cut operational costs is key to reach the growth rate. “This industry will embark on combining cellular phones with Internet, video services and other digital products,” he said. Throughout 2009, his office had booked a growth in the number of subscribers to 17 million, bringing the total number to more than 82 million. In 2010, his office will be serving 100 million subscribers with

an increase of 18 million new subscribers. The 82 million subscribers are 50% of all users of cellular services in Indonesia. Of the total, Simpati prepaid cards had the highest contribution with 59 million subscribers, followed by As cards 21 million, and prepaid HALO cards 2 million. Last year`s communications traffic had increased compared to that in 2008. SMS traffic increased by 21%, from 107 billion to 129 billion short messages last year. In the meantime, Minutes of Usage (MoU) increased by 203% to 273 billion minutes from 90 billion minutes in 2008. Data supply services also increased, by 178% to 9,125 tera

bytes compared to 3,284 tera bytes in 2008. Broadband mobile services went up significantly in terms of number of subscribers, increasing by 700% to 1.6 million subscribers compared to 200,000 subscribers early last year. On networks, last year saw the building of 3,500 base transceiver stations (BTS), bringing the total number to 30,500 BTS, reaching more than 95% of the Indonesian population. This year, all 24 big cities in Indonesia are expected to fully enjoy this service, for which an investment of Rp 13 trillion would be needed to expand the coverage, increase capacity and improve the quality of networks, and provide new services.

teur-Cicaheum-Cileunyi toll road, which will reduce traffic congestion in Bandung, the capital of West Java. “The investment interest of Chinese businessmen and consortium in West Java is quite big. Right now a Chinese consortium is implementing a Jatigede dam project in Sumedang. It is hoped they will invest also in several other infrastructure projects in West Java,” he said. China`s import and export

Indonesian ambassador to Japan Jusuf Anwar said the new service hopefully would boost the number of Japanese tourists to Indonesia, which has decreased in the last two years. In 2008 the number of Japanese tourists declined to 576 thousand from 593 thousand in 2007; it further went down in November 2009 to 405 thousand.

China’s Investment Expected to Rise After ACFTA fair deputy director Wang Zhiping meanwhile said that Java and Bandung in particular are wellknown among Chinese businessmen. Their interest to invest in West Java is big, he said. “Several Chinese businessmen have already been involved in several projects in West Java, including the Jatigede dam and a 10,000 MW power plant development project,” he said.

Government Readies Two Investment Zones The government has named two special economic zones as economic development hubs and will offer them to investors this year, a chief economic minister said. “In 2010, there are two zones that are ready to be offered soon,” Coordinating Minister for Economic Affairs Hatta Rajasa told the press after a meeting of the Indonesia-Japan Economic Forum 2010 here recently. The two zones are among the six pilot projects developed as part of the government`s program to speed up the development of infrastructure facilities in the country, he said. The six special economic corridors include Sumatra`s eastern coast, Java`s northern coast, Kalimantan, Sulawesi and Papua, he added. “We will speed up the devel-

At the end of this year the airline is expected to add 12 aircrafts, and last November one 737-800 and one A330200 arrived. The 777-300 ER is expected to arrive late in 2011 or 2012. Emirsyah said the airline will use Boeing 737-800 New Generation, Airbus A330-200 and Boeing 777-300 ER aircraft. The Boeings are expected to arrive at the end of 2011 or

2012 The airline has ordered 23 units of 737-800 New Generation, 20 units of A330 and 10 units of 777-300 ER, and is planning to increase its number of weekly flights from 1,700 to 3,000 by the end of 2014. Emirsyah also said that the airline has conducted its first trial of on-board visa application service in the Tokyo-Denpasar-Jakarta route, and will conduct a second trial this week before officially running it on a routine basis as of February 1st.

opment of the two zones which have extraordinary potentials,” Hatta said. The special economic corridors will be developed under a public private partnership (PPP) scheme. To get the program realized, the government will soon finalize licensing rules and revise presidential regulation concerning PPP to give legal certainty to investors, he said. “The presidential regulation has been revised and is expected to break barriers and give certainty about the PPP projects. The projects are part of the government`s program in the first 100 days in office,” he said. But he stopped short of revealing the two zones, saying “I will announce them when the time comes.”

Investments made by China in Indonesia have increased following the implementation of the ASEAN-China Free Trade Agreement (ACFTA) earlier this year. “The average investment has been US$50 million per year from 2005 until 2009,” said Industry Minister M.S. Hidayat. This was conveyed during a hearing between the Commission VI for Trade, Industry, State-owned enterprises, Small and medium-scale businesses and Investments, the House of Representatives (DPR) and the ministers for the economy regarding the ASEAN-China Free Trade Agreement (ACFTA) Hidayat said, China’s investments to Indonesia were US$16 million per year from 2000 until 2004. The investments included the textile, wood, basic chemical, food, metal, and transpor-

tation industries.

Food and Beverage Industry Optimistic over ACFTA

Meanwhile, the Indonesian Food and Beverage Association (Gapmmi) chairman Thomas Darmawan, is optimistic that the country’s food and beverage businesses will remain competitive, despite the ASEAN–China free trade agreement. “Our products are still preferred over Chinese products,” Thomas said last week, “as reflected by the increasing turnover of local food and beverage businesses.” In 2007, the turnover of these two products amounted to Rp 402 trillion, increased to Rp 505 trillion in 2008 and Rp 545 trillion in 2009. According to Thomas, preference for local products is also indicated by the reduced volume of imported food and beverages. In 2008, imports reached US$1.95 billion but decreased to US1.90 billion in 2009 and US$1.2 billion in 2010. ��

��

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January 28, 2010

Features

Betting on the Future How Indonesia can learn from the Australian government’s scheme on funding films By Sean Monteiro

he Indonesian film industry is still in its infancy but it won’t be long before it starts to really take off; we are at the crucial time when the government can help the industry grow. Screen Australia is the national government funding body for the Australian film and television industry. A close examination of how this organization works can be beneficial to all of us in Indonesia. It’s clear the Australian government understands how important its film industry is. For 2009 Screen Australia received a budget of AUD$60 million from the government. This was distributed among different categories, $24-$28 million for feature

films, $18-$20 million for TV drama and $16.5 million for documentaries. So how does Screen Australia select projects? Their website says that they value excellence, audience engagement and Australian cultural content. More specifically, the stories must have cultural merit and positive values. On the production side they require that most of the shooting locations are kept within the country and that majority of the cast and crew are local. They also require an awareness of the market, both local and overseas. This means they intend to distribute their films in the international market place as

well. After all, with a population of only 21 million people Australia is a limited market, making it difficult for them to recoup their production costs. To ensure success overseas Screen Australia favors projects that have marketable names on the poster. So producers are encouraged to lure high profile Australian actors to the lead roles, such as Eric Bana in ‘Romulus, My Father’ or (the late) Heath Ledger and Geoffrey Rush in ‘Candy’.

It’s now the Indonesian government’s turn to step up and support the development of its film industry. We have a unique chance to put in place solid foundations for future Indonesian filmmakers, let’s not waste that opportunity.

their work. Which means there is no reason for them t o make films that have box office appeal. Secondly producers are paid on percentages instead of flat fees; typically they receive 10% of the film’s budget. This forces producers to inflate budgets to receive appropriate compensation for their work. This drives up budgets to the point where they no longer match the project.

Screen Australia has been successful in elevating the Australian film industry. However there have been mistakes made along the way, mistakes that Indonesia can still avoid. The major prob-

lem that plagues Screen Australia is its financial structure. First of all, the creators and producers are not financially rewarded for the commercial success of

We often hear people from Screen Australia say the box office is not a true measure of success. I agree with that, many great films don’t make money and plenty of bad films do.

The Meaning of Happiness It is not what you have and it is not what you do. It is how you feel as you are going through the motion of living. By Desi Anwar

appiness, they say, is a state of mind. It is not what you have and it is not what you do. It is how you feel as you are going through the motion of living. But then, it is not like emotions either, that changes when the sun shines or the rain pours even for absolutely no reason at all. Rather it is a constant (like a background noise that ceases to have no sound because one ceases to listen to it) whose presence is noticeable only during its absence. Indeed, it is often in moments of unhappiness do we realize how happy our lives have been! In times of loss do we appreciate how much we actually own. So, how do we achieve a happy state of mind then? It is not, as we have said, in possessing. But we do feel elevated in the anticipation of possessing something we’ve always wanted, do we not? However, this pleasant sense of anticipation normally disappears very soon after we finally possess what we wanted. So we move on to the next set of desirable object, not to delight in that object itself, but to fulfil that craving, to revel in the pleasure of the chase and the anticipation. To get intoxicated in the anguish of being denied. This anguish (the pain of the lover waiting for the beloved), however, must not be confused with happiness though often it does make one feel that much more alive and gives one a sense of purpose. That one’s life has a meaning, whether it is in the accumulation of all sorts of material things, experiencing different situations or forming a variety of relationships. That is why one can have the best things in life (a big house, big cars, a beautiful or handsome spouse, intelligent children etc.) and yet still not be happy. One only needs look at Hollywood

scandals or the lives of the rich and famous for a barometer of how much happiness has no relations to who we are, what we do and what we have. The other thing about happiness is that it cannot and should not be deferred. For instance, we often say to ourselves, I will be happy once I get a job, get married, have children, find the love of my life and so on. The fact is, if you’re not happy now, there is no guarantee that you will be happy tomorrow, next week or next year. As a matter of fact, if you’re not a happy person to begin with, the chances are you will always find something to be unhappy about or you’re never truly happy to begin with. I find one of the keys to happiness is to create meaning or value in the things we have or do. It does not matter how insignificant it may seem to others but if we find meaning in it, it makes a big difference to our state of mind when we do it or when we actually have it. And the way we feel has a lasting impression that teaches us to appreciate this state of mind and not to confuse it with a temporary mood. I would like to give a little example. When I was a young teenager my mother would give me a weekly allowance to spend as I like, which I did, on things that most young people would such as comic books and snacks. I took the money and I spent it without much thought of where it came from and what I should

do with it. Then I took a Saturday job at a local supermarket where I worked from eight o’clock in the morning until six o’clock in the evening, mostly standing on my feet, stock-checking, pricing goods and attending to customers at the check out desk. The job for a young girl not used to working was exhausting and I was not free to do as I wanted. Tea breaks were fifteen minutes long and lunch hour was exactly that. One hour, no more, no less. At the end of the day, after I took off my work overalls, I collected my pay for the day. It was in a brown little pay packet with my name and it contained a small amount of money that I could have easily obtained from my parents in my weekly allowance or if I begged for it. But it was money that I earned myself, through hours of working that gave me dirty hands and aching feet. When I got home I gave the money to my mother for safekeeping, as I did not really need it, but my mother refused. She said, that is your money. You earned it and you can do whatever you want with it. You could throw it away if you want to, but I have no right to it. Suddenly I felt the money in my hand had a different value to the weekly allowance that I normally got. Somehow it felt more precious. It was my first salary paid for by my time and labour. I developed an appreciation for it, not for the value it had, but for the value that it had for me. And it is in this type of appreciation, the appreciation of the value or significance we create in everything we do or we have in life that gives us the true meaning of happiness. The writer is a senior TV journalist and writer based in Jakarta

However, the organization still want their budgets increased every year, which depends on the government’s review of their annual revenue. So in that sense they are not simply giving out free grants, they are an investment agency that relies on box office revenue to safeguard an adequate production slate. John Morris served as chief exec at Screen Australia for 7 years, back when it was called the Australian Film Finance Corp. Morris is proud they took considerable risks in financing ‘Strictly Ballroom’ (Baz Luhrman) and ‘Muriel’s Wedding’ (P.J. Hogan), both from first-time directors.

He says, “You can’t incrementally build revenues, because as soon as a director’s film is a success, he whips off to Hollywood. If we could finance the second and third films from a Baz Luhrmann or a P.J. Hogan, it would be different.” Screen Australia has operated for over 30 years now and has invested in over one thousand projects with a total production value of AUD$2.58 billion. It’s now the Indonesian government’s turn to step up and support the development of its film industry. We have a unique chance to put in place solid foundations for future Indonesian filmmakers, let’s not waste that opportunity.

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January 28, 2010

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Education Government Increases Tempo of Entrepreneurial Education Only two months after the President had issued the instruction, the education minister’s office announced that it had started training 20,000 university students to become entrepreneurs. By Alci Tamesa

n a firm show of policy commitment, President Susilo Bambang Yudhoyono and Vice President Boediono are going all-out to increase the tempo of entrepreneurial education. The aim, obviously, is to create job creators instead of jobseekers at university level. It was President SBY himself who initiated this U-turn in the government’s approach toward higher education when he instructed Minister of Education Prof. Dr. Muhammad Nuh on October 29, 2009 to begin modifying school curricula in order to turn university graduates into “creative innovators” who can create jobs for society.

Only two months after the President had issued the instruction, the education minister’s office announced that it had started training 20,000 university students to become entrepreneurs. This training—involving students from public and private universities—was in fact conducted in collaboration with the Entrepreneurship Center of Ciputra University. Not only were they taught the knowledge and techniques of being an entrepreneur, they were also given a complete set of information on how and where to get start-up capital for their own ventures. The collaboration was a great

success that provided optimism for the government to expand entrepreneurial education in a more formal way. This was apparently the reason why Vice President Boediono recently announced the need for universities to include entrepreneurship in their respective curricula. Boediono made the remarks during a ceremony to mark the launching of Bank Mandiri’s pilot project for entrepreneurial education on January 22. Under this plan, the bank provides entrepreneurship training modules for six leading universities—the University of Indonesia (UI), Bogor Agriculture University (IPB), Bandung Institute of Technology (ITB), Padjadjaran University (Unpad), Gadjah Mada University (UGM), and Sepuluh November Technology Institute Surabaya (ITS). The Vice President called on the rectors to apply the Mandiri modules in all the faculties so that students from all fields of study have the opportunity to de-

velop their entrepreneurial talents. Entrepreneurship is a trait that can’t be found in textbooks, it can only be found in the experience of successful entrepreneurs, Boediono theorizes. “Therefore, teachers must provide motivation so students have courage to take well calculated risks based on prudent analysis before taking action,” he said. This way, according to the Vice President, Indonesia has a new generation of entrepreneurs who will function as strong economic pillars in the future. “The more entrepreneurs we have, the stronger our economy will be,” he notes. The Mandiri entrepreneurial modules are expected to include success stories of entrepreneurs so that students learn the ups and downs of running a business and get some insight for running their own later. Boediono also said he hoped the Mandiri pilot project would run well so it can be taken as a

Vocational Schools Encouraged to Produce Better Skilled Graduates The vocational schools are now receiving increased attention from the government for the simple reason that they are the producers of below-university skilled workers for various lines of industry. By Alci Tamesa

n an effort to reduce the unemployment rate and simultaneously satisfy rising market demand, the government is encouraging vocational schools to upgrade quality and multiply their output as of this year. The aim is to have at least 70 percent of graduates absorbed by the job market by 2014. The vocational schools are now receiving increased attention from the government for the simple reason that they are the producers of below-university skilled workers for various lines of industry. As the new government approaches the end of its first 100 days, all eyes are directed at the ways in which government departments handle this particular issue. Given the fact that unemployment is a complex issue, the government has to intensify inter-ministerial coordination to formulate a comprehensive policy that will ensure employability of vocational graduates, educators say.

(ACFTA) starting to gain momentum, high school graduates will have even greater difficulty competing because under the agreement that covers ASEAN and the People’s Republic of China, regional governments have the obligation to ensure free flow of goods, services, and people, including foreign expertise.

Graduates from general high schools usually have difficulty competing in the labor market because their expertise is very minimum compared to that of vocational schools’ graduates. They only have two options: pursue higher education to elevate their employability prospects, or attend short-cut industrial training courses in order to be employed. This has been the case for decades. But today, with the ASEANChina Free Trade Agreement

In 2009 a total of 891,184 students graduated from vocational schools but the percentage of job market absorption did not improve. So the real challenge is not in the production of graduates but in their absorption by the job market. And this has to do with the graduates’ quality of expertise. Nevertheless, for this year a total of 1,087,098 students will participate in vocational school exams and about half of them are expected to be employed by local

This situation poses an extra challenge to vocational schools in Indonesia because their graduates will have to compete with those from foreign countries who may have a higher level of industrial expertise and experience. This is why the government is pushing vocational schools to upgrade their quality and linkages with industry to make sure that graduates from local schools will not be outmatched by their competitors from abroad. But then a big problem looms large here. Up to 2008 only 10 percent of graduates from vocational schools were absorbed by the market. That translates into some 80,000 people.

ESEMKA: a SUV made by vocational school students in Magelang, Central Java

industries. According Joko Sutrisno, the official in charge of vocational education at the Ministry of National Education, there is a constant five percent increase per annum in the graduates’ absorption by the private sector. So, there is optimism that more and more vocational graduates will find their way to survive tough global competition. For this year alone the government expects to see a market absorption rate of up to 70 percent of vocational graduates whose mandated passing mark is 7.00 for on-the-job practicum. This comes before they sit for the National Exam to do five

tests—for Indonesian Language, English, Mathematics, Vocational Theory, and Vocational Practice. The average passing mark for the National Exam is 5.5 for all subjects tested. Vocational practice exam will take place on February 15, 2010 and this will be conducted individually—unlike in the past when they did it in group. “We just want to make sure that the graduates will really be able to work,” said Joko Sutrisno, when asked why his office changed the mechanism.

model for teaching entrepreneurial skills to high school students. Under this plan Bank Mandiri provided awards to talented students from 200 universities across Indonesia. They were selected from a total of 1,706 students who had registered their entries. Meanwhile, the bank’s CEO, Agus Martowardojo, hopes that the modules given to the six universities will be applied also in other universities all over Indonesia so that in the not-too-distant future Indonesia will have a meaningful number of entrepreneurs to support the economy. He lamented the fact that real entrepreneurs constitute less than 2 percent of Indonesia’s population which is far too low compared to the ratio in neighboring Singapore. Socio-educational analysts say that this is a good strategy to overcome the perennial problem of unemployment which otherwise will get worse. As of January 2010, according to official statistics, more than 680,000 university graduates are still jobless against Indonesia’s overall graduation rate of 350,000 scholars per annum. Independent observers have said the actual figures could be much higher. President SBY has said that “intellectual unemployment” would not have occurred had Indonesia implemented a creative style of teaching whereby the process of learning is student-centered instead of teacher-centered. Rote memorization has for decades been the most popular characteristic of education in Indonesian schools and the outcome is inability to solve problems or initiate programs. This is why the President told the minister of education to alter the teaching-learning method in order to arouse creativity and innovation amongst students from elementary school to university level. “I asked the Minister of Education to alter teaching-learning methodology because from KG to high school, only teachers are active while students are passive. This should not happen again; teachers must be able to make

Photo: www.presidenri.go.id

What Indonesia needs, according to President SBY, is education that will create job creators instead of job seekers, a system of schooling that will produce producers of opportunities for society at large. students active and creative,” the President says. He added that going to school should not be understood as a mere exercise of striving for good marks in order to pass exams, “because if that is the case, students may pass exams but will lack creativity to develop their lives; they will also lack innovation and entrepreneurial spirit.” What Indonesia needs, according to President SBY, is education that will create job creators instead of job seekers, a system of schooling that will produce producers of opportunities for society at large. Prior to making the remarks, the President had actually received letters from President Commissioner of Kompas-Gramedia Group Jacob Oetama and owner of the Ciputra Goup Dr (HC) Ciputra. The two public figures had called on the Presi-

dent to take all necessary actions to encourage the growth of entrepreneurship through education and training. “That’s why we need to reform the sector of education. Teachers, lecturers and trainers must be trained to teach entrepreneurship at all levels of education,” the President says. Meanwhile, the Minister of Education is now busy drafting plans to improve the situation. He says he will begin by improving school facilities while expanding the entrepreneurship training collaboration with the private sector. Antonius Tanan, President Director of Ciputra University Entrepreneur Center, says that his institution aims to intensify training of entrepreneurship lecturers but that they must be welltrained before they take on the assignment.

Business BUSINESS BRIEFS Pertamina to expand business in Australia, Malaysia State oil company PT Pertamina is planning to expand its business operations abroad by building gas stations in Australia and Malaysia at a cost of Rp60 billion this year, a spokesman said. “We hope we can build two gas stations in Australia before the middle of this year,” the company`s commercial and marketing director, Hanung Budaya, said at the company`s headoffice here recently. He said the company would acquire existing gas stations in Australia and Malaysia and run them under Pertamina`s trade mark.

Garuda to go public in first quarter State Enterprises Minister Mustafa Abubakar said PT Garuda Indonesia would go public in the first quarter this year. He said PT Garuda would sell 25% of its shares to the public to raise Rp2.5 trillion. “Right now preparations are already being done including selecting the underwriters,” President and CEO of Garuda Indonesia Emirsyah Satar said. Proceeds from the IPO are expected to reach US$300 million and will be used to finance additional aircraft, refurbishment as well as improving services,” he said. Emirsyah said until 2014 the number of the company`s fleets would be expanded to 116 units from currently 67 units.

Wika to set up joint venture to tap foreign markets PT Wijaya Karya Tbk (Wika) plans to set up a joint venture company to tap construction market abroad particularly in Northern African countries such as Algeria, the company`s finance general manager, Entus Asnawi, said. Wika would inject up to 49% of capital into the joint venture company with the rest of the capital supplied by the local company, he said. He said Wika would set up the company to win construction projects in that country which number a lot including building, housing and bridge construction projects. Regarding Algeria, he said, Wika was now carrying out a 500 kilometer long road and bridge project worth Rp800 billion in cooperation with a Japanese consortium.

IMT-GT businessmen to hold meeting in Pekanbaru Businessmen from countries grouped in the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) will attend a meeting in Pekanbaru, Riau Province, February 5-7, 2010, M Herwan, Executive Director of the Riau chapter of Kadin (Indonesian Chamber of Commerce and Industry), told Antara last week. The 28th Joint Business Council Meeting (JBCM) 2010 of IMT-GT would discuss investment cooperation in the fields of, among other things, infrastructure, tourism, human resources, agriculture, and plantation, he said. The Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) is a subregional cooperation initiative formed in 1993 by the governments of Indonesia, Malaysia, and Thailand to accelerate economic transformation in less developed provinces.

The IMT-GT meeting will be held in Pekanbaru, Riau Province, February 5-7, 2010

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Matahari Department Store Up for Grabs Matahari Putra completed an ownership restructuring of MDS to Pacific Utama, which changed the name to Matahari Department Store in December 2009, after acquiring the department store’s assets through a transfer of 90.78% share ownership.

he management of Matahari Putra Prima is set to offer Matahari Department Store (MDS) assets to outsiders, including a Japanese retailer, following the restructuring of its assets. Matahari Putra completed an ownership restructuring of MDS to Pacific Utama, which changed the name to Matahari Department Store in December 2009, after acquiring the department store’s assets through a transfer of 90.78% share ownership. Matahari Putra management hoped that the asset di-

vestment could provide MDS with the flexibility to further expand, including efforts in seeking external funds. Matahari also vows to continue to develop MDS although it is no longer directly under its retail business portfolio. The company’s remaining portfolios are Hypermart, Foodmart, Times Bookstore, and Time Zone. Rumors at the market are rife that the asset divestment was part of Matahari’s preparation to sell the department store, news that boosted its share price. Bisnis Indonesia reported that Matahari President Director

Benjamin Mailool said that the management is considering all options. “We are open to all options. We will not limit ourselves in maximizing the value for the shareholders. Many retailers have stated their interests (in MDS), but we’ll study them first,” he was quoted as saying by Bisnis Indonesia. He also said that the company did not approach an investment banker to help boost MDS’s value. According to him, in the future the company will remain focused on strengthening the retail business in all lines, including MDS.

Nestle to Open New Plant in East Java

Bumi Resources sold more than 58 million tons coal last year, up 12.62% from 51.5 million tons in the previous year. Bumi Resources Corporate Secretary Dileep Srivastava said the sale exceeded its sale growth target of 10% with production of more than 60 million tons. “The company is targeting production and sale growth of 10% this year,” Srivastava told Bisnis Indonesia.

Nestle invested US$100 million in a new plant in Pasuruan, East Java, which is slated to become one of Nestle’s ten biggest milk processing plants in the world. “They have asked me to inaugurate the plant in February or March,” said Industry Minister MS Hidayat. Nestle has invested about Rp1.2 trillion in Indonesia in the past two years. The expansion move was made to accommodate increasing demand in Indonesia.

Bumi sold 51.5 million tons coal in 2008 and 55.4 million tons in 2007 and 58 million tons in 2009. The figure is expected to increase gradually to 112 million tons in 2011-2012. The sale surge is attributed to the company’s move in acquiring three coal mining companies last year.

Analysts estimated that the mining company managed to reap US$3.21 billion in sales last year which will increase to US$3.57 billion in 2010. Net profit in 2009 was US$424.72 million and US$371.11 million this year. Analysts also predicted that Bumi’s share price will reach Rp3,264 in the next 12 months. Bumi’s share price is currently traded at around Rp2,800 with a market capitalization of Rp53.85 trillion. The mining company’s share price increased after the company booked a profit in line with the prospects of better market price. Coal price at New Castle port in Australia last Friday was at US$97.87 per ton, up from US$84.75 per ton on 1 January. Prices of coal crawled up following projection of higher global demand from China and India, the world’s biggest consumers.

China reported that its coal import in December 2009 reached 16.38 million tons, an increase from 12.65 million tons in the previous month, exceeding the previous record of 16.07 million tons in May 2009. The country’s total coal import last year reached 125.83 million tons, three times higher compared to 40.83 million tons imported in 2008. China also sold 2.07 million tons coal in December, up from 1.49 million tons in the previous month, but a 62% plunge compared to the 5.44 million tons sold in December 2008. In total, the country’s coal export reached 22.4 million tons, or fell sharply by 62% from 58.26 million tons in 2008, bringing its net import to 67.57 million tons, a sharp contrast from its position in 2008 as a net exporter with 17.43 million tons coal.

Bumi Resources sold more than 58 million tons coal in 2009.

Pangestu also assured that In-

donesia would not postpone the implementation of ACFTA, which came into force on January 1, 2010. “We have set up a team to study and evaluate everything related to ACFTA. The important thing is how to improve the competitive edge of our products,” she said. The team set up in coordination with the Office of the Coordinating Minister for Economic Affairs is set to study a wide range of issues, including infrastructure, high-cost economy, and transportation cost, she added. “The next thing we have to think of is how to protect the domestic market as we need to ensure that products in the domestic market meet standards and do not harm consumers,” she said. “All countries have regulations

Times Bookstore: One of Matahari Putra Prima’s portfolio

Bumi Coal Sale Exceeds 58 Million tons

Trade Minister Pangestu Stresses Use of National Products The trade ministry has taken measures in response to the implementation of the ASEAN-China Free Trade Agreement (ACFTA) by encouraging the use of local products as outlined in Presidential Instruction (Inpres) Number 2/2009, Trade Minister Mari Elka Pangestu said this week. Under the presidential instruction, government agencies, stateowned companies and regional government-owned companies must prioritize national products, she said. The trade ministry would also continue to launch “love Indonesian products” campaigns, she added. “We are also promoting goods which have export opportunities by tapping market potentials. Industry and trade offices have figured out which commodities can be exported,” she said.

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to ensure that the products they import are safe and meet standards. Likewise, Indonesia also has to ensure that its products exported to other countries are safe and meet standards.” She said the trade ministry was mulling the issuance of regulations in anticipation of unfair trade, such as the inflow of lowpriced goods. “We can impose anti-dumping duties on such products,” she said.

The Trade Ministry’s new building uses local products

Photo: Bumi Resources

portant region for Nestle’s business and our sustainable investment commitment here is a reflection of our confidence in the region,” Nestle SA CEO Paul Bulcke said last year.

To date, Nestle has 23 plants and employs about 15,000 people in ASEAN countries. Nestle invested about Rp18 trillion globally for research and development in 2008. One of its research projects in the ASEAN region is the partnership between Nestle’s research and development center in Tours, France and Aside from In“They have asked a coffee and cacao donesia, Nestle me to inaugurate research center in will also continthe plant in Jember, Indonesia. ue to increase its February or Under the partinvestment and March”. nership, more than expand its busione million top ness facilities in MS Hidayat Industry Minister quality cacao seeds other countries have been distributin Southeast ed through several Asia. partners and MinNestle’s investment in the region was es- istry of Agriculture. The figure is expected to soar timated at Rp2.3 trillion in to 70 million seeds in 2011. 2009. It has invested more than With the growing number of Rp5 trillion for its ASEAN operations in the past three new plants about to operate in Indonesia, Hidayat is optimistic years. The company booked 15% that the manufacturing indusorganic growth in 2008 with try will continue to post growth in the next five years, adding that sales reaching Rp46 trillion. “Nestle has operated for Krakatau Steel is also set to open more than a decade in this a steel plant this year, a joint venregion. ASEAN is a very im- ture with Koreas Posco.

Petrogres Set to Earn Rp16.7 Trillion This Year State fertilizer maker PT Petrokimia Gresik (Petrogres) has set a target of earning Rp16.7 trillion this year, up 20% from a year earlier. “We have projected our income this year to increase by 20% and net profit to reach more than Rp1 trillion,” Petrokimia President Director Arifin Tasyrif said here last week. The increase will be the result of the company`s business plans to be realized this year, he said. The business plans include the construction of an ammoniac plant, and the development of an oil and gas-to-coal conversion project, he said. “Our investment spend-

ing or capital expenditure this year will be at least Rp800 billion,” he said. The capital expenditure will be 30% financed by internal cash and 70% by bank loans, he said. “We still have no plan to issue bonds and will rely on internal cash and bank loans that are more competitive,” he said. Petrogres plans to increase its production capacity to 4.2 million tons this year. Last year, the company recorded an income of Rp13.9 trillion compared to Rp14 trillion the year before. The drop was chiefly caused by a drop in fertilizer prices.

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10 January 28, 2010

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Business State-Owned Firms’ Profit Projected at Rp90 Trillion The income of state-owned companies is expected to reach Rp1,050 trillion or grow by around 13% from last year`s Rp930 trillion. By Eka Putri

tate Enterprises Minister Mustafa Abubakar said the net profit of stateowned companies is expected to rise to around Rp90 trillion (about US$900 million) this year from around Rp74 trillion in 2009. “The target is quite realistic in line with the continuing program of corporate restructuring, regrouping and efficiency improvement and production growth,” the minister said here recently. He said the income of stateowned companies is expected to reach Rp1,050 trillion or grow by around 13% from last year`s Rp930 trillion. Most of the 139 state-owned companies made significant progress last year, he said. Their total assets are expected to reach Rp2,400 trillion, up 11.6% from the projected Rp2,150 trillion. Capital expenditures meanwhile are set at Rp785 trillion, up from the 2009 forecast of Rp710 trillion. Mustafa said the target of net profit for 2010 was based on various factors such as the implementation of the ASEAN-China Free Trade Area (ACFTA).

He admitted the implementation of the ACFTA would affect the market share of several sectors such as iron and steel. They would be flooded by products from China, he added, and emphasized the importance for the government to impose a national industrial standard (SNI) on products from China and of pushing domestic companies to produce quality products and services. The minister admitted that in 2009 expansion of a number of state-owned companies had not gone smoothly against the backdrop of the global economic crisis. His secretary, Muhammad Said Didu, however said the state-owned companies` financial performance in 2009 improved and was projected to rise in 2010 driven by success in the implementation of good corporate governance. “Good corporate governance has been implemented well in state-owned, an example for other companies,” he said. The increasing performance of state-owned companies was reflected in the drop in the number of unprofitable state-owned companies.

State firms`2010 dividend payments projected at Rp24 trillion

The government has targeted dividend payments to the 2010 state budget from state-owned companies will reach Rp24 trillion, down from last year`s Rp28.6 trillion, Didu said. “The lower target of dividend payments for 2010 is adjusted to the need in the state budget,” added Didu. The target was also in proportion to state firms` profit, he said. Minister Mustafa Abubakar is upbeat the target could be achieved thanks to the improving performance of state firms last year. “The target is quite realistic and in line with the ongoing program of corporate restructuring, regrouping and efficiency improvement and production growth,” he said. A great deal of dividend payments is expected to come from state oil and gas company Pertamina, state banks, state telecommunications operator PT Telkom, state gas firm PT Perusahaan Gas Negara, state tin mining company PT Aneka Tambang, coal mining company PT Batubara Bukit Asam and state plantation companies. Only 10 state firms expected to suffer losses this year

The government is determined to reduce the number of state firms suffering losses to 10 in 2010 from 20 in the previous year. Three state firms managed to

make profit last year after suffering losses for years, he said. “Reducing the number of state firms suffering losses is a realistic target,” he said. He said the State Enterprises Ministry will go ahead with its program of corporate restructuring, regrouping, merger and acquisition as part of efforts to improve the state firms` performance. State firms that still suffer losses are PT Djakarta Lloyd, PT Industri Sandang, PT Survei Udara Penas, Perum Produksi Film Negara (PFN), and PT Pradnya Paramitra. Nippon Steel asked to build special steel plant in Indonesia

Industry Minister M.S. Hidayat said the government will asked Nippon Steel to build a special steel factory in Indonesia. “A special steel factory would strengthen the country’s steel industry structure and reduce dependence on imports,” Hidayat said recently. Indonesia relies entirely on imports for special steel (used especially by automotive and metal-based machinery industries), importing between two and three million tons a year. Earlier this month Hidayat asked Japan to increase its investment in the manufacturing sector by at least US$6 billion to help strengthen the country’s industrial structure. Japan was also urged to transfer technology to improve the competitiveness of local products.

Pusri to Produce 7 Million Tons of Urea Fertilizer PT Pusri was also optimistic that its production of NPK fertilizer would grow by 70% or 2.2 million tons from 1.3 million tons at present. By Eka Putri

PT. Pupuk Sriwijaya (Pusri) is set to produce 7 million tons of urea fertilizer this year or three percent more than 6.8 million tons in 2009. “Supported by efforts to increase our market share and price, and compensation paid by the government through its fertilizer subsidy program, PT Pusri hopes to be able to produce seven million tons of urea this year,” the company`s president director, Dadang Heru Kodri, said here last week. Dadang made the statement after witnessing the signing of a memorandum of understanding by PT Petrokimia Gresik (PGK) and Jordan Phosphate Mines Co. Ltd (JPMC) at the State Enterprises Ministry office. PT Pusri was also optimistic that its production of NPK fertilizer would grow by 70% or 2.2 million tons from 1.3 million tons at present. Dadang said availability of abundant gas supplies would support the increase in PT Pusri`s production capacity this year. Meanwhile, PT Petrokimia Gresik (PGK) and Jordan Phosphate Mines Co. Ltd (JPMC) have reached an agreement to build a phosphate acid plant with a capac-

phate-based fertilizers SP-36 and NPK, urea, ZA, and organic fertilizer. The phosphate acid plant will be built in the first semester of this year.

ity of 200,000 tons per year in Gresik, East Java. The memorandum of understanding on the project to cost US$200 million was signed in the presence of State Enterprises Minister Mustafa Abubakar and JPMC CEO Abdul Walid Khodri in Jakarta early this month. According to State Enterprises Minister Mustafa Abubakar, PT Petrokimia Gresik and JPMC had established a joint subsidiary, called Petro Jordan Abadi with each side controlling 50 percent of the shares. PKG is a producer of phos-

In 2012 PGK is expected to have a capacity to produce 2,840,000 tons of NPK and 500,000 tons of phosphate (SP36), besides urea, ZA and organic fertilizer. Meanwhile, PKG president director Arifin Tasrif said phosphate would be imported from Jordan, which has deposits of 2 billion metric tons. He said national demand for NPK fertilizer until 2015 would reach 7 million tons while the production capacity of PT Petrokimia Gresik by 2012 would only be 2.2 million tons. “In 2012, PT Petrokimia Gresik will be the biggest NPK producer in Asia,” Arifin Tasrif said, adding that to meet its maximum production capacity, it has to import part of of its need for phosphate. Minister Mustafa Abubakar said the process to establish PGK and JPMC`s joint subsidiary company had started in 2007, and following the conclusion of a feasibility study, the joint phosphate acid plant was expected to be in operation at the end of 2012.

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January 28, 2010 11

Leadership

East Meets West Leadership A Leadership Blend That Incorporates The Best Of East And West

Lusi Lubis Managing Consultant Hay Group Jakarta

Globalization has altered competitive landscapes across regions and markets, restructured supply chains across industries and has revealed the need for understanding and anticipating for intercultural differences. These developments redefine the skill sets required of leaders to succeed. Yet, the understanding of these developments and intercultural differences have not been proportionally translated into actionable advice for leaders. What are the specific behaviors that can help them be more effective? Hay Group conducted a study on what the successful key competencies are of Asian and Western leaders in the global arena and what they can learn from each other. The blend of both Western and Asian leadership practices, which unifies individual performance with the long-term good of the team, company and society, could very well be the successful leadership model of the future.

he Hay Group study of successful top CEOs in India, China and Western societies uncovered the unique skills that they have developed to manage the unique business situation that they confront. Figure 1 shows the most common situations which leaders in India, China and the West face. Indian CEOs were focused on getting permission from the government and launching something new; Chinese CEOs were concerned with raising or investing capital; while Western CEOs were more focused on strategic talent management efforts like coaching, deployment and recruiting. Hay Group’s research shows that Indian CEOs are excellent at managing the complex web of external relations, especially with the government and media, which is crucial to the success of business in India. In China, where regulations are often uncertain and conflicting, leaders were found to rely on personal relationships and networking for success, rather than the terms and conditions found in legal contracts. This is often the point of culture shock for many Western executives transplanted into China, where relationships seem to count for more than legalese. To be able to lead for global effectiveness Asian and Western leaders should learn from each others key leadership competencies in the fields of: • Social responsibility and interpersonal approach • Business thinking • Responding to context • Fostering engagement • Building an enabling organization climate Social responsibility and interpersonal approach

At its core, social responsibility involves conducting business in a manner designed to improve society in general and one’s own industry in particular. In India, socially responsible competencies were most effective in turbulent environments including turnarounds and start-ups, both of which required high levels of adaptive thinking and excellence in execution. Indian CEOs demonstrated strong entrepreneurial drives and a single-minded focus on growth that not only related to their companies, but also to their country. Their willingness to take risks is based on altruistic concerns for national welfare, tailoring affordable products, services and rural initiatives targeted at rural populations. Above all else, the Indians exhibited a distinctive “inner strength” in transcending oneself, even if it meant settling for lower margins and growth targets for the business. Likewise in China, the concept of social responsibility was evident, as can be seen from the philanthropic practices of Chinese leaders who endow schools, hospitals and other social projects as they find success (and not at the tail-end of their careers). This expression of ethical values both internally and externally, and tremendous self-discipline in business practices has its roots in Confucianism. Given the perception that Chinese businesses tend to be corrupt, it may be surprising to some that social responsibility emerged as a key success factor among Chinese leaders. Evidently, in the face of emerging laws and evolving government policies, Chinese CEOs too, have found a way to deal with difficult leadership situations by searching for social meaning and contribution to society outside monetary rewards. Next to that a a highly distinctive competency among Chinese leaders is the ability to seek har-

Ed Krancher Managing Consultant Hay Group Jakarta

mony in business relations . It involves negotiation in a way that influences for mutual benefit. Chinese CEOs would construct and present several alternatives in a way that eventually brings everyone in support of the same situation – often the one that the leader sees as best. Considering the lack of reliable business frameworks in China, it was no surprise that seeking harmony was the Chinese leader’s way of working with evolving legal and regulatory systems. In fact, influencing for mutual benefit was their basis for guanxi – the popular concept of relationship building in China – so that no party “loses face” or is seen as compromised in a business situation. For executives schooled in Western business principles, a shift in mindset may be required to view the business landscape from an Asian perspective; that is, to recognize business as a social good. Hence, a Western-style CEO who is proposing a joint venture project or a market entry mode in either China or India might increase his chances of success by emphasizing how the project will benefit the country or community. Western-style leaders would also do well to observe how Chinese CEOs craft mutually satisfactory options to create long-term working relationships (Figure 2). On the other hand Indian and Chinese leaders could benefit from learning how Western-style leaders build organizational capability for the future and as such also put the development of their talent high on their agenda. Business Thinking

In terms of business thinking (Figure 3), Indian CEOs were highly adaptive in their thought processes and able to quickly relate changing technologies or business models to meeting India’s needs. Chinese CEOs demonstrated a business perspective that manifests in understanding and predicting the developments of the industry as well as in acting to help shape industry regulations. Western CEOs, on the other hand, showed strategic insights, which helps give strategic direction based on understanding the market and competitors as well as market trends and changes in paradigm. Responding to contexts

With regards to distinctive business contexts (Figure 4), networking to obtain information was the Indian CEO’s response to the highly regulated business environment. Indian leaders network in a bold, targeted way which is focused effectively on tackling the specific challenges that they and their organizations face. Self-criticism, on the other hand, was an attribute nurtured in the Chinese business context, fostering the willingness not only to reflect and learn from experience, but also to admit to mistakes. This competency seems to be based on an awareness of their own behavioral patterns, attitudes, moods and limitations coupled with a desire to learn. When Chinese CEOs took action towards selfimprovement and inspire others to do the same, better business results ensued. Given the pressures of today’s fast-paced world, the Chinese leader’s competency for reflection and selfcriticism seems almost surreal. It contrasts sharply with the Western approach, where interpersonal understanding is matched with managing and influencing people to respond to the business context. Fostering engagement

According to Hay Group’s extensive employee research, leadership is very often the top driver

of employee engagement, that is, how much an employee is committed to the organization and, hence the corresponding amount of discretionary effort he is willing to put in. Yet, when we compared the specific dimensions for employee engagement and enablement (a measurement of organizational support for success) between Eastern and Western leaders, Asian organizations lag behind on all dimensions, compared to their Western counterparts (Figure 5). In the era of rapid growth, Asian CEOs have been focusing so much on managing external issues such as capitalizing on market opportunities, expansion into new businesses, and securing the very necessary financial capital, that they have overlooked the importance of building internal organizational strengths for future sustainability and continued success. It is akin to growing a bigger body without building the corresponding muscle strength. Given the economic outlook, there is now greater need for Asian leaders to look at their organization’s institutional strength and intangible capital. The could learn from their Western counterparts (see also Figure 2) As discussed in the previous section, leaders in Asia tend to be highly entrepreneurial and less articulate when it comes to engaging employees. They tend to communicate their visions and strategies less than their Western colleagues. In other words, Asian leaders need to step up on employee engagement by investing more time explaining and “selling” their visions and goals to their employees. Why is engagement so important? While CEOs make promises about what their organization can deliver to customers, shareholders and other stakeholders, it is the employees who keep these promises on their behalf. Why is leadership so immportant in fostering engagement. According to Hay Group research up to 30% of variance in financial results – in other words execution capability – can be explained by differences in organizational climate and engaged employees. Anywhere from 50-70% of variance in organizational climate can be attributed to difference in leadership styles, which in turn, are driven by the underlying characteristics of the leaders. Building an enabling organization climate

However, engagement alone is not enough. To get the most from employees, leaders must also ensure that organizational systems and work environments support individual and organizational effectiveness. In short, employee enablement has two key components. The first requires that employees be effectively matched to their positions, so that their skills and abilities are effectively put to good use. The second is creating a supportive environment such that they facilitate, rather than hinder, individual productivity. In a supportive environment, employees have the essential resources required to get the job done (information, technology, tools and equipment, and budgets). They are also able to focus on their most important tasks without having to negotiate obstacles in the form of non-essential tasks or red tape. In other words, we need to not only motivate our employees but also enable them to channel their extra efforts productively. Engaged employees need to have confidence that the organization is not setting them up to fail but “enabling” them to succeed by doing all it can to promote their success. It is time for Asian leaders to

take a hard look at their internal processes, remove unnecessary red tape, and provide adequate resources to set their employees up for success. In this way, employee skills and abilities can be put to good use. A new global leadership team

If we can form an international leadership team combining the Indian leader’s strong creative, innovative and adaptive thinking; the Chinese leader’s strong execution and negotiation skills, sense of social responsibility in business management and long-term view; and a Western leader’s consciousness of having to sell the vision to his own team and encourage their input in decisions on the execution, it would enable today’s leaders to achieve so much more. There is no doubt that the drive for achievement among

Asian and Western leaders have fuelled the meteoric growth of their respective companies and countries. The question that remains is whether today’s leaders can tap into the best of East and West to take their rightful place on the global leadership stage. About Hay Group Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We develop talent, organise people to be more effective, and motivate them to perform at their best. With 86 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. Visit www.haygroup.com.

There is no doubt that the drive for achievement among Asian and Western leaders have fuelled the meteoric growth of their respective companies and countries. The question that remains is whether today’s leaders can tap into the best of East and West to take their rightful place on the global leadership stage.

Figure 1: Most common leadership situations faced by leaders in India, China and the West. INDIA

CHINA

WEST

Getting permissions from government (23%)

Raising or investing capital (32%)

Talent (coaching, deploying, recruiting) (16%)

Launching something new; innovations (23%)

Understanding the market (13%)

Turnarounds (12%)

Turnarounds (21%)

Improving an established business (11%)

Reorganizing the business (9%)

Improving an established business (16%)

Mergers (10%)

Negotiations and influencing others (9%)

Figure 2: Most characteristic interpersonal approaches used by leaders in India, China and the West INDIA Inner Strength

CHINA

WEST

Influence for mutual benefit

Building organizational capability

Social responsibility

Developing others

• Getting permissions from government • Subtle influence strategies to get the desired outcome; but also to preserve the • (23%) Emotional maturity: inner resources to draw relationship and dignity of the counterpart. on during difficult times

• Aligning disciplines, systems & structure and strategy

• Business ethics: supporting fair practices & • Coaching and mentoring others, often healthy industry one-on-one Figure 3: Most characteristic thinking exhibited by leaders INDIA Adaptive thinking

CHINA Business perspective

WEST Strategic insight

• Changing technologies, methods, or busi• Understanding and predicting the develop• Strategic direction based on understanding ness models to meet India’s unmet needs ments of the industry & acting to shape the markets and competitors, market trends (usually the lower half of the economic pyramid)

regulations of the industry

and changes in Paradigms

Figure 4: Leadership characteristics in responding to business environment INDIA Networking to obtain information

CHINA Self-criticism

• Seeking practical information by directly • Continual, and often public, self examinaasking people, often people with whom the tion to find and admit mistakes, areas CEO had no prior contact

for growth, ways to do better, learn, and improve

WEST Interpersonal understanding

• Understanding individuals: their perspectives, concerns, strengths, developmental needs, in order to coach, influence or match them to jobs

Figure 5: Employee engagement and enablement drivers

Engagement drivers Clear and promising direction Quality & customer focus Confidence in leaders

Employee Engagement

Respect and recognition Development opportunities Pay and benefits

Employee Effectiveness Enablement drivers Collaboration Performance management Authority and empowerment Resources Work,structure and process Training Source: Hay Group Insight, 2009

Employee Enablement

The President Post

12 January 28, 2010

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Management Training Needs Assessment – First But Not the Least An intelligently done Training Needs Assessment is as crucial for the success of any effective training program. By Dr. Karan Singh MBA, DBA

uch like careful selection of fresh food and ingredients for an appetizingly balanced meal, an intelligently done Training Needs Assessment is as crucial for the success of any effective training program. The thought stems from the three A’s of adult learning. Application. Atmosphere. Agreement. Adults learn best what they can apply. Adults learn best in pleasant circumstances. Adults learn best when they want to learn and are not forced to learn. And the last point is the reason why many an organization includes the “Felt Needs” methodology (employees are asked to list or rank desired training courses) in their assessment procedures. The ISD (Instructional System Design) Process, the overall umbrella name for Skill Gap/Needs assessment, Training Design, Training Delivery and Training Evaluation varies with the size, age and maturity of an organization; however each must find out what its people require, before finalizing what interventions need to be included in an annual training plan. Broadly speaking, any smart thinking, learning organization which knows that improving existing people efficiencies can make a huge difference to the bottom line, needs to identi-

fy for itself what its people’s needs are and how it will find out what those needs are. So essentially it requires a practical Skill Assessment Methodology and effective Skill Data Collection Techniques. Skill Assessment Methodologies include a) “Felt Needs” – Employees are asked to list or rank desired training courses; traditionally used to assess skill gaps of large numbers of employees quickly. b) Performance analysis and discrepancy - Performance evaluations and other data are aggregated and analyzed to identify skill gaps by comparing individual and organization-wide skills to desired skills. c) Strategic Needs Based - Consists of a strategic needs assessment phase and an employee-perceived performance improvement phase; identifies gaps between what is and what should be in terms of valued organizational goals or results and prioritizes those gaps. Skill Data Collection Techniques include i) Surveys - Most common method for conducting skill data collection; asks employees and managers questions regarding specific job requirements. ii) Observation - Observation at work site by a subject matter expert; usually limited to study of specific job classification. iii) Interviews and Focus Groups - May include key consultation with persons who are in a position to understand the skill gaps and needs of a group, indi-

vidual interviews with those who would participate in training, and group discussion; one of the most widely used techniques for gathering information on organizational and individual skill gaps and training needs. Let’s take the case of what a medium sized organization would find beneficial to do:

tion that can provide a leap forward in overall performance and bottom line results. While Hard Skills are generally easier to evaluate and measure than Soft Skills and Leap Skills, they may change in classification depending on industry and type of business (See Table 1).

Competency listing - “Felt Needs” of Superior & Employee

Test/ Evaluate

Prioritizing

Implement

Matching priority list with budget

Finalize Competency list

Examples of Soft Skills

Examples of Leap Skills

Pharmaceutical Company

Factory Processes. Safety Procedures. Medical Selling.

Time Management. Meeting Management

Internal Customer Service & Attitude

Consumer Manufacturing

Factory Processes. Selling Skills. Retail Management. Distribution Logistics.

Presentation. Negotiation.

Early Leadership.

Advertising Agency

Presentation. Communication.

Service. Time.

Finance. Early Leadership.

Bank

Finance. Customer Interaction (Telephone)

Service. Internal Customer Service

Emotional Intelligence.

Industrial Manufacturing

Factory Processes. Quality. Business-toBusiness Selling.

Presentation. Negotiation. Business Communication.

Early Leadership. Emotional Intelligence. Mentoring.

Competency Listing would

Board Brainstorm

Examples of Hard Skills

Type of Organization

Different organizations use different methodologies and techniques to suit their own circumstances; the key being in using a system by which only the very relevant skills are selected.

Hard Skills

Strategic Requirements

The Board Brainstorm would include a Strategic classification in terms of Hard Skills, Soft Skills and “Leap” Skills. Hard Skills are those without which a company or organization cannot function. Soft Skills include those that enhance the quality and effectiveness of human interaction and performance. “Leap Skills” are those identified by an organiza-

first involve an analysis of Job Performance. The sophistication of this again would vary from organization to organization, however, the job task analysis would form the basis. A Job Task Analysis may contain all or some of the following. Job Description. KSA (Knowledge, Skills, Attitudes) analysis. Literature review. Job Inventory. Performance Standards. Inter-

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views and Surveys. Observation. Operating Problems. A Job description is a narrative statement of the major activities involved in performing the job and the conditions under which these activities are performed. If an accurate job description is not available or is out of date, one should be prepared to use job analysis techniques. A Job inventory questionnaire is an evaluation of tasks in terms of importance and time spent performing. A KSA analysis is a more detailed list of specified tasks for each job including knowledge, skills, attitudes, and abilities required of employees. Review of literature about the job is essentially Research of best practices from other companies, and review of professional journals. Performance standards are a statement of objectives of the tasks of the job and the standards by which they will be judged, and are needed to identify performance discrepancies. Interviews/Surveys are conducted to questions employees, their supervisors, and upper manage-

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Essential Soft Skills

ment about the job requirements. Job observation/work sample includes Manager observation at work site or an analysis of employee products. Analysis of operating problems—Analyzes down time, waste, repairs, late deliveries, quality control, etc. The sequel to a Job task analysis is Individual analysis, which includes Performance evaluation, Personal interviews, Performance problems and Questionnaires. Performance evaluation identifies weaknesses and areas of improvement (e.g., 360/180-degree reviews). Interviews to talk to a manager, supervisor, and employee seeking to know what he or she believes and what he or she needs to learn. Performance problems in terms of productivity, absen-

Strategic needs assessment

Top management in the organization were interviewed to identify a) high priority performance goals, b) performance indicators, and c) perceived barriers to accomplishing them. Sample interview questions included: • What is the mission of your unit? • What are the key goals/objectives of your unit that support this mission? (Prioritize if possible) • What are the key areas within your unit with the greatest performance improvement potential to meet the objectives above? Goals and expected outcomes were summarized in a report for the organization head (each strategic issue received a separate summary). The organization head rated each strategic objective as high, medium, or low priority. Unit management and selected employees were interviewed to gain a better understanding of the high priority goals/issues. Intensive training needs assessment or performance analysis methodologies appropriate for the situation were implemented. These typically involved intensive, multiple-data collection methods including focus groups, customer interviews, work observation, work sampling, and surveys. Training recommendations were made on the basis of the intensive assessments.

The above process for training needed to improve performance was completed on time and within resource limitations. Phase 1 led to a small set of very high priority organizational goals, as intended, and intensive assessment in these areas led to significant training and non-training initiatives. Employees’ reports of performance problems and training and non-training solutions to these problems indicated that the pre-survey was used appropriately. The procedure led to a more

“Leap” Skills

teeism and tardiness, accidents, grievances, waste, etc., and Questionnaires that are written in the form of tests, that measure job-related qualities such as job knowledge and skills. Thus an analysis at three levels – Organizational, Occupational and Individual – will provide a master list of training needs; which would be the wish list. This wish list will then be prioritized based on time/urgency and budget availability. The following hybrid methodology was used by one institution to conduct an organization-wide needs assessment. The model is broken into two phases: strategic needs assessment and employeeperceptions assessment, as outlined below.

Employee-perceptions assessment Employees were divided into job groups with somewhat similar tasks (approximately 20 per department) A sample of 20% from each employee group was randomly drawn and sent a pre-survey form. Sample questions included: • Please describe the three to five biggest problems you face in your job that keep you from being as productive as you think you could be. For each problem noted, please identify any possible training and non-training solutions you see. Three to six subject matter experts from that employee group were then chosen to review presurvey results A survey was created using the proposed training solutions and distributed to all employees in the group Responses were tabulated and ranked by perceived performance improvement rating

highly targeted list of intervention options judged by employees to have the likelihood of improving performance. Different organizations use different methodologies and techniques to suit their own circumstances; the key being in using a system by which only the very relevant skills are selected. Those that affect attitudinal and behavioural change on the recipients, to bring about an improved, and more productive workplace.

Larger and more mature organizations have systems in place, and need inputs to constantly improve their methodologies and processes to make them more efficient. Medium and smaller enterprises, and especially the smart thinking, learning organizations which now know that improving existing people efficiencies can make a huge difference to the bottom line, usually get the help of outside consultants to develop the initial skill gap assessment framework.

Dr. Karan Singh MBA, DBA, Organization Development Consultant, is presently Management Development Director at President University, and Managing Consultant of PT King & Singh Consulting. In his seventeenth year in Indonesia, Dr. Singh has wide experience, across a range of multinational companies, in areas like corporate training, market entry strategy, integrated marketing (external and internal marketing), communications, and human performance improvement.

The President Post

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January 28, 2010 13

Tourism

Borobudur, Prambanan Temples Set to Become More Attractive As an organiser of tour packages, TWC BP & RB wanted to inform potential buyers about the forthcoming attractions of these tourist destinations. By Jeannifer Filly Sumayku

ndonesia has embarked on a plan to enhance the charm of Borobudur and Prambanan temples as UNESCO steps in to underscore the importance of the world’s cultural heritage. The Ministry of Culture and Tourism, collaborating with P.T. Taman Wisata Candi Borobudur, Prambanan, and Ratu Boko (TWC BP & RB), recently conducted a meeting to discuss the issue. The theme was “Borobudur-Prambanan, UNESCO World Cultural Heritage: Million Looks, One Location”. As an organiser of tour packages, TWC BP & RB wanted to in-

form potential buyers about the forthcoming attractions of these tourist destinations. To that end the company brought in around 400 people comprising expatriates, corporate representatives, travel agencies, hotel managers as well as representatives from the airline industry. Member of the European Parliament and the Multimedia Winner of the Cannes Festival, Dr. Titus Leber, presented the outlines of a project he was working on to “take Borobudur to cyberspace.” The aim is to enable Internetizens to get complete information about the popular tourist desti-

nation in an interactive way. This project also enables Indonesia to send out cultural messages for various purposes. The film that Leber presented was entitled Borobudur: Path to Enlightenment. Meanwhile, Toni Tack, a noted archeologist and consultant for the Indonesian private company, also presented her work, Unveiling the Mystery of Borobudur. The audience was enthusiastic about the plan to enhance the charms of these two temples. The Borobudur is regarded as a sacred place and the effigies of Buddha therein represent the sanctity of the temple.

Toni raised her concern over the fact that some people were in the habit of smoking in front of the Buddha effigy while others rampantly urinated in the compound. A representative of the Philippines Embassy in Jakarta responded to this by saying that the government should educate local people in order to respect the sanctity of the temple. UNESCO, whose task is to help preserve cultural heritage around the globe, is working to make sure that the Indonesian temples will remain as the world’s cultural heritage for international tourists to visit.

THE BOROBUDUR TEMPLE:

Everlasting and Enduring

ollowing the AngloDutch Java War, Java was under British administration from 1811 to 1816. The appointed governor was Lieutenant Governor-General Thomas Stamford Raffles, who took great interest in the history of Java. He collected Javanese antiques and made notes through contacts with local inhabitants during his tour throughout the island. On an inspection tour to Semarang in 1814, he was informed about a big monument deep in a jungle near the village of Bumisegoro.He was not able to make the discovery himself and sent H.C. Cornelius, a Dutch engineer, to investigate. In two months, Cornelius and his 200 men cut down trees, burned down vegetation and dug away the earth to reveal the monument. He reported his findings to Raffles including various drawings. Although the discovery is only mentioned by a few sentences, Raffles has been credited with the monument’s recovery, as one who had brought it to the world’s attention. Hartmann, a Dutch administrator of the Kedu region, contin-

ued Cornelius’ work and in 1835 the whole complex was finally unearthed. The Dutch East Indies government then commissioned F.C. Wilsen, a Dutch engineering official, who studied the monument and drew hundreds of relief sketches. J.F.G. Brumund was also appointed to make a detailed study of the monument, which was completed in 1859. Appreciation of the site developed slowly, and it served for some time largely as a source of souvenirs and income for “souvenir hunters” and thieves. In 1882, the chief inspector of cultural artifacts recommended that Borobudur be entirely disassembled with the relocation of reliefs into museums due to the unstable condition of the monument. To refresh one’s memory: Borobudur is a ninth-century Mahayana Buddhist Monument in Magelang, Central Java, Indonesia. The monument comprises six square platforms topped by three circular platforms, and is decorated with 2,672 relief panels and 504 Buddha statues.A main dome, located at the center of the top platform, is surrounded by 72 Buddha statues seated inside per-

forated stupa. The monument is both a shrine to the Lord Buddha and a place for Buddhist pilgrimage. The journey for pilgrims begins at the base of the monument and follows a path circumambulating the monument while ascending to the top through the three levels of Buddhist cosmology, namely Kamadhatu (the world of desire), Rupadhatu (the world of forms) and Arupadhatu (the world of formlessness). During the journey the monument guides the pilgrims through a system of stairways and corridors with 1,460 narrative relief panels on the wall and the balustrades. Evidence suggests Borobudur was abandoned following the fourteenth century decline of Buddhist and Hindu kingdoms in Java, and the Javanese conversion to Islam. The name ‘Bore-Budur’, and thus ‘BoroBudur’, is thought to have been written by Raffles in English grammar to mean the nearby village of Bore; most candi are named after a nearby village. If it followed Javanese language, the monument should have been named ‘BudurBoro’. Raffles also suggested that ‘Budur’ might correspond to the modern Javanese

word Buda (‘ancient’) – i.e., ‘ancient Boro’.However, another archaeologist suggests the second component of the name (‘Budur’) comes from Javanese term bhudhara (or mountain). During the restoration in the early 1900s, it was discovered that three Buddhist temples in the region, Borobudur, Pawon and Mendut, are lined in one straight line position. The three temples (Borobudur–Pawon–Mendut) have similar architecture and ornamentation derived from the same time period, which suggests that ritual relationship between the three temples, in order to have formed a sacred unity, must have existed, although exact ritual process is yet unknown. Borobudur is built as a single large stupa, and when viewed from above takes the form of a giant tantric Buddhist mandala, simultaneously representing the Buddhist cosmology and the nature of mind. The foundation is a square, approximately 118 meters (387 ft) on each side. It has nine platforms, of which the lower six are square and the upper three are circular. The upper platform fea-

The UN organization aims to prevent the temples from being damaged. It has for more than a decade included the two temples on its list of the world’s cultural heritage, and has been cooperating with the Indonesian government to preserve the objects. Borobudur has been renovated several times. The first renovation took place in 1907-1911 and the second by UNESCO in 1972. The largest restoration project was undertaken between 1975 and 1982 by the Indonesian government and UNESCO, after which the monument was listed as a UNESCO World Heritage Site. Once renovation activities had been completed, it became known that 27 countries had participated in the project. UNESCO again extended a helping hand when the temples were damaged by a powerful earthquake that jolted Central Java in May 2006. President Director of TWC BP & RB, Purnomo Siswoprasetyo, says that the company plans to implement what is called MICE, an acronym for Meeting, Incentive, Convention, and Exhibition tours.

tures seventy-two small stupas surrounding one large central stupa. Each stupa is bell-shaped and pierced by numerous decorative openings. Statues of the Buddha sit inside the pierced enclosures. Approximately 55,000 cubic metres (72,000 cu yd) of stones were taken from neighbouring rivers to build the monument.The stone was cut to size, transported to the site and laid without mortar. Knobs, indentations and dovetails were used to form joints between stones. Reliefs were created in-situ after the building had been completed. The monument is equipped with a good drainage system to cater for the area’s high stormwater run-off. Borobudur attracted attention in 1885, when Yzerman, the Chairman of the Archaeological Society in Yogyakarta, made a discovery about the hidden foot. The discovery led the Dutch East Indies government to take steps to safeguard the monument. In 1900, the government set up a commission consisting of three officials to assess the monument. In 1902, the commission submitted a threefold plan of proposal to the government. First, the immediate dangers should be avoided by resetting the corners, removing stones that endangered the adjacent parts, strengthening the first balustrades and restoring several niches, archways, stupas and the main dome. Second, fencing off the courtyards, providing proper maintenance and improving drainage by restoring floors and spouts. Third, all loose stones should be removed, the monument cleared up to

“

Last year, a total of 2.5 million international tourists visited Borobudur while Prambanan was the destination of more than one million tourists. Targeted buyers include multinational corporations, professional and business organizations, expatriate communities, state-owned corporations, and other interested circles. Travel operators are hoping to see a greater number of tourists visit Borobudur and Prambanan this year. They expect at least a 20% increase in the number of visitors to Borobudur. Last year, a total of 2.5 million international tourists visited Borobudur while Prambanan

the first balustrades, disfigured stones removed and the main dome restored. The total cost was estimated at that time around 48,800 Dutch guilders. The restoration then was carried out between 1907 and 1911, using the principles of anastylosis and led by Theodor van Erp. The first seven months of his restoration was occupied with excavating the grounds around the monument to find missing Buddha heads and panel stones. Van Erp dismantled and rebuilt the upper three circular platforms and stupas. Along the way, Van Erp discovered more things he could do to improve the monument; he submitted another proposal that was approved with the additional cost of 34,600 guilders. Due to the limited budget, the restoration had been primarily focused on cleaning the sculptures. Within fifteen years, the gallery walls were sagging and the reliefs showed signs of new cracks and deterioration. Small restorations have been performed since then, but not sufficient for complete protection. In the late 1960s, the government requested from the international community a major renovation to protect the monument, but it was not until 1973 that a master plan to restore Borobudur was created. The government and UNESCO then undertook the complete overhaul of the monument in a big restoration project between 1975–1982. The foundation was

was the destination of more than one million tourists. Borobudur, the world’s largest Mahayana Buddhist monument of the ninth century, measures 123x123 meters. It has 1,460 relief panels and 504 Buddha effigies. According to historical records, Borobudur was built by King Samaratungga, one of the rulers of Old Mataram Kingdom and a descendant of Sailendra dynasty. Based on Kayumwungan inscription, construction of Borobudur was completed on May 26, 824, almost 100 years after it began. The monument is a shrine to the Lord Buddha and has for centuries been recognized as a place for Buddhist pilgrimage. Historical evidence suggests that Borobudur was once abandoned after the 14th century decline of Buddhist and Hindu kingdoms following the arrival of Islamic traders on the island of Java. But in 1814 Sir Thomas Stamford Raffles—the then British ruler of Southeast Asia—made it known to the world after he had learned about the precise location of the temple through native Indonesians.

stabilized and all 1,460 panels were cleaned. The restoration involved the dismantling of the five square platforms and improved the drainage by embedding water channels into the monument. Both impermeable and filter layers were added. This colossal project involved around 600 people to restore the monument and cost a total of US$6,901,243. After the renovation was finished, UNESCO listed Borobudur as a World Heritage Site in 1991. On 28 August 2006 the Trail of Civilizations symposium was held in Borobudur under the auspices of the governor of Central Java and the Ministry of Culture and Tourism. Also present were the representatives from UNESCO and predominantly Buddhist nations of Southeast Asia, such as Thailand, Myanmar, Laos, Vietnam and Cambodia. The climax of the event was the “Mahakarya Borobudur” ballet performance at Borobudur, choreographed to feature traditional Javanese dancing, music and costumes, and tell the history about the construction of the Borobudur. On 27 May 2006, an earthquake of 6.2 magnitude on the Richter scale struck the south coast of Central Java. The event had caused severe damage around the region and casualties to the nearby city of Yogyakarta, but Borobudur remained intact, confirming the belief that the temple is an everlasting and enduring testimony to mankind. Source: Wikipaedia

The President Post

14 January 28, 2010

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Travel

In Praise of

Seminyak

In recent times Seminyak, on the west coast just north of Kuta and Legian, has precisely become the place to be when you’re in Bali. Text and Photos by Taufik Darusman

o the delight of Bali worshippers, Seminyak is now on a par with its better-known tourist-favorite peers such as Kutai, Legian, Sanur and Ubud. Seminyak used to be the place where tourists flock to see beautiful sunsets and rush back to wherever they came from to resume their moments of indul-

gence, and that was it. No longer. In recent times Seminyak, on the west coast just north of Kuta and Legian, has precisely become the place to be when you’re in Bali. It is now famous for its clean, white beach, funky and elegant boutiques, bars and (slightly seedy) nightclubs. It is also infa-

mous for the permissiveness with which gays and transvestites, albeit during nighttime, reassert, if you will, their social status. “Seminyak has entered a new stage in its seemingly unstoppable development, and that is good for business,” says David Hearns, the general manager of The Villas Bali Hotel and Spa (www. thevillas.net).” “Our occupancy rate is very high, at pre-Bali bombings level. Our spa business generates revenue we never reached before in the past.” Seminyak’s ever-rising number of galleries has also rapidly turned the village into becoming a mecca for art lovers. And of the more original (and very spacious) galleries is The Society Gallery (www.society-artbali.com), which features nice and beautiful objets d’art from Java and South Kalimantan, and lies a Balinese wooden statue’s throw away from the site where posh most villas are located. Owners Peter and Mila Leimena virtually stop at nothing to roam villages in Central and East Java in search of roots of teak trees from which sculptors make abstract pieces of art.

“Some bigger pieces are transformed into benches, while others have their natural form retained for many to do whatever they wish to do with them, such as turning them into benches”, said Peter, who as an art dealer regularly commutes between Bali and Europe. Another prominent art dealer is Frenchman Patrick Zaffini, owner of Oxyzen and the Lukisan art galleries. Zaffini is probably the epitome of Seminyak’s art scene. A Buddhist who has lived in Asia for the past 20 years – and, presumably more years to come – Patrick has developed a passion for collecting Buddha statues and crafts. “I’m enjoying life and art at the same time. What more can you ask? One can only achieve this in Bali, particularly in Seminyak,” he says. His compatriot, Franck Metay, the marketing manager of Jacques Ruc, a company that makes “look-and-feel good” woman clothing, agrees. “My boss couldn’t have chosen a better place than Seminyak to start and develop this business,”

asserts Metay, who left his heart in Paris two years ago but allows his soul to develop his business acumen in Seminyak. Just in case one misses the point, he says that most Jacques Ruc products are exported to “many parts of the world” and that the company employs some 200 hundred people. It’s a matter of discourse whether Seminyak grew from within and drew in new investors to enter the scene, or enterprising people from outside came and develop it into becoming what Peter Steenbergen, owner of Made’s Waroeng restaurant (www. madeswarung.com) , calls “the most fashionable area in Bali.” “It is abound with luxury spas, trendy bars, chic restaurants serving world cuisine, and designer boutiques,” he added. As a restless young man with a knack to cover all corners of the world, Steenbergen came to Bali some 30 years ago and decided that Bali was the place in which

he would spend the rest of his life. The decision-making process was in no small measure helped by the fact that he is married to a Balinese woman. Together they developed a thriving business that today comprises two Made’s Waroeng (the other one is in Kutai) and a boutique inn called Puri Damai. A definitive icon in Seminyak, Made’s Waroeng is complemented by six high-end stores, two of them being Bin House and the omnipresent Periplus bookstore. The more incorrigible shoppers and buyers of Balinese furniture are found in the Jalan Raya Seminyak (also referred to as Jalan Legian) bisects the district and acts as its main artery road. The street is Seminyak’s response to Los Angeles’ Rodeo Drive. That is probably a hype-driven statement, but one gets the idea. All what you need to find is there and what is not there is just as well,

as you probably never needed it in the first place. Should you in all unlikelihood fail to find a constructive nocturnal activity, the place to go is Mannekepis (www.mannekepis-bistro.com), a jazz bistro at Jl. Raya Seminyak. It offers fine live jazz music that matches its fine food (see also Travel Notes). Jazz music is indeed making inroads into Seminyak. Another establishment spearheading the move is the two-storey Bale Bali restaurant at Jl. Kunti nearby Raya Seminyak run by a young cultured fellow by the name of Arie Santiko, who hails from Solo. Jazz music oozes out of Bose speakers as you browse the menu awash with Chinese food, “noodles of all kinds” and vegetarian food. When in doubt, try the fried rice, you won’t be disappointed. “In the coming months you can expect to find live jazz music here. We’ve been in contact with several Jakarta jazz musicians,” Arie said. A sound testimony to Seminyak’s sophisticated community of well-to-do locals, foreign long-staying retirees and businesspeople, and tourists is the presence of Bali Deli (“It must be Delicious”), which its general manager cum shareholder, the Frenchman Marc Francois, calls “a gourmet grocery store”. Located at the upscale Jl. Kunti and the newly-built Jl. Sunset on the other side, Bali Deli (www.bali. net) is the place to go for quality food. “For the first time since we opened business here in 2003, Balinese are able to choose from a broad range of imported food,” said Francois, adding that “we also make it our business to bring in gourmet food from as far as Europe.” “Service and customer satisfaction is the key to everything”, Francois insists, “and that’s why we employ about 200 people and pay them well.” Francois makes a note of the rising affluence and the newly acquired taste of Indonesians. “If in the past Indonesian customers make up only 20% of our clientele, the figure is now 35%,” he says. Indeed, business is so good that Francois and his partners have decided to open a second outlet, this time in Jakarta. Somehow, you just can’t go wrong with Seminyak. Reprinted by permission from Garuda Inflight Magazine

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January 28, 2010 15

Health STUDY Antibody Finds, Wipes Out Prostate Cancer Washington - US researchers have found an antibody that hunts down prostate cancer cells in mice and can destroy the killer disease even in an advanced stage, a study showed recently. The antibody, called F77, was found to bond more readily with cancerous prostate tissues and cells than with benign tissue and cells, and to promote the death of cancerous tissue, said the study published in the Proceedings of the National Academy of Science (PNAS). When injected in mice, F77 bonded with tissue where prostate cancer was the primary cancer in almost all cases (97%) and in tissue cores where the cancer had metastasized around 85 percent of the time. It recognized even androgenindependent cancer cells, present when prostate cancer is incurable, the study by researchers at the University of Pennsylvania showed. F77 “initiated direct cell death of prostate cancer cells... and effectively prevented tumor outgrowth,” it said.

Prostate cancer is the second most common cancer among men But it did not target normal tissue, or tumor tissues in other parts of the body including the colon, kidney, cervix, pancreas, lung, skin or bladder, the study showed. The antibody “shows promising potential for diagnosis and treatment of prostate cancer, especially for androgen-independent metastatic prostate cancer,” which often spreads to the bones and is difficult to treat, the researchers wrote in PNAS. Currently, the five-year survival rate for metastatic prostate cancer is just 34%, according to the study. Prostate cancer is the second most common cancer among men, claiming half a million lives each year worldwide, according to the World Health Organisation (WHO).

What You Need to Know About Multivitamins A walk down the vitamin aisle at any store could very well make your head spin.

n this day and age of foodon-the-go, supplements can add much-needed nutrients to your diet. But a walk down the vitamin aisle at any store could very well make your head spin. Here’s a breakdown of several of multivitamin options. Basic Multivitamins

What they are: One-pill wonders that offer 100 percent of the recommended daily allowance (RDA)for many important vitamins. Benefits: They give you much of what you need in a day, including vitamins A, C, D, and E, B vitamins, and folic acid. Bonus: You have only one tablet to remember to take and swallow. Keep in mind: Some single pills also include minerals, such as iron, calcium, and magnesium. But their levels can fall short of what’s recommended. The RDA for calcium, for example, is 1,000 to 1,200 milligrams. But because calcium is bulky, including that much would make for one giant pill. Therefore an additional mineral supplement may be wise in some cases. (Note: Check with your doctor before introducing any vitamins or supplements into your diet.) Food-Based Multivitamins

What they are: Vitamins combined with powdered whole foods. The manufacturers basically break down vegetables,

Disinfectants May Produce Antibiotic-Resistant Superbugs London, England (CNN) -- A new study has provided more evidence that using common disinfectants could promote the growth of antibiotic-resistant superbugs. Antibiotic resistance is considered a major health issue. Overuse of antibiotics is known to give rise to antibiotic resistance, but disinfectants could produce the same effect, according to research by the National University of Ireland, published in the January 2010 issue of the journal “Microbiology.” Researchers grew a bacteria associated with hospital-acquired infections in the presence of a common disinfectant and found that the bacteria became 12 times less susceptible to the disinfectant. But they also found that the same bacteria became 256 times more resistant to a widely used antibiotic -- ciprofloxacin -- even though the bacteria had never been exposed to it. Lead researcher Gerard Fleming told CNN that it was “a worrying finding, especially in critical care areas.” He said that the bacteria had adapted to pump out both the disinfectant and antibiotic from their cells, as well as showing a DNA mutation that made them resistant to ciprofloxacin-type antibiotics. The researchers also found that the resistant strain outgrew the non-resistant strain in the presence of low levels of disinfectant. Fleming said it meant that residue from overly diluted disinfectants left on hospital surfaces might promote the growth of antibioticresistant bacteria. “This is really worrying,” Fleming told CNN. “Where you’ve got residual levels of low concentrations of disinfectant and the resistant organisms are present, they become dominant in the environment.” George Allen, from Oregon Health and Science University in

the United States, told CNN that other studies have linked the use of disinfectants to antibiotic resistance, although some have produced conflicting results. “There’s a lot of discussion as to which disinfectants should be used in hospitals,” Allen said. “The most immediate concern would be resistance to a particular disinfectant, but these investigators showed the use of a disinfectant caused resistance to an antibiotic. “It’s these more unexpected effects that a disinfectant can have on existing antibiotics that I would say is the more serious long-term consequence.” The bacteria tested, Pseudomonas aeruginosa, is a known threat for people with an impaired immune system, and is a major problem in burns units, according to Fleming. He said that the disinfectant used in the study, benzalkonium chloride, is found in many commercial and hospital preparations. Fleming said disinfectants are an essential first line of defense to prevent the spread of bacteria in hospitals, with antibiotics the second line of defense, to be used against bacteria that survive the disinfectant and infect patients. By creating cross-resistance, there was a risk of losing both defenses, he said. “I’m not saying don’t use disinfectants,” he said. “They have to be used in hospitals and food preparation areas.” “But it is essential that they are used at the correct concentration,” he continued. Fleming added that when using disinfectants at home, it is essential to leave them on a surface for long enough for them to kill bacteria, and to vary the disinfectants used, to prevent organisms from becoming less susceptible to the disinfectant.

fruits, and other food ingredients, add vitamins, and formulate that into capsules. Benefits: Less chance of stomach upset. “Since you’re combining the vitamins with real food, they will be absorbed better and shouldn’t cause gastric distress,” says Kulkarni. In fact, it’s even OK to take this kind of multi on an empty stomach. Keep in mind: Despite the name, the vitamins you’re getting aren’t necessarily more natural; often they’re the same synthetically produced versions as in basic multis. Adult Chewable Multivitamins

What they are: Single pills in a form you don’t have to swallow whole. Benefits: Not having to force down large pills, which is a boon to those who have trouble swallowing tablets or who experience stomach problems when they do. Keep in mind: These aren’t the same as the gummy or chewable vitamins that kids take. The levels of vitamins in children’s formulas won’t give adults all they need. (Too bad, considering kids’ chewables tend to taste better.) Women’s Multivitamins

What they are: Souped-up multivitamins that contain larger amounts of nutrients that many women require. Benefits: They help you get the

RDA of such vitamins and minerals as folic acid, calcium, and iron. Because iron can irritate the stomach, though, be sure to take these vitamins with a meal. Keep in mind: These formulas come in age-specific varieties, too. Ones for women over 50, for instance, may contain higher levels of vitamins C and E and less iron. Targeted Multivitamins

What they are: Pills formulated for a specific population, such as pregnant women or those worried about a particular condition (like heart disease, osteoporosis, or eye health). Benefits: Certain people require more or less of certain nutrients. Pregnant women, for instance, are advised to take more folic acid to help prevent birth defects. Keep in mind: Some specialty multis (such as those touted to help joints) don’t have substantial science behind them. Although they’re probably not harmful, talk to your doctor before taking them. Powdered Multivitamins

What they are: Drink mixes you stir into a liquid. Benefits: Often just one heaping tablespoon contains the vitamins and minerals that you would get from several pills. Tablets contain fillers and binding agents that the body has to break down before the nutrients can be absorbed. Keep in mind: Many powders have a bitter aftertaste. Mixing them with juice (not water) may help. Or try blending them

with yogurt and fruit to make a smoothie. Multipill Packs

What they are: Individual daily packets that hold several pills designed to work together. Benefits: You can get higher doses of vitamin D, calcium, and omega-3 fatty acids, which are often not present in basic multivitamins. Keep in mind: Some have megadoses, which in the case of vitamins A, D, and E can be toxic. Check the website of the Institute of Medicine for the maximum levels of vitamins and minerals that can be safely consumed.

New Research Warns Penicillin ‘Becoming Obsolete’ LONDON, England (CNN) -New research suggests penicillin is becoming obsolete, and antibiotic resistance could lead to a “major health crisis” unless governments act to promote research into new drugs. Over prescription of antibiotics means drugs including penicillin are becoming obsolete. Antibiotics such as penicillin have been key to the decline of infectious diseases over the last 60 years, but bacteria are becoming increasingly resistant to existing drugs. That means many antibiotics are no longer effective at combating common diseases, and a lack of research into new drugs means there is a dire shortage of alternatives, according to the report by London School of Economics and Political Science (LSE). Elias Mossialos, professor of health policy at LSE, told CNN that penicillin is becoming obsolete in some developing countries, as well as in France, Spain and Romania, because of over-prescription by doctors and pharmacists. He said the emergence of “superbugs” such as methicillinresistant staphylococcus aureus (MRSA) is causing the growing problem of hospital-acquired infections. “Antibiotic resistance is a much more important situation than swine flu and it will only get worse,” he said. He said doctors are commonly misdiagnosing viral infections as bacterial infections, and then prescribing antibiotics to treat them, while in some countries pharmacists are selling antibiotics without a doctor’s prescription. Excessive use of antibiotics encourages the emergence of resistant bacteria. Dr Kathleen Holloway of the World Health Organization (WHO) told CNN that antibiotic resistance is a global problem, with diseases including childhood pneumonia, dysentery and tuberculosis (TB) no longer responding to first-line

antibiotics in some parts of the world. “We’ve got to a situation where there are no more drugs for certain conditions. There are some people with extreme drug-resistant TB and there are no drugs to treat them,” Holloway said. “Research and development of new antibiotics isn’t keeping up with development of resistance. If we don’t do something about it we’ll end up with a situation where all the old drugs have resistance and we don’t have any new ones.” Mossialos said the lack of development of new antibiotics is largely because antibiotics don’t earn pharmaceutical companies as much as other products. That’s partly because health policy tries to restrain the use of antibiotics, to avoid building up resistance, and partly because patients only need to use antibiotics for a short duration, typically 10 to 14 days, whereas patients take drugs for chronic diseases such as diabetes and heart disease for the rest of their lives. Mossialos said governments need to introduce incentives to encourage pharmaceutical companies to develop new antibiotics. His recommendations include governments developing an international fund that would invest in the early stages of antibiotic R&D, and guarantee sizeable orders for new antibiotics. “In many countries it’s not necessarily doctors who are prescribing, it’s nurses, paramedical staff and unqualified staff,” he said. “Governments need to invest more in providing continuing medical education and supervision for prescribers. “If we run out of antibiotics it’s not just poor people with infections who will suffer, it’s rich people who won’t be able to have anti-cancer therapies or routine operations that rely on antibiotics.”

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16 January 28, 2010

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Living

THE TOP 10 In 2009, we carried tiny computers in our pockets, through which we fed the Internet constant real-time info about where we were and what we were doing.

ngineers didn’t make huge improvements to technology in 2009. The year’s big tech names -- Twitter, Facebook, Google, Apple, Amazon -- all existed before January. Instead, this is the year technology changed us. At year’s end, we’re connected to each other and to the Internet like never before. In 2009, we carried tiny computers in our pockets, through which we fed the Internet constant real-time info about where we were and what we were doing. Our app-laden phones helped us manage our on-the-go lifestyles; our books fell off the shelves and into e-readers; our televisions and video games unchained themselves from home entertainment centers; and our mobile updates helped organize protests and even threaten governments. We could have done any of these things in 2008. But we embraced in unprecedented numbers a digital-centered life in 2009.

About 70% of Facebook’s users now live outside of the site’s home base in the United States, according to statistics released by the company. The site’s importance in our lives grew in tandem with these demographic shifts. Facebook now has more than 350 million users -- that’s more people than live in the United States and is more than double the 150 million people who were on Facebook at the start of the year. Half of Facebook users log on to the site at least once on any given day; the average Facebook user spends nearly an hour a day on the site. Bloggers threaten regimes

Individuals became publishers in 2009, using the micro-blogging site Twitter to post instant, bite-sized updates to the world. The site was founded in 2007 but grew exponentially this

By the end of 2009, having a basic cell phone wasn’t good enough anymore. Now the standard is a smartphone -- a mobile phone that also acts as a computer -- and links its users to Facebook, Twitter and the rest of the digital universe. Despite the economic recession, the smartphone market expanded. It was fueled in part by the popular iPhone but also

by an increasingly diverse set of smartphone choices, including the Droid, BlackBerry and Pre. Smartphone sales worldwide for 2009 were up 24% compared with 2008, according to Gartner Inc., a research company. Thanks to these phones, people this year grew accustomed to sending e-mail, uploading photos and videos and posting status messages from anywhere, at al-

5 W

ill rye be the new “in” grain in 2010? Research shows it can help lower cholesterol as well as prevent type 2 diabetes. A new year has arrived, and with it, a new list of resolutions. If “eating better” is on your list, experts say, there are a few items you can slip into to your diet that can improve your health and help you ward off certain diseases in 2010. Katherine Tallmadge, national spokeswoman for the American Dietetic Association and a registered dietitian in Washington, D.C., says you can find these foods in most stores. Best of all, they’re high in benefits but low in calories. Grains

Add oat, barley and rye to your daily diet. Doctors have known that oat can bring down cholesterol levels -- but so can rye, which may become the new “in” grain for 2010. In a study in the current issue of the journal Nutrition, Finnish doctors found that men who had borderline high cholesterol could lower their numbers by eating dense rye bread. The American Diabetes Association also recommends increasing your intake of dietary fiber and whole grain products, such as rye, to prevent the develop-

Sick of lugging hefty books with you on vacation? Portable, electronic readers -- with their easy-on-the-eyes displays and ability to carry hundreds of titles without gaining weight -- started to make inroads on their hardback cousins in 2009. E-book sales brought in $13.9 million in revenue in the third quarter of last year, according to International Digital Publishing Forum, a trade organization. The same time period this year saw $46.5 million in e-book revenue -- a 235% spike. The Amazon Kindle, originally released in November 2007, found some competition this year with the release of the Sony Reader and Barnes & Noble’s Nook. Meanwhile, libraries, authors, publishers and Google continued to haggle out the details of a settlement that could give the Internet giant permission to create the world’s largest library -- online only. Info in an instant

Here’s a look back at how it happened; 10 biggest tech trends of the year, listed in no particular order. Think we missed something? Smartphone craze

Books go digital

most anytime. Facebook grows up

This was the year of the Facebook mom and grandma. Founded in 2004 for college students, the online social network exploded in 2008 and might have been expected to level off this year. Instead, it went global and expanded into new and older demographics.

year. The political ramifications of the micro-blogging trend became evident in June when Iranians used Twitter to organize and publicize protests of a disputed presidential election. The protests grabbed the world’s attention. Terms related to the Iranian election made up 3 of the Top 10 news trends of the year on Twitter.

‘Eating Better’ Foods to Slip into Your Diet in ‘10 There are a few items you can slip into to your diet that can improve your health and help you ward off certain diseases in 2010.

ment of type 2 diabetes. “Rye lowers cholesterol like oats do, and it evens out blood glucose for diabetics,” Tallmadge says. But don’t run out and buy regular rye bread at the store. Instead, purchase rye mixed with whole wheat -- it’s found in dense, whole-grain breads and in specially made crackers. “I buy the rye crackers,” Tallmadge says. “They’re low in fat, high in rye and are a perfect snack with low-fat cheese.” As for barley, the U.S. Department of Agriculture found that diets high in barley lowered total cholesterol levels and reduced the risk factors associated with excess weight, type 2 diabetes and cardiovascular disease. Barley can be cooked and served as a side dish similar to rice or couscous. It can also be used as an ingredient in soups, stews, casseroles and salads. Dr. Peter Shields, professor of medicine and oncology and deputy director of the Lombardi Comprehensive Cancer Center at Georgetown University Medical Center, has done extensive studies on diet and cancer. He says any diet filled with fiber, either from fruits and vegetables or grains, is good for you. Soy

Researchers have found that

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soy can ward off certain cancers as well as help your heart. The Food and Drug Administration says foods high in soy protein may reduce the risk of coronary heart disease. According to the FDA, 25 grams of soy protein a day can cut heart problems by reducing cholesterol levels. Soy can be found in numerous products, such as tofu burgers, soy meats and soy milk. In order to get the full benefit of soy, the FDA suggests looking for products that have 6.25 grams or more of soy protein per serving and that are low in fat (less than 3 grams), saturated fat (less than 1 gram) and cholesterol (less than 20 mg). Tallmadge urges parents to introduce soy into their children’s diets as well. “We know that when introduced earlier in life, it can have a very strong protective effect against breast cancer and prostate cancer,” she says. Soy can also help fight childhood obesity because it’s low in fat and calories. Soy also contains vitamins, minerals, fiber and protein for growing little ones, and it comes in a variety of foods that kids like, such as chocolate soy milk, frozen pizza, taco “meat” and “chicken” nuggets.

Salmon and other oily fish

“Wild salmon is a wonderful dish that’s not only tasty but is great for you,” Tallmadge says. “It cuts inflammation in the body that can lead to heart problems. It’s a good source of vitamin D and also contains omega-3 fatty acids that keep the brain and heart healthy.” Salmon and other oily fish -such as mackerel, sardines, herring, fresh tuna, trout and anchovies -- are among the few food sources of vitamin D. A 3.5ounce fillet of cooked salmon contains 360 international units of vitamin D -- almost a full day’s recommended dietary allowance for anyone under the age of 70. Oily fish are also chock-full of omega-3 fatty acids, which curb cardiovascular disease by decreasing the risk of arrhythmia (which can lead to sudden cardiac death), triglyceride levels and the growth rate of atherosclerotic plaque. The American Heart Association recommends eating fish, particularly oily fish, twice a week. Although almost all types of fish are good sources of protein, it’s the oily fish that have omega-3 fatty acids. But the AHA also calls for consuming fish in moderation. That’s because some oily fish -- such as swordfish and fresh cuts of tuna -- contain mer-

PUBLISHED BY Yayasan President University CEO & EDITOR IN CHIEF Ali Basyah Suryo CONTRIBUTORS Atmono Suryo Cyrillus Harinowo Hadiwerdoyo Naresh Makhijani Taufik Darusman Thomas W. Shreve Wuryastuti Sunario Eka Putri

EDITORIAL & ADVERTISING/ CIRCULATION DEPARTMENTS Monica Siregar LAYOUT & DESIGN Mohamad Akmal

In 2009, it’s no longer enough to search for information that was current 30 minutes or an hour ago. Now, Internet junkies look for their news, Tweets and links to be updated in “real-time,” just as they are on Twitter. Search engines bought into this idea in 2009. Microsoft and Google struck deals with Twitter to pipe in or replicate its real-time search function. The micro-blogging site lets authors post short bursts of information, which become searchable the moment someone clicks send. App mania

In 2009, mobile phone customers made a strange realization: The phone isn’t as important as the applications that run on it. Droves of iPhone owners downloaded games, widgets and tools for their phones from Apple. By September, just over a year after the company started sell-

cury, a heavy metal that interferes with the brain and nervous system. High mercury levels can cause serious health problems, especially for children and pregnant women. Red wine

Tallmadge calls red wine the “almost the perfect drink.” “But because it contains alcohol, you need to drink it in moderation -- about five ounces a day for women, 10 ounces a day for men,” she says. Nutritionists and physicians are careful about recommending alcoholic beverages, but agree red wine is good for you in small doses. Research suggests antioxidants in red wine, called polyphenols, help protect the lining of blood vessels in your heart. These antioxidants come in two main forms: flavonoids and nonflavonoids. Flavonoids are found in foods such as oranges, apples, onions, tea, cocoa and grape juice, as well as other alcoholic drinks like beer and white wine, but red wine contains the highest levels. Resveratrol, a nonflavonoid antioxidant, is a key ingredient in red wine that appears to help prevent damage to blood vessels, reduce bad (LDL) cholesterol and prevent blood clots. Some research shows that resveratrol may reduce inflammation and blood clotting, both of which can lead to heart disease. More research is needed before it’s known whether resveratrol causes these effects. If you choose to drink wine for your health, Tallmadge says stick to red, because research has shown red grapes have 10 times more health benefit than white grapes. “It seems all the benefits, like resveratrol, are in the seeds and the skin,” Tallmadge says. “So when they crush the red grapes, the benefits stay in the

ing apps through its iTunes App Store, 2 billion of the applications had been downloaded. App mania was far from limited to Apple products, though. Research in Motion, maker of the popular BlackBerry devices, launched its own app store. And smartphones that run on Google’s Android system started campaigning around Android apps, which are not subjected to Apple’s rigorous and somewhat controversial approval process. Games leave the living room

Remember the days when people played video games on huge TVs in their living rooms? That was so 2008. This year, gaming became mobile and social. Instead of hovering around an Xbox or a Wii, it was cooler this year to plant virtual vegetables in FarmVille or run a mobster empire in Mafia Wars -- two games that run through the social network Facebook. The iPhone and its cousin, the iPod Touch, also became popular mobile gaming platforms, shaking up the idea that video games must have great graphics and be backed by huge entertainment companies to succeed. Many of the year’s popular phone-based games cost less than a buck. Government gets techie

Government has a reputation for lagging behind the technological curve. But in 2009, the Obama Administration tried to prove that bureaucrats could be hip and tech-savvy, too. The administration launched DATA.gov, a clearinghouse of information on how the federal government works and how tax money is spent. It also backed digitizing health care records, held the country’s first online town hall meeting and moved toward the more efficient cloudcomputing model, which essentially outsources some storage and processing of government files to companies such as Google.

wine.” But Georgetown’s Shields says that any alcohol, including wine, has also been found to increase the risk of breast cancer. “Some studies have shown an increase risk of 14 percent with each gram of wine you drink on a daily basis,” he says. And a recently published study found that drinking even moderate amounts of alcohol raises the risk of a breast cancer recurrence. “It’s really important that you moderate how much you drink, because the risk might outweigh the benefit,” Shields says. Green tea

“Think green,” Tallmadge says. Green tea is also full of antioxidants that scientists say can ward off some cancers. In a recent Japanese study that looked at nearly 500 Japanese women with stage I and II breast cancer, researchers found the women who drank more green tea before and after surgery had a lower chance of the cancer recurring. Other studies from China showed that the more green tea patients drank, the lower their risk of developing stomach, esophageal, prostate, pancreatic and colorectal cancer, compared with those who did not drink green tea. Recent studies have shown green tea can even help you stay thin. “They’ve found people who drink green tea every day are leaner,” Tallmadge says. “Green tea helps lower belly fat.” Scientists say that’s because it revs up your metabolism. In a study published in the American Journal of Clinical Nutrition, green tea extract increased energy expenditure, which is a measure of metabolism, plus it had a significant effect on fat oxidation, or how much fat your body burns.

Search engine wars

Google is still the world’s dominant search engine, but it faced its first real challengers in 2009 as smaller search companies came up with new ideas about the way people can and should find information online. An oddball search engine called Wolfram-Alpha made big news in the spring when it debuted as a tool that calculates the answers to user queries instead of sending Web surfers to lists of Web site links, as Google does. But the major newcomer was Microsoft’s Bing, a “decision engine” that introduced new ways to sort through photos online and to search for products. Bing quickly grabbed a foothold, gaining 10 percent of the search market by the end of the year. ‘Smart’ electricity use

The economic recession and a federal stimulus package prompted a old-ish idea in frugal gadgetry to take off in a new way: “smart” technology invaded homes and public works projects in hopes of making our use of fossil fuels more efficient. Smart-grid technology monitors energy use and helps steer consumption to times of day when other people aren’t using much electricity -- a time when it is cheaper to power appliances and more juice is available. The federal government invested billions in a smart grid in 2009 that connects homes and apartments with power plants. Consumer-level devices took off, too. Google released a PowerMeter service that gives homeowners reports on their energy use on the Web or on mobile phones. General Electric and others promoted smart appliances, such as hot water heaters, that help further help control energy costs. Most homes didn’t have smart meters in 2009, but that leaves room for plenty of expansion next year. (CNN)

But here’s the catch: One cup won’t do the trick. “You have to drink a lot of it ... at least three, up to six cups a day, to get the effect,” Tallmadge says. “And that means you use bags or loose tea every time you make a cup.” In other words, to get the full benefit, you have to brew it, not buy it in a bottle. Another catch? Most of the green tea research has been done on animals. “Although laboratory data has shown great benefits in green tea, a lot of statistics on humans still aren’t there yet,” Shields says. “The green tea industry has asked the FDA for permission to let them put these claims on their boxes; as of now, the FDA says there’s not enough human data to justify the labeling.” Back to that list of resolutions. When it comes to eating better, Tallmadge and Shields say moderation and balance are important. No one food is going to keep you cancer-free or make your heart healthy. “It’s unrealistic to think that eating only soy or grains all the time is going to make you a healthier person,” Shields says. “You need to look at the whole picture, and have good, healthy behaviors: Eat well, drink in moderation and stay active. All of these lead to a healthier life.” Tallmadge Agrees “Putting these foods into your diet are excellent substitutes for other foods that may not be healthy,” she says. “If you are trying to cut down on sugar, and are looking for a drink alternative, why not green tea? Or a better snack at night can be rye crackers instead of chips. It’s all a matter of balance and good nutrition.”