Saturday, November 10, 2012


Thirsday, October 25th 2012.

 -- House endorses Rp 1,683t budget for 2013
-- RI economy remains resilient on strong investment: UOB

-- EPA concludes fact finding on Indonesia's palm oil*

-- Govt trims coal quota on PLN's low take up*

-- WB to host conference on RI's reconstruction efforts


 House endorses Rp 1,683t budget for 2013

Jakarta Post, Jakarta | Business | Wed, October 24 2012,

The House of Representatives endorsed the 2013 state budget of Rp 1,683 trillion (US$177.15 billion), up from last year's budget of Rp 1,435 trillion, in a plenary meeting on Tuesday.

As much as Rp 1,154 trillion has been allocated for the central government, while another Rp 528.6 trillion will be transferred to the regions.

The government allocated 18.8 percent of the state budget, or Rp 317.2 trillion, for energy and non-energy subsidies. The amount set aside for energy subsidies totals Rp 274.7 trillion, of which Rp 193.8 trillion will go to fuel subsidies and Rp 44.96 trillion will subsidize electricity costs. Meanwhile, Rp 42.5 trillion of the non-energy subsidy funding was allocated for fertilizer and public services.

The central government budgeted Rp 241.1 trillion for civil servants' salaries, while Rp 167 trillion will be used for the procurement of daily equipment. The budget for the central government's capital expenditures has been set at Rp 216.1 trillion, while Rp 113.2 trillion has been earmarked for debt interest payments.

The government and the House expect to earn Rp 1,529 trillion from taxes and non-tax income and grants, up from last year's Rp 1,311 trillion. (cor/lfr)

 RI economy remains resilient on strong investment: UOB

The Jakarta Post, Jakarta | Headlines | Wed, October 24 2012, 8:56 AM

Indonesia will benefit from strong investment and domestic consumption that will continue to drive growth next year, the UOB Group says.

In its recently released economic outlook, the Singapore-based bank said that Indonesia's economy, the largest in Southeast Asia, would continue to be resilient, expanding by 6.3 percent in 2013, slightly lower than the government's target of 6.8 percent.

"As the world's economy is slowing down, our forecast is a bit more moderate. We see that domestic consumption and investment remain the forces behind growth next year," UOB Group head of research and investor relations Jimmy Koh said after a presentation in Jakarta on Tuesday.

Indonesia's economy grew by 6.3 percent in the first quarter of 2012 and 6.4 percent in the second quarter.

The bank estimated that the nation's economic growth rate would slow to between 6 percent and 5.8 percent in the last quarter of 2012 due to the prolonged worldwide slowdown.

In the January to September period, Indonesia has booked Rp 229.9 trillion (US$23.9 billion) in realized investments, up 7.02 percent from Rp 181 trillion last year, and has been inching closer to the government's annual target of Rp 283.5 trillion.

UOB did not see major risks posed by trade to Indonesia. Unlike other Asian nations, Indonesia has relied more on intra-regional trade and has cut its dependency on traditional key buyers such as the US and the nations of the European Union, Koh said.

Asian markets accounted for 56.5 percent of the nation's exports in 2011, up from 53.9 percent in 2000, while the share of its exports to the US plunged to 8.1 percent from 13.6 percent and the share of its exports to EU nations dropped to 9.3 percent from 14.3 percent.

As the Indonesian economy was on a "stronger footing" than it was during the Asian financial crisis in 1997, the nation would also see lower risks from the financial channel, Koh added.

Quantitative easing in a number of advanced economies has caused higher inflows of liquidity to other countries with faster growth rates, creating concerns about overheating and asset price inflation.

"Indonesia's foreign reserves today stand at more than US$100 billion, as compared with less than $20 billion at the end of 1997, and this brings a different dynamic compared to 1997," Koh said.

Speaking during the release of the outlook report, University of Indonesia economist Faisal Basri expressed optimism that Indonesia's economy would grow by 6.8 percent next year, as targeted by the government.

"Economic growth will be greatly supported by the expansion of domestic industry, which might grow above 7 percent and for the fi rst time will likely outpace our economic growth," Faisal said.

With such growth rates, domestic-focused businesses would contribute around 25 percent to the gross domestic product, he added.

Other industrial sectors that will experience fast growth include the textile, food and beverage, transportation equipment and base metal sectors.

Growth in those areas would be driven by increased demand domestically and overseas, according to Faisal.

--- JP/Linda Yulisman

*EPA concludes fact finding on Indonesia's palm oil*

Linda Yulisman, The Jakarta Post, Jakarta | Headlines | Wed, October 24 2012,

A visiting delegation from the United States' Environmental Protection Agency (EPA) has completed fact finding on the operation of oil palm plantations in Indonesia, a step that may lead to a review of the eligibility of palm oil to join renewable fuel programs in the world's largest energy market.

EPA representative Regina McCarthy said on Tuesday in Jakarta that despite the end of the mission, her agency did not have any immediate plan to recalculate greenhouse emissions generated from palm oil based biofuel.

"We will continue to talk and understand what the technical issues are and once we're comfortable, we will make a decision, but not before," she told reporters at a workshop on sustainable palm oil production.

McCarthy underlined that the EPA's analysis would not restrict the entry of palm oil to the US.

Previously the EPA has stated that palm oil cannot be included in the US renewable fuel program (RFS) based on its assessment of greenhouse gas (GHG) emissions from biofuel production, distribution and tailpipe emissions.

Palm oil-based biodiesel cut green house emissions by only 17 percent compared to gasoline and the diesel fuels it is set to replace, slightly lower than the 20 percent threshold required to qualify.

Deforestation is the key issue faced by the oil palm industry, especially in Indonesia where lowland rainforests contain high levels of biodiversity, and peat lands are home to globally significant carbon reserves.

Deputy Agriculture Minister Rusman Heriawan said that what should concern local stakeholders are opportunities in the US market if the renewable energy project was fully executed.

"Our palm oil exports to the US are still relatively small, but the market will become much bigger as the country aims to replace fossil fuel with other fuels. If it's confident our palm oil is eco-friendly, this will be good for our palm oil prospects in the future," he said on the sidelines of the workshop.

The RFS is scheduled to reduce US dependence on fossil fuel by more than 328 million barrels per year, and cut GHG by more than 138 million metric tons a year when fully phased in by 2022.

The EPA's evaluation should be an impetus for palm oil producers to improve their compliance with sustainability standards, Rusman added.

The government has introduced the Indonesian Sustainable Palm Oil (ISPO) scheme to address concerns over rapid deforestation and the massive destruction of carbon-rich peat land, particularly caused by the incremental expansion of oil palm plantations.

The Agriculture Ministry wants to issue sustainability certificates for up to 20 oil palm plantations before the end of this year.

*Govt trims coal quota on PLN's low take up*

Amahl S. Azwar, The Jakarta Post, Jakarta | Headlines | Wed, October 24 2012,

Indonesia, the world's largest thermal coal exporter, is set to trim the amount of coal that miners are required to give it, as construction delays on several power plants slows consumption.

The government would set the quota under its domestic market obligation (DMO) policy for coal miners to 74.2 million tons for 2013, Edi Prasodjo, the Energy and Mineral Resources Ministry's coal chief, said in a text message sent to The Jakarta Post.

The figure is 9.4 percent lower than the 82.02 million ton quota imposed for 2012.

Under the new quota, coal mining companies operating under contracts of work (CoWs) will be required to contribute 61.76 million tons of coal in 2013, while those under mining permits (IUPs) will be required to contribute 10.31 million tons.

The DMO policy affects 45 companies with CoWs, 28 companies with IUPs and one state-owned company, PT Bukit Asam, which will be required to contribute 2.2 million tons of coal.

"We received some input from local coal consumers, such as coal-fired power plants as well as the cement industry. Based on that, we decided on the quota for next year," Edi said.

The quota is estimated to comprise 20.3 percent of the expected annual coal output of between 337 million to 366.04 million tons of coal for 2013. Indonesia's coal production has been forecast to grow by 10.24 percent next year for a total volume of 332 million tons.

State-owned power firm PT Perusahaan Listrik Negara (PLN), which is currently building several coal-fired power plants, has been allotted the lion's share of the DMO quota for 2013 at 49.29 million tons. Delays in building the power plants means that PLN is unlikely to use the 57.2 million allocated to it for 2012.

PLN's fast-track program to build plants that would produce an additional 10,000 Megawatts of electricity was launched in 2006 and scheduled for completion in 2011, which was later delayed to 2014.

Privately-owned coal-fired power plants, also known as independent power producers (IPPs), will receive an allocation of 13.21 million tons of coal next year, or 9.82 percent of the quota.

Local cement businesses will get 13.19 million tons of coal in 2013, or 9.8 percent of the planned DMO allocation; while textile makers will get 2.59 million tons of coal, 1.93 percent of the quota.

PT Kaltim Prima Coal, a subsidiary of Indonesia's largest coal producer, PT Bumi Resources, is set to supply 10.76 million tons for domestic buyers next year, which would make it the largest supplier under the DMO policy.

PT Adaro Energy, the nation's second-largest thermal coal producer, is set to provide 10.15 million tons of coal for local customers in 2013; followed by PT Kideco Jaya Agung, a subsidiary of publicly listed PT Indika Energy, which is expected to supply 6.5 million tons, according to the ministry.

Separately, Energy and Mineral Resources Ministry minerals and coal chief Thamrin Sihite told reporters on Tuesday the decision to reduce the domestic quota for 2013 was made considering that PLN would not use all the coal allocated to it in 2012.

"PLN cannot consume all the coal that has been already allocated for it because several its coal-fired power plants did not enter operation as planned," he said.

 WB to host conference on RI's reconstruction efforts

The Jakarta Post, Jakarta | National | Wed, October 24 2012

The World Bank will host an international conference to showcase success stories of how the nation recovered from a string of disasters over the past eight years.

A World Bank executive Shamina Khan said the Nov. 12 conference titled "Lessons from Indonesia: Experiences in Disaster Reconstruction and Preparedness", would feature experts, government officials and development agencies from Indonesia and abroad.

"We will share lessons and knowledge from Indonesian post-disaster experience, which will eventually help us to explore how these can be applied in other fragile situations," she said during her media visit to The Jakarta Post on Tuesday.

Among the speakers will be National Development Planning Minister Armida Alisjahbana, delegation head of the European Union (EU) to ASEAN Julian Wilson, the World Bank vice president for East Asia and Pacific Pamela Cox and Pakistan Poverty Alleviation Fund CEO Qazi Azmat.

The conference participants will also receive some insight on overseas disaster mitigation.

Japanese Minister of State for Disaster Management Tatsuo Hirano and Haitian Minister of Public Works, Transport, Energy and Communications Jacques Rousseau will share their experience in coping with devastating earthquakes in their respective countries, she added.

President Susilo Bambang Yudhoyono is expected to open the event, to take place at the Pullman Central Park hotel in West Jakarta.

When asked about disaster mitigation in Indonesia, Shamina attributed the success to close cooperation between the government and the international community, including the World Bank.

The bank, upon the government's request, set up the Multi-Donor Fund (MDF) shortly after the 2004 tsunami in Aceh and the 2005 earthquake in Nias, one of North Sumatra's poorest regencies.

The MDF manages US$654.67 million of funds, collected from 15 international donors, to cover six key areas, ranging from community recovery to economic development.

As of Oct. 23, the MDF has rebuilt or rehabilitated tens of thousands of facilities, such as 20,000 houses, 1,200 public buildings, 3,000 kilometers of village roads and five ports.

In response to the 2006 earthquake and tsunami that affected Yogyakarta, Central Java and West Java, another multi-donor reconstruction fund, the Java Reconstruction Fund (JRF), was initiated.

The JRF manages a US$94.06 million trust fund contributed to by seven governmental and international bodies, such as the European Union and the Asian Development Bank.

The program has provided over 15,000 permanent houses, 5,000 elements of community infrastructure and financial access to more than 10,000 small and medium-sized enterprises.

Some of the aid, for example, was extended to the 2010 Merapi volcano victims. (yps)

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