Indonesia Law Update:
TRADE AND INVESTMENT
May 2015. Indonesia to Manufacturing Basis for Tyhpoon Jet Fighter. The Typhoon Generation 4.5 Series is a portege jetfighter of a number of European Countries and Middle East Countries with current manufacturing basis in England, German, Italy and Spain. Indonesia is planned to be the 5th manufacturer, the first outside Europe continent. The Eurofighter is a manufacturing company with company affiliation with Airbus, a major civil aircraft manufacturer in the world. The above four existing countries being involved in the manufacturing major jetfighter component are facilitated with assembling lines and final works. Indonesia is planned to provide the assembling lines by PT Dirgantara Indonesia, the first aircraft manufacturer in SouthEastAsia in late 1970. The requirement of such facilities in Indonesia may be initialized by the purchase of the said Typhoons by the Indonesian government, followed by Eurofighter to begin the technology transfer through PT Dirgantara Indonesia, who has the reputation of years back has been involved in the design, engineering and manufacturing of civil commercial aircraft prestigious Airbus 380 line. These Indonesian engineers will further get trained in Spain prior to the manufacturing of the Typhoon.
May 2015. US Chamber of Commerce Objection over 40% Local Content Regulation. The American Chambers of Commerce (AmCham) wrote to the Indonesia Minister of Technology and Higher Education for its objection to new regulation to apply 40% local content for cell phone manufacturing to be sell in Indonesia. AmCham wrote its concern that the regulation may cause particular effect in Indonesia due to the limitation access towards new technologies, then these may increase prices, triggered black market and other consequences as a result. The major concern is Indonesia lack of supply chain to manufacture such high-end cell phone. However Indonesian Minister Rudiantara insist on the regulation that will become effective January 2017 at any cost, with December 2016 is set as a limit of direct selling of cell phones made outside Indonesia. Indonesia has long been a basis for high technology manufacturing of famous IT brand from Japan, South Korea, China internationally a number of well known domestic IT manufacturer, not to mention the capacity to manufacture airplanes, satellite and communications.
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Indonesian Farmers Urged for Reformation. The research by the Indonesian Agrarian Ministry shows that Indonesian farmers in the last 10 years become poorer, owns small and smaller land to cultivate, many convert its land from rice field into Industrial needs while food importation keeps doubling. Statistics conducted by Farmer Statistics 2013 shows importation of 8 major food hit 175 percent within the last 10 years from USD3.34 billion in 2003 to USD 4.9 billion in 2013, causing the release of foreign exchange reserve 4.5 times higher, and as a result budgets increase 611% within the last 9 years. Farmers families also become more reluctant to survive, since statistic shows that the small medium or big land size they own reduced, 1.321.787 family feels a lesser quality of life. Some of the rice farmers opted to survive by converting to horticulture plants, which in fact is very costly in investment and vulnerable to market prices. Statistic in 2013 recorded that 62.8% out of 28,55 million poor people in Indonesia are farmers. This figure creates a greater gap ratio between the poor and the rich from 0, 35 (2008) to 0,41 in 2013.
Indonesian 70% Financial Asset Occupied by 31 groups. The statement was released by the a senior officer of the Indonesian OJK - Otoritas Jasa Keuangan, the Indonesian Monetary Authority in charge of banking and financial practices. The all 31 financial institutions are now under light monitoring and supervision by the OJK under the Bank Monitoring, Capital merlot and Regime Office Department in OJK. OJK senior official further add that apparently those 31 financial conglomeracy controls most of the Indonesian financial distribution, which 5 biggest are government owned financial institutions, 2/3 are domestic financial institution and the rest are foreign financial institution.
KPPU Cartel Investigation on Singapore Dollar. The initiation of investigation on unfair trade practices was based on complaints and reports by the business parties, including report from Australian Competition and Consumer Commission (ACCC) submitted to the Indonesia Fair Trade Practices - KPPU. The report was the existence of a strong indication of cartel practices by a number of Singaporean banks on silent agreements to setup higher exchange rates of Singapore Dollar against other 5 regional currencies, namely against Indonesian Rupiahs, Malaysian Ringgit, Vietnam, Thailand Baht, and Australian Dollar. The tricky practices by such Singaporean Banks has been identified earlier by the AAAC and has caused significant economic loss for Australia.
Garuda Indonesia, the World's Best Cabin Staff 2014. The Award by Skytrax put Garuda Indonesia, the Indonesian national flag carrier equal to Singapore Airlines and Cathay Pacific during the Farnborough International Air show in London, recently. This award follows Garuda's achievement in 2012 as the Best Regional Airline. The 2014 Award covers not only for the cabin shaft, but also for 4 other categories, namely Best Business Class Comfort Amenties, Best First Class Comfort Amenties, Best Airline Staff Service in Asia, and World's Best Economy Class.
Adjustment of Wages Ratio In Indonesia. The statement was released by the Indonesian Cooperative Research and Development, on findings of wide gap of wages between the top executives and the lowest position in an office, particularly in private companies. The gap reaches 100 to 1, or even worse 200-500 to 1. There search further found that apparently national asset concentration of 87% are monopolized by only 0.2% population in Indonesia. As a matter of stability in social, economy and politics, he urged the government of Indonesia soon to take action through set of new regulation on (1) wage ratio and asset distribution, (2) agrarian reform and (3) cooperative institution reform in general. The ideal figure of ratio should be at 20 to 1. This particular and sensitive issue is drawn over the great gap of salary and in turn create a wider gap of economy, and even 2013 marked the worst trend of salary gap in history. He further added, that the Indonesian human resources are qualified, hard worker, intelligent and honest, and therefore deserve a far better wage system.
Indonesia GMF get EA5A Approval for Airbus. The Garuda Maintenance Facility Aero Asia - GMF, a subsidiary state-owned company of PT Garuda Indonesia also just recently awarded by the European Aviation Safety Agency (EASA) as center for training of the the Airbus Remote Training Center (ARTC). Such prestigious rating allows GMF to conduct training for civil aircraft of Airbus planes series of A320 and A330. The GMF was also awarded for other international class of civil aviation training series of AMTO 147 EASA, particularly to train aircraft of Boeing B737-NG and B747-400 within the standard of Europe. In the near future, GMF is planning to expand to open a training center for Canadian aircraft Bombardier CRJ1000 dan ATR72-60. GMF has been known also the hub for most international civil aircraft maintenance and services for engine and parts in the region for the last 20 years.
30 % world illegal fishing is in Indonesia. The figure was released by the Food and Agricultural Organi2ation, Department of fisheries and aquaculture Department. The statement then is reinstated by the Indonesian Chairman of the Board ofTrustees of the Unitarian Indonesian Traditional fishermen (KNTI) . He added that the loss may reach 30%, Or around Rp 100 trillion (USD 8.5 billion), annually. The tremendous loss for Indonesia also caused dueto government low responses, bad sectoral management of natural resources due to the narrow vision as the role and functions of the maritime sector is only calculated on the basis of economic contribution and land area as an indicator of mobilization of the state resources. Finally, �he third challenge faced is the lack of participation by fishing organizations, farmers, and coastal people in drafting a public policy.
Indonesia Rank 10th in World GDP. The release by the World Bank figures out, that Indonesia's economy is in a very good shape, compared to the rest of the world, today. The United States remain in the first rank, followed by China, India, Japan, Germany, Russia, Brazil, France then Great Britain. The rank also shows strong optimism in Indonesia's economy players, with 6% growth in 2012-2013, and even better in the previous year with figure of 6,23%. China reached 7,75 percent the respective year. Malaysia sits on 5,3%, Singapore with 1,55, Vietnam 4,4%, and Thailand 2,6%.
Trade Law, Released. The bill passed the parliament On 11 February 2014, with full acclaimed not only by majority of the political parties, but also all Indonesian economy community components being represented. There are some important notes, namely of the trade preferential, Importation liberalization and import substitution. The bill has gone along chronological events, since its Inception in 1972. The Indonesian parIiament early days rejected the bill in 1979, then it relapse in 2010, then finally found its acceleration in 2013. The new trade law will replace the archaic Dutch Trade Law 'KUHD' being tought at law schools until today, which most of its articles has been impaired by tens of partial new articles, regulation and new laws. Indonesian Deputy minister of Trade Bayu Krishnamurthy is very proud and optimist, that this new trade law gives more power to the government in managing, controlling and put punishment to all trade matters. Misleading in export and import will be punished (article 43), e-commerce is tighter (article 65-68), consumer protection is even more detailed, including protection and development of small to medium enterprises and cooperative (article 73). The parliament is also empowered in establishing and annullment of International trade agreement (article 83). Generally this new trade law is a controlled-regime, rather than a liberal one.
Food scam USd15 billion due to food Hike Prices. The scam is of fake food distributed within the market, in respond to the hike Prices of food world at 2,5% manually and uncontrolled importation. The scam in turn is a dangerous potential to not only heath, but also cashing loss of agriculture due to price gap.US FDA admitted it is hard to trace the distribution though only 15% are imported domestically. The worst case of fake food are fake honey bee in the American history, swept away the original honey bee from the market. Other fake offs are juices, olive oil, and sea foods. The fake food also is a tax scam, where USD 180 annual tax is potentially lost.
High Price of Properties, a dilemma. A Indonesian senior ecomonimist at a major foreign bank in Jakarta warned that Indonesia current problematic is escalating prices of properties, which also occur at other countries with big cities. He identified that property become the only tools of investments due to the lack absoprsion of real economic from quantiatve easing, or hot money in the market. The only tools seen profitable is property. The government is urged to be more be aware for its negative impact, namely the widen spread of social gap between the poor and the rich in big cities. So far, he added, Indonesian government has put forward regulation on higher tax, including tight policy of Loan to Value to tighten uncontrollable boom of credit for properties, and disaloowing property ownership for foreigners. Another property consultant warned the hikes has reached 25,1% within the first trimester, where amazingly the market absorption is high, where statistic shows demand for upper hig property is 27%, middle up is 22%, middle is 15% and finally lower is 8%.
The Government to Draw Bill for Business Partnership. The new legislation is a particular law governing business legal entity other than the common use of business legal entity namely the limited liability form under the Indonesian Company Law. This business partnership has long been in practice, namely business joint cooperation or partnership in the form of firm, commandment - CV and private cooperation - persekutuan perdata. The bill will govern details of rights and duties, internal and external relationship, which was lack under the the archaic Indonesian Civil Code and Trade Law. As to compare with the company law which has long been well governed since 1997, and has been renewed in 2004 and 2007, the partnership business has never been re-regulated and legalized, since its first draft of 30 articles in 1990. The Bill is expected to be released, soon.
Law on Gas and Mineral, Revoked. The Indonesian MK - Mahkamah Konstitusi, the Constitution Court revoked the Law 22 year 2001 on the basis the law in consistent and contrary to the article 33 of the Indonesian Constitution 1945. Articles revoked were article 1 item 23, article 4 sub paragraph (3), article 41 paragraph (2), article 44, article 45, article 48 (1), article 59 letter a, article 61, and article 63 Law number 22 year 2001 on Oil and Gas. MK further explained, the said the impact of the revoked law at its early announcement in 2001 has created a new entity named BP Migas, whose took the role in controlling and act as regulatory body, a task indeed according to MK, must fall into the sole authority of the government and may not passed to other entity whatsoever. As result of the said rationale, the entity of BP Migas shall become void. The plaintiff were 12 communities orgabizations, submitted in March 2012 on a basis the law and the BP Migas entity is improper, illegitimate and unlawful, as in fact the law has taken over substantive control of state sovereignty in controlling gas and mineral over the public good, where plaintiffs constitutional right was infringed. The plaintiff further accused the BP Migas in practice acts ultra vires, as it took itself as a party in oil and gas contracts, which is rather an act as a broker in oil and gas exploration upstream contracts and BP Migas took benefits for its own for the public good as stipulated. The parties further ask MK to re-position that the contracting parties shall be state own goverment appointed by the government, instead BP Migas. Following the decision, BP Migas annulled the Law and ordered the Indonesian government � the Ministry of Natural resources to take a measurable transition action in taking over the task from BP MIgas, including to review of the upcoming revised new oil and gas contracts, where the government must a be one of the party. The MK also decided an ultra petitum, on the basis as a �Constituion Guardian�, supported by its previous precedences to rule beyond requested under MK Decision number 006/PUU-III/2005, dated 31 May 2005 ad MK decision number 11/PUU-V/2007, dated 20 September 2007, that the MK may and has deicide to revoke a law potentially indicated to harm and infringe the Indonesian Constitution 1945. According to an Indonesian watchdog of laws, there remain other 12 laws on natural resources potentially harm the Indonesian Constitution.
Pendulum Nusantara, established. Pendulum Nusantara (Nusantara Sea Lane Corridor) is a new concept to re-arrange the management of sea freight corridors within the Indonesian sea waters (territorial seas) covering from Belawan Port at the west end of Indonesia and Sorong at the other east end of Indonesian archipelago (East - West Pendulum). The stopover of ports shall be at major port of Tanjung Priok in Jakarta, Tanjung Perak in Surabaya and Makassar in Sulawesi Island. The concept will serve for domestic goods transportation needs, efficiency and reduce cost up to 50%, with an approach of 'trade follow ships'.
PTDI Airbus. Indonesia PTDI to cooperate with Spain Airbus Military. The equal partnership between the two major aircraft manufacturing companies are to manufacture new model of CN 295 military version, with capacity to load 73 troops, 48 paratroops, 3 military trucks etc. The version will also for sea patrol/anti submarine and early air warning with 360 degree radar. The CN 295 is another version of CN 235. This aircraft will be fully manufactured in PTDI, Indonesia. Previously PTDI has manufactured with local components varies from 40 to 100 percent, namely CN-212 100%, CN-235 40-60% and NC-295 40%- 60%. Indonesia� PT DI�s has been the leading aircraft manufacturer in Southeast Asia since 1980. the new CN 295 military version has been employed by several countries, such as Finland, Czech, Portugal, Spain, Poland, Brazil, Algeria, Chile, Colombia, Egypt, Ghana, Yordania, and Mexico, with total employed of 75 aircraft and production contact reaching 85 aircraft.
Unsimplified Initiation of AntiDumping Duties. The statement was released by Indonesian Textile Association in respect to the injury and damages suffered by the Indonesian industries, mainly textile. It also applied to other trade defense mechanism, namely safeguard and countervailing duties, as provided under the WTO/GATT Agreement 1994, and has been implemented under various laws and regulation in Indonesia. The WTO noted that since 1994, Indonesian Government initiated 83 anti dumping case, where only 35 reach final determination, statistically -wise 4-5 cases, annually. Meanwhile, the same period, Indonesia has been alleged 157 times for its products being dumped in the foreign market.
The Indonesian Fair Trade Commission to Catch Up Banking Cartel Practices. The legal action is close-related to the market facts of high rate permanent credit interest practices by big and dominant major banks (identified as the controller) as then followed by all banks (identified as followers). According to the KPPU officer, KPPU seeks for evidences, specialist, information and documents that related to the doer of the deeds, the initiator, including cartel members. Importantly, KPPU is in search of the cartel agreement or common practices as evidence. The suspicion was initiated by the Indonesian Central Bank, where banks lending rate did not meet significant rate reduce with the central bank. The close investigation and surveillance is planned to be held in the next 3 months.
Malaysia Agree on Protection Terms for Indonesian Domestic Workers. The other terms in the renewed MOU between both Manpower Ministers also include compulsory one day weekly holiday, no holding passport by the employer, transfer costs, banking payment for salaries, and increased salaries, which regulation applied to only Indonesian domestic workers. The 2 years talk of domestic workers by both ministries was initially triggered by numbers of torture by the Malaysian employers towards their Indonesian domestic workers in 2007, which was followed by moratorium by the Indonesian government by temporary not to send these domestic workers to Malaysia.
Foreign and Domestic Investment increased 54,2% in 2010. The total investment is Rp 208,5 trillion (2010), increased from Rp 135,2 trillion (2009), far above the targeted at Rp 160,1 trillion. The good news does however is quite irrelevant to the increase of employment, since most investment are of consumptions dominated by warehousing, transportation and telecommunication. The Indonesian Investment Board (BKPM) urge investors to setup manufacturing plants in their portfolio, which statistically manufacturing is reduced from 4,4% (2nd quarter 2009) to 4,1% (3rd quarter 2010), as it is also indicated by the reduce of power consumption for industry at 8,9% (2009 to 2008). The major problem is of bad infrastructure in Indonesia, namely limited power supply (which has been settled accordingly), roads, and ports. This have caused Indonesian� rank for investment go down from 115 (2009) to 121 in 2010, according to the World Bank Report.
Indonesia-Italy Cooperation in Building Corvette Ships. The cooperation covers the initial building of two corvette worth 400 Million Euro to be built in PT PAL shipyard in Surabaya. The Italian company Orizzonte Sistem Navali will also involve an Indonesia electronic state enterprise based in Bandung, West Java, Indonesia, where transfer of technology and design copy rights will then be under the proprietary of Indonesia. The corvettes will be utilized by the Indonesian Navy.
Indonesia and Russia Concluded Set of Mutual Cooperation Agreements. The 8 sectors of cooperation in sport, energy, mining (USD 4 billion), infrastructure, telecommunication, aviation and defense are expected soon to increase Russia' investment from USD 600 million to USD 1 billion. Indonesia has become a potential country in the region to develop war crafts since the availability of technologies and human resources since 1980, such as PT INTI (telecommunication), PT PAL (shipyard, PT PINDAD (war devices and machines) and PT Nurtanio (aircraft). The signing by both Presidents took place in Jakarta during the official state visit of the President of the Federation of Russia Vladimir Putin, early this month.
Indonesia to stop importing food and medicine originating from China. The release by the Indonesian Food and Drugs Inspections Body (Badan POM), found that 7 candies brands and 1 toothpaste products contains human-hazardous chemical substance. Formalin in candy and diethylene glycol in toothpaste are two dangerous ingredients contained withn the products, may cause health fatality and death. The director of Food Certification and Inspection of POM strongly urge the authorities to withdraw the products from market.
Minister of Trade Fight against Foreign Illegal IPR Registrars. The plan was established by the minister of trade, following a number of illegal claims of patents by illegal foreign registers of a number of products. The products has been known bearing special, geographical and cultural characteristics of places in Indonesia, covering foods, clothing, wood products and various cultural products. Singapore (wood crafts) and Malaysia (for batik) are those on top of the list who are confidently claim such illegal rights. However, Japan government has dismissed a number of registered products known to be bearing Indonesian characteristics.
48 Sectors are Open to Domestic Investment. The Indonesian Government has decided those sectors must be 100% owned by Indonesians, where nominee scheme are not allowed and become null and void accordingly. The said new regulation of President' Decision are number 76/2007 and 77/2007, were just released early this month.
Reformation of System at the Indonesian Anti Dumping Committee (KADI). The reformation will cover the system and the Government Regulation 34 year 1996 on Anti Dumping Duty and Safeguards. This is in respond to entrepreneurs' and domestic industries' request for KADI to be more protective and proactive in response to the dumped products of electronics, steel and foods from various sources, mostly from China, following its rejection from the market in the US and Europe. KADI should also reform its public legal certainty during investigation, period of investigation, parties' company secrecy, fairness, in-depth knowledge and to be more professional. KADI promised the reform will be completed in October 2007.
Foreign Investment Increased at 18.21%The above figure from the Indonesian Coordination Board of Investment (BKPM) is for the January-May 2007 period, which reached USD 3,7 billion of 401 projects. In 2006 it reached only USD 3,13 billion of 377 projects, respectively. In 2007 BKPM expects the investment will reach USD 19,79 billion.
Reformation of Tanjung Priok Port Authority Increased additional Rp200 billion/month State Revenue. The new so-called Office of Public Services for Port Custom and Clearance now employed full Electronic Data Interchange where contact between the on-site users and the data officers at the port are maintained, electronically. The new system is effective and efficient, cutting-off smuggling, false data, fraud and collusion. Previous 1,300 employees were replaced and 848 new well-trained, educated and professional staffs are securely recruited from all over Indonesia. The new system will officially take place on 1 July 2007, where the state revenue is expected higher than it is now.
Indonesia - Japan Finalized Economic Partnership Agreement (EPA). The Discussion Record was signed in Tokyo on 22 June 2007, official agreement is expected to be signed in August by both Presidents. Indonesia will play the role for production centre not only for Japan market, but also the region through establishment of Manufacturing Industrial Development Center for the component manufacturing for automotive, electronic and engines to meet Japan' standards. Zero percent tariffs applied to 91% of Indonesian export to Japan, where in turn Indonesia reduce them at 30%. In labor issues, internship of 3-4 years in Japan will be open for hospitality industries. The trade between Japan-Indonesia in 2006 reached USD 12,2 billion for oil & gas to Japan, where in turn USD5,4 billion for non-oil and gas to Indonesia.
Malaysia come to Agree on Migrant Workers new Employment Terms. Following strong international critism and its reputation for Human Trafficking and Violation, Malaysian officials come to Jakarta to agree Indonesia's new terms to protect better Indonesian migrant workers in Malaysia. Indonesian embassy in Kuala Lumpur has now a number of lawyers to increase their legal position in anticipating common abuses by Malaysian employers. Recently, a phenomenal picture in a number of international newspapers shows an Indonesian domestic workers in Malaysia, Ceriyati, stucked at the outside at level 12 building apartment for attempt to escape after receiving several physical abuses by the employer, Ivone Siew, a mistress. Ceriyati was compelled to work 20 hours a day, one day feed and unpaid for 4 months. Ivone Siew and husband, now faces criminal charges. Last April, also two Indonesian domestic workers in Long Island , New York, the US, escaped for the same reasons. They were employed by an American family, Varsha Mahender Sabhani and Mahender Murlidhar Sabhnani for two years, compelled to work for 21 hours a day, unpaid, and abused. The couple now facing serious criminal charges.
Timor Leste President visited Indonesia. Ramos Horta, the direct-elected president meets President of Indonesia Susilo Bambang Yudhoyono in Jakarta, expects to increase economy relation since Indonesia are the main importer into Timor Leste market, through reducing border problems between two countries. Ramos Horta also planning to establish Bahasa Indonesia Faculty in Timor Leste, where Bahasa Indonesia serve as one of the official language in Timor Leste.
New President Instruction number 6 year 2007. The regulation called 'the Policy on the Acceleration of Real Sectors and the Empowerment of Micro Small and Medium Enterprises', aimed at to increase growth and reduce unemployment and poverty. Of 141 guidance for direct actions, over 60 will be handled by the Finance Ministers. The said regulation 6/2007is expected to reach 6,3% growth this year, following 6% growth the first quarter of 2007.
Indonesian Competiton Committee Found Breach by Temasek. The initial investigation held by the Indonesian Anti Competition Committee found, the article 27 Law 5/1999 was breached through the ownership by Temasek as one entity in two equal business in the same area in Indonesia, that is the cellular providers Telkomsel (35%) and Indosat (42%). Temasek then set out high price for cellular air time, where consumers have no option.
Indonesia-China Trade will Reach USD 30 Billion in 2010. According to the Indonesian Chamber of Trade and Industry, both countries trade and investments growth reached 18,6 % annually (2001-2006), where mostly are in oil and gas and infrastructure. Major export from Indonesia are chemical products, wood products, pulp and papers, fertilizer and rubber. From China, Indonesia imported iron and steel, spare parts, motorcycle, electronics, data processor and fruits. China has become the fifth export market from Indonesia with volume totaling USD 19,6 billion in 2006. China's investment in Indonesia in 84 projects with value of USD 205 million, are at the 8th position after Singapore, Britain, Japan, Malaysia, Canada, Australia and the Nederland.
33 Memorandum of Understanding by 42 Indonesian State Enterprises. The 33 MOUs through synergies between state enterprises are expecting to increase state revenue up to Rp 70 trillion, annually. The cooperation will empower each enterprise in government projects, such as aircraft manufacturer will utilize steels, electrical devices, and use of gas and all other product manufactured by the state enterprises.
Bill of Foreign Investment Soon Released. The final summit meeting of the house on 29 March will decide to or delay the release of the 39 article laws. A number fraction in the house objects the soft laws on the issue of foreign corporation crime, as proven by current number of cases on trial under various laws, committed by foreign investors. The law will now provide single entry for licensing at the BKPM, which is now shall directly responsible to the president instead the minister of trade. The law will provide facilities for those investing in remote areas and able to employ more workers, to enjoy land title, import license, and special fiscal rights.
Japan Government Provide Soft Loan to the Government of Indonesia. The untied loan for 30 years at 1,5% interest p.a of Rp 1,875 trillion (USD205million) are aimed at the development of social and economy sectors in Indonesia. The ExcellencyJapan Ambassador for Indonesia, Shin Ebihara, signed the said loan in Jakarta, recently.
Advance Micro Devices establish its Representative Office. AMD, the world class micro processor manufacturer, establish its office in Jakarta, the first in Indonesia. The office is aimed at getting closer with the Indonesian market, which is seen prospective. In 2005 AMD' global market share reach 5 percent, where 2006 reach almost 12 percent.
PT Freeport Indonesia willing to Contract Renegotiation. The said agreement is made with the House' Working Committee. A number of the contract has been identified unfair for the Indonesian government, also where the company is compelled to take precautions of environment and state revenues. A good progress made is, that a number of process of raw materials are now conducted in Indonesia instead abroad.
The Government of Indonesia dismissed the CGI donor group (Consultative Group on Indonesia). The group consist of a number of developed countries to provide financial support was established in 1992. In turn, through tough terms and conditions, CGI had the authority in setting up economy and financial policy for Indonesia. The dismissal of CGI are based on the set of failure by CGI's advices implementation in economy and financial, particularly in settling Indonesian government debt in 2000-2002.
Investment to Indonesia from Switzerland increased. The figure of 2005 to 2006 comparisons released from the Indonesian Investment Board, shows that Switzerland, Thailand, Malaysia and Italy increase of investment in Indonesia are of 1,637% (USD 447 millions), 528%, 401,4% (USD2,21 billion) and 102,88% ( USD 216 million), respectively. The decrease are from Japan and China of -61,13% and -43,22% respectively, which favor destinations are to Vietnam and Chine itself. On the other hand, KPK released the corruption index in Indonesia in 2006 is at 130 (out of 163 countries) compared to year 2005 at 143 (out of 158 countries).
US-ASEAN to Cooperate in 8 Sectors in 2007. The Cooperation also pivoting 30 years of relations between both, a subsequent of plan action to implement Enhanced Partnership 2007-2011. 8 major sector will soon be implemented, such as good governance, combating corruption, IPR, SME's, reducing HIV/other diseases, and cooperation in IT, communication, technology, energy, disaster management and environmental management.
President Director of PT Newmont Charged for Environmental Detrimental. The said person Richard Ness, an American, is charged for 3 years in prison plus fine of Rp500million (USD 55.000) and Rp 1 billion (USD 120,000). He is held responsible for serious environment detrimental in the area of Buyat Bay in Sulawesi, caused by disposal mercury and unorganic arsen 100 times beyond other bays during the operational of the PT Newmont Minahasa Raya (PT NMR) gold-mining company,. Such method of disposal has been banned in the US and that the company did not have the proper permit to dispose of its waste. The disposal has caused villagers near the mine complained of tumors, skin rashes and dizziness. The court after at least 20 sessions ruled, that under the Indonesian corporate law, the chief or chairman of the company is held responsible for any company legal actions. Earlier, PT NMR has signed a good will agreement with the Indonesian Government to recover the environment and their strict liability responsibility under the environmental law, adopted internationally, where USD 12 million has been allocated by NMR and USD 30 million in the next 5 years. Newmont stopped mining in 2002 at the Sulawesi site, 2,000 kilometers (1,300 miles) northeast of the capital, Jakarta, after extracting all the gold it could, but kept processing ore there until Aug. 31, 2004, when the mine was permanently shut.
The Indonesian Government Settled its Debt to IMF. The USD 4 billion debt was paid in full, covering also the interest. In comparison to other foreign loans, IMF' loan was known with full of terms related to politics rather than to improve economic development.
RI -Malaysia Talks Over the Movement of People. Malaysia now employed many Indonesian workers, from domestic /construction workers to university lecturers, due to Malaysia's progressive development and Malaysia's lack of qualified Malaysian human resources. Indonesia warns Malaysia to protect them better. Up to now there are 1,75 millions Indonesian legal workers, where 2,5 percent are Indonesian intellectuals.
Indonesian Minister of Trade Mari Elka Pangestu meets Australian Minister of Trade Mark Vaile. The meeting agenda held in Canberra and Brisbane are to discuss over several issues such as the Terms of Reference for the Expert Group, revitalize last years' Action Agenda Trade and Investment Framework, optimizing AUSAID Program for the Indonesia' BPEN (National Development for Export Program), and business meetings between private companies. The major aim are to strengthen economic ties between Indonesia and Australia.
New Banking Regulation on Single Presence Policy. The policy will be in force in August 2006, expecting adoption by all banks by the end of 2008. The policy are based on bad experiences of high non-performing loan, unfortunately occurred mostly at bank with Single Presence ownership. The policy applies to private and government ownership, to allow the central bank to effective monitor and encourage bank consolidation.
Indonesia-Singapore establish SEZ. The said SEZ, Special Economic Zone covers Batam Island, Bintan Island and Karimun Island (called BBK) in the territory Indonesia, adjacent to Singapore. The SEZ, managed by a Joint Steering Committee, will allow both countries in managing investment, tax, services, to attract more investment and employment. Investment at BBK was US$4 billion, expected doubled in 2011. Currently, Honeywell successfully manufactured cockpit of Boeing 777 civil airplanes in Bintan.
Nuclear Reactors in Indonesia. IAEA, the International Atomic and Energy Agency, formally allows Indonesia to build nuclear reactors in year 2016, at the latest. It is expected that Indonesia will finalize building 4 reactors with 1,000 MW capacities. Indonesia is considered having the human resources capacity to build nuclear projects.
Foreing Visitors to Indonesia, Increased. Foreign Visitors to Indonesia 50.7% are for leisure, 33.83% for businesses purposes. The said researches are based on the Passenger Exit Survey (PES) in 2005 to 10.000 respondents, where most are professionals and business managers groups. Jakarta is the most place to visit (47,48%) following Bali (35,37%).
Intellectual Property Rights Ratifications. The Government of Indonesia had ratified a number of international conventions since 1995, such as the Paris Convention for Protection of Industrial Property, Paten Cooperation Treaty (PCT), Trademark Law Treaty, Berne Convention, WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty. These had been adopted into national laws, such as the Patent Law, Trademark Law, Copyrights Law, Trade Secrets Law, Industrial Design Law, Integrated Circuit Design Law and Plant Variety Law. All are based on the WTO TRIPs, ratified under Law no. 7 year 1994.
Russian Investment in Indonesia. KaMaz (Kama Automotive Plant) a Russian heavy equipment manufacturer together with an Indonesian company in heavy equipment tools and armors manufacturer PT Pindad, will joint in manufacturing trucks and heavy equipments for mining and construction. Both companies have long track in the said business line and technology.
Indonesian and Russia on Space Rocket Laucher Spot. Following the negotiation between Indonesia and Russia, it was agreed that both countries will establish a rocket space launcher at Biak, Papua west part of Indonesia territory. Indonesia has the experience in air and space technology for 25 years as proven by the international civil aviation license obtained for civil aircraft manufacturing and technically involvement in manufacturing wing parts of Boeing A380 in 2005.
Bank mediation Dispute Settlement. This entity soon will be established , where the mediation mechanism will provide rooms for bank customers from various disputes with the bank products.
Banking Consolidation. The Indonesian Central Banks will soon release new regulation to allow more foreign banks to conduct its business in Indonesia. Currently, out of 131 banks in Indonesia, 41 are foreign shares dominated, with 48,51% ownership of total industry asset compared to 37,45 by the Indonesian government ownership. 12 foreign banks are owned by ultimate shareholders.
Indonesian Labor Court, established. Under the law 2 year 2004, this court will replace the Committee of Labor Dispute Settlement. The Labor Court consist of 99 career judges and 160 ad hoc judges, having office at 33 places. This court will run on the Civil Procedure Law instead of the previous procedure law under the labor law. This court will provide more room for argumentation and a firm judgement both for disputing parties in rights, interests and termination.
Nokia will establish its Technology Center. According to Nokia' Country Director of PT Nokia Networks, the center is situated in Bandung, Indonesia, established on the first semester 2006. The center will serve as a center for competence development and technology transfer for custodian, staffs, and Indonesian local partners.
750 Foreign Investment Companies from 6 Countries Suspected for False Tax Assesment. The companies are also suspected for money laundering and transfer pricing. This is the government report based on Tax Directorate research. The name of the companies soon will be released.
PT Microsoft Indonesia collaborate research with Indonesian Universities. The collaboration of 9 research focuses are with the Indonesian engineers at two universities are, Institut Teknologi Bandung in Bandung and Institut Teknologi Sepuluh November in Surabaya. This is part of Microsoft budget on research at the amount of USD 2 billion.
PT Dirgantara Indonesia new contract to manufacture parts of the new Airbus A380. PT Dirgantara Indonesia, an Indonesian national airplane manufacturer (previously known as PT IPTN), concluded a contract with British Aerospace to manufacture wing parts of the new Airbus A380, called as the Inboard Outer Fixed Leading Edge. The contract is valued of USD 60,2 millions for 318 units of the said passenger airplane.
Indonesia and Japan signed the EPA - Economic Partnership Agreement. Following the visit of President Susilo Bambang Yudhoyono to Japan last May, both countries agree to cooperate in an Free Trade Arrangement (FTA) Plus in the form of EPA. Sectors covered are trade of goods, services, government procurement, freedom of movement of persons, investment, intellectual property rights, investment and dispute settlement. Indonesia is the last country dealing with FTA in the region, ASEAN in particular.
Microsoft will establish its 5th Software Center in Indonesia. Following the visit of President Susilo Bambang Yudhoyono in the US and meet with the founder of Microsoft Company Bill Gates, Microsoft will start to cooperate with Indonesian government, private entities, and academics to set up its software business in Indonesia for Indonesia and the region. Other Software Centers are in the US, Great Britain, China and India. Infrastructure are now under preparation.
New Chairman of BKPM. The President of the Republic Indonesia has appointed new chairman for the Indonesian Investment Coordinating Board (BKPM), Mr. Muhammad Lutfi, who was the chairman of the Indonesian Young Entrepreneur Association (HIPMI). Mr. Lutfi is also member of the Forum WTO Indonesia.
Draft of Foreign Investment Law. The Minister of Finance of the Republic of Indonesia has send the draft of foreign investment law (RUU PMA) to the Indonesian parliament for review and approval. Some issue for the new bill will are, to reduce investment application process into 30 days, assurance that foreign investment will not be nationalized (except through passing new laws by the parliament), and more access for foreign businessmen on working permit and immigration. The bill is expected to pass this year.
Telecommunication. New investment in telecommunication services regulation will be released, that foreign investor ownership will be limited to 49% only. However, the government still prefer to keep up to 95% foreign ownership to investments with high technology and high investment in infrastructure content only, under the PP 20/1995.
Deficit Grows. Trade between Indonesia and China has grown significantly, where the figure for China export to Indonesia in 2003 was USD 2,39 billion increase to USD USD 3,4 billion for oil and gas and non-oil and gas products in 2004. Indonesia suffered from loss of USD 261 million from non-oil and gas export to China. Guangzhou contribute 40% of total export, followed by Shanghai (30%) and Beijing (20%).
55 Draft of Bills. The Indonesian parliament and government will release 55 new bills consisting of laws (Undang-undang), 22 amendment of laws, and 6 ratification of international conventions in 2005. The total number of the proposed new laws for 2005-2009 are 284.
Foreign Lawyers. New RI-MLHR regulation issued on the requirement of the use of foreign lawyers in Indonesia, which requires recommendation from Indonesian Advocate Organization, prove of individual Indonesian tax file number (NPWP), obligation to teach law for 10 hours per month within 12 months, limited to deliver legal services of foreign laws (other than Indonesian laws) or international laws, and will only act as an expert or staff in an Indonesian Law Firm.
Monsanto Case. the Indonesian Committee to Exterminate Corruption (KPK) is now evaluating and will take serious action based on a report from the United States Department of Justice (US DOJ) for the report of bribery by US based Monsanto Company through the subsidiary company PT Monagro Kimia, who bribed 140 Indonesian public high officials at least USD 700,000 during 1997-2002. The public officials are subject to law PP number 30/1980. The US DOJ based on the US Foreign Corrupt Practices Act fined Monagro Company at the amount of USD 1,5 million payable to the Indonesian Capital Market Supervisory Board (BAPEPAM) and US DOJ.
Buyat Case. The Indonesian government is preparing to file civil and criminal case against PT Newmont Minahasa Raya for environmental degradation in North Sulawesi, through poisonous material disbursement to Buyat Bay. Some foreign nationals of the board of the company are arrested and are subject to criminal charges.
Investment. Coordinating Minister of Economy Aburizal Bakrie said, that BKPM (Investment Coor-dinating Board) will play its new role mainly as a promotional entity for investment and a single-entry for all licensing for investment. This new role differs from past bureaucratic single- roof where licensing will take 150 days compared to single- entry system that slash down bureaucracy and license will be obtained within 20 days.
Employment. Minimum Provincial Wage - MPW (UMP) is set at Rp 711.843 (USD 80,00) per month applied in Special District Jakarta in 2005, challenged refusals from 7 Labor Associations, which compeled to raise it to the minimum of Rp 759.953 per month, which earlier requested the number of Rp1,2 millon (USD 133) per month to accommodate high living cost in Jakarta for 55 life components compared to 43 life components. This Provincial Government Decision no 2515/2004 was signed earlier by Governor Sutiyoso. The MPW is adjusted annually. In 2006 new Sectoral Minimum Wage will be applied for labor prosperity.
Indonesia Law Update:
TRADE AND INVESTMENT
2010, 2009, 2008
Hundreds of Indonesian Lecturers and Researchers Now Serving in Malaysia. The said numbers are now serving their knowledge in Malaysia�s education institutions from high school to major universities in Malaysia. The demands of Indonesian lecturers and researchers are so high since Malaysia has limited Malaysian educated human resources. According to the Chief of Indonesian Lecturer and Researcher Association in Malaysia (ILRAM), DR. Riza Muhadi, the Indonesian researchers spread in many areas of knowledge. Riza whom also a lecturer a Malaysian International Islam University (UUIM) and the chairman of International Indonesian Scientist Community, these Indonesian highly-international caliber scientist returned home, following the studies abroad, then make their way straight to Malaysia. The statistic shows significant increase in the last 4 years, for example, Indonesian lecturers in UUIM has reached 40, and keep increasing 4 to 5 peoples, annually. Indonesian lecturers also achieve appreciation in Malaysia, as Dr. Seca Gandaseca, lecturing in Universitas Putra Malaysia, was awarded as best lecturer. IIUM, also DR. Irwandi Jaswir as the best researcher in 2009, defeated other competitors from Malaysia and other countries. He also the best young scientist in Asia-Pacific and represented IIUM and Malaysia. The most interesting part is, that surprisingly those Indonesians migrants keep their Indonesian nationalities and spirit as Indonesians.
New 2010 Investment Negative List. The list of Presidential Regulation No. 36 Year 2010, extend opportunities for business investors, which also amend limits of shares ownership in eight business sectors. The new list do not applied retroactively for business concluded prior to the new list, unless regulated otherwise. Some of the list are: special permit for Cyclamate and saccharin industry , increase from 55% to 67% to foreign ownership in construction service, maximum of 49% shares in technical movie products, increased from 65% to 67% at all location for medical sector (specialist hospital, specialist clinic, health support service or clinic laboratory and medical check up), maximum 95% shares for electricity generator above 10MW and partnership required from 1 to 10 MW, maximum 49% for agricultural production in staple food (corn, rice, soy bean) with land above 25 hectare, maximum 49% for mail service with special permit. However construction data provider to BTS remain closed to domestic investment.
The Indonesian Fair Trade Commission - KPPU Called For Temasek Penalty Payment. Temasek, a Singapore company is subject to pay Rp. 30 billion penalty following the rejection over verdict review by the Indonesian Supreme Court over the cross ownership case in Indosat and Telkomsel, both Indonesian major telecommunication company who Temasek own significant shares. The rejection indicated Temasek�s legal rights meet its last resort. The decision to pay has been since December 2009 expected to be carried soon after the rejection.
Background: The case initialized in November 19 2007, KPPU ruled that Temasek� shares ownership in both telecommunication service company, Telkomsel and Indosat, violated Law 5/1999 on Restriction on Monopoly and Unfair Trading. Temasek, beyond reasonable doubt, was found guilty in violating article 27 a Law 5/1999. According to the article, business person is restricted to possess majority shares in same types companies with same main business activity, same market, one business person or group whom control 50% of market segment or particular services or goods. AS a result, KPPU ordered Temasek Holdings to end its shares ownership at both companies by releasing all its shares in one company or by reducing 50% ownership in each company, not later than two years after the verdict has been declared final and binding. Reluctant to hear the verdict, Temasek Holding Ltd, ST Telemedia Pte Ltd, STT Communications Ltd. (STT), Asia Mobile Holding Company Pte Ltd (AMHC), Asia Mobile Holdings Pte Ltd, Indonesia Communications Limited, Indonesia Communications Pte Ltd, Singapore Telecommunications Ltd, Singapore Telecom Mobile Pte Ltd, appeal the verdict to Central Jakarta District Court. In fact, Court strengthened KPPU�s decision. Supreme Court also rejected their appeal through MA verdict Number 496 K/Pdt. Sus/ 2008 at 10 September 2008. Temasek was ordered to release its shares in Indosat and Telkomsel. Temasek agree to release it, but the release was given to Qatar Telecom, one of Temasek partner companies, through STT. Still, Temasek also must pay Rp.15 Billion penalty to State. Temasek states its pursuance to the verdict and waiting the paying order from the Court, since the verdict is still a publication, said Deputy of Corporate Secretary, Ersyah Marianto. PT Telkomsel Tbk. as the holding company and majority-share holdes of Telkomsel mentions its intention to study the verdict. The verdict however will effecting shares ownership in Telkomsel, and coordination for further steps is needed, said Vide President Marketing and Communication Telkom, Eddy Kurnia.
KPPU: Twenty Indonesian Cooking Oil Producers Involved in Cartel Pricing. The Indonesian Fair Trade and Business Competition Commission (�KPPU�) decided twenty cooking oil producers are guilty for cooking oil cartel pricing and fined with total Rp.290 billion, which damaging consumers at Rp.1.27 trillion for packed cooking oil and Rp.374.29 billion for bulk cooking oil during the period of April until December 2008. The said verdict number 24/KPPU-I/2009 decided the activity violated article 4, article 5, and article 11 Law Number 5 year 1999 concerning Restriction on Monopoly and Unfair Trading. The court session which brought by Chief Dedie S. Martadisastra, and Yoyo Arifardhani and Didik Akhmadi, decided companies as follows � amongst other- are in violation with the said law: (in bulk cooking oil market) Multimas Nabati Asahan, Sinar Alam Permai, Wilmar Nabati Indonesia, Multi Nabati Sulawesi, Agrindo Indah Persada, Musim Mas, Intibenua Perkasatama, Megasurya Mas, Agro Makmur Raya, Nikie Oleo Nabati Industri, Indo Karya Internusa, Smart Tbk, Berlian Eka Sakti Tangguh, and Asian Agro Agung Jaya, (in packed cooking oil market): Multimas Nabati Asahan, Sinar Alam Permai, Multi Nabati Sulawesi, Smart Tbk, Salim Ivomas Pratama dan Bina Karya Prima.
KPPU: Nine flag carriers Condemned of Cartel Activity. Again, the Indonesian Fair Trade and Business Competition Commission (�KPPU�) decided nine airways companies guilty for cartel activity accusation on fuel surcharge for Rp.587 billion. The airways companies were said beyond reasonable doubt violated article 5 Law Number 5 Year 1999 which restricts collective costing. They are fined Rp.80 billion, calculated from excess of fuel surcharge applied by the airways companies which compared to the cost on May 2006 or reference from Transportation Ministry. KPPU mentioned that from 2006 to 2009, there are Rp.13.84 trillion excess of fuel surcharge applied by the airways companies compared to estimation reference cost. This reference itself was made according to the signed agreement between Head of National Aviation Association (�INACA�) and nine airways companies at May, 4th 2006 which mentioned the cost will be at average Rp.20 thousands per passenger. However, airways companies still apply the agreement, even it had been revoked. Meanwhile, there is Rp.5 trillion excess existed from the fuel surcharge compared to Transportation Ministry reference cost, from 2008 until 2009. The airways companies also forced to pay damage to the state for Rp.507 billion, as the excess has damaged the passengers ranging from fines of Rp.25 billion plus damages of Rp.162 billion (Garuda Indonesia) to Rp.9 billion fine and damage Rp.62 billion (Sriwijaya Air). All fines and damage costs will be used to renovate airport and public facility. The other charge mentioned that the companies has violated article 21 for infringement when decided production cost was not proven. KPPU mentioned some factors aggravated its decision, as Garuda has conducted the violation repeatedly. KPPU also blame the companies for still applying fuel surcharge nevertheless Minister Stipulation Number 26/ 2010 ordered to abolish fuel surcharge per April 14th 2010. The stipulation was the revision of Minister Stipulation Number 9/2002.
Amnesty Calls for Migrant Worker Protection in Malaysia. The calls for Malaysian government are of the facts found by the Amnesty International, that migrant workers are misleaded and cheated by the Malaysian employers and its agents for good work and high salary, in order to evade poverty, a fact far from reality for they being tortured and exploited. Workers found their working condition deemed as labor exploitation. In the report called �Trapped- The Exploitation of Migrant Workers in Malaysia�, further details that Malaysia highly depends on the migrant workers from Bangladesh, India, Indonesia, Nepal, Myanmar, Filipina and Vietnam, to work at sectors such as construction site, factory, restaurant, domestic working, oil-palm plantation and other job which avoided by local workers. However, the employers� treatment are far from equal, such as improper salary, unsafe working condition, illegal detention and extortion by Malaysian officer with criminal �like approach. The report by the Director of Policy, Michael Bochenek, documented a wide exploitation in Malaysia, in every sector of works, and no effective inspection system in working area and no effective compensation given to workers for their individual claims. The report is based on more than 200 workers (legal or illegal) in July 2009. The report also urge Malaysia Government to upgrade inspection on working places and conduct judicial process upon the migrant abuse, since they fail to serve their responsibility to prevent violation, including exploitation, enforced work, and human trafficking. However as usual, the Malaysian denied the facts, where later then Amnesty found that Malaysian officers often misuse their authority by arresting migrant workers, make a trick on the workers by searching documents, just to end up with forcing the workers to give them some money. Indonesia has earlier responded by not sending any migrant workers since June 2009 until present.
Modern retail market dominates in Jakarta. The fast-growing market has beaten traditional market in Jakarta by number. Modern retail market is addressed to mini-market, supermarket, department store, convenience store, and hypermarket. While traditional market is mostly known as market in traditional way, multiple seller spread in one area and sell different kind of goods. The figure shows that during the period of 2005-2008, the increase of the modern retail market is at 117% (from 1.014 units to 2.196 units), while traditional market has not build any market (zero percentage number). Among the development of modern retail market in Indonesia, mini-market has shown extraordinary number, as shown by a research for a period from 2003-2008. The figure shows growth 2,058 units to 7,301 units - 254% increase (for minimarket), and (54 units to 135 units - 150%) for Hypermarket , respectively. In terms of area, modern retail market mostly operated in West Java province, with Jakarta in the second position. Both then combines in an area called Jakarta-Bogor-Depok-Tangerang-Bekasi � Jakarta and its satellites (�Jabodetabek�) as the central of modern retail market spread. Hypermarket remain the largest in Jakarta (represents 1/4 in Indonesia). Jakarta to Jabodetabek comparisons chart shows that, mini-market 1.841 units of 4.939 (37.3%), supermarket 200 of 336 (59.5%), department store 120 of 217 (55.3%), hypermarket 35 of 70 (50%). While the figure for the whole modern retail markets Jakarta to Indonesia represents mini-market 25.4%, supermarket 17.4%, department store 19.3%, and hypermarket 25.3%. The figure for traditional markets in Jakarta per 2008 are 151 units, spread in West Jakarta 27 units, North Jakarta 23, Central-Jakarta 39, East Jakarta 33, and South Jakarta 29. Total of stalls spread in the 151 units traditional market are 98,705 units. Total average visitors in the traditional markets in Jakarta each day are 2 million people.
Medicine Cartel under KPPU Invesigation. The 2 months preliminary examination investigation by the Indonesian Anti Trust Auditor Commission (�KPPU�) is on allegation conducted by several business entities of pharmacies that lead to anti trust. The findings indicated of phenomena of industrial concentration and high price of particular medicine types. KPPU monitoring particularly conducted on therapeutic class, after patent right of the originator medicine has expired. The allegation raised based on the consideration that pharmaceutical industry as strategic sector to national economic due to its domestic market-development potency. Type of allegedly medicine cartel are amplodipine class, consist of Amdixal (Sandoz), Divask (Kalbefarma), Norvask (PT Pf), Tensivask (PT DM) with market concentration 55.8% in PT. Pf and 30% in PT. DM, and concentration ratio (CR4) for 93%. Amlodipine product is medicine that contains dihydropiridine derivative calcium-channel blockers which specifically used for cardiovascular related-disease and expire its patent period in 2007. Price of two primary brands for amlodipine class, Norvask and Tensivask, are far above their generic medicine. In respect of preliminary examination, KPPU has scheduled examination agenda addressed to Respondent I (PT. Pf) in 8 March and Respondent II (PT. DM) in 9 March.
22 Migrant Worker Placement Private Organizer License, Revoked. Ministry of Manpower and Transmigration Muhaimin Iskandar, has revoked mobilization permits of 22 Migrant Worker Placement Private Organizer (�PPTKIS�) for committing various infringements. The action was also taken as a warning to other PPTKIS, to bear responsibilities in case the migrant worker suffers damages, said by Minister Muhaimin Iskandar. Muhaimin stated that several infringements that frequently committed are deserved for sanction. Some of the infringements, among others, are placing workers without fulfilling 200 hours training, improper living place, permit misuse and indication of fraud to migrant workers recruit. Violation also occurred upon article 13 Law Number 39 Year 2004 for not depositing Rp.500 million used for responsibility guarantee to any probability of violation. Many migrant workers claimed from suffering damage and bad experiences during placement period caused by PPTKIS negligence. Protecting the migrant worker is obligatory to both government and placement organization, and that from 500 private placement organizations in Indonesia, only a half considered good. The rest are still able to be corrected but some must be shut down, according to the Minister. Thus, Ministry will cooperate with independent auditor to conduct audit to PPTKIS and standardize service to migrant worker. The actions were taken to increase service standard to develop PPTKIS. If violation are found during the audit, the implication are various depends on the violation level, whether correction to increase the service, warning, or assertive sanction measure. Violation in certain cases involving money and criminal aspect will be engaged by law procedure. Those 22 private placement organizations are: PT Fim Anugerah, PT Tulus Widodo Putra, PT Putri Bersaudara, PT Nour Mansour Abadi, PT Barokah Bersaudara, PT Zaya Abadi Ekasogi, PT Jasa Makmur Sejahtera, PT Maju Puta Dewangga, PT Irfan Jaya Saputra, PT Gabila Wadi Amed, PT Muara Mas Globa, PT Assalam Karya Manunggal Putra, PT Bafa Anugerah Persada, PT Permata Gobel Sejahtera, PT Amrita Mahesa Prima, PT Multi Sukses Putranto, PT Dwi Insan Setia Utama, PT Bintang Lima, PT Prime Global Manpower, PT Bin Hamoud Safarindo, PT Asia Primadona Pratama, PT. Assalam Bersaudara.
Indonesian Government Finance Consultants to be European Government Consultant. The recent request of the Indonesian government finance consultants to foreign finance institutions (such as Spain and Portugal) was conveyed by the Indonesian Secretary of Finance to the World Bank Head of Delegation in Indonesia. The statement instead of an arrogant one, was triggered by the success story of Indonesian finance consultant to curb the ratio decrease to level 30% (October 2009) from 89% debt ratio to GNP (2000). Early in January 2010, the world was shocked by debt crisis potential in Europe. Public debt of 16 European Union members came to average of 84% of Gross National Product (�GNP�) in 2010, beyond the maximum 60% of GNP limit of public debt, according to Development and Stability Pact. Germany which known for its strictness to maintain fiscal stability has been suffered 78% of GNP rising on public debt this year. France public debt has attained 75.8% of GNP on III quarterly period of 2008, while Greece already in the level 120% of GNP in 2010 (Kompas, January 4, 2010). In Asia, Japan�s debt was estimated to reach 53.5 trillion yen, equal as US$ 597 billion, in undergoing budget period 1April 2009-31 March 2010, which already a record for this country.
Generic Medicine Drugs Regulation. According to statistics released by the Ministry of Health, Rp2,52 trillion are those market sold of generic drugs as to compared to Rp 21,07 trillion of those patented drugs in year 2005, where in 2009 the figure is Rp 2,37 trillion to Rp30,57 trillion, respectively. The figure represents only 9-10%, annually. Currently, there are 8-12 generic drugs pharmacy companies where 3 are government-owned as to compare to 204 private companies (31 are foreign investment pharmacies). To resolve the high price, the government has (out of 453 drug types) reduced prices of 106 types, 33 increased and 314 remain. The major problem according to private pharmacies are those generic is less popular, the cheaper price affect people� confidence over the effect to cure, the law is unenforceable and insufficient to control the distribution and finally that difference of pricing structure. As a result, consumers are drawn and compelled to buy patented 3.4 times higher prices than the generic drug with the equal cure effect, since most clinics and hospitals do not sufficiently promote and are much in preference to sell patented drugs due to free market system. The recent Ministry Regulation HK.0202/Menkes/068/2010 article 4 now stipulate a clause for doctors to compulsory include generic receipt for patients according their medical indications.
KPPU: 8 Indonesian Companies Suspected for Cement Cartel Pricing. The 8 cement companies are Holcim Indonesia, Semen Andalas Indonesia, Semen Padang, Semen Baturaja, Indo Semen Tunggal Perkasa, Semen Gresik, Semen Tonasa, and Semen Bosowa. The said indication was the initial findings by the Indonesian Anti Monopoly Commission (�KPPU�), which was seen by two companies raising its prices at the same structural level, a finding almost the same as previous investigation where the companies deliberately set up prices through idle of production at the factory. The practices caused price increase as a respond to increase of demand as the supply are limited, a practice since 2006 until today. The 8 companies production reached 56 million tonnes, while the consumption only 35 million, where the idle production capacity was approximately 21 million, the together set up a uniform prices, even higher when the coal prices gone down in the market. Coal is used as main energy in the factory. Such practices breached Law 5 year 2009 on Cartel.
Indonesia and Malaysia finally come to an initial agreement over the Indonesia Domestic workers in Malaysia. The said which issues are crucial due to many human rights abuses by the Malaysian Employers. The points in agreements covers the issue of minimum wages, paid insurance by the employer, one day weekly leave, passports hold by the employee and finally compulsory psychological test for employers prior to employment. The Malaysian government have objection over the paid salaries, admitting that most Malaysians homes are not in the capacity to pay salary of 250 US dollars per month to the domestic workers, particularly after the financial crisis where poor families increases significantly in Malaysia. Indonesia also urge psychological test for Malaysian employers, since in most cases of human rights abuses towards Indonesian domestic workers by the Malaysians are identified that the most Malaysian employers are mentally ill. Transparent and qualified legal system is also another issue in Malaysia, where most criminal cases of human abuses no yet settled.
Indonesia at Strategic Level in G-20. The Indonesian President Susilo Bambang Yudhoyono in his speech at the G-20 in Pittsburgh last September, welcomes the permanent G-20 as an institution where Indonesia is included. He expected G-20 to bring a better civilization, representing the east and the west, and even Islamic Civilization and a forum to build a much safer world. He is of the opinion that G-20 replacing G-8, will play different significant role than G-7 or G-8, which both G-7 ands 8 only represents developed countries, mostly from Europe, except Japan as Asian representation. Indonesia sit at number 16 on the world� big economic growth.
Keris, Wayang and Batik, an Indonesian original Common World Heritage of Mankind. Following the UNESCO Recognition of Indonesia original cultural world heritage of Keris and Wayang since 2003, now UNESCO agreed Batik (an Indonesian traditional sheets used for clothing) as Indonesia� original cultural world heritage since September 2009, a ceremony to be held in Abu Dhabi 2 October 2009. The Common World Heritage of Mankind of UNESCO is one of three lists made under the UNESCO 2003 on the Protection of Cultural Heritage of Mankind, where Indonesian is one of the ratifying country. The recognition is part if the effortless Indonesian government attempt since 2008, though projects of intensive researches in the field, involving the community and Batik experts at 17 out of 33 provinces all over Indonesia. The UNESCO after 2 years of considerations by 6 countries, considers that Batik indeed is originally an Indonesian nation cultural icon with unique of symbols and philosophy of human life cycle. It represents not only Indonesia, but also mankind. Batik is considered a traditional art with rich of cultural values maintained for generations. The Indonesian Minister of Culture is now attempting to include Angklung (a traditional bamboo music instruments), to be the next recognition by the UNESCO.
Dispute Over Songs between Indonesia and Malaysia. The Indonesian song titled �Terang Bulan� and Malaysian national anthem called �Negaraku�, are exactly same in its introduction and intonation, except for the lyrics and patriotical beat for the Malaysian Anthem. According to Lokananta, an Indonesian State Enterprise in recordings, the Indonesian �Terang Bulan� song was recorder by Lokananta in a choir version at the Republic of Indonesia Government Radio in 1956, a year earlier to Malaysia independence. The recorded song was copied into phonograph and sited in Lokananta Archive in 1965. Lokananta Archive only stated that the said song is an entertainment song or a popular public song, in Keroncong genre categorization, on 11 minute and 15 second duration and without a composer name. The said song rerecorded to a phonograph on 16 March 1965, together with 3 other keroncong genre songs. �Terang Bulan� was popular in Indonesia years before recorded. The old generation who lived on the era of the said song must be agree that the Malaysian national anthem �Negaraku� was copied from �Terang Bulan�.
Carrefour's Trading Term: contrary to Article 17(1) Anti Monopoly Law 5/1999. The Indonesian Fair Trade and Business Competition Commission or known as the Anti Monopoly Commission warned the Carrefour, giant retail business in Jakarta to stop implementing a compulsory terms to its suppliers that leads to monopoly and unfair trade practices. Carrefour has in fact plays its significant role, a dominant position to put its suppliers with no choice. The investigation was held 30 days by the Commission, then suggest Carrefour to adjust its terms adequately particularly in advertising materials and lot lease, otherwise further code applies.
Material Transfer Agreement agreed by the World Health Assembly (WHA). Indonesian Minister of Health figured that 90% success has been reached by the Indonesian party. It is expected that with the SMTA, Indonesia can get direct access for the utilization (the progress, the research, for vaccines uses and the party who uses) of Indonesian viruses or materials being shared to the WHA. WHA is the highest World Healthy Organization hearing forum. Standard Material Transfer Agreement (SMTA) is an agreement to share viruses or sample.
OECD released Lists of Countries who commits to Banking Secrecy. Malaysia, Philippines, Costa Rica, and Uruguay are on the Organization on Economic Cooperation Development (OECD) version of Black List, which consider as countries for safe heavens for tax tariff embezzlers. Those countries are on the list for their unwillingness to cooperate in the fight against international tax crime and their refusal to adopt the new rule on finance and banking transparency. The said list was announced on the G-20 High Level Conference in London, where world leaders threat those countries through various sanctions. In respond to this issue, th French President responded by saying that, the age of banking secrecy is over, everyone is eager to put those tax embezzlers on trial and drop a sentence. The banking secrecy policy be concerned will worsen the global economic crisis because it�s covering the real value of assets. OEDC had divided countries into three groups. First are countries with full commitment to the rules and willing to share its tax information (the white list), such as England, China, France, Germany, Russia, and USA. Second are countries commited but has done nothing so far (the grey list), that include Singapore, Belgium, Brunei Darussalam, Chile, Antilles (Nederland), Luxembourg, and Bahamas, Bermuda, Cayman in the Caribbean Islands, together with Switzerland, Liechtenstein, Monaco, and Alpine, which stated their commitment to loosen their Banking Secrecy Policy. Lastly, are countries abovementioned which have not agree to reform their banking policy (the black list).
Anti Competition Committee (KPPU) initialize Investigation on Carrefour Suspected for Monopolizing the Market. The investigtion are based on the preliminary data for its market domination toward supplier reaching 66%, while its market domination toward consumer as to compare with other supermarket and hypermarket reaching 40%, Carrefour market domination considered as law infringement. In contrary, Carrefour admits that they never dominate the market as it said. If then the KPPU come to a decision that the monopoly practice does proven in this case, the Temasek case of telecommunication company domination might be repeated.
New Regulation for Foreign Pharmacy. The new regulation issued by the Minister of Health Number 1010 year 2008, are a compulsory to establish a pharmacy plant in Indonesia to be called as Pharmacy Industry, where pharmacy industry are now entitled to register drugs, drugs containing narcotics for medical use, patent drugs, be it locally manufactured or directly imported. The regulation also refuses suggestions as proposed by group of international pharmacy corporation to change their member status form big seller into pharmacy industry, since they do not have factory in Indonesia. The major goal are to protect society from drug circulation to meet qualifications, such as condition, security, quality, and benefit. Under this new regulation, foreign pharmacy who do not own a factory falls under the category as a big pharmacy seller (PBF), where they activity are limited to importing drugs from the original factory, running administration and dispensary.
WIEF: Jakarta Declaration by Islamic Countries. The World Islamic Economic Forum on its the 5th conference in Jakarta, Indonesia, declared the mutual agreement between Islamic countries called the �Jakarta Declaration�. One of the important points is to accommodating the Indonesian government proposal, brought by the Indonesian President Soesilo Bambang Yudhoyono on the structuring the support fund from and used by the syariah (Islamic Law) economic based countries or known by Islamic Expenditure Support Fund. The Jakarta Declaration then establishes seven groups of recommendation, namely (1) recommendation to overcome global financial crisis, (2) steps to secure food product, (3) energy protection, (4) the global development of small and medium size business, (5) the development of business conducting by women in Moslem country, (6) the capacity development of young leader in the Islamic Conference Organization (OKI) country, and (7) the agreement on education development.
Indonesian and Australian Government signed MOU on Visa. The annual 100 double -function visa is particularly designed for Indonesian students both for holiday and work, valid for students age of 18-30 years old subject to requirements the ability to speak both countries languages, healthy, good behavior, and single. The aim of this MOU is to provide chances for Indonesian students to travel and learn about the life, culture, economy of the neighboring country, while working as their source of fund during holiday. Indonesia is the 7th country in agreement on the implementation of this double function visa. The 100 initial visas is subject to examination the upcoming year.
Indonesian and Australian Government signed MOU Human Trafficking. The MOU is to avoid the case where Indonesia has become a pivot point for this trafficking to Australia. Both Indonesian Minister of Law and Human Rights, Andi Matalata, and Australian Minister of immigration and Citizenship, Chris Evans agree to discuss the details in the upcoming Bali Peace Meeting, such as Rohingya tribe from Burma. For the latter particular case, Indonesia has its policy to provide an immigration detention house in Tanjung Pinang, while seeks for an integrated solution in a short time.
PT Dirgantara Indonesia (PT DI) Get C212-400 License. Following the cooperation contract with EADS CASA in November 2006, now PT DI (an Indonesian State Enterprise in aircraft manufacturing since 1980) hold a license as a producer and assembler of new type of civil aircraft C212-400 along with a production facility from San Pablo. According to PT DI President, PT DI is the only company holding such license in the region, which include a license on marketing this aircraft both transportation and military version for Indonesia and ASEAN region. Due to PT DI, instead of its potential market, high demand of this type is shown as indicated by 88 units ordered so far, and will reach 155 units in the next 7 years. The civil aircraft 212-400 has a similar body with the C212-200 previously produced by PT DI, but with a longer nose and a �wing tip� that enable this aircraft to take-off in the shortest runway. In the early 2009, PT DI closed procurement contract of one C212-400 aircraft unit with PT Airfast Indonesia.
Malaysia to home-return 100.000 Indonesian Migrant Workers. The statement was conveyed by the Malaysian Manpower authority, where those 100,000 out of 1,2 million Indonesian migrant legal workers are from manufacturing sectors. The return are due to economic downfall in Malaysia recently, where like most country' policy, foreigners are on the list to be dismissed to allow local workers to remain to have a job. However, to most employers, most are in favor to Indonesian workers since Indonesians meet all the qualifications as workers with dedication, loyal, diligent and skillful, qualifications that Malays do not posses so far in the business, particularly job requires skills and intelligence. Most Malays prefer job as bureaucrats or landlord. This has become the fact that most jobs in Malaysia are done by expatriates or migrant workers composing more than 20 percent (4,5 millions expatriates) of total Malaysia population of 20 millions.
ASEAN Charter Ratified. After months of long debate, the Indonesian parliament finally ratified ASEAN Charter on Wednesday, 8 October 2008, the last country in ASEAN to ratify the Charter. The signing of document on ASEAN Charter bill was represented by Minister of Foreign Affairs Hassan Wirayudha, Minister of Trade Mari Elka Pangestu, and Minister of Law and Human Rights Andi Mattalatta, representing 10 Fraction and governments in Commission I at the Parliament. However, questions remain by the parliament of the urgency of ASEAN Charter as a legal ground of ASEAN transformation into a solid organization. Also the disagreement with the voting mechanism (Article 20), a creation of a slower ASEAN and a longer in taking decision. Beside of that, the parliament also disagree with the unclear sanction of ASEAN Charter violation, and human rights body mandate which cannot be guaranteed by the Charter and its effectiveness (Article 1). However, the parliament foresee the Charter to bring benefit for Indonesia. According to Hassan Wirayudha, �ASEAN Charter ratification is a first step of ASEAN transformation to accomplish a full integration as a community in 2015�.
Indonesian Broadcasting Committee Team Published 4 Improper TV Programs. The programs breached the Law 32/2004, are film with title Bleach (Cartoon), Detective Conan (Cartoon), Naruto (Cartoon), and other High School TV Programs, notably such program did not suit and did not protect students and teenagers morality. Further, the Team found other 84 TV titles of 316 episodes broadcasted by 9 private TV stations (Indosiar, SCTV, TPI, RCTI, Global TV, ANTV, TransTV) and one government TV (TVRI), breach the abovementioned law. Such TV programs contained non-rated of visualization and substance including coarse language, verbal and non verbal violence (physical and non-physical), no rating of norms and classification of audiences.
20 percent Annual Budget for Education Sector. The Indonesian Constitutional Court has its decision in 13 August demanding the Indonesian government to raise up to 20 percent of state annual budget allocated for education sector as addresses by the Indonesian Constitution 1945. The budget shall raise from Rp 154.2 trillion to Rp 224 trillion next year, where in 2005 was Rp 78,5 trillion. The current 2008 budget of Law 16/2008 was challenged against the Constitution 1945, since Law 16/2008 provide only 15,6% budget portion. The budget is expected to meet education standard all over Indonesia. In line with the decision, two days priori to the 13 August 2008, the President addressed a speech confirming his administration to set higherbudget for education the next annual state budget 2009.
Legal Notes: The Indonesian Constitutional Court decision and government commitment over 20% education budget for 2009 hailed positive responses from teachers and education institutions, particularly state owned-universities. People now noted that 57 state owned-universities (providing 99,360 seats for undergraduate degree leading bachelor degree, annually) all over Indonesia are receiving a very low budget since year 2000, compelling them to set out new independent financial and budgetary as allowed by the National Education Law through BHMN concept. Under the BHMN, 6 state universities (ITB, IPB, UI, UGM, Airlangga and USU) are free to set their own fees and tuitions, which is considered high. Other state universities follows later in 2004. Previously, students are fully funded by the government during 5 to 7 years study period, provided they passed the national examination. Unfortunately, such conception with fee orientation now provide more rooms for the haves but lesser portion below 20% of seats (out of 99,360) for the poor students, who may not be able to pay high tuition as much as private universities. While it remain undisputable, that prior to the BHMN concept in 2004, the National Entry Exam to Indonesian State Universities are very tough, with annual from 400,000 contestants out of 750,000 high school graduates, the competition rate are 1 to 20 to 1 to 300 (depending on the reputation of state universities and favorite faculties), where the best and the brightest high school graduates are those who studied at state universities filling total 99,360 seats. As for its good reputation, state graduates received positive job market within and outside Indonesia, a university for thousands of foreign students, mostly from Malaysia who studied engineering and medicine. However, as a result of its current independent financial and policy, now state universities orientation are merely of benefit where bright students but poor are given limited access and seats, where in the future its reputation may be at stake.
Poll: Foreign Investors Control Over Indonesia Economy.
The poll held by Setara Institute of 800 respondents age of 17 to 22 in
May 2008 shows, that 60,8 percent believe that foreign investors took
control the Indonesian economy. The young generation suggested that
Indonesia as a nation must take over the control as President Evo
Morales of Bolivia did to his country particularly in oil mining. The
poll also shows low expectation of 57 percent domestic capability to
compete with foreign entrepreneurs, and of 50,7 percent did not agree
privatization of potential state enterprises. 56,85 percent respondents
also perceive there is an economy draw back in the last 10 years, proven
by 76 percent sees development are not for the poor and 60,9 percent
believe developments are not in concordance to the Indonesia
Constitution in protecting main natural resources and entities for the
people' prosperity. In foreign investment, however, an Indonesian
economist Chatib Basri from the University of Indonesia argued, that the
survey did not meet the review issued by a number of international
organization, OECD, IFC, and the world bank who considered Indonesia as
a close country for foreign investors due to its updated Investment Law
and negative list, ranked Indonesia at 135 out of 170 in open economy
Indonesia must Refuse WTO Agreement.
The refusal are based on the exclusion G33 of developing countries
represented by Indonesia as spokesman, during the WTO meeting in Geneva
ending 30 July. Transparency are the keyword where developing countries
must be involved during negotiation attended by G7 members Australia,
Brasil, China, European Union, India, Japan and the United States.
Indonesia on behalf G33 compelled 'Special Products` (SP) and `Special
Safeguard Mechanism` (SSM) to be accommodated in the modality draft for
agriculture to protect developing countries farmers at villages being
the least protected under the WTO Agreements in Agriculture. The WTO
mechanism under the scheme allows developed countries to pour big
subsidies to its farmers, subsidy not allowed by developing countries.
Further, the scheme of trade liberalization is also unfair where duties
differs. At the end, food defense are the most vulnerable for most
developing countries. However, disagreements between developed
countries, existed, such as India and China vs the US and EU.
France as member of the EU request EU's clarification and transparency.
The WTO meeting has been delayed for 7 years already due to a number of
Temasek Sell all of its Shares in Indosat Cellular Provider to Qatar. Following the lost at the appeal court, Temasek of Singapore then sold all of its shares to Qatar Telecom. Temasek and its 8 subsidiaries has been found by KPPU for conducting unfair business through direct and indirect ownership and management at 2 major cellular provider in Indonesia, PT Indosat and PT Telkomsel.
Temasek of Singapore lost the Case against KPPU. The award by the Indonesian Business Competition Commission - KPPU penalized 9 of cellular telephone operators in Indonesia for monopoly through share ownership at a number of cellular providers in Indonesia. The 9 companies are Temasek Holdings Pte Ltd, Singapore Technology Telemedia Pte. Ltd, STT Communications Ltd., Asia Mobile Holding Company Pte. Ltd, Indonesia Communications Limited, Indonesia Communications Pte, Singapore Telecommunications Ltd., and Singapore Telecom Mobile Pte. Ltd and PT Telkomsel. The KPPU award are that the 9 companies are found for breaching article 27 Law 5 year 1999 on Competition Law (for unfair competition), KPPU also ordered Temasek and its 8 subsidiaries to sell all of its shares at either PT Telkomsel or PT Indosat within 12 months, where prospective buyers must not have an afiliation with Temasek, and finally fines Temasek (and 8 subsidiaries) and PT Telkomsel to each pay fine of Rp15 billion. The Temasek then also found thier lost at the Appeal Court, where the award are tougher than the KPPU Award.
President Susilo Bambang Yudhoyono appoint Chairman for Institute for National Goods and Services Procurement. The said Institute under the National Development Body (Bappenas) will be staffed to continuously analyze, monitor and to secure the transparency and accountable government procurement. The institute and its appointment is drawn under the President Decision 34/M/2008, a complement to the previous President Decision 80/2003 of Government Goods and Services Procurement. The law has effectively curbed corruption, collusion and nepotism between government officer and brokers.o
Government of Egypt: 40% anti dumping measure dropped to Indonesian Tire Products. The initial complaint in August 2006 then was reduces into �a slight margin of dumping by the Indonesian exporters� after the WTO agreements the allegation and tax was recently lifted. During the investigations period, Indonesian tire export to Egypt hit US$ 70-80 million per year. Bit with dumping duties cut, the Indonesian tire exports to could easily reach US$ 1 billion mark. The new policy is expected to further enhance the bilateral cooperation and create new opportunities in a better environment for mutual businesses to develop and flourish. Bilateral trade between both countries over the last six years increased by more than 150 percent. With its 80 million people and promising economy, Egypt is an attractive market for Indonesia. The archipelago�s exports to Egypt reached $484.48 million in the first 10 month of 2007 and imports hit $40.57 million in 2006 during the same period.
Indonesian Industrial Court seen as Ineffective. The ineffectiveness in settling business-related disputes are caused by of a lack of technical guidance, according to Indonesian employers Association (ApindoAprindo pointed out numbers of ineffectiveness are those many essential points regulated in the law for the settlement of industrial relations disputes were neglected, unclear schedule of trials, uncomfortable working equipment, inadequate court buildings, improper remuneration and allowances received by ad-hoc judges and lastly unproven judges of knowledge of industrial relations, unavailable judges from district court as a presiding judge, an ad-hoc judge and a court minuter also had caused delays in case rulings then in turn would affect business people and their companies and adversely affected the investment environment. There were about 2.008 reports registered with the court since it took effect in January 2006.
Govt to pursue privatization despite global economy. The government plans to privatize 44 state companies this year, including 10 companies initially planned to be privatized last year. The plan raised critics from the House, where it concerns over current global economic conditions, particularly turbulence in global capital markets led by the US mortgage crisis is unfavorable for the privatization plan, and that the government would be unable to secure the best share prices. Member of the house also indicated that it was aimed merely at generating money to cover the government�s growing budget deficit, which is likely to reach Rp. 87.3 triliun in 2008, or about 2% og GDP. The divestment is expected to raise about Rp.15 triliun. Member of the house suggested the administration take a specific control mechanism to avoid state losses and also to maintain majority ownership in SOEs which fall under strategic national interests.