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Quarterly
Issue: Winter 2004
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AICC'S Response to the Tsunami Disaster
The American
Indonesian Chamber of Commerce and its members express their deepest
condolences to the victims, families, and the people of Indonesia,
who have suffered a deep loss as a result of the December 26, 2004 tsunami.
Nature’s overwhelming vengeance must be met with an
overwhelming human response. The reply from members as corporations
and as individuals has been stunning and immediate. Their generous
commitment of cash, pledges, and in-kind contributions to numerous
charities as well as their work as individual volunteers helping as
relief workers coupled with the strong presence of multilateral forces
anchored by US
transport airplanes, helicopters and amphibious forces providing aid and
logistical support, will help Aceh move toward full recovery. Those
wishing further details about current events in Aceh or those wishing to
donate should contact the AICC at (212) 687-4505 or
aiccny@bigplanet.com. A list of qualified relief organizations who
accept earmarked contributions for Indonesia are listed at AICC's
website: www.aiccusa.org. Your support in any way is
encouraged and welcome.
Letter from
AICC’s Chairman, Allan Harari
Dear Members and Friends,
The time has come for the private sector to step up to plate on Indonesia.
An unprecedented opportunity exists for us to shape the future of
US-Indonesia relations, which, if properly handled, will pay dividends
for years to come. In spite of the terrible disaster striking at Aceh Province in Sumatra,
a year from now, we will look back on 2005 as the year the Indonesian
economy rebounded out of its economic doldrums, survived one of the
planet’s major natural disasters and started to churn with renewed
and more diverse vigor. The old guard which constructed the
tipsy but lucrative conglomerate structure which led to the necessity of
IBRA and generated an unparalleled capital exodus, has licked their
wounds, consolidated and in many cases come back in much leaner and
focused form. Younger Indonesian entrepreneurs have emerged and
established enough of a foothold to compete against their larger older
brothers and on the international stage. A recent visit of KIKAS members
combined last year’s PERMIAS delegation suggests we will be seeing
a new and younger crowd. More importantly, a lot of them are looking to
the future as evidenced by the return of local capital and the launching
of new business ventures.
The environment is reminiscent of that in the
early 80’s when the economy was not ready for the massive infusions
of investment capital which landed during the late 80’s and
90’s. Although the focus is still internal, this academically and
empirically educated generation is paying attention to trade, the growth
of corporate infrastructure and will not take 10-15 years reach their
pre-crisis operational levels.
Where the comparison differs is in the
current segregation of business opportunity from government meddling
cleaved from the political meandering of the past 6 years. Political
appointments are viewed as musical chairs by a business community which
learned to work and prosper without the previously vaunted
“blessing”. Don’t expect the same pre-crisis rush
to jump on the bandwagon but they are focused on business.
Finally, all the above will transpire under
the framework of a new SBY administration comprised of many old AICC
friends who will soon start a series of visits to the US.
The Chamber, with its legacy of promoting
US/Indonesia commerce continues to play a vital role. The current
configuration of our board provides us an opportunity for the
organization and those wishing to more closely participate in the next
cycle. Therefore, please give some thought to joining the AICC
board or recommending someone with the kind of forward thinking
personality and corporate affiliation who can make a contribution to the
growth of the AICC activities. Directorship does not require a great time
commitment and will provide you an intimate proximity to the corporate
and political decision makers who will shape the future of the
post-Soeharto Indonesia.
Hear from you soon.
Very truly yours,
Allan Harari
Chairman
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Managing Expectations
Commentary by Wayne Forrest,
Executive Director
A
surging stock market, rising bond ratings and newborn optimism
accompanied the September election of Susilo Bambang Yudhoyono as
President. He rolled up his
sleeves in October and projected a manager’s image. As 2004 ends Indonesia
has much to be thankful for: 3 peaceful elections, stable macroeconomic
conditions and a stabilizing political situation for a government elected
by popular rather than a parliamentary mandate. The fourth largest nation of the
world has now shown the world that democracy and Islam are compatible and
you don’t need to go to war to achieve it.
Indonesia
now fields one of its best lineups in years to go up against a formidable
pitching staff headed by: bureaucratic inertia, high liquidity/low
lending, radical jihadists and separatists, self serving legislatures,
counterintuitive court decisions, strong regional investment magnets
(India, China), as well as human resource deficits. The government doesn’t
have to hit homeruns but a rally of singles and doubles will do.
50
days have passed and already you can see some patterns in SBY’s
government: careful attention to sequencing policy changes (i.e. rolling
back fuel subsidies in an orderly fashion), accountability within the Cabinet,
more actions on corruption (actual arrests and prosecutions), solving
domestic problems rather than international ones, and realistic
expectations for change (singles not homeruns).
The
recent election of SBY’s VP running mate, Jusuf Kalla, as chairman
of the Golkar party (the largest faction in Parliament) should quell the
small rebellions that have already threatened his legislative agenda. If
the two can truly work together as a tandem, with Kalla running political
interference for the government’s reform efforts, a lot will be
accomplished. Some patronage
may seep in as a consequence, but what government anywhere can operate
without some amount.
From
all reports SBY and his government are fully engaged with the business
community to implement a series of changes collectively known as
“the economic roadmap”, a plan created by KADIN, the national
chamber of commerce with input from many regional and binational business
groups. Some thought that by
now SBY would be announcing a significant “economic package”,
harkening back to the late 80’s and early 90’s when such
packages came frequently, but SBY and his ministers seem not to want to
over inflate expectations unrealistically. They are patiently making their
way through past issues, especially solving tough business cases (Cemex, Cepu) that have come to
symbolize a stagnant investment environment. When these are done some time in
2005, the confidence that is returning to Indonesia will get a major
boost.
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Top
Stories of Help and Hope
The stories that follow are a
sampling of the many of efforts by AICC members and friends to help the
victims in Aceh. They are by
no means comprehensive, and we wish not to diminish all the contributions
that are being made daily by companies and individuals to our partners in
so many relief organizations.
US
Coffee Importers Raise Funds for Aceh Farmers
With a local presence already on the ground
at the time of the December 26 earthquake-tsunami disaster, local
partners of Vermont
specialty coffee importer ForesTrade
Inc., were able to quickly mobilize relief efforts in Aceh, Sumatra.
The response from ForesTrade’s
customers, investors, colleagues, financial institutions, trade groups
and friends from around the world has been tremendous as people offer
their support and financial assistance. Two specialty coffee industry
non-profit organizations, Coffee Kids and Café Femenino
Foundation, are acting as conduits for funds to be channeled directly to
those in need for immediate relief, and long term reparations to
infrastructure such as roads, homes, schools, Mosques and coffee
processing facilities.
“Coffee Kids really stepped up to the plate, offering to
channel donations directly to a designated Sumatra
Relief Fund.” exclaimed Thomas Fricke, Co-Founder and CEO of
ForesTrade. “100% of
the money donated is being transferred to the PPKGO and other reputable
local organizations, and Coffee Kids has generously offered not to take
any administrative fees.”
“Many of our staff and partnering
farmers have family in these areas, and we are deeply concerned about
their immediate safety and well-being.” Thomas Fricke explained.
“We believe we can be most effective providing relief to those areas
where we already know local people, are familiar with the topography and
have a trusted way for distributing supplies to ensure they reach those
people most in need.”
Fricke continued, “with bridges and roads washed out or
blocked, the efficiencies of distributing relief is an important
consideration.” Contact
Forestrade at (802) 257-9157
Marion
Djakababa- Marion
came to AICC as an intern after graduating from a US
university.
“Yunan, one of my best friends from
College who lives in Jakarta
has a sister who was living in Meulaboh, Aceh. As many of you know, the
tsunami left this seaside town utterly devastated. She lived there with
her husband, who worked for the port authority, and four children ranging
from the ages of three to fifteen.
Yunan e-mailed me his sister's story: The family lived in a house about
400 meters from the beach. On Sunday, December 26 at around 8:00 AM a strong earthquake
shook the area. The earthquake did not seem to do much damage to their
house. So, after things seemed to stop shaking, Yunan's brother-in-law
decided to take their two younger kids to check out the market and
government buildings (about 3 km from their home) to see how badly
damaged the area was. The market and buildings are located on the hilly
part of town. Their first son also went to the market area with his
friends. He took his brother with him (the second child). Yunan's sister was left alone at
home and decided to clean-up. Five minutes after her husband and kids
left, people started screaming,
"Water! Water!!" She went outside and saw a huge wall of
water coming right at her. She ran as fast as she could while being
chased by the water for 50 meters before getting sucked in by it. While
in the water, she was hit hard by a large wooden beam which she
instinctively held fast to. That enabled her to float above the
water. While being carried
away by the water, she spotted a coconut tree and promptly hugged it and
let go of the beam. As the water grew higher, she climbed up the tree so
she wouldn't drown. Half an hour passed and the water receded. She was
way up the coconut tree, scared for her life and had no knowledge of what
happened to her family. As far as she could see, there were only rubble
strewn with dead bodies and carcasses of livestock. She was going to go down
but somebody who's holding on to the next tree warned her not to because
there might be another wave coming. So she did not. Sure enough, another wave bigger
than the first came crashing down. She saw a large piece of wooden board
floating her way (must be someone's former wall). She climbed onto it
while still holding on to the tree. So it was like sitting on a boat.
After an hour the water finally withdrew, she climbed down the tree and
walked /swam through the rubble and dead bodies. She waded her way toward
the hills where she thankfully was united with the rest of her family.
They have lost absolutely everything, but she was glad that they were
still alive. They left their beloved town shoeless with only tattered
clothes on their backs. The
next week was very grueling for the family as they walked, swam and
hitchhiked their way to Medan,
the capital of North Sumatra where
Yunan's mother lives. They resorted to eat leaves and begging to survive
the trip. They finally got to Medan
on New Year's day in the morning. Hungry, filthy but glad to be given
another chance at life while so many others had perished.” To help this family directly, call
Marian at 973-884-1354.
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Unocal Matchs Employee
Contributions 2 for 1
El Segundo, Calif., Jan. 10, 2005 –
Unocal Corporation (NYSE:UCL)
announced today that it will provide an additional $3 million to assist
with longer term recovery and reconstruction needs for communities in Indonesia
and Thailand affected by the tsunami. "This commitment represents
our recognition of the role that our company has played in these
countries for many decades and our interest in helping our friends meet
their longer term recovery needs in the aftermath of this devastating
natural disaster," said Unocal CEO Chuck Williamson. "Our
relationships with the people in this region span nearly 40 years. Unocal has approximately 2,000
employees in Indonesia
and 1,000 employees in Thailand,
and many valued, mutually beneficial partnerships with our host
governments and communities."
Unocal has already provided immediate and near-term disaster
assistance totaling $275,000 from the corporation, Unocal Foundation,
business units and employees in the U.S., Thailand,
Indonesia
and Myanmar.
The disbursement of the $3 million will be overseen by Unocal
Foundation’s Board of Directors. Projects will be developed in
collaboration with the host governments and implemented in partnership
with qualified organizations, including those with whom Unocal already
has existing relationships. Priority will be given to children’s
welfare, rebuilding schools and medical clinics, helping provide fresh
water and sanitation, and other long-term community sustainability. Unocal Foundation will also match
employee contributions for disaster relief through its Workplace Giving
Program. Employees who make a
contribution to the International Federation of the Red Cross (or U.S.
employees who earmark contributions to the American Red Cross
International Response Fund) will be matched on two-for-one basis, which
means Unocal Foundation will contribute $2 for every $1 contributed by
Unocal employees to the IFRC.
LOVE FOR
ACEH CENTER
Sien Lemke
is an Indonesian businesswoman based in NY with business, medical and
healthcare connections in Indonesia.
Her immediate family in Indonesia
include doctors as well as business owners. Through her brother who is a
physician currently operating at Ground Zero in Banda Aceh, she is in
direct contact with the bupati (regional mayor) of Banda Aceh area and
through AICC and AMCHAM contacts she is arranging for prefabricated
housing to be sent to the area.
Her family has operated a foundation benefiting the poor in the
cities and remote villagers since 1961 in East
Java and their current program for Aceh is described
below.
Sien has also begun a kids-to-kids Toys Drive in
New York
to be distributed to emotionally traumatized kids in the survivor camps
of Aceh.
She can be contacted at (914) 761-1288.
Program Outline:
1. Opening a warehouse
to receive support from the wider community in the form of food, clothing
and funds. Lots of
sorting and cleaning and preparing of goods. Bulk rice and oil are
being broken down into smaller bags and containers for ease in
distribution. Clothing are cleaned and washed and ironed and made
into presentable condition. (Aceh people are known to be very proud folks
and are not accustomed to wearing used clothing).
2. Coordinating and
sending out volunteers to help local emergencies and support refugees and
victims. All volunteers have been outfitted
with personal survival gear backpacks and back-up systems to sustain
themselves. Many initial volunteers have been forced to
turn around and come back since they arrived on location that has
completely lost its infrastructure. The group aims to fulfill the
20,000 estimated volunteers needed willing to go into forests and
wastelands, on a rotating basis.
3. Working with NGOs
who are active in Aceh and West Sumatra
to coordinate efforts for channeling supplies. An excellent chain
of supply in people contact and destination for distribution of goods and
volunteers. System is organized down to logistics of volunteers
able to stay at local homes/ hosts etc. thereby securing their own
survival
mechanisms and not becoming refugees
themselves.
4. Working with the
Forum of InterReligious Harmony (Forum Kerukunan Antar-Agama) to build
trust and synergy with other inter-religious crisis centers.
continuing being done. The Forum is an excellent NGO
that joins hands between leaderships of various religions.
Office: KHA Dahlan 33, Malang, Tel: 62(341)354107,
62(341)7713343
Email: one_body_malang@yahoo.com
Contact person: local: Tutik
(62811367030); international: Paul (62811364939)
Bank accounts: Rupiah: Paul I.
Zacharia, BCA Malang #0118555557; US$ Citra Dewi Zacharia, Citibank
N.A. #8000897-002, Basuki Rahmat 86, Surabaya
All funds and support will be reported
through a financial statement on a monthly basis with statements going to
each donor We have provided financial reports for many years to
sponsors for our Yayasan that runs 6 units of social services for
our orphanage and junior and senior highschools.
The Director is Paul Zacharia (owner of
a leather factory in Malang)
- cellphone 62-811-364-939. You can call him direct on that
HP number. You can also email him at paulizac@indo.net.id. When
contacting him direct, you may want to mention my name, Sien Lemke of Valhalla,
NY so he will pay
better attention (he's a very busy man). Alternatively Sien is
available at 914-761-1288 or cellphone 914-433-1502 and by e-mail: icciusa@aol.com
to the Top
AMCHAM Effort
The American Chamber of Commerce in Indonesia has
created a new Aceh Disaster Relief Committee specifically to address the
mid-long term issues since a shift is already underway from the initial
emergency reaction phase.
Amcham Members Mike McGowan, Harvey Goldstein and others quickly raised funds within
24 hours after the disaster. McGowan notes:
“We got the first medical
disaster relief kit to the Achenese, just 3 days after the
disaster. We provided desperately needed sanitary napkins and
disinfectant to Achenese women. Purchased new clothing such as underwear
and T shirts for many who literally lost the shirt off their back.
Sent 1,600 cases of instant noodles to Aceh as basic food, this is over
65,000 meals. Send 4,800 packages of high energy biscuits as a quick
supplement. Send an American teacher whose church supported an orphanage
in Meulaboh, together with two sisters, up to protect their children
and possible return to Jakarta
with them. I was able to arrange his travel courtesy of the US
Airforce free of charge. Disappointingly, his orphanage was
obliterated by the wave, there was nothing left and yet he stayed on
collecting and clothing kids wandering around the area in shock, hunger
and thirst. These children were then given to Red Cross and Red
Crescent centers organized with government approval. Not one child
was removed from Aceh, as the Provincial Government instituted
safeguards to prevent child trafficking. Two days later, I sent an
additional two sisters from Keith's church up there to help him and their
fellow sisters. Sent 2,000 Jerry Cans for water Delivered 2 tons of
medical kits for disaster relief
Mike
McGowan can be reached at mmcgowan@ganesha-aggies.com
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First Aid to Aceh
Emil Arifin, a young Acehnese based in
Jakarta, does business with several AICC members (i.e. ATSGlobal (Allan Harari), Smith Asbury (Greg Asbury). He may
have been the first to ship in aid to Aceh, especially the town of Meulaboh, the
worst hit area, still largely cut off from the rest of the region.
He wrote this:
Thank you very much for your concern.
I’m touched for your effort to help, I don’t know how to
describe it but everytime I remember it, my eyes were in tears. I came to
Meulaboh because this is the only town that has no news, meaning all the infrastructure
were gone. 3 days after the tsunami, I and 5 other guys with small
airplane that unloaded one ton of food and medicine and the second
team arrive the next day with tuna boat, loaded with about 50 tons of
food ( rice and instant noodle), mineral water, tents, medicine, 50
mattress, 12 box of used clothes, 1000 sandals, 3 set satelite telp, 6
set of 4000 watt electrical generator and 10 barrel of diesel fuel
etc...We recruit 2 doctors and 46 students who has lost their family or
relatives and who has no clothes, most of them has no place to stay. So
they are happy to stay with us, at least for the moment. Afteronly 7 days
all of the food was finished; we distributed to very remote places. When
we enter the town, there is no government at all because most of the
government officials were busy looking for their family or had died . The
town was in chaos and people were chasing our truck asking for water and
food. We just got more supply and I think it will be enough until mid of
January but I’m now looking for more fund for food at least till
the end of Jan. If you are interested to contribute to
Emil Arifin’s efforts, contact him at emilarifin@yahoo.como.com.
Response From the Opposite
End of Indonesia
“Freeport is a major
employer in Indonesia,
where our mining operations are located in the easternmost province of Papua. Freeport’s operations were not
impacted by the devastating earthquake and tsunami of Dec. 26, which is
about 3,000 miles away in Indonesia’s
westernmost province
of Aceh, but
we are part of the larger Indonesian community and as such moved quickly
to do what we could to help our brothers and sisters. Freeport provided a
sizeable initial cash contribution in Indonesia within 24 hours of
the tragedy to provide immediate assistance and to jumpstart fundraising
efforts, and additional contributions since that time in both Indonesia
and the U.S. Freeport also provided chartered airplanes that have made a
number of flights to the stricken area with food and supplies, aid
workers and government officials – including some of the first aid
to reach the area. In addition, Freeport
employees have made generous cash contributions and the company is
matching these. Many Freeport
employees in Indonesia
with special skills have also volunteered to help in the relief effort,
and the company is currently coordinating such assistance as is
appropriate to the situation”. William Collier, Vice
President, Communciations
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Comments from Senior Officials and Indonesian
“hands”
Hon. Lynn
Pascoe, US Ambassador to Indonesia
The December 26 earthquake and resulting
tsunami created a humanitarian catastrophe of biblical proportions for Indonesia.
President Yudhoyono's administration -- still under 100 days in office --
has responded quickly with its own resources and also welcomed assistance
from overseas. The United States Government responded with tens of
millions of dollars in immediate assistance and has pledged hundreds
of millions in relief aid. In close consultation with
the Government of Indonesia, we brought considerable military
assets to the country to help deliver critical assistance to
inaccessible areas. American corporations with a presence
in Indonesia
have also donated tens of millions of dollars in cash and in kind toward
the relief effort.
As the toll from the December 26 disaster
continues to mount, it is difficult to find any silver lining in this
dark cloud. However, the United States' devotion of official
resources to this humanitarian effort, along with the incredibly generous
charitable contributions by American businesses and individuals, have
likely reinforced with Indonesian officials as well as the public our
readiness to assist a friend in need. Despite our occasional
disagreements on the issue of the day, this crisis has demonstrated in
the most concrete terms the deep value that we place on our decades-long
friendship with Indonesia
Hon.
Paul Berg, US Consul General- Designee Medan
The
earthquake and tsunami are turning out to be one of the greatest natural
disasters in history. In Indonesia, they struck
primarily in Aceh, which has already suffered from the effects of years
of conflict with a separatist group, corruption at the top of the
provincial government, and underdevelopment. Our effort has
been a cooperative one, coordinating with the Indonesians,
international organizations and other governments to assure the
greatest effectiveness possible in such a situation. Our
first efforts were intended to deal with the most immediate needs, such
as emergency food, water and clothes. While emergency efforts
on the ground are intensifying, long range priorities are being
developed in consultation with the Indonesians and our international
partners. One priority will surely be physical reconstruction of a
province which has lost important parts of its infrastructure, such
as roads, harbors, government buildings,
electrical telephone and water facilities and the like.
Housing for the hundreds of thousands of homeless will also be an
important need. Medan is the closest US consulate
office to Aceh
US
Image Improves
Jim Castle is a long time
resident of Indonesia, President of his own consulting company, past President
of AMCHAM Indonesia
The outpouring of support and good will has
literally been overwhelming. The most important things that
need to be done right now relate to organization and logistics. Today the
relief effort cannot immediately deliver all the goods that are
being made available or spend all the cash that has been actually
collected, not to mention the huge amounts that have
been pledged and will be extremely useful in the long term
recovery effort.
The major challenge will be to keep attention and
resources focused on the plight of the survivors and their needs
long after the crisis has faded from the headlines.
Corporations not already actively engaged can be most
effective by committing themselves (even to the point of assigning
personnel) to monitor, assess and support the rebuilding effort for at
least the next twelve months. For
those abroad, cash contributions are probably best because the money
can be used efficiently later as long term recovery needs (as
opposed to short term life-saving activities that are essential today)
are identified and need funds for implementation. For those in country,
finding out from relevant relief agencies what is actually needed at the
moment and being able to provide it in an immediate fashion is extremely
useful. Often this is just a matter of a few hundred dollars cash at the
moment, or the right phone call to provide the right equipment -- fork
lift, chain saw, etc. Or a few extra volunteers to help load goods at the
airport. I
want to emphasize how important and well-received the US effort
has been, especially the immediate appearance of our aircraft carrier,
the USS Abraham Lincoln. One
of my Indonesian friends characterized the rapid mobilization of the
Lincoln
to Aceh as "an absolute home run!". The Lincoln
has saved hundreds of lives, if not more, with its personnel and
equipment, and helped relieve the suffering of
many thousands. Their efforts have been outstanding and enabled
those of us with fewer resources at our disposal to leverage whatever it
is we have been able to contribute. Much is being done, but much, much
more will be needed. I know AICC and all its members will be in the front
lines with the Embassy, USAID and Amcham in making sure we are doing all
we can. I know we will stay in close touch on this. Thanks so much as
always for your tremendous personal commitment and that of your members.
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Banking/Finance
Indonesia
Sends Young Bankers
to NY
The Financial Services
Volunteer Corps (FSVC), a not-for-profit organization founded fifteen
years ago to provide technical assistance to banking and financial
institutions in emerging markets, has recently concluded a
month-long training program for twenty top consumer
bankers from Indonesia's largest bank, Bank Mandiri. As
part of FSVCs Bank Management Internship Training Program, these
specially selected officers spent four weeks in the United States
studying best practices in consumer lending at nearly a dozen
leading US
banking and credit card institutions. This is the second consecutive year
that FSVC has hosted a management training program for Bank Mandiri.
This year, over 150 senior
professionals in the fields of credit card products, auto finance, and
consumer mortgages volunteered their time to collaborate with FSVC to
design a rigorous course of study that would provide immediate and
practical results for the client. The program was intended to enhance the
participants skills in developing, marketing, and managing
Mandiris growing consumer loan portfolio. By expanding its
retail lending business, Bank Mandiri will be serving the larger economic
objective of making credit available in three critical areas of the
Indonesian economy.
The bankers from
Mandiri spent the first week of the program in New York City in classroom
training, hosted by Credit Suisse First Boston. During
this week, the group of twenty bankers was given a detailed overview
of the three targeted sectors. The training sessions were led by
senior bankers from some of the country's leading lenders, including
JPMorgan Chase, Citigroup, Washington Mutual, Fifth
Third Bank and Regions/Union Planters Bank. Other
leading financial services firms who also contributed to the training
include Standard & Poors, Synergistics Research, Michael
Auriemma Consulting, MMS Consulting Group and BIG FNI.
Following the New York
training, the interns split into three teams. Each
team spent two weeks developing expertise in credit cards, auto finance
or residential mortgage lending through intensive site visits with prominent
banks across the country. BB&T, Fifth Third, National City
, JPMorgan Chase, Providian, and Visa International
all provided in-depth training as part of the hands-on portion of the
internship program. While visiting operational facilities in different
locations nationwide, the Indonesian bankers also had the opportunity to
meet with regulators from regional Federal Reserve branches in New York, Cleveland and San Francisco, and
industry specialists such as the Cleveland Automobile Dealers Association
and Edgar, Dunn & Company. A program officer from FSVC
accompanied each of the groups in their travels, including two staffers
who previously lived and worked in Indonesia for long periods.
The three groups of
interns reconvened in New York to share their
findings during the final week of their internship. The bankers discussed
how the best practices they observed could be applied at their
own bank. Each group then prepared a presentation offering
strategic business plans incorporating these conclusions, which were
formally presented to Bank Mandiri's senior management upon their return
to Indonesia
. Bank Mandiri has already endorsed many of the group's recommendations
and is now moving swiftly to implement the new strategic plans.
Indonesia to Cut Corporate Tax in
’05
JAKARTA
Bloomberg (12/1/2004)
Indonesia
plans cut its corporate tax rate starting next year to spur investment
and growth in Southeast Asia’s
largest economy, Coordinating Minister for Economic Affairs Aburizal
Bakrie said. The tax rate will be cut to 25 percent from 30 percent over
a period of five years, starting with a one percentage-point reduction in
2005, Bakrie said in an interview yesterday.
“This has
been put on the tax reform draft to be presented to parliament,” Bakrie
said in Vientiane,
Laos,
where he attended a meeting of leaders of the Association of Southeast
Asian Nations.
The tax cuts
are among policies being introduced by Indonesia’s new
president, Susilo Bambang Yudhoyono, to reverse a decline in foreign
investment. Bakrie said the government is also considering steps to
improve roads, power plants and other infrastructure and relax labor
laws. Lee said. The corporate
tax rate in Singapore
is 20 percent while in Hong Kong
it’s 17.5 percent. Mor
FITCH REVISES INDONESIA'S RATING OUTLOOK TO POSITIVE
Fitch Ratings-London/Hong
Kong-05 October 2004: Fitch Ratings, the international rating agency,
today raised the Outlook on Indonesia's sovereign ratings
to Positive from Stable to reflect diminished political uncertainty
following the satisfactory conclusion of presidential elections on 20
September and the improved outlook for reform. Fitch upgraded Indonesia's
Long-term foreign and local
currency ratings to 'B+' with a Stable Outlook in November 2003
Indonesian Government
expects economy to grow 5.5% in 2005
JAKARTA:
The Indonesian government Thursday said it expects the economy to grow by 5.5% next year, up from
the 5.4% forecast in the 2005 state budget presented earlier.
Finance
minister Jusuf Anwar told legislators at a hearing session that the government expects inflation
next year to rise to around 7%, up from 5.5% projected by the previous
government.
Interest
rates are expected to rise to between 7.5% and 8.5% from the 6.5% previously forecast.
Anwar
said the government will also need to sharply revise the forecast of oil prices to $35 barrel from $24
barrel stated in the state budget .Dow
Jones Newswires December 9, 2004
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Consumer
Franchise
Businesses Grow 15%
Franchise businesses in the country have
grown by 15 percent this year and are expected to further thrive,
considering the fact that Indonesia's
economy still mostly relies
on domestic consumption, the Indonesian Franchise Association (AFI) said.
Data from the association shows that
there are now 270 foreign companies -- from restaurants, supermarkets and
dry cleaners to educational institutions --which have franchised their
businesses in Indonesia.
"There are also 120 local firms
which have the potential for franchising, though perhaps only some 30
percent would be able to do so," AFI chairman Anang Sukandar said on Monday.
Last
year, there were 239 foreign companies and 49 local firms that franchised their businesses here.
Auto Sales Up 62%
JAKARTA
(Bloomberg): Indonesia's
automobile sales in the local market rose 62 percent in November from a
year earlier, PT Astra International said, citing figures from the
Association of Indonesian Automotive Industries. A total of 35,162 vehicles were
sold last month, compared with 21,683 in the same month last year. Astra
sold 16,093 automobiles in the local market last month, 81 percent more
than the 8,879 units it sold in the same month last year. Faster economic growth and record-low
interest rates are helping Astra and rival PT Indomobil Sukses
Internasional sell more cars in the country of 235 million people. Most
car purchases in Indonesia
are funded by loans.
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Mining/Energy
Downstream Energy Markets
Begin to Open
JAKARTA, Oct 31 (Reuters) - Indonesia has granted oil
giant BP Plc. a license to
sell oil products in the retail market as part of efforts to open
the business to foreign
firms, a mines and energy ministry official said on Sunday.
"We have issued an in-principle approval to BP. BP
wants to be involved in the wholesale business including trading and
retail," Erie Soedarmo, director of processing at the mines and
energy ministry, told Reuters.
Malaysian state oil and gas firm Petronas [PETR.UL] was awarded a license in June to sell oil
products, such as high octane gasoline, in the Indonesian retail market.
New Hope in Energy Sector
The Indonesian government
will sign as many as 46 natural gas exploration, distribution and
management contracts with foreign and national gas and oil companies in
mid-December. President
Susilo Bambang Yudhoyono will witness the signing of contracts between representatives from
companies and the Indonesian government, The Mines and Energy Ministry said in a
statement December . These will include 15 contracts to explore and
manage oil and natural gas blocks across the nation. "For the first
three years, the companies are expected to invest around $190 million for
exploration needs," the ministry said. Amid the plunge in Indonesia's
oil production to 966,500 barrels per day (bpd) this year from as many as
1.2 million bpd in 2002 -- which degraded the country as a net oil importer -- there
have, of late, been several promising developments in the petroleum
industry.
Last Tuesday, the Oil and Gas
Implementing Body (BP Migas) awarded 12 new oil and gas contracts to foreign and
national companies, with combined
commitments to spending at least US$163 million for exploration
within three years.
Problems still remain such as
contradictory
provisions on
taxation for expenditure during the stage of exploration as well as a
lack of certainty regarding contract extensions.
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Trade/Investment
Op
Ed on Investment by Joe Bartlett
AMCHAM Indonesia’s President Joe Bartlett, a long
time resident of Indonesia,
says “mindset” is more important than laws in bringing
investment back to Indonesia. Excerpts from a recent op ed
contribution to the Jakarta Post follow:
One of the major disappointments of Indonesia's
economic recovery is that the government's success in re-establishing
macro-economic stability has not generated the high levels of investment
necessary to increase per capita income, reduce poverty, and raise gross
domestic product (GDP) growth levels.
Historically,
the government has provided the capital necessary for much of the
investment in Indonesia
through state owned enterprises and state banks. There was a suspicion, if not
distrust, of private capital. However, today, the government does not
have the funds, let alone the ability, to be the main driver of economic
development. The government must switch gears to fulfill its new role as
the facilitator of investment and financial flows rather than the role of
its principle provider. Now, more than ever, the government must work in
partnership with the private sector to facilitate investment, job
creation, and economic growth. In
spite of macroeconomic stability, a sampling of recent events informs
us that:
New foreign direct investment (FDI)
approvals have dropped yet again for the first six months of 2004.
However, it is important to note that the decline was somewhat offset by
an increase in approvals for investment project expansions by existing
investors.
Oil and gas exploration activities
have significantly declined over the past several years. Indonesia
is a net oil importer. Mining exploration is at a standstill. Electrical
power capacity and access to telecommunications are less than the public
and business require.
As
these few items indicate, Indonesia
needs new, private investment capital, and must address the issues that
are hindering the country from attracting it.
Investors
are attracted to stable and predictable policy environments, where
private sector counsel is sought and included in policy formulation.
Investors are deterred by surprises and inconsistencies. Equally
important, investors are attracted to places where current, existing
investors are successful and enthusiastic about their business' future.
From
an investor's point of view, major concerns in Indonesia are transparency and the quality of
regulations, the control of corruption, the rule of law and regulatory certainty as well
as overall government effectiveness,
especially policy development and coordination across government
ministries and between the
national government and the provinces and regions. These are
government-created sources of business risk and uncertainty that have
reduced Indonesia’s
competitiveness, increased the perception of risk and inhibited the
inflow of capital.
There
is a misperception that business climate can be improved simply by
issuing new laws and regulations. Actually, the major problems investors
face are often not with the actual rules themselves but with their implementation
throughout the bureaucracy which is badly in need of streamlining,
rationalization and discipline.
Rules
and regulations can always be improved. But these improvements will not
bear fruit unless the regulations in which they are embedded are
consistently and transparently implemented by the relevant government
institutions.
There
is a strong perception in the foreign investor community that the
problems deterring investment here are ones of attitude and mindset. As a
submission by the International Business Chamber to the Ministry of
Finance states:"More than just superficial changes are required to
reverse the damage which has been done to Indonesia's image and
economy. New thinking is required, including the adoption of new
paradigms and mindsets towards direct investment, regardless of whether
it is foreign or domestic in origin."
As
the first president directly elected by the people, the incoming
president and her/his Cabinet will be uniquely positioned to introduce a
new paradigm towards private investment and governance. We wish to offer
a few proposals:
Upon taking office, the President
should personally issue a statement of unequivocal support for private
sector investment, in which the central role of business, be it a small, medium
and larger enterprise, in economic development is clearly recognized.
Current investors are Indonesia's
best advocates. Within 100 days of taking office, the President should
convene a working session with the business community, to be followed up
with quarterly meetings thereafter. The purpose of the meetings will be
to jointly discuss and develop integrated, economic policies that will
encourage and facilitate private sector investment and development.
Reporting directly to and in the
office of the President, a national economic ombudsman office should be
established with counterparts in each Department. This office shall serve
as the coordination center for the dialogs, an open office where private
sector ideas, concerns, and complaints can be presented, and a venue for
the private sector to address difficulties across ministries.
Among the many specific, focused
actions that should be taken to show a new paradigm, we propose the
establishment of a new Intellectual Property Rights (IPR) agency, chaired
by the coordinating minister, and inclusive of the National Police, the
Attorney General, Customs and other relevant departments and agencies.
The
article was condensed from a presentation made by Joe C. Bartlett,
Chairman of Amcham Indonesia,
at a dialog between the Indonesian Chamber of Commerce and Industry and
presidential candidate Megawati Soekarnoputri on Aug.2.
FOREIGN INVESTMENT DOWN
The
Jakarta Investment Coordinating Board (BKPMD) revealed on Wednesday that
foreign investment as of August had plunged sharply by 58 percent to US$1
billion against last year's $2.5 billion.
Investment
in the first eight months was made through 376 approved projects, more
than the 341 projects approved for 2003.
Domestic
investment also decreased to Rp 2.627 trillion as of August, compared to
Rp 3 trillion last year.
The
board did not provide figures for the corresponding period last year.
"The
decrease is mostly due to lingering concerns by investors about the
business climate and security in the country," said BKPMD head
Muzahiem Mokhtar.
Muzahiem
acknowledged that red tape and uncertainty in the investment procedures
also put off investors.
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Legal Affairs
Indonesia to start trial of Newmont Minahasa officials
JAKARTA,
Dec. 8 (AFX) - A state court in Manado, North Sulawesi, will put on trial
in January five officials of PT Newmont Minahasa Raya, a local unit of US
gold mining group Newmont Mining Corp, on charges of polluting Buyat bay,
said Environment Minister Rachmat Witoelar. Witoelar said the government
is already preparing reports on the pollution at Buyat bay and these will
be filed with the court within three weeks at the latest.
"In
early January, the trial will start at the state court in Manado," he
added. Witoler said the accused are five officials of Newmont Minahasa,
but he declined to name them. He added the government has not, because of
the case, immediately revoked
Newmont's
license, but is pursuing the course of action for legal reasons.
A
World Health Organization report does not tie villager health problems to
Newmont’s waste disposal system. Problems of wildcat mining using
mercury have been occurring in the Newmont mining area for years. The mine is now closed as the ore
has run out. Newmont’s
Chairman, Wayne Murdy, recently visited Indonesia and told reporters:
'It's a shocking thing to see these allegations,' Mr Murdy said. He said
it was the first time Newmont had faced criminal charges in any country. Indonesia
is a nation that has huge potential from a geologic standpoint,' Mr
Murdy
told reporters, 'It has a lot of mineral wealth, and it's a place (in
which) we want to do business and make a long-term commitment.'
Corruption Initiatives
Govt identifies 40
suspects in illegal logging cases
PALANGKA RAYA, Central
Kalimantan (Antara): Minister of Forestry Malam Sambat Kaban said here on Tuesday that
his ministry had registered 40 new suspects allegedly involved in illegal
logging throughout the country.
"The
new names brings the number of those involved in illegal logging to
59, including 19 others whose
names had been publicly announced," Kaban said at the Tjilik Riwut airport before
visiting Tanjung Puting National Park.
"The
government will crack down against those people or companies involved
in illegal logging," he
said. (AP 11/9/2004)
Indonesia's president
orders police to question governors on alleged corruption
Indonesia's
new president on Thursday ordered police to question two provincial governors over
allegations that they stole from official budgets, as part of a widening drive against this
country's notorious corruption.
The
measure is part of President Susilo Bambang Yudhoyono's promise to
crack down on graft in a bid
to attract foreign investment.
"It
is very sad that our nation is considered one of the most corrupt countries," he said in a
televised speech marking International Anti-Corruption Day. AP 12/9/2004
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US-Indonesia Relations
Lynn
Pascoe Becomes Ambassador
AICC
hosted the new US Ambassador to Indonesia, Lynn
Pascoe, for orientations on October 20. He told us he would be spending at
least 20% of his time promoting US business and would
practice diplomacy in an “indirect fashion”. Below are excerpts
from his confirmation hearings. Questions were by Senate Foreign
Relations Committee Chairman, Richard Lugar
(IN),
Question: Are
there any indications of substantial reform in the military?
Answer:
It is an evolving situation.
Since 1998 there have been changes to decrease the military's power in
politics, for example, moving away from its dual function role and withdrawing
from membership in the parliament.
There is a general
feeling now that it is more appropriate for the military to have a greater professional military role
instead of what it has been doing in the past in politics. A bill has been proposed on the
functions of the armed forces,
and it may not be acted upon until the next legislature is
convened after the presidential election. The situation is evolving
especially because there has
been and will be changes of personnel over time. I believe it is important for the United States to
cooperate with the military and to increase our relationship with them. Programs such as IMET will be able
to help in this regard.
Question: What is the current relationship
between the armed forces and the civilian government? Are there concerns regarding the
control of the outlying areas
of Indonesia, such as Ache and Papua, where the military has more
power than the government on
the basis that they are doing it to safeguard the integrity of the country?
Answer: It is definitely a localization
process. Over time there
needs to be more accountability by the local governments to take
responsibility and have more control of their regions; hopefully local
elections will be able to do this.
I believe that there is an opportunity for the U.S. to
help in strengthening local governments for this particular role.
Question:
I recently met with a delegation of young Indian parliamentarians and I
was impressed that most of them have been educated in the U.S. The delegation members said that
their educational background is related to the economic growth and
dynamism that India
is currently experiencing. I
noticed there has been a lot of trade impact between India and
the U.S.
and also with China,
but not much going on with Indonesia. What are the Indonesians going to
do about economic dynamism in their own country, especially in relation
to India
and China?
Answer: In the past, the Indonesian
economic miracle was attributed to the group known as the Berkeley Mafia.
These people understood how the world works and they wanted Indonesia
to be a part of that world.
The U.S.
had a fairly robust higher education program for Indonesia
in the 1980's but for some reason has backed off from that program. Malaysia has helped their
citizens who want to study in the U.S. with government
sponsorships, but Indonesia
does not have a similar program.
I think it is important to have more Indonesians coming to the U.S. to
study and that the president's initiative of $157 million in funds for
education is a good start. It
is something we can work with.
We need to put some quality time in long-term planning for
education, not only in the short-term like counter-terrorism.
Senator
Lugar agreed enthusiastically
with this statement. He also
mentioned that Secretary Powell, in his testimony given a day earlier to
the Senate Foreign Relations Committee about the genocide in Sudan,
gave a plea for more emphasis on "soft diplomacy" to increase
assistance in this area, also in the Millennium Challenge Account and the
exchange of scholars. He
agreed that the education initiative in the 80s that has disappeared
needs to be restored.
Ambassador-designate
Pascoe then mentioned the need to improve the visa process and to
re-establish the idea that the U.S. does indeed want
students from abroad and they will be welcomed. Senator Lugar
commented that the Committee has had several hearings on this issue and
that it is recognized as a critical challenge. Universities in the U.S. are
suffering because of this, but it is not easy especially with the need to
focus on the security implications, people overstaying their visa limits,
etc.
Feds Charge 26 With
Operating Asylum Ring
A
fraud ring operating in northern Virginia
helped more than 1,000 Indonesian immigrants file bogus asylum
applications in recent years, federal prosecutors said Monday.
Sixteen
people were arrested Monday and 10 more are facing federal charges,
including asylum fraud and labor-certification fraud.
The
defendants all worked for companies that charged immigrants $2,000 or
more to help them with fraudulent asylum claims or to improperly obtain
labor certifications or identification documents like Virginia driver's licenses.
Applicants
were coached to tell authorities they had been beaten or raped by Muslims
in Indonesia
because they were ethnic Chinese or Christians. Their applications
contained bogus accounts of abuse that were identical on multiple
applications.
"The
stories of torture they fabricated were repeated word for word by
immigrants who were coached to memorize them exactly," said U.S.
Attorney Paul McNulty. McNulty's office has made immigration fraud a
priority since the Sept. 11 attacks, when it was discovered that seven of
the 19 hijackers had fraudulently obtained Virginia driver's licenses.
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Security
The
trials of suspects in the Australian Embassy and Marriott bombings,
including radical Muslim preacher, Abu Bakir Bashir, are proceeding.
Witnesses for the prosecution have established links between Bashir and
Osama bin Laden but have not
provided unequivocal testimony that he ordered bombings, something Bashir
denies. The following report
supports the notion that radical Islam continues to be on the rise in Indonesia,
notwithstanding the fact that Islam was not a factor in the recent
Presidential election.
Survey
Shows Significant Support for Radical
Islam in Indonesia
A recent survey showed that many
Indonesians support the implementation of strict Islamic law, with nearly
60 percent saying they want adulterers to be whipped and 40 percent
backing cutting off a thief's hand.
The survey, conducted by the
U.S.-funded Freedom Institute, also found 16 percent of people polled
refused to condemn terror attacks by the al-Qaida linked regional terror
group Jemaah Islamiyah if they were committed to fight Muslim oppression.
Still, 59 percent condemned the attacks, while 25 percent said they had
no opinion.
The findings will likely rekindle
concerns that radical Islam is gaining a foothold in the world's most
populous Muslim nation, which has long embraced a moderate form of the
religion. AP November 12, 2004
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Socio-Cultural
Bahasa Indonesia: The Pride
of Indonesians
Almost by
definition, all Indonesians are bilingual, speaking one of the 300
regional languages as well as the national language: Bahasa Indonesia. “Bahasa” means language.
For
Bobby Kuntoro, 23, a student of social sciences at Sebelas Maret
University in Solo,
Central Java, it has always been a
dilemma about what language to use in and outside of his house.
"I
have been using equally Bahasa Indonesia and Bahasa Jawa since my
childhood. I use Bahasa Indonesia when outdoors and Bahasa Jawa when
indoors. I must be careful while talking to my mother, who is a Javanese
and is not fluent in Bahasa Indonesia," Bobby said.
Bobby
is one of millions of Indonesians who use Bahasa Indonesia and regional
languages in their everyday lives. Both the languages, national and
regional, have so far maintained their identity but there is a potential
danger that the dominance of Bahasa Indonesia among the younger
generation could harm regional languages in coming decades.
Since
its birth as a nation, one of the most remarkable achievements of Indonesia
has been the development of Bahasa Indonesia as its national as well as
official language.
From
Sabang to Merauke, Bahasa, or Indonesian -- as it is popularly known --
is widely spoken as a first or second language by almost all 220 million
Indonesians. Beyond Indonesia's
borders, Bahasa is now also spoken by a majority of people in the
youngest nation, East Timor. JP
10/20/2004
Indonesia halves
infant mortality rate: UN
JAKARTA
(AFP): In just over a decade Indonesia has managed to cut by half
its mortality rate for
children aged under five but the country still has work to do to tackle regional trouble
spots, the United Nations said Thursday.
The
UN Children's Fund UNICEF said in a statement that mortality rates
among under fives had fallen
between 1990 and 2002 from 91 deaths per 1,000 to 45.
It
said the country was on track to reduce under-five mortality by two
thirds over the next decade.
But
UNICEF said there were pockets of high under-five mortality,
especially in eastern Indonesia,
where the rate could reach more than double the national average.
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TOurism
Bali
Favorite Island in Asia: Conde
Nast Traveler
Bali's
panoramic views and unique mixture of spiritualism and tourism has made
it the favorite island for travelers in the Asia-Indian Ocean region,
according to readers of Conde Nast Traveler magazine.
The
international award was received by Bali Tourism Agency head I Gede
Nurjaya last week in London at
the World Travel Mart 2004, Antara news agency reported.
"Even
though Bali has received numerous awards, many things still need to be
perfected to make it a high-quality tourist destination,” Norway
said.
The
island beat out other attractive destinations such as Phuket in Thailand
and the Maldives in the Indian Ocean. Borneo and Bali’s next-door
neighbor Lombok also made it
into the top 10 destination list; in eighth and 10th position
respectively.
Conde
Nast Traveler surveyed 241,000 subscribers to determine the winner of this
year's award. Other awards were also presented to favorite cities,
hotels, resorts, and modes of transport.
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Economic Indicators
|
Figures in Billions of $, except where noted
|
2001
|
2002
|
2003*
|
|
Population (millions)
|
215
|
224
|
231
|
|
GDP ($ billions)
|
145
|
172.9
|
179.1
|
|
Real GDP growth rate(%)
|
3.4
|
3.7
|
3.9
|
|
GDP Per Capita (nominal $)
|
609
|
811
|
830
|
|
Inflation (%)
|
12.55
|
10.0
|
5
|
|
Unemployment (%)
|
6.4
|
9
|
9
|
|
Foreign
Exchange Reserves
($
billions, including gold)
|
29
|
31.5
|
32.6
|
|
Average Exchange Rate for $1.00 (Rp)
|
10,500
|
9316
|
8500-9000
|
|
U.S. Economic Aid (millions of
$)
|
230
|
200
|
184
|
Source: Government of
Indonesia, Bank Indonesia, Central Bureau of Statistics, US Commerce
Department and Embassy Projections Fiscal Year in Indonesia is April-March
31, Shares calculated from Indonesian Government Data
( *= preliminary)
|
TRADE (billions of US $)
|
2001
|
2002
|
2003
|
|
Total Exports(FOB)
|
56.3
|
57.9
|
58.7
|
|
Total Imports(CIF)
|
31
|
34.8
|
35.2
|
|
U.S.
Exports
|
3.2
|
2.5
|
2.5
|
|
U.S.
Market Share of Imports%
|
8%
|
8%
|
7%
|
|
U.S.
Imports
|
7.7
|
9.6
|
9.3
|
|
|
|
|
|
|
TOP 5 US IMPORTS FROM INDONESIA (millions of US$)
|
|
|
|
|
|
2002
|
2003
|
2004
|
|
MACHINERY (ELECTRONICS)
|
1655
|
1373
|
1168
|
|
APPAREL/TEXTILES
|
1633
|
1715
|
1879
|
|
RUBBER
|
361
|
541
|
732
|
|
OIL
|
376
|
258
|
575
|
|
FURNITURE
|
417
|
403
|
416
|
|
|
|
|
|
|
TOP 5 US EXPORTS TO INDONESIA (millions of US$)
|
2002
|
2003
|
2004
|
|
ELECTRONICS/MACHINERY
|
474
|
376
|
472
|
|
GRAIN/FOOD
|
378
|
449
|
404
|
|
CHEMICALS
|
158
|
151
|
144
|
|
WOOD/PULP/PAPER
|
139
|
119
|
125
|
|
COTTON
|
161
|
183
|
222
|
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