LOL, good point Alvin, sometimes they makes me wonder, what sort of governance they wanted to see. Its like they want Indonesia to be at their standard first before it actually investing. Too much talk i can say. They should see Malaysia, Singapore, China and Japan on how they're investing in Indonesia.

cheers

The UK's share of investment in Indonesia is as much as Japan, Singapore, Malaysia, and China combined. So, some other countries put their money where their mouth is. Most other European countries, on the other hand, don't.

I didnt know that the UK share of investment is almost the same with those countries i mentioned. Mostly in Oil and infrastructure project? What about the US? from what i heard they mostly investing in the equities and bond(s) market, cigarettes industry, shoes and t-shirt companies.

cheers

I don't know what UK invests in to be honest. I just got that information from Indonesia's Investment Coordinating Board's FDI information. The UK is also a huge investor in China and India. US is not a very major investor in Indonesia. Actually, the US is not a huge source of FDI in the world. Most of its investments go into the US because it has steady 3-4% growth.

The US actually has their own perspective of investment, it is by buying shares and take over an established company throughout the world. For instance is Mercedes Benz, Alibaba (which Ebay is trying to take over it.) and many more. But yeah, their FDI is quite small compare to the rest of the developed world.

cheers

That's a good point. I assume much of the foreign investment into the JSX over the last year has been from the US. Another big example for Indonesia, as you know, is Sampoerna.

The rupiah and JSX rebounded strongly today, I think we successfully averted a mini crisis..
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Indonesia Plans to Raise Fuel Prices in Early October (Update2)
Sept. 12 (Bloomberg) -- Indonesia's government will raise prices of gasoline and diesel in early October to help reduce soaring fuel subsidies and control its budget deficit.

President Susilo Bambang Yudhoyono, on a conference call from the U.S., ordered ministers to make preparations ``before a fuel price increase is in place in early October,'' Cabinet Secretary Yusril Ihza Mahendra said in Jakarta today. The size of the price increase hasn't been decided, he said.

Surging oil prices are draining Indonesia's finances as the government subsidizes fuel for its 238.5 million people, threatening to scuttle the budget deficit target. The government expects a reduction in subsidies will trim fuel demand, forecast to rise 7 percent in the second half, and dollar purchases.

``The market has been waiting for this,'' said Winang Budoyo, an economist at Mandiri Sekuritas, a unit of PT Bank Mandiri, Indonesia's largest lender. ``This is positive and provides certainty to the government's fiscal policy stand.''

The rupiah rose 1.5 percent to 10,066 against the dollar at 1:02 p.m. local time, the strongest since Aug. 24. The benchmark Jakarta Composite Index advanced as much as 0.8 percent, following the biggest weekly gain in 20 months last week.

The government may today win approval to cap fuel subsidies at 113.7 trillion rupiah ($11 billion) this year, Emir Moeis, chairman of parliament's budget commission, said on Sept. 8.

Yudhoyono last month forecast spending on subsidies may reach 138.6 trillion rupiah this year. On Aug. 31, he said Indonesia would hold off raising fuel prices till after October.

Protests

The government is wary of raising fuel prices too quickly because of concern the move may spark unrest among the nation's poor. An attempt to increase tariffs in 1998 contributed to protests that triggered the ouster of former President Suharto. In 2003, street protests forced Megawati Soekarnoputri's government to backtrack on plans to raise prices.

Indonesia raised prices of gasoline and diesel by about 29 percent in March. New York crude oil prices have risen 46 percent in the past 12 months, and 24 percent since March 1.

Oil prices fell 5 percent last week, the first decline in three. Crude oil futures in New York were little changed today at $64.18 a barrel after reaching a record $70.85 on Aug. 30. Indonesia is the only member of OPEC that is a net oil importer.

Gasoline prices in Indonesia are less than half the level in international markets, Energy and Mineral Resources Minister Purnomo Yusgiantoro said Sept. 5.

In August, the international price of 88 RON gasoline, the type that is subsidized by the government, was 5,700 rupiah (56 cents) a liter, Purnomo said. The government, through the state oil company PT Pertamina, sells the fuel at 2,400 rupiah a liter.

Cash Payments

Indonesia plans to pay about 4.7 trillion rupiah in cash to the nation's poor this year to compensate them for fuel price increases, Information Minister Sofyan Djalil said on Sept. 9.

The government plans to give 100,000 rupiah a month to 15.5 million families, Djalil said. Payments will be made to families earning less than 175,000 rupiah a month, helping people who will ``feel the most effect from the fuel price increase,'' he said. The proposal needs parliamentary approval.

``The President wants these cash transfers to be well monitored and that any problem in the implementation should be avoided,'' Mahendra, the cabinet secretary, said today.



To contact the reporters on this story:
Wahyudi Soeriaatmadja in Jakarta at
wahyudi@bloomberg.net; Soraya Permatasari in Jakarta at
soraya@bloomberg.net

Monday September 12, 3:24 PM
CHARTING ASIA: Indonesia Rupiah, Stocks Escape Crisis

By Andrew Torchia
A Dow Jones Newswires Column
SINGAPORE (Dow Jones)--Developments on the charts in recent days say Indonesia's forex and stock markets have escaped from the crisis of the past few weeks, and may well regain their pre-crisis levels before long.

Jitters over Indonesia's state finances and economic policy haven't completely disappeared. But after interest rate hikes, the government's pledge to raise domestic fuel prices and a pull-back in global oil prices, confidence has improved dramatically, and investors are again expecting fairly strong economic growth this year.

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There's even talk that the crisis may to some extent have been a blessing in disguise, by forcing the government to improve its policy coordination and make some badly needed economic reforms.

The charts reflect this. Down at 10085 on Monday afternoon, USD/IDR has cleanly broken support on last week's low of 10200; it's also retraced more than 61.8% of the rise from early August, even leaving the brief spike on August 30 out of the calculation. This retracement suggests strongly that USD/IDR isn't liable to resume rising sharply.

The drop implies USD/IDR will test minor underlying support at 10000 in coming days. There's a good chance of a break, which would target support on the shallow uptrend line from last November, now at 9800 (coinciding roughly with the 100-day moving average). Such a fall would bring USD/IDR very close to the early August low of 9725, which was hit before the crisis started building.

As long as the uptrend line from November holds, USD/IDR will remain in a gradual long-term uptrend - but there will be no reason to expect another rapid rise. Immediate underlying resistance lies at 10200; USD/IDR won't start looking strongly bullish again unless it breaks above last week's corrective high of 10605.

The charts for the Jakarta stock market tell a similar story. The Jakarta Composite Index, up 0.1% at 1099.535, appeared to form a new uptrend line from June 2004 when it bounced from the August 30 low of 951. The bounce was accompanied by a positive 10-day momentum divergence, another sign of a bottoming market.

Then in recent days, the index has triggered a reverse head & shoulders pattern formed by the August and September lows - a classic sign of the reversal of a downtrend. And it's risen above the 50% retracement of the plunge from the August peak.

Today, the index is testing major resistance at 1103 (the July trough and roughly the 61.8% retracement). Strong weekly oscillators (stochastics just staged a bullish crossover) say there's a good chance of this resistance breaking sometime in coming days or weeks. This would target in subsequent weeks at least 1160 (the objective of the reverse head & shoulders), and quite possibly the August peak of 1195.

Immediate underlying support lies at 1060, and the August low of 951 should be considered the floor for coming months, quite possibly longer.

Significant risks continue to surround Indonesia, but the charts say the markets have decided those risks no longer constitute a crisis.

- by Andrew Torchia, Dow Jones Newswires; (65) 6415-4013; andrew.torchia@dowjones.com

The rupiah and JSX rebounded strongly today, I think we successfully averted a mini crisis..


market relieved that government will raise the price of gasoline.

A question, everytime the prise of gasoline raised, does it AUTOMATICALLY reduce subsidy?

A question, everytime the prise of gasoline raised, does it AUTOMATICALLY reduce subsidy?

theoretically it will reduce the amount of money subsidized, but in practical it really depends on the global oil prices. If you cut the amount of subsidy 50% but the oil prices is raising up to 30%, then its just useless.

Btw the NYMEX crude oil is falling 7 dollars from its peak $70, because the IAEI and the US inventories predicted that the local and global demand of oil/gasoline will slump, following the katrina disaster and raising oil prices. I think that statement is working for now. In my opinion, why the oil prices keep raising, its not because the politics or iraq, but because we keep buying it.

cheers

Also important to note is that because Indonesia's automobile sales are growing at around 35% annually, even if prices were to stay totally flat the subsidy would likely increase around 20% annually because of increased crude oil demand. Over the next two years I imagine the Indonesian government will have no choice but to raise prices to the market level.

French, Chinese Investors to Build Indonesia's Trans Sumatra Railway

JAKARTA, Sept 13 Asia Pulse - The Indonesian government will award the contract to build Trans Sumatra Railway to Societe Nationale de Cheming de Fer Francois (SNCF) and an investor from China, an official said.

A local daily quoted Transport Minister Hatta Rajasa as saying the priority will be the construction of northern and southern parts of the 2,151 km track that will cost around US$7 billion.

The northern part will be awarded to the French company and the southern part to the Chinese investor, Hatta said.

The two investors have conducted feasibility studies for the project that will be operational in 2010, Hatta told legislators in a working meeting yesterday.

The operation of the track will facilitate distribution of goods and boost economic development in nearby areas, he said.

SNCF, which was awarded to built the part from Aceh to Medan in North Sumatra, built a railway track for coal transport in South Sumatra in 1982-1987.

Hatta said the central part of the track, to be used mainly for the transport of palm oil and coal, will likely be offered to Indonesian investors.

(ANTARA)

Read it...a very interesting article about tax reform
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Bottom line: Indonesian rubberocity
By Gregory Fossedal Sep 12, 2005, 14:06 GMT
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Indonesian President Susilo Bambang Yudhoyono decends down the stairs with wife Kristiani Herawati as he arrives at Lambert-St. Louis International Airport on St. Louis on September 11, 2005. (UPI Photo/Bill Greenblatt)

In less than a year since his election, Indonesia`s Susilo Bambang Yudhoyono has cut burdensome but politically sensitive energy subsidies, restored relations with Exxon and other international investors, fought off a run on the currency and reduced the legendary corruption of his nation`s bureaucracy. Oh, along the way, he responded to the death of more than 100,000 of his countrymen after December`s tsunami, with a skill that makes the U.S. federal and local governments look like they`re the Third World entities.


Now, 'SBY,' as the president is often called in the Indonesian media, faces the challenge that could make or break his country`s economy for years to come, and could cement a successful first term: tax reform.


Taxes and Emerging Markets


At first glance, and in the eyes of many analysts, Indonesia isn`t in desperate need of a tax rate cut.


The country`s top rate of tax on corporate and (more important) personal income are at 30 percent -- a tad lower than such countries as India and the Philippines, higher than Pakistan (with scheduled cuts), Singapore, and even developed Norway, Russia, and Hong Kong.

Furthermore, the country has what it thinks is a compliance problem -- only few Indonesians pay personal taxes, and the system accordingly generates few revenues compared to developed countries.

The flip side, of course, is that the system may, like a discount store still charging a higher price than Wal-Mart, be discouraging large firms from hiring, or people from starting small businesses, because of the burden of marginal rates and paperwork for compliance.

The latter is less important in highly developed legal systems, more important in countries (like Indonesia) with a history of officials using the tax code as leverage to extract what might be generously called 'bureaucratic rents.'

All of which makes it good news that SBY`s administration recently put forward a tax reform proposal that would cut rates for businesses and people by 5 percentage points. This came in combination with the central bank`s spirited defense of the currency -- at the president`s urging -- by enacting several consecutive interest rate hikes in recent weeks.

At the same time, the administration has begun to muse in public about further reductions in Indonesia`s grotesque oil subsidies, which still have gasoline selling at less than $2 a gallon. SBY slashed the subsidy by 30 percent in the spring and, revealingly, stuck with it through several tough days of opposition-orchestrated street demonstrations.

Markets evidently like the way policy is heading. In dollar terms, Indonesian stocks have rallied more than 15 percent off their August lows, hit as international oil prices spiked above $70 a barrel. This may be a signal to SBY that he can be even a little bolder on the tax front.


The Rubber Meets the Code

To complete the economic-growth tsunami they`re capable of, Indonesia`s people would benefit from, and might need, an even sharper tax rate reduction than the 5 percent now on the table. (The administration has emphasized it`s open to further improvement in its initial proposal from the legislature.) There are at least three reasons:


1. In Keynesian terms, Indonesian macroeconomic policy, and to some extent the burden of events, is relatively restrictive across the board. Indonesia has now tightened monetary policy, and tightened spending policy by reducing oil subsidies. It also faces a meteorological 'tightening' in the vast destruction of physical and human capital after the tsunami. This is mitigated by the flow of dollars from Australia and other countries, but as the administration saw with the run on the rupiah, this is not an unmixed blessing. Finally, Indonesia is suffering, as the world is, from high global energy prices, putting a crimp on businesses and consumers.

A tax cut would bring some needed relief to this austere picture. A bigger tax rate cut, more relief.

2. In classical or 'supply-side' terms, low-wage countries need very-low tax rates. Indonesia`s greatest resource is a vast pool of talented, hard-working, but relatively un-credentialed people.

To capitalize on this resource, it needs to reduce what the late Jude Wanniski used to call the 'wedge' between employers and workers. This is especially important where small business startups are concerned.

In Indonesia as elsewhere, small businesses do a lot of the hiring and (in effect) self-hiring. Yet they often pay taxes under the personal code. Tax rates, and the paperwork burden of complying with one or two codes, are a major factor in their activity.

Whatever adds to the business-labor wedge lowers the after-tax reward to workers and raises the cost of providing that compensation to employers or self-employers. This will tend to lower the rewards to labor in the formal sector relative to in the informal or barter sector.

To raise formal employment, low-income countries need an especially low tax rate and paperwork burden. To compete with other low-wage economies, they need sharply lower marginal rates, not rates that are 'good enough.' The countries with rapidly growing employment, wage, and investment income in recent years include Russia, Latvia, Ghana, Pakistan and Hong Kong. Not by coincidence, all have cut personal tax rates substantially, and most have a top rate in the range of 13 percent to 20 percent.

3. Indonesia needs to drain the corruption swamp. SBY has already cleaned out staff, revised relations with businesses under the regulatory squeeze, and changed the tone of the judicial branch. But a very efficient way to further curb the power of some officials is to reduce the money in their pockets -- and, especially, to reduce the leverage they have over taxpayers. The higher tax rates are, the more leverage officials throughout the bureaucracy have. The lower they go, the less daunting the tax stick is.

A Policy Rule of Thumb

My own general guideline for policy-makers, all over the world but especially in emerging markets, is to act decisively, and make your country something special. Indonesia, like other developing countries, poses a lot of risks to investors, from its still-imperfect legal system to the threat of future tsunamis. It helps to have a strong, simple, core selling point to attract interest.


By my calculation, the entire personal income tax code collects less revenue than the government (still) pays out in energy subsidies. One striking solution to these twin disincentives would be to eliminate both.

Imagine investors, factory managers, and talented people, picking up their Jakarta Post or The New York Times, and reading the following headline:

'Indonesia abolishes personal income tax.'

In cash flow terms, wouldn`t this merely 'balance' out, taking the same amount of money away from consumers and producers as the ultimate tax cut put back? Yes, in those terms, it would.

But notice the difference in incentives. Energy consumption would be more costly, and would decline.

Investment in energy conservation would surge. Most important, the rewards for working would go up, and the cost of hiring or self-hiring, go down.

If that suggestion is too much, Indonesian tax rates on personal income should at least be brought into line with the countries of Asia and Eastern Europe that Indonesia needs to compete with. That means a top rate of, oh, 15 percent: halving the current marginal tax burden.

This policy mix would still buy a lot of oil-subsidy relief, lift employment, curb energy consumption, and reduce bureaucratic corruption, all in one swoop.

Indonesia rupiah breaches 10,000 mark to 3-wk high

SINGAPORE, Sept 14 (Reuters) - The Indonesian rupiah edged past the psychologically important 10,000-per-dollar mark on Wednesday, gaining ground on the back of improving investor confidence after this month's tightening in monetary policy.

The rupiah gained more than half a percent from late Asian trading on Tuesday and was quoted at a three-week high of 9,988 per dollar. The currency has gained more than 17 percent since hitting a four-year low of 11,750 on August 30.

Jakarta's benchmark stock index has recovered almost 14 percent over the same period after the central bank moved to calm financial markets by raising its key rate by 125 basis points, and required banks to park a greater share of deposits as reserve with the central bank in a bid to tighten money supply.

oh my godness! Keynesian.. luv him, just done my Econs Exam today! huhhh.. buhbyee econs~~~~~ no more keynesian, no more tightening/easy mp&fp hhahhahaha

thank godness for the rupiah thoughhh..

this would be a bold move.................

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Indonesia May Increase Fuel Prices by 50% in October
Sept. 14 (Bloomberg) -- Indonesia's government may raise fuel prices by at least 50 percent in October as soaring subsidies threaten the budget deficit target, Planning Minister Sri Mulyani Indrawati said.

``I think the minimum is going to be 50 percent'' and prices will be raised further to cover costs within 36 months, Sri Mulyani said in an interview. The government is debating the decision to minimize the effect on the poor while aiming for a deficit of no more than 1 percent of gross domestic product.

President Susilo Bambang Yudhoyono needs to raise fuel prices, currently less than half import costs, to reassure investors who sold the nation's currency and stocks last month because of concern about a ballooning deficit. He faces opposition from consumers after promising that a 29 percent jump in fuel prices in March would be the last this year.

``The fuel subsidy issue risks causing a lot of social unrest in Indonesia,'' said Michael Coleman, who manages about $30 million of assets including petroleum at Singapore-based hedge fund Aisling Analytics Pte. ``The government can't go cold turkey at one go. The subsidies will have to be removed, but I'd expect a gradual removal.''

A fuel price increase will help the government cap its budget deficit at 25.1 trillion rupiah, or 0.9 percent of GDP, Amin Said Husni, chairman of the parliamentary panel in charge of debating fuel subsidies, told reporters yesterday. He didn't say how big the fuel price increase would be.

In June, the government budgeted a deficit of 20.3 trillion rupiah, or 0.8 percent of GDP. At the time, it estimated the cost of fuel subsidies would rise to 76.5 trillion rupiah this year. The subsidy bill may reach 138.6 trillion rupiah ($13.8 billion) this year, Yudhoyono said Aug. 31.

Rupiah's Decline

Indonesia's rupiah has declined 8.1 percent this year after crude-oil prices rose to more than $70 per barrel. Higher oil prices increase the cost of government-funded fuel subsidies and force oil importers to buy more dollars to pay for the commodity.

The currency fell as much as 8.9 percent on Aug. 30, while stocks fell as much as 6.5 percent on Aug. 29, prompting Yudhoyono to pledge a reduction in fuel subsidies. The central bank meanwhile raised its benchmark interest rate three times, by a total of 1.5 percentage points, to make the currency more attractive against the dollar.

The government plans to raise fuel prices in early October, Cabinet Secretary Yusril Ihza Mahendra said Sept. 12. The government expects to save between 18 trillion rupiah to 25 trillion rupiah from raising fuel prices in October, Sri Mulyani said yesterday.

Hundreds of bus drivers, vendors and factory workers staged a protest in Jakarta on Sept. 4 against the plan to raise fuel prices. An attempt to increase tariffs in 1998 contributed to protests that triggered the ouster of former dictator Suharto. In 2003, street protests forced Megawati Soekarnoputri's government to backtrack on plans to raise prices.

Preempt Protests

To preempt further protests the government plans to give cash compensation to 15.5 million families before raising fuel prices. The government will start paying 100,000 rupiah to families earning less than 175,000 rupiah a month from Oct. 1, Sri Mulyani said. The amount of payment is based on the assumption that a family of five uses 4 liters of kerosene a month per person, she said. Indonesia caps kerosene prices at 700 rupiah or about a 10th of the global price.

The idea is to make raising fuel prices ``politically palatable for people,'' Sri Mulyani said. To ``preempt the political risk of this policy, we designed the direct subsidy for the poor to compensate the increase in kerosene price. No one really dared to touch this commodity.''

The amount will also help the poor tackle faster inflation after the increase in fuel prices, she said. The government expects inflation may accelerate by as much as 5 percentage points after the increase in tariffs.

Consumer Prices

Indonesian consumer prices rose 8.3 percent in August after increasing 7.8 percent in July. Indonesia's inflation rate reached a 26-month high of 8.8 percent in March after the government boosted fuel prices.

``Inflation is our main concern as it's certainly going to push the cost of services, prices of food, goods higher,'' said Muhammad Hanif, who helps manage the equivalent of $902 million of assets at Danareksa Investment Management in Jakarta. ``The central bank rate will likely be above 10 percent, thus hurting bond prices.''

In Malaysia and Thailand, governments are cutting fuel subsidies to ease their financial burden as crude oil costs surged to records. Oil has risen 46 percent in New York this year, more than the 34 percent gain last year and the 4.2 percent in 2003.

The government is counting on higher fuel prices to slow demand. Indonesia's fuel demand may reach 65.6 million kiloliters this year, 10 percent higher than the initial forecast of 59.6 million kiloliters, Ari Soemarno, director of trading and marketing at the state oil company, PT Pertamina, said on Sept. 5.

Pertamina's Prices

PT Pertamina, Indonesia's state oil company, sells 88 RON gasoline, the type that is subsidized by the government, for 2,400 rupiah, or 24 cents, a liter. In Singapore, 92 RON gasoline, the poorest-quality available, cost 48 cents a liter yesterday. Pertamina sells diesel for 2,100 rupiah, or 21 cents, a liter, compared to 45 cents a liter in Singapore, Asia's biggest oil-trading center.

Indonesia sells kerosene for as little as 700 rupiah (7 cents) a liter for households and individual consumers, compared to 47 cents a liter in Singapore, based on Bloomberg data.



To contact the reporter for this story:
Arijit Ghosh in Jakarta at aghosh@bloomberg.net;
Wahyudi Soeriaatmadja in Jakarta at (62) wahyudi@bloomberg.net.
Last Updated: September 13, 2005 23:12 EDT

50%?!??!!!?!?!? godness!!!! is indonesia tryna follow other developed countries??!?!?!!? crazyyyy but it's good for that govt yeAh..

50% increase doesnt mean it will level the current market price in developed countries, 50% increase means 3,600 rupiah, still below other developed countries, which approx around 8-9000 rupiah/litre.

cheers

50% increase doesnt mean it will level the current market price in developed countries, 50% increase means 3,600 rupiah, still below other developed countries, which approx around 8-9000 rupiah/litre.

cheers

I think 50% would send the correct signal to the market that the government is serious about getting rid of those inefficient subsidies. People should be educated about the evils of these subsidies and the poorest should be supported. In the long term, this is good for Indonesia.

Wednesday September 14, 10:50 AM
INTERVIEW:Indonesia Fuel Price Rises Won't Hurt Econ:IFC

By Phelim Kyne
Of DOW JONES NEWSWIRES

JAKARTA (Dow Jones)--The Indonesian government's plan to slash fuel price subsidies and hike fuel prices later this year likely won't affect the country's economy severely, a senior International Finance Corp. executive said.

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Indonesia is likely to avoid an inflationary shock because numerous industries have already begun raising prices in anticipation of the subsidy cut, IFC Indonesia Country Manager German Vegarra told Dow Jones Newswires in an interview recently.

The IFC is the World Bank's private sector lending arm.

"What we've seen is a lot of prices have already adjusted (upward) on some of the goods consumed by Indonesians," Vegarra said.

"So our expectation is that consumption won't be hit as dramatically as people expect, simply because a lot of the prices are (already) being adjusted and a lot of the industries are operating under market conditions."

Bank Indonesia Governor Burhanuddin Abdullah said last week that inflation might hit 9.0% in 2005, outpacing an official target of 7.5%. Inflation reached 8.33% on year in August, accelerating from July's 7.84%.

Indonesia needs to slash budget-busting fuel price subsidies which President Susilo Bambang Yudhoyono warned last month could cost the government IDR138.6 trillion. Fuel price subsidies bled government coffers of $7.4 billion, or 3% of gross domestic product, in 2004.

Indonesian ministers will likely submit to Yudhoyono later this month a proposal to slash fuel price subsidies by an average of 40% by end-2005 and phase in additional fuel subsidy cuts throughout 2006 to bring prices at the pump on par with those on the international market, a government official told Dow Jones Newswires Monday.

The first round of subsidy cuts will occur in early October, Minister/State Secretary Yusril Ihza Mahendra told reporters Monday, quoting President Yudhoyono's comments during a cabinet meeting he led via teleconference from the U.S. earlier Monday.

Indonesia Rate Hikes Will Boost Risk Management

The government has allocated IDR4.8 trillion in income support payments for three months from October to cushion the impact from the fuel subsidy cut on 15.5 million lower-income families. That figure will rise to IDR25 trillion in 2006.

Those support payments aim to avert the possibility of potentially politically-destabilizing public protests against the fuel price hikes similar to those that plagued Yudhoyono's predecessor, Megawati Sukarnoputri.

"It's very important the government takes necessary measures to protect the poor...and the World Bank is working with (the government) to provide technical support to develop the right compensation," Vegarra said.

Vegarra said recent increases in the central bank's benchmark interest rate may spur improvements in the Indonesian bank sector's corporate risk management levels that will outweigh the potential negative economic impact of those rate hikes.

That most recent increase occurred last week when the central bank raised its benchmark Bank Indonesia rate 75 basis points to 9.50% as part of a series of monetary policy measures to stem a recent-record high surge in the U.S. dollar. The Bank Indonesia rate could hit 10.5% by the end of the year, analysts say.

Some analysts have cautioned that the rate hikes could stifle domestic consumption critical to the government's economic expansion target of 6.0% in 2005. That projection outpaces the 5.4% gross domestic product growth in 2004.

"I think we can expect some reduction in the amount of credit...but more because creditors will be more careful about extending loans and doing their due diligence," Vegarra said.

"The positive side of this mini-crisis is we were seeing some perhaps unhealthy credit practices by some companies...(so) it was a timely crisis because risk management has become a key area."

You know what funny about all of these payment for the poors which has 175,000 rupiah salary per month. Today in news article, there is a survey regarding which family is accountable for such subsidies. The answer is only 0,1% because in Jakarta alone, 175K rupiah/month family will never survive the tough jakarta's economy life.

The news article mentioning about the garbage collector in Jakarta and he said that he can get around 500K rupiah per/month. Wow..quite amazing for a garbage collector. I think the government should give 100k a month to family with 500k less income, not the 175k, simply because it doesnt exists that much.

cheers

The problem is that even if they cut susbidies by 50%, they are just cutting the excess increase in subsidies over last year. It's not like they will be getting extra money, it will only be reducing the deficit from about 2% of GDP to 1%. If they wait until late October, the bill is still going to be about $11 billion for 2005. They're not going to get any exta funds to disperse to the poor.

However, if they decrease subsidies by another 25% in early 2006 and have an increase in revenues, only in the 2007 budget will there be visible increases in development spending and assistance for the poor. Just a sad situation, but because SBY has a PhD in economics I'm hoping he can come up with a good plan that will be in place for the 2006 budget that will be pouring billions of dollars into development programs rather than in subsidizing fuel.

Domest consumption still booming...

---

Indonesia's August vehicle sales jump 31 pct yr/yr

JAKARTA, Sept 15 (Reuters) - Indonesia's domestic vehicle sales rose 30.8 percent in August compared with the same month of 2004, the fastest annual pace since March despite higher interest rates and a weakening rupiah, industry data showed on Thursday.

The country's largest automotive distributor, PT Astra International Tbk , said based on data provided by Gaikindo, the Indonesian automotive industry association, there were 50,608 vehicles sold by all brands in Indonesia, up from 38,680 units in August 2004.

Last month's sales were the highest volume since May and brought total sales for this year to 395,774 units. The industry target for this year's domestic sales is 550,000 units.

Including exports, total vehicle sales reached 60,040 in August and 453,566 units for the year so far.

Record low interest rates and a generally positive economic outlook had encouraged Indonesians to buy cars at a record pace in the past few years.

But some analysts had expected a decline in the pace of domestic sales this year due to rising interest rates and the weak rupiah currency, which hit four-year lows last month.

Government plans to cut its ballooning fuel subsidy bill later this year will result in higher pump prices for petrol and diesel and that could hurt car sales, they said.

If you watched today's opening bell of NYSE (dowjones) then you know who opened today's trading. Its our own Mr president SBY!

Cheers

Wow, cool. I didn't see. :(

http://us.news3.yimg.com/us.i2.yimg.com/p/ap/20050915/capt.nyr10309151517.wall_street_indonesia_nyr103.jpg

Wow, damn I missed it..

From Bisnis Indonesia today:
Cabinet is discussing fuel subsidies for the year, there are two options:
1. capping it to Rp113 trillion - this will cause 1.7% deficit.
2. capping it to Rp89 trillion - 0.9%.

Govt is leaning to the latter, whereas the parliament recommended the former.

Apparently under one scenario (presumably the latter), minyak tanah untuk rumah tangga (cooking oil for households) may rise by 100%....this would be quite risky...
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Harga BBM naik rata-rata 50%

JAKARTA: Persentase kenaikan harga BBM bulan depan diperkirakan rata-rata 50%, lebih besar dari kenaikan terakhir pada Maret 2005 yang rata-rata 29%.
Menneg PPN/Kepala Bappenas Sri Mulyani Indrawati menyatakan pemerintah mempertimbangkan salah satu skenario kenaikan harga bahan bakar minyak (BBM) rata-rata minimal 50%.

"Kenaikan [harga BBM] rata-rata minimal 50% itu salah satu base line scenario. Pokoknya implikasi dua alternatif defisit APBN yang direkomendasikan Panitia Anggaran DPR masih harus dibahas di Sidang Kabinet. Sementara bapak [Presiden] masih di luar negeri," ujarnya seusai berbicara dalam Temu Koordinasi Nasional Pengarusutamaan Gender Tahun 2005, di Jakarta, kemarin.

Panja A Panitia Anggaran DPR merekomendasikan dua alternatif defisit APBN tahun ini, yaitu 1,7% dan 0,9% dari PDB (produk domestik bruto), yang ikut menentukan bisa atau tidaknya pemerintah menaikkan harga BBM pada Oktober.

Alternatif pertama, plafon subsidi BBM tetap diberikan sekitar Rp113,7 triliun. Konsekuensinya, defisit APBN akan mencapai Rp46,3 triliun atau setara dengan 1,7% dari PDB.

Alternatif kedua, pemerintah dan DPR menyepakati besaran subsidi Rp89,2 triliun sehingga defisit menyusut ke level 0,9% dari PDB atau setara dengan Rp25,1 triliun.

Menanggapi keputusan DPR itu, Menneg PPN/Kepala Bappenas Sri Mulyani Indrawati memastikan bahwa pemerintah akan berupaya mempertahankan defisit di bawah 1%.

Bahkan Mulia P. Nasution, Dirjen Perbendaharaan, Departemen Keuangan, menegaskan pemerintah memilih besaran Rp89,2 triliun daripada Rp113,7 triliun yang diusulkan DPR.

Langkah itu diambil untuk menekan defisit APBN tahun ini guna mengejar target defisit sebesar 0,9% dari PDB.

Ikhwal kenaikan harga BBM bulan depan, yang persentasenya lebih tinggi dibandingkan dengan kenaikan pada Maret 2005, juga diisyaratkan oleh PT Pertamina.

Direktur Pemasaran dan Niaga PT Pertamina Ari H. Soemarno menuturkan pemerintah tengah menghitung kenaikan harga minyak tanah untuk rumah tangga, yang lebih dari 100% dari harga saat ini sebesar Rp700 per liter.

Selain itu, premium dan solar bersubsidi juga akan disesuaikan harganya di kisaran Rp4.000-5.000 per liter dari harga saat ini yang masing-masing hanya Rp2.400 dan Rp2.200 per liter.

Namun saat dikonfirmasi mengenai pernyataan Wakil Presiden Jusuf Kalla dan kajian yang dilakukan Sri Mulyani tentang kenaikan harga BBM mendatang paling realistis mencapai 50%, Menteri Energi dan Sumber Daya Mineral Purnomo Yusgiantoro enggan menanggapinya.

"Yang pasti, kami selalu konsultasi dengan Wapres. Dan beliau menyatakan what's wrong with antrean. Antrean terjadi sama dengan orang nonton bioskop yang antre. Point message-nya adalah pertimbangan yang lebih makro daripada pertimbangan karena munculnya kelangkaan terjadi kenaikan [harga]."

September 15, 2005 23:16 ET

Telkomsel: Indonesia Mobile Mkt May Grow To 80M In 2006

SINGAPORE (Dow Jones)--PT Telekomunikasi Selular, Indonesia's biggest mobile phone company by market share, expects the country's mobile market to number 80 million customers in 2006 compared with 55 million to 60 million currently, Chief Executive Kiskenda Suriahardja said Friday.

Telkomsel is aiming for about 25 million mobile customers by the end of 2005 and expects full year revenue and earnings before interest, tax, depreciation and amortization to grow about 30% from the previous year, he told reporters at a briefing.

Friday September 16, 6:30 PM

Indonesia fuel prices could rise 70-80 pct -VP

JAKARTA, Sept 16 (Reuters) - Indonesian domestic fuel prices could rise by 70 to 80 percent when the government hikes the cost of the heavily subsidised resource next month, Vice President Jusuf Kalla said on Friday.
His comments came as Planning Minister Sri Mulyani Indrawati told reporters there was a "big chance" the rise would be more than 30 percent, adding to public confusion over the increase.

The government has said the hike will come in early October but has yet to state by how much the sensitive prices will rise.

"It is said that it will be a minimum 50 percent. It could be 70 or 80 percent," Kalla told reporters during a visit to the resort island of Bali when asked about the increase.

President Susilo Bambang Yudhoyono has promised to raise fuel prices gradually to wean Indonesians off Asia's cheapest gasoline at 20 U.S. cents a litre and to cut fuel subsidies that eat up a large chunk of the budget.

Indonesia has been forced to sell rupiah for dollars to pay for oil imports, depressing the local currency as well as hurting the economy and the budget as world oil prices soared. ADVERTISEMENT



Concerns over oil costs forced the rupiah to a four-year low of 11,750 per dollar on Aug. 30, prompting the central bank to raise interest rates sharply to support the currency.

Officials have been racing to get a compensation package for the country's poorest in place ahead of the fuel hike.

A senior official at the statistics bureau said it had completed 90 percent of a census of those who would qualify for compensation and should be finished by the end of September.

The bureau is collecting details on the poor to pave the way for the government to disburse 100,000 rupiah ($9.86) in cash per month to 15.5 million poor families, equal to some 62 million people or more than a quarter of Indonesia's population.

SUBSIDIES

Separately, the Finance Ministry's treasury director general, Mulia Nasution, told reporters the government had disbursed 78 trillion rupiah ($7.7 billion) worth of fuel subsidies so far this year.

The government and a parliamentary commission are deliberating on a revised figure for 2005 fuel subsidies, with officials and legislators saying the amount would likely be set at 89.2 trillion rupiah. The government had previously said subsidies could reach as high as 138.6 trillion.

Swiss Bank UBS said in early September that Indonesian fuel prices were 25 to 30 percent of world prices. Based on that, prices would need to rise 233-300 percent to reach world parity.

A big rise in fuel prices in May 1998 triggered rioting that was a factor in helping topple former autocrat Suharto. Yudhoyono raised fuel prices by an average 29 percent in March, sparking protests, although there was little violence.

Kalla said Indonesia's poor did not benefit too much from subsidised fuel.

"Who gets the subsidy? Those who use fuel, who own cars, hotels, air-conditioners and who utilise electricity. People who have high incomes," he said.

"Little people only use kerosene and do not have air-conditioners or cars." ($1=10,140 rupiah)

Although the writers is simplifying his case, I agree with him with his main thesis.

The Case for Cutting Indonesia's Fuel Subsidy
By Christopher Lingle

The Indonesian rupiah has lost more than 5% of its value against the US dollar this year and is at its lowest rate since March 2002. Perhaps the single most important cause of the weakness is the Indonesian government's subsidies on petrol prices. Pump prices are 2,400 rupiah (24 US cents) per liter. The cost of the subsidy now exceeds $14 billion and will constitute about a third of the estimated spending by the central government this year.

With international oil prices at around $65 per barrel, the primary beneficiaries in Indonesia of this largesse are likely to be fuel smugglers and corrupt officials who allow fuels to be bought at low prices locally and sold at higher prices in foreign market.

Despite high global crude prices, the demand for domestic consumption of fuel remains high. Import costs and opportunity costs have both risen sharply. Because domestic oil output is down due to a lack of new investment, Indonesia has become a net importer of crude and the demand for dollars to fund imports further weakens the rupiah.

Subsidizing the prices of automotive diesel, industrial diesel, and kerosene for industries is a failure of political governance. It places an enormous burden on the state budget and creates opportunities for corruption. Continuing such subsidies will make it difficult for the government to maintain a healthy budget or promote sustainable economic growth. Raising fuel price is actually in the true interests of the vast majority of Indonesians. Failure to do so is a classic instance of politicians choosing political expediency over economic reality.

Reducing subsidies for any goods or services is always a problematic political issue (which should be a good reason for never implementing them). Faced with higher costs in the short-run, politicians inevitably avoid immediate pain even when long-run gains would be substantial. An April 2000 plan to raise fuel prices was scrapped after massive demonstrations against the proposed increases.

But governments must be determined to educate their general public on basic facts to help minimize the inevitable unrest following subsidy cuts.

In this case, the primary beneficiaries of government subsidies on the sale of refined petroleum products (BBM -- Bahan Bakar Minyak) are not the poor. Instead, many of the beneficiaries are those whose income places them well in the middle class or higher and who drive about in large cars.

Furthermore, most of the financial gains from subsidies go to industrial users. While households consume 20 percent of kerosene, the remaining 80 percent goes to industry. Since many of the companies receiving advantages from BBM are exporters, foreign buyers of their products constitute a large but undeserving group of beneficiaries.

In this form, BBM is a form of "corporate welfare" that harms the poor because public funds are diverted from programs that might offer substantially greater benefits to lower income groups, such as improved public transport systems or better schools.

From an economic point of view, there are opportunity losses due to the government not selling refined products at the current high prices. Such sales would yield more dollar earnings and assist in propping up the beleaguered rupiah and strengthening the overall economy.

And then there is the matter of smuggling. The presence of large price differentials in neighboring countries presents a lucrative temptation for smugglers to buy at low, subsidized prices in Indonesia and then sell offshore for considerable profits. These returns are high even when factoring in the bribes that are paid to corrupt officials with Pertamina, the fiscal authorities, customs officials or naval personnel. It is bad enough that smuggling benefits corrupt officials and criminals, but such operations result in Indonesian taxpayers extending a subsidy to foreigners who buy from the smugglers!

Regardless of street demonstrations and denunciations by various groups, steps must be taken to reduce BBM and eventually eliminate it. This will be important in allowing the central government to gain control of its budget by reducing a major source of deficits and mounting debt.

Meanwhile, delaying price increases means that the subsidy burden on the central government will continue to grow. As it is, BBM subsidies for refined petroleum products exceed by almost three times non-BBM subsidies on items like food, electricity, and other items.

Low prices for fuels also have environmental consequences. Much of the air pollution that plagues Jakarta and other large cities arises from low prices that encourage waste and encourage private vehicle use instead of encouraging use of public transit systems.

There is a widespread public misconception that foreign companies are exploiting most of the wealth and profits from Indonesia's oil and gas industry. However, Pertamina takes an average of 85 percent of the profits and some part of these funds disappears through corruption. Allegations have been made that Pertamina and military officials have smuggled subsidized fuels to other countries.

BBM has the perverse effect of rewarding the wealthy, damaging the environment, reducing costs for rich enterprises, and providing benefits to foreigners at the expense of locals!

Professors and students should denounce this corporate welfare and these transfers to the rich that also provide gifts to citizens of neighboring countries. Instead of manning barricades to protest against a reduction in fuel subsidies, time would be better spent finding better ways to spend scarce public funds, increasing economic production and reducing the corruption associated with the fuel subsidies.

Telkomsel to enhance network in Indonesia
By Andrea Tan Bloomberg News

SINGAPORE Telekomunikasi Selular, Indonesia's biggest mobile-phone operator, has said it plans to spend $850 million, 21 percent more than its earlier estimate, to expand its network and add customers.

Also known as Telkomsel, the company is expanding outside the main island of Java, where mobile usage is low, to attract new users. The Jakarta-based company, which offers stored-value cards and the option of monthly bills, has trimmed prices and sold cheaper cards to first-time users to gain more customers in a country where half of the residents live on less than $2 a day.

Telkomsel has to compete with entrants like Hutchison Telecommunications International, Telekom Malaysia and Maxis Communications, which have invested in Indonesia's mobile phone market. Eight companies, including Hutchison's Cyber Access Telecommunications and Maxis's Lippo Telecom, are vying for a share in a market where fewer than 20 percent of the people own a cellphone.

"The competition will get more competitive," the Telkomsel president director, Kiskenda Suriahardja, said in a telephone interview Thursday. "But network roll-out and coverage is very important to cellular users, and we're doing that aggressively."

Telkomsel expects to surpass its goal of 25 million users this year by 10 percent and to grow 30 percent next year even as competition increases, said Suriahardja, who joined Telkomsel in March. Telkomsel had 16 million users last year, 67 percent more than the previous year.

Indonesia's cellphone users are set to increase to 45 million by the end of the year, according to the association of Indonesian cellular operators. The number may grow to about 79 million users by 2007, according to Morgan Stanley, making Indonesia the fourth-largest mobile phone market in Asia.

"The existing players are likely to sustain their positions, at least in the near term, as the market's strong growth offsets the impact of rising competition and foreign investment," Anna Ho and Jeffrey Lam, analysts at Moody's Investors Service, wrote in a report issued Friday.

Telkomsel's bonds are rated Baa2, the lowest investment grade.

Faster economic growth is driving demand for cellular services in Indonesia. The $258 billion economy grew 5.1 percent last year and is expected to expand 6 percent this year, according to government forecasts, which would be its fastest pace since 1996.

Telkomsel controls more than half of Indonesia's cellphone market. Indosat, the nation's second-largest phone company, has about one-third and Excelcomindo Pratama has about 11 percent, Suriahardja said.

"We won't have to cut prices more" to attract users, Suriahardja said. "Indosat's more aggressive now and has the same strategy as us, but we were here first."

Telekomunikasi Indonesia, the nation's biggest phone company, owns 65 percent of Telkomsel. Singapore Telecommunications holds the rest.

Telkomsel in July reported a 57 percent jump in net income to 3.79 trillion rupiah, or $367 million, for the six months that ended June 30, citing an increase in subscribers. The company expects sales and earnings before interest, taxes, depreciation and amortization to grow by 25 percent to 30 percent this year.

Indonesia will invite phone companies to bid in November for rights to operate high-speed wireless, or 3G, services. Telkomsel received a trial, six-month 3G license from the government in May to test the technology.

Indonesia previously had granted 3G licenses to Natrindo Telepon Selular, which operates Lippo Telecom, and Hutchison Telecom's Cyber Access Communications.

Telkomsel's 3.8 million subscribers who use mobile data services will be the company's "first priority" in the upcoming 3G contest, Suriahardja said.

Still fast...


Indonesia's Economy Predicted to Grow 5.8 PCT This Year

JAKARTA, Sept 19 Asia Pulse - The country's economy will expand by around 5.8 per cent this year falling short of the 6 per cent target previously set by the government, State Minister for National Development Planning Sri Mulyani Indrawati predicted.

Sri Mulyani told the Kompas daily the target may not be reached this year because of the oil price hike and falling value of the rupiah.

She predicted inflation will also increase with the increase in the bank interest rate lately.

Chatib Basri, an economist from the University of Indonesia, said fuel price hikes planned next month and increase in bank interest rate will also slow down investment flows to he country.

In the first half of this year, the domestic economy grew 5.9 per cent.

(ANTARA)

Investment numbers for August have been released (am I late?).

Foreign direct investment realization from Jan-Aug 2005 is $7.22 billion compared to $2.71 billion in the same corresponding period last year.

Domestic investment realization from Jan-Aug 2005 is Rp 11,061.6 billion compared to Rp 9,628.0 in the same period last year.

FDI approvals from Jan-Aug 2005 were $7.28 billion along with $2.11 billion expansion investment approvals. FDI approvals are 73% higher than last year.

Domestic investment approvals showed a marginal increase from Rp 31,640 billion last year to Rp 33,286 billion this year.

---

Hmmm, investment realization is surging but it looks like approvals have started to taper off because of recent circumstances.

http://us.news3.yimg.com/us.i2.yimg.com/p/ap/20050919/capt.jak11109191034.indonesia_rupiah_jak111.jpg?x=380&y=268&sig=Snrpm0037iLxNenIU_ER3A--

http://img293.imageshack.us/img293/1176/100008ym.jpg
http://img293.imageshack.us/img293/8292/500009ep.jpg

Investment numbers for August have been released (am I late?).

Foreign direct investment realization from Jan-Aug 2005 is $7.22 billion compared to $2.71 billion in the same corresponding period last year.

Domestic investment realization from Jan-Aug 2005 is Rp 11,061.6 billion compared to Rp 9,628.0 in the same period last year.

FDI approvals from Jan-Aug 2005 were $7.28 billion along with $2.11 billion expansion investment approvals. FDI approvals are 73% higher than last year.

Domestic investment approvals showed a marginal increase from Rp 31,640 billion last year to Rp 33,286 billion this year.

---

Hmmm, investment realization is surging but it looks like approvals have started to taper off because of recent circumstances.

Nice figures....

Indonesia-Exxon oil deal one step to woo investors
Mon Sep 19, 2005 6:16 AM ET

By Muklis Ali and Harry Suhartono
JAKARTA (Reuters) - Indonesia has restored a measure of investor confidence by finally clinching a $2 billion oil deal with U.S. giant Exxon Mobil Corp., but must do more to boost the investment climate to stem its declining oil output.

The government signed a contract at the weekend with state oil firm Pertamina and Exxon, ending a four-year dispute over developing the biggest oil find in years in the Asia-Pacific region's only OPEC member.

The deal, one of the country's biggest investments in years in any sector, is a welcome relief at a time when skyrocketing global oil prices and declining domestic output have battered the economy and seen the rupiah slide to four-year lows.

But with first oil at least three years away, the most immediate benefit will be aiding the cash-strapped country's effort to regain favor with foreign investors put off by graft, a maze of red tape and restrictive labor regulations.

"This shows that the government has the good intention to attract foreign direct investment, and at the presidential level intervention can be done if necessary," said Fauzi Ichsan, an economist at Standard Chartered Bank.

The government of President Susilo Bambang Yudhoyono, elected last year partly on pledges to stimulate the economy with fresh investment, had ordered officials to push through a deal, despite resistance from the management of Pertamina.

But Fauzi warned that such action could give the impression that government intervention is needed for deals to succeed.

Analysts said the deal should support the rupiah, which has strengthened in the past week to around 10,165 against the dollar, but on its own would only have a short-term impact.

"For the rupiah itself, it's all about confidence at this point, so this kind of news about foreign investors committing to Indonesia should be supportive," said Song Seng Wun, an economist at CIMB-GK in Singapore.

"Hopefully this will be the first of many agreements and (more) investor interest."

Pertamina had decided last year not to extend the contract for Exxon Mobil for the Cepu block development after it expired in 2010. That decision was made after Exxon, using advanced techniques, determined in 2001 that potentially massive reserves existed at Cepu.

It has been negotiating ever since to extend the contract and begin development and actual production.

NO FIX FOR DECLINE

Jakarta estimates Cepu block on Java island could hold more than 500 million barrels of oil and could bolster Indonesia's production by as much as 180,000 barrels per day (bpd), equivalent to about 19 percent of the country's current output.

The deal is also important for Exxon Mobil as oil majors find it increasingly difficult to secure access to new reserves to replace their production at a time when many producing nations reassert control over their assets.

"We appreciate the efforts of the government of Indonesia to reach a resolution which recognizes not only the investor's contractual rights, but also the risks taken and large investments already made," Exxon said in a statement.

While a welcome boost for future production, Cepu alone is unlikely to turn back the 5 percent-plus decline rate in Indonesia's older oilfields.

With domestic demand stimulated by cheap prices and output in decline, Indonesia has struggled to remain a net exporter of crude. Total crude production hit a 34-year low of 934,000 bpd in June when several wells were shut due to technical problems.

"I think the production from Cepu and other oilfields cannot compensate for the decline of Indonesian oil production, because domestic oil consumption continues to grow," said Kurtubi, an oil analyst at the Center for Petroleum and Energy Economics Studies.

"Indonesia needs to attract more oil investment to search for new oil and for that the investment climate still has to be improved."

Indonesia expects its oil product consumption to rise to 413 million barrels (1.13 million bpd) this year, 10 percent above its budget forecast, the government said last month, as subsidized prices spurred demand.

The country sweetened the terms for investors with a new oil and gas law in 2001, but uncertainties over its implementation have continued to dog the sector.

Under the weekend deal, Pertamina and Exxon each holds a 45 percent participating interest, with the remaining 10 percent going to the regional government. They had announced in June a tentative agreement over key issues such as the production split and how much the foreign firm had spent so far.

But analysts said the risk of contracts not being extended remained a worry for investors.

"They're never going to get people back to the comfort level they had before without a return to the old regime -- when it was a routine ministerial matter to extend production-sharing contracts up for renewal," said John Vautrain, vice-president of energy consultants Purvin and Gertz.

"It means it will just be slower to do things."

(Additional reporting by Neil Chatterjee in Singapore)

Many Indonesian IT professional flee the country late '90s. One of the reasons were due to Y2K thing that was a hit before year 2000. Companies were forced to get their system compliant with Y2K or --according to the experts-- face loss billion dollar due to system failure.
I was not part of those "Y2K-platoon" left the country but months after moving to Paris I saw around 30-40 Indonesians got jobs in Paris. They do have nice jobs for IT, like DBA, SAP expert, Oracle, Networking, programming etc. Some of them till now still in Europe, some choose to return home. They can't eat too much cheese they said, they're home-sick, miss Gado-gado lontong and other reasons. Working abroad looks interesting, but we must be prepared mentally especially for culture shock .

Below is article from TheJakartaPost.com about how much Indoesian worker oversea send money back home. Beli tanah ;)

Tata
------------------------------------------------------------------------

RI gets US$3.4b per annum from migrant workes

DENPASAR, Bali (Antara): The around 2.6 million Indonesians working overseas send home about US$3.4 billion in foreign exchange a year, an official of the Ministry of Manpower and Transmigration said on Tuesday.

From 400,000 to 500,000 workers were sent to 16 countries annually under work contracts of up to three years, Director General of Overseas Work Placement I Gusti Made Arka said.

Speaking before an international seminar on Indonesian labor attended by representatives of 18 countries, Made Arka said Indonesia would put emphasis on the formal arrangements to send workers overseas.

Many Indonesian workers were working in well-paid professional jobs overseas, he said. These included nurses, stewardesses, along with experts in chemicals, fertilizers, telecommunications, geology and banking.

"We are also begining to send more professionals to Australia and Japan," he said.

Eighteen other countries who were big users of Indonesian labor included Italy, South Korea, Malaysia, Saudi Arabia, the United Arab Emirates, Kuwait, Singapore, Hong Kong and Taiwan, he said.

Representatives of countries employing Indonesian will meet Bali to discuss how labor exports from here could be improved.

"Many things will be discussed at the meeting, including fake legal documents and illegal workers," Made Arka said.

The meeting is to be opened by Vice President Jusuf Kalla on Wednesday. (**)

Indonesia parliament group OKs 2005 fuel subsidy figure

JAKARTA, Sept 20 (Reuters) - Indonesia's parliamentary budget commission approved on Tuesday an option to set fuel subsidies at 89.2 trillion rupiah ($8.8 billion) this year, much lower than previous official forecasts, to keep the budget deficit below the targeted one percent of GDP, a legislator said.

"The budget commission has selected option number two under which (fuel) subsidies have been set at 89.2 trillion rupiah. This will result in a fuel price hike," Emir Moeis, the head of the budget commission, told reporters after a parliamentary hearing.

A full parliamentary hearing is scheduled later this month and expected to give final approval. Normally what has been approved by the commission would be also be approved by the full parliamentary hearing.

Planning Minister Sri Mulyani Indrawati told Reuters earlier on Tuesday that an 89.2 trillion rupiah cap would imply a need to hike subsidised fuel prices by an average of least 50 percent from early October.

"The minimum increase is going to be around 50 percent. That's the mathematics of this option," Indrawati said in an interview.

The government has said the hike will come in October but has yet to state by how much the sensitive prices will rise.


President Susilo Bambang Yudhoyono has promised to raise fuel prices gradually toward global levels to wean Indonesians off Asia's cheapest gasoline at 20 U.S. cents a litre and to cut fuel subsidies that eat up a large chunk of the budget.

Indonesia has been forced to sell rupiah for dollars to pay for oil imports, depressing the local currency as well as hurting the economy and the budget as world oil prices soared.

Concerns over oil costs helped force the rupiah to a four-year low of 11,750 per dollar on Aug. 30, prompting the central bank to raise interest rates sharply to support the currency.

Officials have been racing to get a compensation package for the country's poorest in place ahead of the fuel hike.

A senior official at the statistics bureau said it had completed 90 percent of a census of those who would qualify for compensation, and should finish by the end of September.

The bureau is collecting details on the poor to pave the way for the government to disburse 100,000 rupiah in cash per month to 15.5 million poor families, equal to some 62 million people or more than a quarter of Indonesia's population.

Separately, the Finance Ministry's treasury director general, Mulia Nasution, told reporters the government had disbursed 78 trillion rupiah worth of fuel subsidies so far this year.

A big rise in fuel prices in May 1998 triggered rioting that was a factor in helping topple former autocrat Suharto.

Yudhoyono raised fuel prices by an average 29 percent in March, sparking protests, although there was little violence.

($1=10,180 rupiah)

Indonesia international reserves fall to $30.24 bln

JAKARTA, Sept 21 (Reuters) - Indonesia's international reserves fell to $30.24 billion in the second week of September, from $31.15 billion a week earlier, central bank data showed on Wednesday.

Bank Indonesia also said on its website (www.bi.go.id) that base money rose to 218.29 trillion rupiah ($21.82 billion) compared with 200.81 trillion rupiah the previous week.

The figures below are in trillions of rupiah, except for international reserves, which are in billions of dollars.

Sept15 Sept 7 Aug 31 Aug 23
Base Money 218.29 200.81 195.01 190.52
Net Domestic Assets 78.91 55.64 47.90 39.00
Net claims on 204.83 199.66 201.35 189.13
government
International Reserves 30.24 31.15 31.18 32.02
($1=10,000 rupiah)

Senin, 19 Sept 2005,
Terjajah ExxonMobil di Cepu

Oleh:
Kwik Kian Gie

Kali ini saya tidak akan membahas tentang pengertian subsidi -apakah
itu sama dengan uang tunai yang harus keluar atau tidak- dan hal-hal
teknis lain seperti itu.

Saya akan membahas tentang negara kaya yang menjadi miskin kembali
karena terjerumus ke dalam mental kuli yang oleh penjajah Belanda
disebut mental inlander. Mental para pengelola ekonomi sejak 1966
yang tidak mengandung keberanian sedikit pun, yang menghamba, yang
ngapurancang ketika berhadapan dengan orang-orang bule.

Ibu pertiwi yang perut buminya mempunyai kandungan minyak sangat
besar dibanding kebutuhan nasionalnya, setelah 60 tahun merdeka hanya
mampu menggarap minyaknya sendiri sekitar 8 persen. Sisanya
diserahkan kepada eksplorasi dan eksploitasi perusahaan-perusahaan
asing.

Apa pekerjaan dan sampai seberapa jauh daya pikir para pengelola
ekonomi kita sejak merdeka sampai sekarang? Istana Bung Karno
dibanjiri para kontraktor minyak asing yang sangat berkeinginan
mengeksplorasi dan mengeksploitasi minyak bumi di Indonesia. Bung
Karno menugaskan Chairul Saleh supaya mengizinkannya hanya sangat
terbatas.

Putrinya, Megawati, bertanya kepada ayahnya, mengapa begitu? Jawaban
Bung Karno kepada putrinya yang baru berumur 16 tahun, "Nanti kita
kerjakan sendiri semuanya kalau kita sudah cukup mempunyai insinyur-
insinyur sendiri."

Artinya, Bung Karno sangat berketetapan hati mengeksplorasi dan
mengeksploitasi minyak oleh putra-putri bangsa Indonesia sendiri.
Mengapa sekarang hanya sekitar 8 persen?

Lebih menyedihkan ialah keputusan pemerintah memperpanjang kerja sama
dengan Exxon Mobil (Exxon) untuk blok Cepu selama 20 tahun sampai
2030. Begini ceritanya. Exxon membeli lisensi dari Tommy Soeharto
untuk mengambil minyak dari sebuah sumur di Cepu yang kecil. Exxon
lalu melakukan eksplorasi tanpa izin. Ternyata ditemukan cadangan
dalam sumur yang sama sebanyak 600 juta barel.

Ketika itu Exxon mengajukan usul untuk memperpanjang kontraknya
sampai 2030. Keputusan ada di tangan Dewan Komisaris Pemerintah untuk
Pertamina (DKPP). Dua dari lima anggota menolak. Yang satu menolak
atas pertimbangan yuridis teknis. Yang lain atas pertimbangan sangat
prinsipil.

Dia sama sekali tidak mau diajak berargumentasi dan juga sama sekali
tidak mau melihat angka-angka yang disodorkan Exxon beserta para
kroninya yang berbangsa Indonesia.

Mengapa? Karena yang menjadi pertimbangan pokoknya, harus
dieksploitasi bangsa Indonesia sendiri, yang berarti bahwa Exxon pada
2010 harus hengkang, titik. Alasannya sangat mendasar, tetapi
formulasinya sederhana. Yaitu, bangsa yang 60 tahun merdeka
selayaknya, semestinya, dan seyogianya mengerjakan sendiri eksplorasi
dan eksploitasi minyaknya. Bahkan, harus melakukannya di mana saja di
dunia yang dianggap mempunyai kemungkinan berhasil.

Menurut peraturan yang berlaku (sebelum Pertamina berubah menjadi
Persero), kalau DKPP tidak bisa mengambil keputusan yang bulat,
keputusan beralih ke tangan presiden. Maka, bola ada di tangan
Presiden Megawati Soekarnoputri. Beliau tidak mengambil keputusan,
sehingga Exxon kalang kabut. Exxon mengirimkan executive vice
president-nya yang langsung mendatangi satu anggota DKPP yang
mengatakan "pokoknya tidak".

Dia mengatakan, sejak awal sudah ingin bertemu satu orang anggota
DKPP ini yang berinisial KKG, tetapi dilarang kolega-koleganya
sendiri. KKG tersenyum sambil mengatakan karena para koleganya masih
terjangkit mental inlander.

Lalu dia berargumentasi panjang lebar dengan mengemukakan semua angka
betapa Indonesia diuntungkan. KKG menjawab bahwa kalau dia ngotot
sampai seperti itu, apa lagi latar belakangnya kalau dia tidak
memperoleh untung besar dari perpanjangan kontrak sampai 2030? Karena
itu, kalau mulai 2010, sesuai kontrak, Exxon harus hengkang dan
seluruhnya dikerjakan Pertamina, semua laba yang tadinya jatuh ke
tangan Exxon akan jatuh ke tangan Indonesia sendiri.

Lagi pula, KKG menjelaskan bahwa sudah waktunya belajar menjadi
perusahaan minyak dunia seperti Exxon. KKG bertanya
kepadanya, "Bukankah kami berhak mulai merintis supaya menjadi Anda
di bumi kita sendiri dan menggunakan minyak yang ada di dalam perut
bumi kita sendiri?"

Eh, dia mulai mengatakan tidak bisa mengerti bagaimana orang
berpendidikan Barat bisa sampai seperti itu tidak rasionalnya! Jelas
KKG muntap dan mulai memberi kuliah panjang lebar bahwa orang Barat
sangat memahami dan menghayati tentang apa yang dikatakan EQ, dan
bukan hanya IQ. Apalagi, kalau dalam hal blok Cepu ini ditinjau
dengan IQ juga mengatakan bahwa mulai 2010 harus dieksploitasi oleh
Indonesia sendiri.

Bung Karno juga berpendidikan Barat dan sejak awal beliau
mengatakan, "Man does not live by bread alone." Dalam hal blok Cepu,
dua argumen berlaku, yaitu man does not live by bread alone, dan
diukur dengan bread juga menguntungkan Indonesia, karena laba yang
akan jatuh ke tangan Exxon menjadi labanya Pertamina.

Pikiran lebih mendalam dan bahkan dengan perspektif jangka
panjang yang didasarkan materi juga mengatakan bahwa sebaiknya blok
Cepu dieksploitasi oleh Pertamina sendiri. Mengapa?

Jawabannya diberikan oleh mantan Direktur Utama Pertamina Baihaki
Hakim kepada Menko Ekuin ketika itu bahwa Pertamina adalah organisasi
yang telanjur sangat besar. Minyak adalah komoditas yang tidak dapat
diperbarui. Penduduk Indonesia bertambah terus seiring dengan
bertambahnya konsumsi.

Kalau sekarang saja terlihat bahwa konsumsi nasional sudah lebih
besar daripada produksi nasional, di masa mendatang kesenjangan
ini menjadi semakin besar, dan akhirnya organisasi Pertamina yang
demikian besar itu akan dijadikan apa?

Apakah hanya menjadi perusahaan dagang minyak, dan apakah akan mampu
berdagang saja dalam skala dunia, bersaing dengan the seven sisters?
Maka visi jangka panjang Baihaki Hakim, mumpung masih lumayan
cadangannya, sejak sekarang mulai go international dan menggunakan
cadangan minyak yang ada untuk sepenuhnya menunjang kebijakannya yang
visiuner itu.

Menko Ekuin ketika itu memberikan dukungan sambil mengatakan, "Pak
Baihaki, saya mendukung sepenuhnya. Syarat mutlaknya ialah kalau Anda
ingin menjadikan Pertamina menjadi world class company, Anda harus
juga memberikan world class salary kepada anak buah Anda."

Sang Menko Ekuin keluar dari kabinet Abdurrahman Wahid. Setelah itu
dia kembali ke kabinet sebagai kepala Bappenas dan ex officio
menjabat anggota DKPP. Maka pikirannya masih dilekati visi jangka
panjangnya Pak Baihaki Hakim dan kebetulan direktur utama Pertamina
ketika itu juga masih Pak Baihaki Hakim. Tetapi, kedudukan kita
berdua sudah sangat lemah, karena dikreoyok para anggota DKPP dan
anggota direksi lain yang mental, moral, dan cara berpikirnya sudah
kembali menjadi inlander.

Baihaki Hakim yang mempunyai visi, kemampuan, dan telah berpengalaman
13 tahun menjabat direktur utama Caltex Indonesia langsung dipecat
begitu Pertamina menjadi persero. Alasannya, kalau diibaratkan sopir,
dia adalah sopir yang baik untuk mobil Mercedes Benz. Sedangkan yang
diperlukan buat Pertamina adalah sopir yang cocok untuk truk yang
bobrok. Bayangkan, betapa inlander cara berpikirnya. Pertamina
diibaratkan truk bobrok. Caltex adalah Mercedez Benz. Memang sudah
edan semua.

Ada tekanan luar biasa besar dari pemerintah Amerika Serikat di
samping dari Exxon. Ceritanya begini. Dubes AS ketika itu, Ralph
Boyce, sudah membuat janji melakukan kunjungan kehormatan kepada
kepala Bappenas, karena protokolnya begitu. Tetapi, ketika sang Dubes
tersebut mendengarkan pidato sang kepala Bappenas di Pre-CGI meeting
yang sikap, isinya pidato, dan nadanya bukan seorang inlander,
janjinya dibatalkan.

Eh, mendadak dia minta bertemu kepala Bappenas. Dia membuka
pembicaraan dengan mengatakan akan berbicara tentang Exxon. Kepala
Bappenas dalam kapasitasnya selaku anggota DKPP mengatakan bahwa
segala sesuatunya telah dikemukakan kepada executive vice president-
nya Exxon, dan dipersilakan berbicara saja dengan beliau.

Sang Dubes mengatakan sudah mendengar semuanya, tetapi dia hanya
melakukan tugasnya. "I am just doing my job". Kepala Bappenas
mengatakan lagi, "Teruskan saja kepada pemerintah Anda di Washington
semua argumen penolakan saya yang diukur dengan ukuran apa pun,
termasuk semua akal sehat orang-orang Amerika pasti dapat diterima."

Kepala Bappenas keluar lagi dari kabinet karena adanya pemerintahan
baru, yaitu Kabinet Indonesia Bersatu, dan Exxon menang mutlak.
Ladang minyak di blok Cepu yang konon cadangannya bukan 600 juta
barrel, tetapi 2 miliar barrel, oleh para inlander diserahkan kepada
Exxon penggarapannya.

Saya terus berdoa kepada Bung Karno dan mengatakan, "Bung Karno yang
saya cintai dan sangat saya hormati. Janganlah gundah dan gelisah,
walaupun Bapak sangat gusar. Istirahatlah dengan tenang. Saya juga
sudah bermeditasi di salah satu vihara untuk menenangkan hati dan
batin saya. Satu hari nanti rakyat akan bangkit dan melakukan
revolusi lagi seperti yang pernah Bapak pimpin, kalau para cecunguk
ini sudah dianggap terlampau lama dan terlampau mengkhianati
rakyatnya sendiri."

*) Mantan Menteri Negara PPN/kepala Bappenas.

BI Terbitkan Uang Kertas Baru Pecahan Rp 10 Ribu dan Rp 50 Ribu
Senin, 19 September 2005 | 17:59 WIB


TEMPO Interaktif, Jakarta:Bank Indonesia (BI) akan menerbitkan uang kertas baru pecahan
Rp 10 ribu dan Rp 50 ribu tahun emisi 2005 pada 20 Oktober.

Deputi Gubernur BI, Maulana Ibrahim, menyatakan penerbitan pecahan baru tersebut
didasari beberapa pertimbangan, antara lain usia edar yang cukup lama bagi kedua pecahan
tersebut. "Usia edar Rp 50 ribu tahun emisi 1999 adalah 6 tahun, dan usia edar Rp 10
ribu tahun emisi 1998 adalah 7 tahun," ujarnya, Senin (19/9).

Selain itu, untuk menstandarisasi ukuran uang kertas, meningkatkan kualitas unsur
pengaman yang mudah dan cepat dikenali masyarakat, serta antisipasi perkembangan
teknologi pengaman uang yang mutakhir.

Uang pecahan baru Rp 50 ribu akan bergambar utama pahlawan nasional I Gusti Ngurah Rai
di bagian depan, dan gambar Danau Beratan di Bedugul Bali pada bagian belakang.
Sedangkan uang pecahan baru Rp 10 ribu, bergambar utama pahlawan Sultan Mahmud
Badaruddin II di bagian depan, dan gambar Rumah Limas di Palembang pada bagian belakang.

Dengan diedarkannya kedua pecahan baru itu, pecahan Rp 50 ribu emisi 1999 dan Rp 10 ribu
emisi 1998 masih tetap berlaku sebagai alat pembayaran yang sah. R.R. Ariyani




Badaruddin II di bagian depan dan gambar Rumah Limas di Palembang pada
bagian belakang.

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Jakarta - Predikat negara pengutang memang pantas disandang Indonesia. Tengok saja total utang Indonesia yang hingga Maret 2005 mencapai Rp 1.282 triliun atau 52 persen PDB. Wuihh..!!

Rincian utang tersebut adalah utang dalam valas sejumlah Rp 624 triliun dan utang dalam rupiah Rp 658 triliun.

Komposisi utang negara berdasarkan jenis mata uang adalah dalam rupiah (52 persen), yen Jepang (21 persen), dolar AS (14 persen), euro (4 persen), mata uang lain (9 persen).

Jumlah utang tersebut disampaikan oleh Menteri Keuangan Jusuf Anwar saat rapat dengan Komisi XI DPR RI di Gedung DPR/MPR, Senayan, Jakarta, Senin (19/9/2005).

Portofolio utang negara, menurut Jusuf, sangat rentan terhadap berbagai risiko, baik risiko refinancing dan risiko akibat perubahan suku bunga dan nilai tukar.

Untuk risiko refinancing dikarenakan struktur jatuh tempo yang tidak seimbang akibat besarnya volume utang negara yang jatuh tempo dan harus dilunasi pokoknya tiap tahun pada periode 2006-2009.

Risiko pasar akibat perubahan bunga dan nilai tukar rupiah, lanjut Jusuf, terjadi akibat hampir sepertiga dari total utang negara merupakan utang dengan bunga mengambang atau floating rate. Sementara risiko nilai tukar muncul akibat besarnya pinjaman luar negeri pemerintah dan sebagaian surat utang negara (SUN) dalam mata uang asing.

"Risiko-risiko tersebut secara terus-menerus harus dikelola dengan sebaik-baiknya agar krisis fiskal dapat dihindari dengan menerapkan strategi pengelolaan utang negara terbaik sesuai standar yang berlaku secara internasional," kata Jusuf.

Selain kedua risiko di atas, terdapat hal lainnya, yakni risiko kesinambungan fiskal yang terjadi akibat besarnya jumlah utang. Hal tersebut dapat mengurangi daya dukung fiskal.

Risiko lainnya adalah risiko operasional akibat kegagalan jika operasional pengelolaan utang sehari-hari tidak dikelola dengan baik dari sisi sumber daya manusia maupun kelembagaan.

Pemerintah dalam tujuan pengelolaan utang negara dalam jangka panjang bertujuan meminimalkan biaya utang pada tingkat risiko yang terkendali. Untuk itu, lanjut Jusuf, financing gap dan fiscal sustainability perlu dipenuhi sesuai kondisi ekonomi makro dan biaya yang paling murah.

Dalam penerbitan SUN, pemerintah tetap akan mempertimbangkan volume penerbitan yang bervariasi dan daya serap pasar, khususnya SUN yang berjangka waktu hingga 15 tahun. "Jadi jangan sampai overcrowded," tegas Jusuf.

Menurut Jusuf, penerbitan SUN dalam valas dimaksudkan untuk refinancing utang dalam valas dan memperkuat cadangan devisa.

Soal penerbitan surat perbendaharan negara (SPN), Jusuf mengatakan, akan dilakukan pada saat terjadi kebutuhan kas jangka pendek yang sangat mendesak atau cash missmatch.

wah.. he speaks about himself.

Senin, 19 Sept 2005,
Terjajah ExxonMobil di Cepu

Oleh:
Kwik Kian Gie

Kali ini saya tidak akan membahas tentang pengertian subsidi -apakah
itu sama dengan uang tunai yang harus keluar atau tidak- dan hal-hal
teknis lain seperti itu.

Saya akan membahas tentang negara kaya yang menjadi miskin kembali
karena terjerumus ke dalam mental kuli yang oleh penjajah Belanda
disebut mental inlander. Mental para pengelola ekonomi sejak 1966
yang tidak mengandung keberanian sedikit pun, yang menghamba, yang
ngapurancang ketika berhadapan dengan orang-orang bule.

Ibu pertiwi yang perut buminya mempunyai kandungan minyak sangat
besar dibanding kebutuhan nasionalnya, setelah 60 tahun merdeka hanya
mampu menggarap minyaknya sendiri sekitar 8 persen. Sisanya
diserahkan kepada eksplorasi dan eksploitasi perusahaan-perusahaan
asing.

Apa pekerjaan dan sampai seberapa jauh daya pikir para pengelola
ekonomi kita sejak merdeka sampai sekarang? Istana Bung Karno
dibanjiri para kontraktor minyak asing yang sangat berkeinginan
mengeksplorasi dan mengeksploitasi minyak bumi di Indonesia. Bung
Karno menugaskan Chairul Saleh supaya mengizinkannya hanya sangat
terbatas.

Putrinya, Megawati, bertanya kepada ayahnya, mengapa begitu? Jawaban
Bung Karno kepada putrinya yang baru berumur 16 tahun, "Nanti kita
kerjakan sendiri semuanya kalau kita sudah cukup mempunyai insinyur-
insinyur sendiri."

Artinya, Bung Karno sangat berketetapan hati mengeksplorasi dan
mengeksploitasi minyak oleh putra-putri bangsa Indonesia sendiri.
Mengapa sekarang hanya sekitar 8 persen?

Lebih menyedihkan ialah keputusan pemerintah memperpanjang kerja sama
dengan Exxon Mobil (Exxon) untuk blok Cepu selama 20 tahun sampai
2030. Begini ceritanya. Exxon membeli lisensi dari Tommy Soeharto
untuk mengambil minyak dari sebuah sumur di Cepu yang kecil. Exxon
lalu melakukan eksplorasi tanpa izin. Ternyata ditemukan cadangan
dalam sumur yang sama sebanyak 600 juta barel.

Ketika itu Exxon mengajukan usul untuk memperpanjang kontraknya
sampai 2030. Keputusan ada di tangan Dewan Komisaris Pemerintah untuk
Pertamina (DKPP). Dua dari lima anggota menolak. Yang satu menolak
atas pertimbangan yuridis teknis. Yang lain atas pertimbangan sangat
prinsipil.

Dia sama sekali tidak mau diajak berargumentasi dan juga sama sekali
tidak mau melihat angka-angka yang disodorkan Exxon beserta para
kroninya yang berbangsa Indonesia.

Mengapa? Karena yang menjadi pertimbangan pokoknya, harus
dieksploitasi bangsa Indonesia sendiri, yang berarti bahwa Exxon pada
2010 harus hengkang, titik. Alasannya sangat mendasar, tetapi
formulasinya sederhana. Yaitu, bangsa yang 60 tahun merdeka
selayaknya, semestinya, dan seyogianya mengerjakan sendiri eksplorasi
dan eksploitasi minyaknya. Bahkan, harus melakukannya di mana saja di
dunia yang dianggap mempunyai kemungkinan berhasil.

Menurut peraturan yang berlaku (sebelum Pertamina berubah menjadi
Persero), kalau DKPP tidak bisa mengambil keputusan yang bulat,
keputusan beralih ke tangan presiden. Maka, bola ada di tangan
Presiden Megawati Soekarnoputri. Beliau tidak mengambil keputusan,
sehingga Exxon kalang kabut. Exxon mengirimkan executive vice
president-nya yang langsung mendatangi satu anggota DKPP yang
mengatakan "pokoknya tidak".

Dia mengatakan, sejak awal sudah ingin bertemu satu orang anggota
DKPP ini yang berinisial KKG, tetapi dilarang kolega-koleganya
sendiri. KKG tersenyum sambil mengatakan karena para koleganya masih
terjangkit mental inlander.

Lalu dia berargumentasi panjang lebar dengan mengemukakan semua angka
betapa Indonesia diuntungkan. KKG menjawab bahwa kalau dia ngotot
sampai seperti itu, apa lagi latar belakangnya kalau dia tidak
memperoleh untung besar dari perpanjangan kontrak sampai 2030? Karena
itu, kalau mulai 2010, sesuai kontrak, Exxon harus hengkang dan
seluruhnya dikerjakan Pertamina, semua laba yang tadinya jatuh ke
tangan Exxon akan jatuh ke tangan Indonesia sendiri.

Lagi pula, KKG menjelaskan bahwa sudah waktunya belajar menjadi
perusahaan minyak dunia seperti Exxon. KKG bertanya
kepadanya, "Bukankah kami berhak mulai merintis supaya menjadi Anda
di bumi kita sendiri dan menggunakan minyak yang ada di dalam perut
bumi kita sendiri?"

Eh, dia mulai mengatakan tidak bisa mengerti bagaimana orang
berpendidikan Barat bisa sampai seperti itu tidak rasionalnya! Jelas
KKG muntap dan mulai memberi kuliah panjang lebar bahwa orang Barat
sangat memahami dan menghayati tentang apa yang dikatakan EQ, dan
bukan hanya IQ. Apalagi, kalau dalam hal blok Cepu ini ditinjau
dengan IQ juga mengatakan bahwa mulai 2010 harus dieksploitasi oleh
Indonesia sendiri.

Bung Karno juga berpendidikan Barat dan sejak awal beliau
mengatakan, "Man does not live by bread alone." Dalam hal blok Cepu,
dua argumen berlaku, yaitu man does not live by bread alone, dan
diukur dengan bread juga menguntungkan Indonesia, karena laba yang
akan jatuh ke tangan Exxon menjadi labanya Pertamina.

Pikiran lebih mendalam dan bahkan dengan perspektif jangka
panjang yang didasarkan materi juga mengatakan bahwa sebaiknya blok
Cepu dieksploitasi oleh Pertamina sendiri. Mengapa?

Jawabannya diberikan oleh mantan Direktur Utama Pertamina Baihaki
Hakim kepada Menko Ekuin ketika itu bahwa Pertamina adalah organisasi
yang telanjur sangat besar. Minyak adalah komoditas yang tidak dapat
diperbarui. Penduduk Indonesia bertambah terus seiring dengan
bertambahnya konsumsi.

Kalau sekarang saja terlihat bahwa konsumsi nasional sudah lebih
besar daripada produksi nasional, di masa mendatang kesenjangan
ini menjadi semakin besar, dan akhirnya organisasi Pertamina yang
demikian besar itu akan dijadikan apa?

Apakah hanya menjadi perusahaan dagang minyak, dan apakah akan mampu
berdagang saja dalam skala dunia, bersaing dengan the seven sisters?
Maka visi jangka panjang Baihaki Hakim, mumpung masih lumayan
cadangannya, sejak sekarang mulai go international dan menggunakan
cadangan minyak yang ada untuk sepenuhnya menunjang kebijakannya yang
visiuner itu.

Menko Ekuin ketika itu memberikan dukungan sambil mengatakan, "Pak
Baihaki, saya mendukung sepenuhnya. Syarat mutlaknya ialah kalau Anda
ingin menjadikan Pertamina menjadi world class company, Anda harus
juga memberikan world class salary kepada anak buah Anda."

Sang Menko Ekuin keluar dari kabinet Abdurrahman Wahid. Setelah itu
dia kembali ke kabinet sebagai kepala Bappenas dan ex officio
menjabat anggota DKPP. Maka pikirannya masih dilekati visi jangka
panjangnya Pak Baihaki Hakim dan kebetulan direktur utama Pertamina
ketika itu juga masih Pak Baihaki Hakim. Tetapi, kedudukan kita
berdua sudah sangat lemah, karena dikreoyok para anggota DKPP dan
anggota direksi lain yang mental, moral, dan cara berpikirnya sudah
kembali menjadi inlander.

Baihaki Hakim yang mempunyai visi, kemampuan, dan telah berpengalaman
13 tahun menjabat direktur utama Caltex Indonesia langsung dipecat
begitu Pertamina menjadi persero. Alasannya, kalau diibaratkan sopir,
dia adalah sopir yang baik untuk mobil Mercedes Benz. Sedangkan yang
diperlukan buat Pertamina adalah sopir yang cocok untuk truk yang
bobrok. Bayangkan, betapa inlander cara berpikirnya. Pertamina
diibaratkan truk bobrok. Caltex adalah Mercedez Benz. Memang sudah
edan semua.

Ada tekanan luar biasa besar dari pemerintah Amerika Serikat di
samping dari Exxon. Ceritanya begini. Dubes AS ketika itu, Ralph
Boyce, sudah membuat janji melakukan kunjungan kehormatan kepada
kepala Bappenas, karena protokolnya begitu. Tetapi, ketika sang Dubes
tersebut mendengarkan pidato sang kepala Bappenas di Pre-CGI meeting
yang sikap, isinya pidato, dan nadanya bukan seorang inlander,
janjinya dibatalkan.

Eh, mendadak dia minta bertemu kepala Bappenas. Dia membuka
pembicaraan dengan mengatakan akan berbicara tentang Exxon. Kepala
Bappenas dalam kapasitasnya selaku anggota DKPP mengatakan bahwa
segala sesuatunya telah dikemukakan kepada executive vice president-
nya Exxon, dan dipersilakan berbicara saja dengan beliau.

Sang Dubes mengatakan sudah mendengar semuanya, tetapi dia hanya
melakukan tugasnya. "I am just doing my job". Kepala Bappenas
mengatakan lagi, "Teruskan saja kepada pemerintah Anda di Washington
semua argumen penolakan saya yang diukur dengan ukuran apa pun,
termasuk semua akal sehat orang-orang Amerika pasti dapat diterima."

Kepala Bappenas keluar lagi dari kabinet karena adanya pemerintahan
baru, yaitu Kabinet Indonesia Bersatu, dan Exxon menang mutlak.
Ladang minyak di blok Cepu yang konon cadangannya bukan 600 juta
barrel, tetapi 2 miliar barrel, oleh para inlander diserahkan kepada
Exxon penggarapannya.

Saya terus berdoa kepada Bung Karno dan mengatakan, "Bung Karno yang
saya cintai dan sangat saya hormati. Janganlah gundah dan gelisah,
walaupun Bapak sangat gusar. Istirahatlah dengan tenang. Saya juga
sudah bermeditasi di salah satu vihara untuk menenangkan hati dan
batin saya. Satu hari nanti rakyat akan bangkit dan melakukan
revolusi lagi seperti yang pernah Bapak pimpin, kalau para cecunguk
ini sudah dianggap terlampau lama dan terlampau mengkhianati
rakyatnya sendiri."

*) Mantan Menteri Negara PPN/kepala Bappenas.

Fdi in Indonesia up 166 PCT to US$7.2 BLN in First 8 Months

JAKARTA, Sept 22 Asia Pulse - Indonesia has recorded an increase in the implementation of direct investment, though the condition in the country is not yet sufficiently attractive for investors, a local daily reported.

Based on a report from the Investment Board (BKPM) implementation of foreign direct investment (FDI) surged 166 per cent to US$7.23 billion in the first eight months of this year compared with the same period last year.

BKPM spokesman Yus'an said the increase in the implementation of FDI projects in the first eight months of this year was the highest in a number of year indicating improved confidence of foreign investors in the country's economy.

The value of approved FDI also surged 73.5 per cent year-on-year to US$7.28 billion in the January-August period.

Meanwhile, implementation of domestic investment project rose 14.9 per cent to Rp11.06 trillion (US$1 billion) and approved investment grew 5.2 per cent to Rp33.39 trillion.

The implementation of the FDI and domestic investment projects provided 172,000 new jobs.

(ANTARA)

Indonesia's August motorbike sales up 41.7 pct y/y

JAKARTA, Sept 22 (Reuters) - Motorcycle sales in Indonesia rose 41.7 percent in August from a year earlier as demand stayed robust despite rising interest rates and a weaker currency, data from the country's largest automotive distributor showed.

PT Astra International Tbk , controlled by Singapore's Jardine Cycle and Carriage Ltd , said 504,787 units of motorcycles were sold in August, a record high monthly volume.

The August figure brought the total sales for the first eight months of 2005 to 3.43 million, nearly matching the total for all of 2004 of 3.89 million units.

Astra distributes Honda Motor Co. Ltd. motorcycles in Indonesia, which accounted for 50.8 percent of August sales. Honda motorcycle sales rose 35.2 percent last month compared to the same period of 2004.

Cheaper financing, due to historically low interest rates, has helped boost car and motorcycle sales in the world's fourth most populous nation, home to 220 million. But a fall in the rupiah to a four-year low last month prompted the central bank to raise rates twice in once week.

Distributors and auto financing companies were optimistic that the growth rate of motorcycle sales in Southeast Asia's largest economy could continue to rise due to low penetration rate for motorbike usage in the country.

The motorcycle penetration rate in Indonesia was estimated around 12 percent, compared to 40 percent in Thailand and Malaysia, the chairman of Indonesia's Motorcycle Industry has said.

Some analysts have said the recent interest rate rises could dampen demand. Bank Indonesia hiked its target for the rate on benchmark one-month paper (SBI) on Aug. 30 and Sept. 6, lifting it by a total of 125 basis points.

The SBI rate has risen by more than 250 basis points since the start of the year, forcing some banks and financial institutions to adjust their lending rates.

Sense of crisis deepening in beleaguered Indonesia
By Wayne Arnold International Herald Tribune

THURSDAY, SEPTEMBER 22, 2005


SINGAPORE Rising oil prices and fears of a bird flu epidemic are deepening a sense of crisis enveloping Indonesia and prompting predictions of a cabinet shake-up next month as President Susilo Bambang Yudhoyono attempts to defuse mounting public tension.

The darkening mood stands in stark contrast to the optimism that surrounded Yudhoyono's victory a year ago in Indonesia's first direct presidential elections. Despite enduring faith in his own competence as an administrator, Indonesians are voicing growing doubts about whether his unwieldy coalition government can steer the country through its mounting list of troubles.

Analysts warn that the risk of unrest is growing as Yudhoyono prepares to raise fuel prices in October just as the country celebrates the traditional Muslim fasting month.

"The situation is not understood by most people here. They oppose it," said Kurtubi, an analyst at the Center for Petroleum and Energy Economics Studies in Jakarta. "But the government has no choice."

Although Indonesia is a considerable producer of oil, economic growth in recent years and inadequate spending on new wells have made the country a net importer of petroleum. The government is also saddled with extensive fuel subsidies that are particularly important to Indonesia's many poor people.

Yudhoyono is a former general with experience fighting both rebels and terrorists, and his promises to uproot corruption and revive investment still inspire confidence among business leaders at home and abroad. So does his willingness to acknowledge and tackle longstanding problems like bureaucratic inertia and legal uncertainty.

But because his party lacks a majority in Parliament, Yudhoyono rules through a coalition that has since stumbled over a string of calamities. These include the devastating South Asian tsunami, illegal burning of jungles that covered parts of neighboring countries in choking haze, the re-emergence of polio, spiraling commodity prices and increasing cases of avian influenza that the government has labeled an emergency.

With a second hurricane in the Gulf of Mexico threatening still higher oil prices, anxiety in Jakarta is high. The benchmark stock index dropped 2.6 percent Thursday.

Opposition party leaders have been calling for Yudhoyono to replace his economics team, saying it had lost the confidence of the people and of investors, although political analysts have long been predicting that the president was eager himself to form a more cohesive cabinet.

Yudhoyono alluded to the possibility of a reshuffle last month, saying that he would review his cabinet's performance.

Coordinating Economy Minister Aburizal Bakrie is a member of the party of the ousted former President Suharto. He was among a group of politically connected tycoons who after the Asian financial crisis fought government efforts to wrest control of their bankrupt companies to help pay for a huge bailout of the banking system.

He may enjoy the support, however, of fellow party member Jusuf Kalla, Yudhoyono's vice president.

More speculation surrounds the possible replacement of Finance Minister Jusuf Anwar, a technocrat formerly at the Asian Development Bank, and of Attorney General Abdul Rahman Saleh over what critics complain has been meager progress in tackling corruption among high-level officials.

But even SBY, as Yudhoyono is widely referred to in Indonesia, has not escaped criticism, particularly over what many see as his own indecisiveness. A national magazine recently had a cover story playing on a popular re-translation of the president's ubiquitous acronym: "Selalu Bimbang, Ya," or "Forever undecided, right?" The president's spokesman could not be reached for comment.

The anxiety created by rising living costs has been exacerbated by the government's admission that it could face an epidemic of the bird flu virus. Bird flu has killed four people in Jakarta alone, while eleven other patients remain hospitalized with symptoms of the virus.

On Monday, the government invoked powers to hospitalize and quarantine those suspected of being infected by the virus. It has since announced plans to conduct mass slaughters of poultry.

Chicken is perhaps the most widely consumed meat in Indonesia's diet, and the country has vast numbers of free-range poultry, so the impact on public consumption is likely to be significant, analysts said.

Already, fears of the virus have sparked travel warnings and sent members of the foreign investment community in Indonesia rushing to clinics for vaccines and remedies.

Yet paramount among the fears facing Yudhoyono is the effect of rising oil prices on his country's 218 million people. Early this month, Yudhoyono announced plans to cut fuel subsidies in October.

Indonesia subsidizes the price of fuel in the amount of 73 trillion rupiah, or $7 billion, a year, a figure that it estimates will balloon to 140 trillion rupiah this year as world oil prices rise.

The swelling cost to the government of the subsidies sent the rupiah plunging in August to its lowest level in four years and precipitated a similar decline in stock prices.

The subsidies are a legacy of Indonesia's days as a big oil exporter. Few analysts or economists dispute that the subsidies need to be eliminated. Not only do the subsidies eat up government revenue that could be used for public works or alleviating poverty; they also offer relatively little benefit for the poor.

Subsidies on gasoline prices benefit primarily wealthier Indonesians who drive fuel-inefficient cars. And the artificially low prices the subsidies create has given rise to a brisk trade in smuggling Indonesian crude and refined product out of the country.

SINGAPORE Rising oil prices and fears of a bird flu epidemic are deepening a sense of crisis enveloping Indonesia and prompting predictions of a cabinet shake-up next month as President Susilo Bambang Yudhoyono attempts to defuse mounting public tension.

The darkening mood stands in stark contrast to the optimism that surrounded Yudhoyono's victory a year ago in Indonesia's first direct presidential elections. Despite enduring faith in his own competence as an administrator, Indonesians are voicing growing doubts about whether his unwieldy coalition government can steer the country through its mounting list of troubles.

Analysts warn that the risk of unrest is growing as Yudhoyono prepares to raise fuel prices in October just as the country celebrates the traditional Muslim fasting month.

"The situation is not understood by most people here. They oppose it," said Kurtubi, an analyst at the Center for Petroleum and Energy Economics Studies in Jakarta. "But the government has no choice."

Although Indonesia is a considerable producer of oil, economic growth in recent years and inadequate spending on new wells have made the country a net importer of petroleum. The government is also saddled with extensive fuel subsidies that are particularly important to Indonesia's many poor people.

Yudhoyono is a former general with experience fighting both rebels and terrorists, and his promises to uproot corruption and revive investment still inspire confidence among business leaders at home and abroad. So does his willingness to acknowledge and tackle longstanding problems like bureaucratic inertia and legal uncertainty.

But because his party lacks a majority in Parliament, Yudhoyono rules through a coalition that has since stumbled over a string of calamities. These include the devastating South Asian tsunami, illegal burning of jungles that covered parts of neighboring countries in choking haze, the re-emergence of polio, spiraling commodity prices and increasing cases of avian influenza that the government has labeled an emergency.

With a second hurricane in the Gulf of Mexico threatening still higher oil prices, anxiety in Jakarta is high. The benchmark stock index dropped 2.6 percent Thursday.

Opposition party leaders have been calling for Yudhoyono to replace his economics team, saying it had lost the confidence of the people and of investors, although political analysts have long been predicting that the president was eager himself to form a more cohesive cabinet.

Yudhoyono alluded to the possibility of a reshuffle last month, saying that he would review his cabinet's performance.

Coordinating Economy Minister Aburizal Bakrie is a member of the party of the ousted former President Suharto. He was among a group of politically connected tycoons who after the Asian financial crisis fought government efforts to wrest control of their bankrupt companies to help pay for a huge bailout of the banking system.

He may enjoy the support, however, of fellow party member Jusuf Kalla, Yudhoyono's vice president.

More speculation surrounds the possible replacement of Finance Minister Jusuf Anwar, a technocrat formerly at the Asian Development Bank, and of Attorney General Abdul Rahman Saleh over what critics complain has been meager progress in tackling corruption among high-level officials.

But even SBY, as Yudhoyono is widely referred to in Indonesia, has not escaped criticism, particularly over what many see as his own indecisiveness. A national magazine recently had a cover story playing on a popular re-translation of the president's ubiquitous acronym: "Selalu Bimbang, Ya," or "Forever undecided, right?" The president's spokesman could not be reached for comment.

The anxiety created by rising living costs has been exacerbated by the government's admission that it could face an epidemic of the bird flu virus. Bird flu has killed four people in Jakarta alone, while eleven other patients remain hospitalized with symptoms of the virus.

On Monday, the government invoked powers to hospitalize and quarantine those suspected of being infected by the virus. It has since announced plans to conduct mass slaughters of poultry.

Chicken is perhaps the most widely consumed meat in Indonesia's diet, and the country has vast numbers of free-range poultry, so the impact on public consumption is likely to be significant, analysts said.

Already, fears of the virus have sparked travel warnings and sent members of the foreign investment community in Indonesia rushing to clinics for vaccines and remedies.

Yet paramount among the fears facing Yudhoyono is the effect of rising oil prices on his country's 218 million people. Early this month, Yudhoyono announced plans to cut fuel subsidies in October.

Indonesia subsidizes the price of fuel in the amount of 73 trillion rupiah, or $7 billion, a year, a figure that it estimates will balloon to 140 trillion rupiah this year as world oil prices rise.

The swelling cost to the government of the subsidies sent the rupiah plunging in August to its lowest level in four years and precipitated a similar decline in stock prices.

The subsidies are a legacy of Indonesia's days as a big oil exporter. Few analysts or economists dispute that the subsidies need to be eliminated. Not only do the subsidies eat up government revenue that could be used for public works or alleviating poverty; they also offer relatively little benefit for the poor.

Subsidies on gasoline prices benefit primarily wealthier Indonesians who drive fuel-inefficient cars. And the artificially low prices the subsidies create has given rise to a brisk trade in smuggling Indonesian crude and refined product out of the country.


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Indonesia to raise fuel prices on Oct 1September 24, 2005 - 3:29PM
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Indonesia is preparing to raise fuel prices on October 1, a sensitive step that risks nationwide protests and political instability in the world's fourth most populous nation.

The government is being forced to slash subsidies to stop soaring global crude oil costs blowing its budget. The subsidies have long kept fuel prices affordable for the country's millions of poor.

President Susilo Bambang Yudhoyono announced the date of the hike late Friday, but did not say how large it would be. His ministers have said in recent days that prices could soar by as much as 50 per cent.

"We plan to hike (prices) on Oct. 1 after the government makes sure that a direct cash subsidy has been received by the people who deserve it," Yudhoyono said.

The government plans to gave small cash handouts directly to some 15 poor million families to cushion the blow from the hikes, which will also push up the price of food and other basic necessities.

Raising the price of fuel is a sensitive issue in Indonesia.

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AdvertisementRiots triggered by a price hike in 1998 hastened the collapse of former President Suharto's dictatorship. Former President Megawati Sukarnoputri was also forced to scale back an increase early in 2002 because of protests.

Yudhoyono's plan to raise prices has already sparked small demonstrations, and the protests are expected to increase in the coming weeks - specially if they are bankrolled by wealthy opponents of Yudhoyono.

Economists say the move is essential to reduce government spending, and point out that wealthy car owners also benefit from the current subsidies.

Former presidents Megawati and Abdurrahman Wahid released a statement on Thursday urging the government to postpone the rises, saying they would cause "social upheaval," state news agency Antara reported.

The two former leaders still head two of the country's largest political parties.

A spokesman for Yudhoyono said Wahid and Megawati were "seeking short term political gain" from opposing the fuel hikes.

Andi Mallarangeng noted that the former leaders have also campaigned against a recent peace deal in Aceh province, despite both initiating similar efforts with rebels there when they were in office.

"This is democracy and people can say what they like, but we would have hoped for more statesmanship," he said.

© 2005 AAP

Monday September 26, 5:33 PM
Indonesia Pres Likely To Survive Fuel Price Rise Protest
By Phelim Kyne
Of DOW JONES NEWSWIRES


JAKARTA (Dow Jones)--Indonesia's looming fuel price increases Saturday will power protests that will bruise, but not cripple, the government of President Susilo Bambang Yudhoyono, analysts say.

A government compensation plan and timing of the fuel price increase for the eve of the Muslim fasting month of Ramadan will help defuse public anger over the cut in price subsidies that have given Indonesians some of the cheapest fuel in the world for decades.

Yudhoyono's "government won't be very popular (after the fuel price increases), but I don't think it's in any danger," said Dewi Fortuna Anwar, Indonesian Institute of Sciences deputy chair for social sciences and humanities. He "is no Gloria Arroyo", Anwar added, referring to the recent massive demonstrations against the embattled Philippine president.

Yudhoyono announced the fuel price subsidy cut Friday, but didn't elaborate on the size of the pending price rise.

But the government's recent decision to cap budget-crippling fuel subsidy costs at IDR89.2 trillion in 2005, a reduction from an earlier projection of IDR138.6 trillion, indicates that fuel prices must rise by an average of 50%, said Irene Cheung, ABN AMRO's head of Asia sovereign and foreign-exchange strategy, in a research report.

Subsidized gasoline costs Indonesian motorists IDR2,400, or less than 25 cents, per liter.

The start of Ramadan in the week following the fuel price increases should reduce the type of potentially explosive street protests that plagued Yudhoyono's predecessor, Megawati Sukarnoputri, in 2002 when she announced deep cuts in fuel, telephone and electricity subsidies, said Jakarta-based security risk analyst Ken Conboy. Those protests forced Megawati to abort the planned cuts.

The bulk of Indonesia's 80% Muslim population abstain from eating and drinking during the annual Ramadan period.

"Yudhoyono will benefit from the (Ramadan) fatigue factor," Conboy said. "If (people) aren't drinking all day, they are less prone to go into the hot sun (to protest)."

Govt's Success Hinges On Compensation Plan For Poor

Fuel price subsidy cuts are the latest in a series of highly volatile political challenges that Yudhoyono has grappled with since taking office in October 2004.

Yudhoyono last raised fuel prices March 1 by an average 29% in the wake of the massive Dec. 26 earthquake and tsunami that devastated northwestern Aceh province.

The urgency of this latest planned fuel price subsidy cut was highlighted by last month's mini-currency crisis, when the rupiah plummeted to a more-than-four-year low of 11,800 rupiah against the U.S. dollar. Analysts and government officials said massive dollar purchases to fund oil imports - which go directly into highly subsidized fuel at the pump - contributed to the rupiah's slide.

To be sure, the pending fuel subsidy cut brought thousands of demonstrators onto the streets of Jakarta on Sunday. Last week former Indonesian presidents Megawati and Abdurrahman Wahid publicly urged Yudhoyono to ditch the fuel price hike plan.

But government officials and analysts agree that the current fuel price subsidy program is unsustainable. Fuel price subsidies bled government coffers of $7.4 billion, or 3% of gross domestic product, in 2004.

Key to averting large-scale protests to the fuel price increases will be smooth management of an income support payment program, which aims to cushion the effect of the fuel subsidy cut on 62 million people, or 15.5 million families, said Salim Said, professor of the University of Indonesia's Graduate School of Political Science.

Any evidence of payment-obstructing bureaucratic snafus "will add salt to the wound of rising fuel prices", Said warned.

The government has allocated IDR4.8 trillion for income support payments from October to December. That figure will rise to IDR25 trillion in 2006.

Targeted families in 15 unspecified areas will receive up-front three-month lump-sum compensation payments of IDR300,000 starting Oct. 1, the official Central Statistics agency said Monday. Lower-income families in an additional 24 areas will get such payments beginning Oct. 5.

Inflationary Pressure May Fan Protests

While Yudhoyono will survive the unpopular subsidy cuts, the move will create other economic headaches including a surge in inflation pressure that could outweigh the impact of the government's price hike compensation plan, some analysts warn.

ABN AMRO's Cheung estimates that fuel subsidy cuts will accelerate inflation up to 11% by the end of 2005. Indonesia's on-year inflation rose to 8.33% in August from 7.84% in July, and Bank Indonesia Governor Burhanuddin Abdullah said earlier this month inflation could hit 9% for full-year 2005.

Fuel price hikes will also damp consumption that will limit economic growth in 2005 and 2006 to 5% and 4%, respectively, Cheung said. Those projections compare with official gross domestic product targets of 6.0% in 2005 and 6.2% in 2006.

"While removing subsidies is a good idea on efficiency grounds...the most important issue in our view at present is to address inflationary expectations," said HSBC Global Research in a report. "Reducing subsidies will do the opposite, particularly if offset by compensation payments, and this isn't to mention the potential social dislocation which could result."

Yudhoyono's looming fuel price subsidy cuts would likely be politically safer in November, when income support payments will already be safely in the pockets of a public that might otherwise take to the streets to protest higher fuel prices, Standard Chartered economist Fauzi Ichsan said.

"It's a political gamble," he said. "But markets expect the government to signal its commitment to fiscal prudence and balancing the budget."

I'm worried that they are going to be using the postal system in the distribution of this aid. About half the stuff I've sent through the Indonesian postal system never arrives at the target address. Perhaps not coincidently, these are usually the packages with the most valuable items.

I'm worried that they are going to be using the postal system in the distribution of this aid. About half the stuff I've sent through the Indonesian postal system never arrives at the target address. Perhaps not coincidently, these are usually the packages with the most valuable items.

I suggest if you want to send something, especially from overseas, try use TNT logistic international because just recently, PT POS indonesia and TNT were signing a major agreement and deal to work together. So TNT will help PT POS for overseas shipping etc.

I think why your package was not delivered, because most of them must been stucked in the Custom but they didnt give the receipent a single notice about their package and PT POS couldnt do anything because they dont receive anything. I actually had the same thing before but i was using other major shipping company (since its a public forum, i cant mention their name).

My advice is not to send anything using normal post, just try with TNT, DHL or FEDEX, that way you can claim your stuff if the package is not successfuly delivered. Normal post like PT POS or other government owned postal post usually wont resposinble for the loss (unless its super express service, which usually expensive)

cheers

So, how much government will raise the petrol price, 50% or 100%?

I'm worried that they are going to be using the postal system in the distribution of this aid. About half the stuff I've sent through the Indonesian postal system never arrives at the target address. Perhaps not coincidently, these are usually the packages with the most valuable items.

Throughout the years I've been sending greeting cards to friends and relatives via PT POS, and sadly I agree that many of those cards never reach their intended destination. I'm quite skeptical about the ability of PT POS to deliver all those compensation money.

But hey, we can't be skeptical all the time, right? Maybe this time they'll perform up to standard! :)

I suggest if you want to send something, especially from overseas, try use TNT logistic international because just recently, PT POS indonesia and TNT were signing a major agreement and deal to work together. So TNT will help PT POS for overseas shipping etc.

I think why your package was not delivered, because most of them must been stucked in the Custom but they didnt give the receipent a single notice about their package and PT POS couldnt do anything because they dont receive anything. I actually had the same thing before but i was using other major shipping company (since its a public forum, i cant mention their name).

My advice is not to send anything using normal post, just try with TNT, DHL or FEDEX, that way you can claim your stuff if the package is not successfuly delivered. Normal post like PT POS or other government owned postal post usually wont resposinble for the loss (unless its super express service, which usually expensive)

cheers
Thank you for the info David. I'm sure Customs is a problem, but I was mostly referring to the stuff I send while in Indonesia. I'm probably just unlucky.

Thank you for the info David. I'm sure Customs is a problem, but I was mostly referring to the stuff I send while in Indonesia. I'm probably just unlucky.

Just .. give it to DHL ... they will take care the 'customs' things :-)
They know what they are doing and who to contact ... he he he

Thank you for the info David. I'm sure Customs is a problem, but I was mostly referring to the stuff I send while in Indonesia. I'm probably just unlucky.

No problem man, but here is a tip for you if you want to send something in Indonesia. Dont ever send something valuable or expensive over PT POS, because if your stuff is lost or gone, you CANNOT claim anything. Try use something like TIKI, JNE, Pandu logistic, Cardig or any other mail express company that privately owned. That way, you can claim your stuff if they are missing.

Just .. give it to DHL ... they will take care the 'customs' things :-)
They know what they are doing and who to contact ... he he he

Most private or foreign company usually will take care the custom, such as Fedex, DHL, TNT, ARAMEX, UPS.


cheers

Oh and while I am in it, the distribution of the 100,000 rupiah will not be delivered by PT POS, instead they need to come and see the PT POS staff, bring the card then you get the money. PT POS branches are everywhere around Indonesia and it doesnt make sense that they will send it through postal service because most of the poor doesnt have fixed address.


cheers

Oh and while I am in it, the distribution of the 100,000 rupiah will not be delivered by PT POS, instead they need to come and see the PT POS staff, bring the card then you get the money. PT POS branches are everywhere around Indonesia and it doesnt make sense that they will send it through postal service because most of the poor doesnt have fixed address.


cheers

Well this is also making sense that government is chosing PT POS since it is now who distribute pension.

Exactly and BRI is going to maintain the distribution of the money with government cooperation. The reason to choose BRI is the same reason why they choose PT POS, because they are everywhere in Indonesia(even in some remote areas).

cheers

Don't take what I said too seriously. I really didn't know what I was talking about.

Nothing personal Zoro :hug: we just have a discussion.

Yeah and I wasnt taking it to seriously either, I also worried if they would send it via postal service and the news that they wont delivered it through postal service just making me confidence about the poor subsidy program. Hopefully it works, just like in Mexico. :)

cheers

Murdoch's Star TV buys 20% stake in Indonesia's ANTV

JAKARTA (Bloomberg): Billionaire Rupert Murdoch's Star TV bought a 20 percent stake in PT Cakrawala Andalas Televisi, which runs the ANTV channel in Indonesia, to tap the SoutheastAsian nation's $2.1 billion advertisement market.

Star TV spokeswoman Jannie Poon didn't disclose the value of the transaction. ANTV, controlled by the family of Indonesia's top economic minister Aburizal Bakrie, will use the proceeds to train personnel and improve programming, spokeswoman Zoraya Perucha said. Under Indonesian law, foreigninvestors are allowed to buy as much as 20 percent in a local television company.

Star TV, owned by News Corp., is expanding in Asia's third- most populated nation where advertising sales are estimated to grow 20 percent, according to ACNielsen.ANTV, which has 7 percent of the market, may benefit because its low rates and Star's brand will attract advertisers, analyst Ben Santoso said.

"All television companies expect the big three are losing money," said Santoso, who monitors television companies at PT Namalatu Cakrawala Securities in Jakarta. "If Star TV can attract new advertisers it will help."

PT Rajawali Citra Televisi Indonesia, or RCTI, controlled by former president Suharto's family, is the nation's most popular broadcaster. Indosiar and SCTV rank second and third.

ANTV expects Star TV's investment to help boost its market share from 7 percent, Anindya Bakrie, president of the Indonesian broadcaster, told reporters in Jakarta today, without giving details. Star TV is entering Indonesia after it faced obstacles in China when the government reversed a policy of relaxing controls on international media companies.

"We were looking for the opportunity," in Indonesia, Star TV's Poon told reporters in Jakarta. "This is the first step," she said without elaborating. (***)

From detik.com

Government finally rised the price of fuel:
1. PREMIUM 87.5% ( Rp2400 -Rp4500)
2. DIESEL 105% (Rp2100 to 4300)
3. KEROSENE 185.5% (Rp700 to Rp2000)

A brave move!

Yeah, its really brave and its like a gamble for that decision. i was waiting until 12 AM until finally they announced it. Btw take a look at diesel price!

Lets hope its going to be peaceful until tuesday...I am really worried about the mass protests tomorrow.

cheers

Yeah, its really brave and its like a gamble for that decision. i was waiting until 12 AM until finally they announced it. Btw take a look at diesel price!

Lets hope its going to be peaceful until tuesday...I am really worried about the mass protests tomorrow.

cheers

I dont understand why government decided to rise the price of kerosene that high.
One can argue that premium petrol only effect car owners but kerosene, that's what all indonesian household uses.

Hope the protests that follow this price hike will stay under control. I agree that the raise in kerosene price is high. Hope that the subsidy given out can help those who're really hit hard by the hike.

When i read on tv, they showed me a different kind of price on kerosene. The expensive one (2000) is for industrial kerosene and for the house/non industrial kerosene stays at 700 rupiah. But the list could be wrong.

My prediction is why they raise that much (if it is) because they want to stop the kerosene smuggling activity or to advise poor people to use LPG again, which is very expensive for them.

cheers

Apparently kerosene prices prior to today's rise, at Rp700, is only ONE TENTH of world prices. If so, this is the highest subsidised fuel in Indonesia which explains why the govt felt that it had to raise it by so much today..

Old price New price %Change
(In Rupiah/liter)

Kerosene 700 2,000 185.7%
Premium gasoline 2,400 4,500 87.5%
Auto diesel 2,100 4,300 104.8%

------------------------------------------------------------------------


Indonesia Doubles Gas Prices Amid Unrest
By ALI KOTARUMALOS, Associated Press Writer
49 minutes ago



JAKARTA, Indonesia - Indonesia said Saturday it will more than double the average cost of fuel to try to stave off an economic crisis, despite protests by thousands of people, some of whom burned tires and threw rocks at police.

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Security forces responded to Friday's demonstrations by firing tear gas at more than 100 rioting students, then chasing them down and hitting some of them with sticks.

President Susilo Bambang Yudhoyono said the cash-strapped government of this major oil producer, which for years has subsidized fuel to let motorists fill up for less than 95 cents per gallon, could not afford to keep doing so amid spiraling global energy prices.

The government said after a three-hour Cabinet meeting that — as of Saturday — the cost of gasoline will go up 87 percent — to $1.71 per gallon. It said the price of diesel fuel will more than double and the cost of kerosene will nearly triple.

That will push up the price of everything from rice to fish to cigarettes in the sprawling country of 220 million people, half of whom live on less than $2 a day.

"I realize that this is not a popular policy ... but we have to do it to save the nation's budget and the future of the country," Yudhoyono said as university students set tires ablaze, vandalized a bus and exchanged a volley of rocks with police on a busy street in the capital.

He called on everyone to remain calm, saying "anarchy will only deter investment."

Despite the brief flare-up in Jakarta, most rallies were peaceful, scattered and relatively small — given the size of the country and its history of massive street rallies. But more demonstrations were expected, and the government deployed thousands of soldiers and police at major intersections, the presidential palace and other strategic locations.

Indonesia is Southeast Asia's only member of OPEC, but it has to import oil because of decades of declining investment in exploration and extraction due to corruption and a weak legal system that makes people wary of doing business here.

Most in Indonesia agree that the current level of fuel subsidies are unsustainable, especially with the price of world oil hovering at $65 a barrel.

Coordinating Minister for the Economy, Aburizal Bakrie, said Indonesia would consider adjusting its figures if global prices slide — but if they go up the country may have to hike fuel costs once again.

Raising prices is a sensitive issue in Indonesia, where a big increase in 1998 triggered rioting that helped topple former dictator Suharto. Protests also forced former President Megawati Sukarnoputri to scale back a fuel price increase in 2002.

This is the second time that Yudhoyono, who was elected last year on promises to fight poverty and revive the economy, has pushed up prices. Some said he betrayed those who put him in office.

"I'm disappointed in SBY," said Achmad Syarif, 21, referring to the president by his initials as many Indonesians do. "This is going to place a heavy burden on the people. ... There have to be other ways to solve the economic crisis."

Economists said Yudhoyono had little choice.

Nearly a quarter of the government's budget goes to fuel subsidies, with $7.4 billion doled out last year.

At the same time, other sectors, such as health and education, are sorely underfunded.

The government hopes to balance its budget by capping the subsidies at $8.68 billion this year, while bolstering confidence in the stock market and the local currency, the rupiah, both of which have taken a hit recently amid the economic uncertainty.

Seeking to cushion the blow to the poor, the government has offered 15 million poor families a lump-sum compensation payment of $29.

Coordinating Minister for People's Welfare Alwi Shihab said those who are eligible can pick up their money at local post offices on Saturday morning.

Wow it's unexpectedly more than 100% rise, btw how much the inflation would rise this year after the increase in the fuel price?
Will there be some halted construction projects in Indonesia because of the increase in the transportation cost?

Premium price is Rp 4500 per litres
http://img120.imageshack.us/img120/715/bengsin10jk.jpg

Rp 10.000 for 2,2 litres
http://img120.imageshack.us/img120/4442/bengsin23ja.jpg

Premium price is Rp 4500 per litres
http://img120.imageshack.us/img120/715/bengsin10jk.jpg

Rp 10.000 for 2,2 litres
http://img120.imageshack.us/img120/4442/bengsin23ja.jpg
:eek2: :eek2: :eek2: :eek2: :eek2: :eek2: :bash: :bash:

does anyone know for how many months the government distribute the 100K rupiah for the poor family?

Its every month but the government will distribute the money every three months, so in total they will get 300,000 rupiah.

How much is unleaded gasoline in the US?

cheers

does anyone know for how many months the government distribute the 100K rupiah for the poor family?
It dun very happy with this policy
This only makes people more lazy
They should use those money to lower the health cost in gov hospital
or lower the education cost

Sorry, I disagree, I am happy with that policy, its not making them lazy, it helps them a lot. Maybe you have no idea how much 100,000 worth for them...its a lot.

The education cost would be gone by next year, from elementary school until high school.

cheers

Sorry, I disagree, I am happy with that policy, its not making them lazy, it helps them a lot. Maybe you have no idea how much 100,000 worth for them...its a lot.

The education cost would be gone by next year, from elementary school until high school.

cheers

My family in Cianjur told me schools there are free now (for elementary school) and the government will do the same for SMP/SMA next year.

Oh yeah, Rp100,000 may look small but for many families that's what they earn for few days working. This amount means a lot for them especially those living in smaller city.

probably the 300K (100K permonth for 3 months) is only intended for short term (until this end of yr) but roughly i'm quite agree with the policy because it will reduce the short term impact of the rise of BBM price
but i'm pretty sure that if the governemnt is clever enough they will change the allocation of the money from BBM subsidy and those 300K into education, infrastructure development and public services

Its every month but the government will distribute the money every three months, so in total they will get 300,000 rupiah.

How much is unleaded gasoline in the US?

cheers
I have read that Rp4500 per liter translates to about $1.67 a gallon. In the US it is around $2.90-$3 a gallon. That means in the US unleaded gasoline is about Rp8000 per liter. In Europe it's even higher, around $4-6 (depending on the tax) per gallon.

What I heard is that the cash subsidy will only last till the end of next year.

Minister says fourth-quarter GDP to be hit by Bali bombings

KUALA LUMPUR (AFP): Indonesia's economy will suffer a new blow in the fourth quarter after the Bali bombings, the country's planning minister said on Sunday.

National Development Planning Minister Sri Mulyani Indrawati said Saturday's bombings would be a second blow to growth after the government more than doubled fuel prices over the weekend.

"With this bombing I think the fourth quarter will be double-hit because first we are increasing quite significantly the fuel price that may lead to an increase in inflation, (which) will maybe to some extent reduce the potential growth that we areexpecting," Sri Mulyani told reporters on the sidelines of the World Islamic Economic Forum here.

"With this Bali bomb, I think it will be reduced even more. If we are lucky I think we can still maintain 5.7 or 5.9 by the end of 2005," she said.

The official growth forecast for 2005 is 6.0 percent but Sri Mulyani earlier this month had already predicted growth would slow to 5.8 percent for the year after rising oil prices and interest rates.

While the minister said the fourth quarter would be a "very hard quarter for us", she said fast action by the government to deal with the aftermath of the bombings would hopefully mean that "in 2006 we expect to have a normal growth."

The three bombings killed at least 26 people in Bali, just days before the third anniversary of nightclub attacks which killed 202 people on the Indonesian resort island. (**)

that's suckz dude....!!! my goshh...im soo mad

SE Asia Stocks-Jakarta rebounds to 3-wk highs, S'pore down

SINGAPORE, Oct 3 (Reuters) - Indonesian stocks closed at a 3-week high on Monday as a positive reaction to the removal of some state fuel subsidies outweighed the impact of fatal bomb attacks on the resort island of Bali.
The attacks, which killed up to 27 people, initially knocked 2.2 percent off the Jakarta index.

They also contributed to a weaker close in Singapore's main index, knocking shares with interests in Indonesia, and sending Singapore Airlines down 0.9 percent on fears the bombings may hurt tourism in the region.

Indonesia's key stocks index finished up 0.38 percent.

The Indonesian government late on Friday raised domestic fuel prices by an average of 123 percent, far more than market expectations, which were in the range of a 30 percent to 50 percent rise.

Overall the market favoured the fuel price hike, seen as lowering the fuel subsidy bill, cutting the trade deficit by lowering fuel consumption, and convincing credit agencies to maintain their sovereign ratings, traders said.

The also said the bombing factor was shortlived.

"If we are to use past experience as a reference, we could see that during every bombing the market has always been sharply down in an over reaction. Immediately afterwards the market rebounds," said Kim Eng analyst Katarina Setiawan.

Those Jakarta stocks that did end weaker included banks and consumption-sensitive firms such as auto-distributor Astra International , down 1.5 percent, and noodle-maker Indofood Sukses , down 5.5 percent.

But a 15 percent surge in Perusahaan Gas Negara and a 3.1 percent rise in Unilever Indonesia helped the index recover.

Singapore's Straits Times Index closed 0.16 percent lower, weighed down by a 0.8 percent fall in Singapore Telecommunications , which has a stake in Telkom Indonesia's mobile phone arm, and a 1.1 percent fall in retailer Dairy Farm , which has a stake in Indonesian supermarket chain PT Hero .

Singapore Airlines, which operates 3 daily flights to Bali, said its flights were continuing as scheduled and that it saw no substantial cancellations.

By 0939 GMT, Thai stocks had fallen 1.06 percent, led by losses in telecom shares such as Advanced Info Service , down 4 percent.

Brokers said telecoms were sold after unlisted number-three mobile phone operator TA Orange, 83 percent owned by True Corp , showed a modest rise in new subscribers in August.

Advanced last week said its net new subscribers dropped 11 percent in August, while the number two operator Total Access Communication PCL reported a 2.74 percent drop in net new subscribers in the same month.

Shares in Kuala Lumpur edged down 0.24 percent, but the Philippine index nudged up 0.19 percent.

IMF: bombs to have little impact on Indonesia economy

TOKYO, Oct 3 (Reuters) - Indonesia's economy is likely to be only slightly affected by the bombings that rocked the tourist island of Bali over the weekend, the International Monetary Fund's top official for Asia said on Monday.
David Burton, director of the IMF's Asia and Pacific department, noted that tourism accounted for about 5 percent of Indonesia's economy, and that Bali's tourism industry was responsible for a significant portion of that.

"So it could have some limited effects on growth in Indonesia," Burton told a news conference in Tokyo, while also pointing out that previous bombings had caused little economic damage on a national scale.

However, he added that it was difficult to judge at this point how big an impact the bombings would have.

Burton said in an interview with Reuters late last month that Indonesia's economy was fundamentally sound. The IMF has said it expects the economy to grow 5.8 percent in 2005 and 2006.

Indonesia's chief economic minister said on Monday the economy should expand by 5.9 percent this year, slightly lower than the budget forecast of six percent.

^^ WOrld Bank shares IMF's optimism, predicting gdp growth to be 'close to 6%' this yr. The Chief Economics minister Bakrie also said separately that he expects growth to accelerate to 6.2-6.5% next year.
---------------------------------------------------------------------

Bank Dunia Optimistis Pertumbuhan Ekonomi Indonesia Bisa 6 Persen
Senin, 03 Oktober 2005 | 17:22 WIB

TEMPO Interaktif, Jakarta:Kepala Perwakilan Bank Dunia untuk Indonesia Andrew Steer menyatakan, optimisme tersebut karena Bank Dunia percaya pada saat ini perekonomian Indonesia sudah sangat kuat. Selain itu juga investasasi telah tumbuh dengan cepat.

“Kami menduga pertumbuhan ekonomi akan hampir mencapai 6 persen tahun ini,” kata Steer di Jakarta, Senin (3/10).

Stephen Schwartz, pejabat senior perwakilan Jakarta Dana Moneter Internasional juga memperkirakan ekonomi Indonesia akan tetap tumbuh walaupun beberapa kalangan menyatakan pesimistis.

“Ini didasari dari berlangsungnya pemilu yang damai tahun lalu dan stabilitas kondisi sosial ekonomi yang terjadi,” tuturnya.

Selain itu, kata dia, pengumuman kenaikan harga BBM oleh pemerintah ternyata ditanggapi positif oleh pasar.

“Protes masyarakat pun sudah mulai mereda.”
RR. Ariyani

High inflation will dampen consumption, but let's hope that investments and exports continue to be strong for the remainder of the year.
-----------------------------------------------------------------------


Indonesia's Inflation Rate at 33-Month High in Sept. (Update1)

Oct. 3 (Bloomberg) -- Indonesia's inflation accelerated at its fastest pace in 33 months in September, adding to expectations the central bank will raise interest rates again to curb the price pressures expected from the government's Oct. 1 fuel cost increase.

Consumer prices in Southeast Asia's largest economy climbed 9.1 percent from a year ago after rising 8.3 percent in August, the central Statistics Bureau said in Jakarta today. That was faster than the median 8.8 percent increase forecast by 13 economists in a Bloomberg survey.

President Susilo Bambang Yudhoyono's government on the weekend more than doubled retail fuel prices to cut its subsidy burden and keep the budget deficit at about 0.9 percent of gross domestic product. The move may increase Indonesia's inflation rate by as much as 4 percentage points and add pressure on the central bank to raise interest rates, Planning Minister Sri Mulyani Indrawati said yesterday.

``Inflation will be a lot higher'' with the doubling of fuel prices, Fauzi Ichsan, chief economist at Standard Chartered Bank Plc in Jakarta, said before the announcement. ``That means that interest rates will be raised.'' Ichsan said he may change his economic growth and inflation forecasts.

Indonesia's central bank has raised its benchmark interest rate by 1.5 percentage points to 10 percent since July 5. Bank Indonesia may raise rates further to contain inflation, which it expects will exceed its 9 percent target for the year, Senior Deputy Governor Miranda Goeltom said on Sept. 28.

Monday October 3, 10:56 AM

Indonesia optimistic on growth despite bombs, fuel

JAKARTA, Oct 3 (Reuters) - Indonesia's government is largely sticking to its growth forecast for 2005 despite huge fuel price increases and bomb blasts on the tourist island of Bali at the weekend but independent economists are much less optimistic.
Chief economic minister Aburizal Bakrie said on Monday that gross domestic product (GDP) should expand by 5.9 percent this year, only slightly lower than the budget forecast of 6 percent.

Both Bakrie and finance minister Jusuf Anwar said consumer price inflation would be under 10 percent at the end of the year.

"Because the impact from the Bali (bombings) was not significant, I am sure that GDP growth could reach 5.9 percent this year," Bakrie told reporters.

David Burton, director of the International Monetary Fund's Asia and Pacific department, told a news conference in Tokyo that tourism accounted for only about 5 percent of Indonesia's economy and he expected the Bali bombs to have only "limited effects" on overall national growth.

Burton said in an interview with Reuters late last month that Indonesia's economy was fundamentally sound. A


Bakrie said year-end inflation would be slightly under 10 percent, compared to the government's estimate in the budget of 8.55 percent, and would head towards eight percent next year.

Data published on Monday showed that annual inflation in September was at its highest since December 2002 at 9.06 percent, up from 8.3 percent in August and higher than the market estimate of 8.86 percent in a Reuters poll.

The government was forced to hike politically sensitive energy prices from Saturday in its effort to cut subsidies and hold down the budget deficit after world oil prices hit record highs this year.

The retail price of petrol almost doubled and that of household kerosene, used for cooking, almost tripled.

Although most analysts said the move would be positive for the country in the long run, they said short-term shocks would be felt in the economy and could push inflation higher, which would force the central bank to raise interest rates again.

Christa Janjic, senior economist at UBS, praised the big price rises as a bold policy step that should help address balance of payments and budget pressures.

But she said in a report: "We expect inflation to reach 14 percent year-on-year by November, and to stay above 12 percent at least until mid-2006."

RATES TO RISE

"We maintain our view that interest rates may have to be raised to 14 percent, and bring the timing of this forward to end-2005 from the second quarter of 2006 previously," she added.

Interest rates on Indonesia's benchmark one-month central bank certificate (SBI) have risen by nearly 260 basis points so far this year to 10 percent.

"This policy change signals to us that the government is committed to the efficient allocation of resources and we foresee savings from spending on fuel subsidies in 2006," Sailesh Jha, a research analyst at Credit Suisse First Boston, said.

However, he said in a research report that CFSB was revising down its GDP forecast for 2005 to 4.9 percent from 5.2 percent.

It forecast that inflation would be 9.1 percent this year and 10.5 percent in 2006.

Despite its membership of the Organization of the Petroleum Exporting Countries, Indonesia still depends on imports of energy products due to declining production and ageing oil wells.

Official data on Monday showed that Indonesia had a trade surplus of $1.63 billion in August, lower than the market forecast of $2.15 billion and the $2.29 billion recorded in August 2004. (Additional reporting by Adrian Syahputra)

The inflation situation is getting a bit out of control, especially when you consider how low the interest rates are relatively speaking.

i think the indonesian economic is quite sound atm
hopefully government can allocate money from BBM subsidy into better sector such health, tourism and especially EDUCATION

Indonesia to enter global bond market again this week: finance minister







JAKARTA: The Indonesian government will launch its second global bond issue this week consisting of two series, with one carrying a tenor of 30 years for the first time, Finance Minister Jusuf Anwar said.

"The government has decided to enter the market this week... we're already in the market today (Tuesday) for an international dollar bond issue," Anwar told reporters.

Saturday's Bali bombings, which killed at least 19 people, are not expected to have an impact on demand for the bonds, he said.

"They (investors) were initially concerned, but it turns out that there's no impact from the Bali bombings."

Anwar said the bonds will come in two series, with tenors of 10 and 30 years.

He said that the pricing and size of the global bond issue have not yet been decided.

Anwar said the government's decision to raise fuel prices has also bolstered investors' confidence in the economy.

On Saturday, the government raised fuel prices steeply, by an average of 125 percent, to help reduce the subsidy burden and ease pressure on the state budget deficit.

"The bottom line is that the fuel price increase has raised confidence internationally that the government dares to take bold actions for the health of the economy," Anwar said.

He said the joint lead managers for the bond sale are "very optimistic" of high demand for the 30 year-bond series, but did not say who the lead managers were.

The government is aiming to raise a total of 43 trillion rupiah (41.75 billion dollars) through bond issues this year to help cover the budget deficit and refinance maturing bonds.

In April, it sold global bonds worth one billion dollars at a yield of 7.375 percent.

The proposed second bond issue may amount to 1.25 billion dollars, said Standard and Poor's Rating Services in a statement.

It said the bonds will come in two tranches, one of at least 750 million dollars maturing in January 2016 and the second of at least 250 million dollars maturing in October 2035.

SP assigned a rating of "B+" on the proposed global bond issue, citing Indonesia's declining debt and debt-servicing burden and its track record of conservative fiscal management.

i think the indonesian economic is quite sound atm
hopefully government can allocate money from BBM subsidy into better sector such health, tourism and especially EDUCATION

I'm not so optimistic. Industry and manufacturing (particularly those that are labour-intensive) needs a lot of push, GDP growth at 5-6% p.a. is NOT enough to reduce unemployment and the rising unemployment we have every year is a time bomb for future unrest and instability.......

Tuesday October 4, 7:28 PM
Indonesia Ctrl Bank Ups Rates As Inflation Builds


By I Made Sentana
Of DOW JONES NEWSWIRES

JAKARTA (Dow Jones)--Indonesia's central bank Tuesday tightened monetary policy for the third time in five weeks, raising the country's benchmark interest rate by 100 basis points to 11.0% as it struggles to keep a lid on inflation.

The latest interest-rate rise comes a few days after the government's long-awaited fuel price rises, which threaten to push Indonesia's inflation rate to 15% in coming months, economists say.

Bank Indonesia Governor Burhanuddin Abdullah told reporters that the aim of the interest-rate increase, which takes effect immediately, "is to cool down the temperature of the economy."

He indicated further interest-rate rises are possible.

"Bank Indonesia will continue to...take policy adjustments if necessary," the governor said.

Analysts said they expect further rate increases, but the tightening trend may be only temporary, as the central bank could cut interest rates next year once the impact of the fuel-price spike passes through the economy.

Burhanuddin said that in light of weaker-than-expected third-quarter economic indicators, Bank Indonesia had lowered its forecast for economic growth in 2005 to 5.7% from 5.9% and its forecast for 2006 growth to 5.9% from 6.1% in 2006.

Indonesia's exports growth will also likely to be lower than expected, as global trade volume is likely to be less than its previous forecast.

"Because of that, our balance of payments performance is not expected to improve as yet," the central banker said.

The Central Statistics Agency reported Monday that Indonesia's trade surplus fell 25% in August to $1.63 billion from $2.18 billion in July.

Financial market participants welcomed the interest-rate move.

The Indonesian rupiah gained ground after the policy tightening was announced, ending 1.2% higher Tuesday. The dollar fell to IDR10,190, its lowest closing level since Sep. 20, compared with IDR10,310 Monday.

Indonesian shares also ended higher, led by gains in mining and telecommunications blue chips. The Jakarta Stock Exchange's Composite Index ended up 1.6%, or 17.752 points, at 1101.166.

"The gain (in the main index) today was a testimony to the market's determination to reward the government for cutting fuel subsidies for future growth," said an analyst with Paramitra Securities.

Follows Fuel Price Rises

The central bank began its most recent monetary tightening in late August to help support the then-ailing currency.

Soaring global oil prices had sharply increased Indonesia's fuel-import bill, which generated demand for dollars and sales of local currency.

Bank Indonesia raised its benchmark rate by 75 basis points to 9.50% on Aug. 30 and by a further 50 basis points to 10.0% on Sept. 6.

Burhanuddin indicated that he hoped the latest rate rise would support flows into the rupiah.

"With an 11% Bank Indonesia rate, the differential with the U.S. Federal Reserve rate is 7.25 percentage points, (and) I think this is a very attractive (level) compared to previously," he said. The Federal Reserve's key interest rate is now at 3.75%.

Tuesday's rate increase follows the government's announcement this past weekend of a sharp increase in fuel prices to reduce government subsidies, which had led to a sharp deterioration in government finances.

The government, on average, more than doubled fuel prices Saturday.

Analysts said the latest rate rise shows that the central bank is becoming more proactive.

"What (the central bank) is trying to control is expected inflation rather than actual inflation," said Standard Chartered economist Fauzi Ichsan.

The central bank governor said inflation could hit at least 12% by the end of the year.

Indonesia's consumer price index rose 9.1% in September from a year earlier.

"I think it (the rate rise) is being responsible, especially when it looks like CPI is about to head higher," said Song Seng Wun, a vice president of regional economics at CIMB-GK Research Pte. Ltd. He said the CPI could rise by 15% in October from a year ago.

Still, the interest-rate increase will drag on growth.

"Now the best-case scenario is around 5% (economic growth) over the next 12 months, but more stronger growth will emerge in the second half of 2006, back up around 6%," Song said.

He said the central bank could raise rates by a further 75 to 100 basis points by the end of 2005, but that rates could fall in early 2006 once inflation expectations ebb.

I think the government is doing fine with the economy, remember they have a lot of problem this year, Oil prices, Tsunami, the increasingly US interest rates and now this bombs. I said, lets put all the problem in 2005 and by 2006 we will have speedy recovery and much faster economic growth.

The Market is also agree with the government.


Indonesia Shares End Higher Led By Telkom, Gas Negara

JAKARTA (Dow Jones)--Indonesian shares ended higher Tuesday on gains in mining and telecommunication stocks which rose on hopes that last week's cut in fuel subsidies will help the local economy, dealers said.

"The gains (of the main index) today was a testimony of the market's determination to reward the government for cutting fuel subsidies (which will help the economy grow in the future)," said an analyst with Paramitra Securities.

The Jakarta Stock Exchange's Composite Index ended up 1.6%, or 17.752 points, at 1101.166.

Gainers led decliners 98 to 36 with 64 stocks unchanged. Volume rose to 2 billion shares valued at IDR1.9 trillion, compared with 1 billion shares valued at IDR1.4 trillion Monday.

Dealers said shares also rose on the stronger rupiah against the U.S. dollar and because the market has proven resilient to bomb attacks like the one on the resort island of Bali over the weekend.

The dollar was trading lower at IDR10,188, compared with its previous close of IDR10,310 after the central bank's decision on Tuesday to raise its key BI rate to 11% from 10% previously.

---

Thanks God we have Golkar back in majority with their elite members.

cheers

I think the government is doing fine with the economy, remember they have a lot of problem this year, Oil prices, Tsunami, the increasingly US interest rates and now this bombs. I said, lets put all the problem in 2005 and by 2006 we will have speedy recovery and much faster economic growth.

cheers

it's good to be optimistic, but who's to say that no bombs will go off in 2006? I was hoping that 2005 would mark the end of "year of living with bombs" for indonesia, but I was wrong.

Well, the reason why i am being optimistic is because i see yesterday and today result of shares market and rupiah, I think we are now living in dangerous time and investors are already adapted with this situation in Indonesia. On top of that, I think the Indonesian economy and foreign investors are already immune with this bombing experiences. Of course, I dont want the bombings to continue next year but i see small chance that the bombings will have greater impact and damage to the future of Indonesia's economy. These, i think will take the bombers mastermind to actually take note if their havoc action is becoming a useless action and not going to have a greater impact for them and their followers..... Unless the mastermind is a cyco who likes to fool, just like the DC snipers.

cheers

the mastermind is a cyco who likes to fool, just like the DC snipers.

Exactly where my worry come in. These guys got an aim, but it's not to destabilize rupiah or our tourism industry. I think I share the same kind of worry with Alvin. The not-so-stable political outlook and high level of unemployment can ultimately release a time-bomb in Indonesia, and it can happen anytime. This is what the SBY government must realize. If by 2009 (when SBY's term ends) nothing much has been done to address the situation, it could perhaps be too late to do something about it.

Many things are being done to address the situation. SBY is constantly making trips overseas in an attempt to woo investors back to the country. To Indonesians this may not seem important, but foreign investment in Indonesia (even at the current chronically low levels) is roughly 3x as high as domestic investment. It is the key to rapid, sustained economic growth. He has raised fuel prices to about 60% of market prices to stave off a budget crisis. He has diverted some of this money into social programs and into improving government salaries. He has also cut personal income taxes to encourage consumer spending. There's only so much the government can do while bombs are blowing up foreign tourists and people are protesting the fuel price increases and subsequent inflation.

---

Here's an article from the Financial Times:

Jakarta raises key rate to fight inflation after fuel price increases
By Shawn Donnan in Jakarta

Indonesia's central bank raised its key short-term policy rate 100 basis points to 11 per cent yesterday in anticipation of a surge in inflation caused by Jakarta's decision to increase domestic fuel prices aggressively.

The move comes as Indonesia prepares to go back to global bond markets as early as today to sell $1.25bn (EU1.05bn; £700m) in sovereign bonds to finance the budget.

It also adds to an aggressive turnround in the economy since market turmoil in August sent its currency, the rupiah, to four-year lows.

At that time investors criticised what they said was Bank Indonesia's slack attitude towards monetary policy and a delayed reaction by the government of President Susilo Bambang Yudhoyono to soaring global fuel prices and subsidies.

But with yesterday's move the central bank has raised its key policy rate by 225 basis points in six weeks. With its bold move on Saturday to raise government-set fuel prices by an average 126 per cent, Mr Yudhoyono's administration has also won praise from economists.

The goal of the rate rise, said Burhanuddin Abdullah, Bank Indonesia's governor, "is to cool down the temperature of the economy".

He said future rate rises would follow "if necessary".

The main target was inflation expected to reach 14-15 per cent in the coming months as the fuel price increases work their way through the economy. The central bank said it had reduced its forecast for economic growth in 2005 to 5.7 per cent from 5.9 per cent. It also lowered its forecast for next year to 5.9 per cent from 6.1 per cent.

While most economists expect the fuel price increases to affect Indonesia's growth in the short term, they also believe the move will be positive for growth in the long term as it eases the burden of subsidies on Jakarta's budget.

The government is also seeking to minimise the impact on the economy by implementing measures such as lowering import tariffs on sugar and other products and raising the price paid for unhusked rice to farmers. It is also paying just under $10 every three months to 15.6m poor families as part of a compensation scheme ministers have said might eventually be the basis for a more permanent social security programme.

The rupiah gained 1.2 per cent on yesterday's rate increase, which the central bank said should bring capital flows back as it would widen Indonesia's spread over US Treasuries. The Jakarta Stock Exchange closed 1.6 per cent up.

Indonesia's dlr bond over twice subscribed-source

HONG KONG, Oct 5 (Reuters) - Indonesia's proposed $1.25 billion , 2-part bond issue, has attracted nearly $3 billion in orders so far, a source familiar with the deal said on Wednesday.

The B2/B-plus-rated deal, which will be used to help finance the country's budget deficit, is likely to be priced later on Wednesday, the source said.

Indonesia's second international debt issue this year comes just days after the government sharply raised domestic fuel prices to restore investor confidence in the economy and after deadly bomb blasts in Bali killed 22 people.

The government would be raising at least $750 million through a tranche due January 2016 and a minimum $250 million through another 30-year bond.

The indicative yield on the 2016 issue ranged between 7.625 and 7.75 percent, while the longer-dated bond was expected to yield 8.625 percent to 8.75 percent.

Citigroup, Credit Suisse First Boston and Merrill Lynch are the lead managers.


In late August, the rupiah fell to a four-year low of 11,750 per dollar as investors worried that soaring costs of oil imports would hurt the country's balance of payments and increase government spending as it keeps domestic fuel prices low.

But the central bank has raised interest rates sharply -- the latest increase on Tuesday -- and the government boosted domestic fuel prices at the weekend.

Indonesian rupiah at 3-wk high on investment flows

SINGAPORE, Oct 5 (Reuters) - The Indonesian rupiah rose to a three-week peak on Wednesday, more than recouping losses made last week before the rise in domestic fuel prices, on heavy inflows of investment from offshore players, traders said.

The rupiah was quoted at 10,100 per dollar, a 3.5 percent jump in the past three sessions.

A Jakarta-based trader said there was talk of a foreign investor bringing in dollars to buy a government stake in a local bank.

Other traders said offshore investors had been pouring into Indonesia's bond and equity markets this week after the larger-than-expected rise in fuel prices on the weekend, which could result in lower oil imports and a reduction in government subsidies.

"There are good inflows from offshore investors in stocks and bonds," said Surendra Rosha, head of global markets at HSBC in Jakarta.

The higher fuel prices are expected to feed into consumer price inflation, which is already running high at an annual 9.1 percent rate.


The central bank on Tuesday raised its policy rate, the target yield on one-month bonds, by one percentage point to 11 percent.

More money for the government. If the Rupiah continues to strengthen the Indonesian government might just end the year with some extra cash.

---

Indonesia raises bond issue size by 20 pct - source

HONG KONG, Oct 5 (Reuters) - Indonesia has raised the issue size of its 2-part bond by 20 percent to $1.5 billion on the back of strong demand, market sources said on Wednesday.

The deal, comprising a tranche due in January 2016 and another due in October 2035, is expected to be priced later on Wednesday.

The 2016 bond issue will have an aggregate size of $900 million, while the 30-year tranche will be $600 million, they said.

A source said the 2016 deal was likely to yield 7.625 percent, while the 30-year portion was seen yielding 8.625 percent. Both were at the tight end of their indicative yield range.

Citigroup, Credit Suisse First Boston and Merrill Lynch are the lead managers.

He has also cut personal income taxes to encourage consumer spending.



i read on a post somewhere said that income tax in Indonesia is one of the highest in the region. If government decided to lower, i think it's good at least people already burdened with the hike of fuel proce.

so, what is the new income tax segregation now?

i read on a post somewhere said that income tax in Indonesia is one of the highest in the region. If government decided to lower, i think it's good at least people already burdened with the hike of fuel proce.

so, what is the new income tax segregation now?

I think it is 20% flat for all income above Rp1,000,000/month (someone correct me if I'm wrong). But starting from next year they are planning to increase the tax-free threshold to Rp1,100,000

I think they should consider adopting a progressive tax system, whereby the proportion of tax you pay increases the more you earn. For example 20% for income between Rp1,100,000 - Rp5,000,000, 25% for Rp5,000,000-Rp10,000,000 and 35% for all income above Rp10,000,000.