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World Body Praises RI’s Commitment to Progress in Tourism Indonesia views the tourism sector as an industry which can create jobs, boost economic growth, reduce poverty and is friendly to the environment. www.evisaasia.com

United Nations World Tourism Organization (UNTWO) Secretary General Taleb Rifai.

From right to left: President Susilo Bambang Yudhoyono, Executive Chairman of the World Economic Forum Klaus Schwaab, Singapore Prime Minister Lee Hsien Loong, Trade Minister Mari Elka Pangestu, and Coordinating Minister for Economic Affairs Hatta Rajasa.

President: Asia’s Young “More Open, More Creative” JAKARTA (TPP) – President Susilo Bambang Yudhoyono in his speech on Sunday at the opening ceremony of the World Economic Forum (WEF) on East Asia here praised the young people in the region who he said are “much more connected, more open, more creative, and more active”. “Through the internet, and social media networks such as Facebook and Twitter, the youths are developing a sense of trans-generational consciousness, a feeling of mutual empathy and shared hopes,” he said.

developed world. One way or another, we all need to make structural adjustments to correct the global imbalances. Asia -- more than any other region -- can help achieve a strong, sustainable and balanced world economy.”

The President also said “the world economy cannot afford to rely on strong growth in emerging economies alone. We need healthy growth globally, including in the

However, he reminded that needs to anticipate and address the growing pressures that will come from food, energy and water insecurity. He said of the 7 billion

people that now inhabit the planet, 60% among them live in Asia. As their economies grow, they would seek and compete for finite natural resources. “[This is] A pattern that in previous centuries led to wars, conquest, exploitation and untold suffering,” he said. “Asia should not just try to catch up, it can leapfrog into the future. And these days, innovation and technology can come from anywhere. There is a growing force of innovators and techies, from Bangalore to Bandung, from Singapore to Shenzhen that can produce homegrown innovation with global application,” he said. Yudhoyono also said that Asia’s growth would put it at the heart of

the global economy. “Asia, more than any other region, can help achieve a strong, sustainable and balanced world economy,” he said. One key issue up for discussion at the forum, which is being held for the first time in Indonesia, is food security. “Every six seconds a child dies because of a lack of food. We need to find sustainable food security system,” WEF co-chairman Paul Polman, also the CEO of Unilever, told reporters. Among the heads of government attending the forum are Singapore Prime Minister Lee Hsien Loong, and his counterpart from Thailand, Abhisit Vejjajiva. WEF on Wednesday released

Govt Mulls 70:30 Oil Production Sharing Split In general, the current production sharing split ratio is 80-85 percent for the state and 15-20 percent for contractors. The government is considering the application of a profit-sharing split of 70% for the state and 30% for contractors in productionsharing contracts, a senior energy official said. Director General of Gas and Oil Affairs at the Ministry of Energy and Mineral Resources Evi-

ta Legowo said here last week the 70:30 split was to be applied to contractors who conducted deepsea explorations, especially in eastern Indonesia regions, Antara reports. “We want more investors to become interested in the exploitation of oil fields in the eastern regions,” she said. She said the idea to introduce the 70:30 split system was developed by a team of engineers and university representatives. “It should be a fair deal because the team that formulat-

Evita Legowo

In general, the current production sharing split ratio is 80-85 percent for the state and 15-20 percent for contractors. The new production sharing split was calculated after deducting operating costs (cost recovery). The government will offer 20 oil and gas blocks in the first stage of an auction with the blocks mostly located in eastern Indonesia seas.

ed it consisted of people from different disciplines such as experts in geology, production and infrastructure,” Evita said.

Of the 20 blocks on offer in the first round auction, nine would be awarded through regular tenders and 11 through direct bids.

INTERVIEW

THE WORLD

INVESTMENT

SECTION C

David P. Norton: Master of Business Strategy

50 Years of NAM and Its Future Challenges

RI Investment Up 27% in Q1 this Year

Amazon E-books Now Outselling Print Books

A frequent lecturer and author, Dr. Norton is best known for his work The Balanced Scorecard, which has been the subject of many conferences and articles. PAGE A3

The Non-Aligned Movement (NAM) celebrated its 50th anniversary in an event that was commemorated in Bali in May.

PAGE A4

Indonesia`s potentials mainly come from natural resources, such as geothermal energy source which comprise 40% of the world`s geothermal source and coal reserves which are huge. PAGE B4

Amazon introduced the Kindle e-reader in November 2007. By July 2010, Kindle book sales had surpassed hardcover book sales, and six months later, Kindle books overtook paperback books to become the most popular format on Amazon.com. PAGE C1

its first-ever Indonesia Competitiveness Report saying the archipelago of 240 million people had showed the strongest progress among the Group of 20 countries. Ranked 44th of 139 economies in the Global Competitiveness Index, Indonesia “has done remarkably well in the past decade and has proven very resilient during the global economic crisis,” WEF economist and the report’s author, Thierry Geiger, said. The WEF is an independent organization bringing together top business leaders, governments and academics to discuss responses to challenges facing the world.Its highly publicized annual meeting is held in the Swiss mountain resort of Davos.

President Susilo Bambang Yudhoyono received an Open Letter from the secretary general of the United Nations World Tourism Organization (UNTWO), Taleb Rifai, that acknowledges Indonesia’s commitment to progress in the tourism sector. Indonesia was the first Asian country to receive the letter, Tourism and Culture Minister Jero Wacik told the press following a meeting between President Yudhoyono and UNWTO Secretary General Taleb Rifai at Laguna Hotel here Saturday. “UNWTO considers Indonesia a country that has a very high commitment to promoting tourism. And according to the UNWTO secretary general, Indonesia is the first Asian nation the UNWTO has presented with the `Commitment Letter`,” the minister said.

“UNWTO considers Indonesia a country that has a very high commitment to promoting tourism. And according to the UNWTO secretary general, Indonesia is the first Asian nation the UNWTO has presented with the `Commitment Letter`.”

Indonesia views the tourism sector as an industry which can create jobs, boost economic growth, reduce poverty and is friendly to the environment. UNWTO also recognized that Indonesia’s tourism sector has developed significantly over the Tourism and Culture Minister past ten years, he added. Jero Wacik “He (Rifai) said there is a golden opportunity for Indonesia because many investors want to come to Indonesia to do business or engage in productive activities,” Jero Wacik said. Rifai was in Bali to speak at a three-day Seminar on “Tourism Ethics For Asia And The Pacific” participated in by around 160 delegates from Asia and Pacific countries. UNWTO and the World Travel and Tourism Council (WTTC) are jointly presenting the Open Letter to heads of state and government around the world, calling on political leaders to acknowledge tourism’s role in facing global challenges and prioritize the sector high in national policies in order to maximize its potential to deliver on sustained and balanced growth. Travel and Tourism currently accounts directly and indirectly for about 3% to 5% of global GDP, as well as 30% of the world’s export of services. The total contribution of Travel & Tourism to employment including jobs indirectly supported by the sector - is estimated at 7% to 8%.

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A2 June 12, 2011

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Opinion Trade and Competition:

A Chance for RI to Compete Against China? On April 4, 2011, the Washington state legislature passed a bill making it a violation of the state’s unfair competition laws for a business to sell products in Washington “while using stolen or misappropriated information technology in its business operations”.

By Michael Mudd

U

sually when a law has a title like ‘The Unfair Competition Act’ (UCA), most exporters from Asia are uncomfortable. And when that comes from the US, a major trading partner, they shudder. On April 4, 2011, the Washington state legislature passed a bill making it a violation of the state’s unfair competition laws for a business to sell products in Washington “while using stolen or misappropriated information technology in its business operations”. Although this is not a US Federal law, it does matter for Asia, simply because of the fact that Seattle is a major port of entry in Washington State for goods from Asia. Seattle ranks as the 7th largest US port by trade volume, it ranks second for good imported from Asia behind Long Beach. Therefore, this law will apply to many imports from Asia, including Indonesia. Four of the top 10 trading partners of the US are in Asia; of these China is by far the largest, with Indonesia being the US’s 25th largest trading partner, vs. 35th with the EU, for perspective. The US is Indonesia’s third largest trading partner after Japan and China (2009 figures, excluding transshipments via Sin-

gapore). In March 2011 Indonesia exported $1758m to the US and imported $725m, giving a trade balance in goods of over a billion dollars in Indonesia’s favour. Based on 2010 figures, Indonesia has balance of trade of almost $9.5 Bn in its favour. Washington State is often referred to as the most trade dependent of all the US States. This is why the UCA matters to Indonesia. So, is this law positive or negative? Or perhaps a better way to look at it is to look at what the law is intended to achieve and then examine the opportunities. According to an industr y association, The Business Software Alliance, the use of illegal software (that is the originator received no payment) costs copyright owners some $59bn in 2010. In commercial software the value of illegal software interestingly, was highest in the US, but second came China at $7.78bn, with Indonesia ranking 11that $1.3bn, but it

US, it could be argued that on a weighted basis, a greater proportion of exports may have been produced that are not in compliance with the UCA. Although the law does not explicitly target China or any other country, it will naturally mean that imports will be looked at closer by Washington state authorities for compliance from major trading partners.

should be noted that Japan, Germany, the UK and Brazil are all higher than Indonesia in terms of unpaid or copied software.

From the perspective of trans Pacific trade, based on US Census figures as China exported $27.6 bn in March to the

Four of the top 10 trading partners of the US are in Asia; of these China is by far the largest, with Indonesia being the US’s 25th largest trading partner, vs. 35th with the EU, for perspective.

With software that has not been paid for being some 6 times higher in China than Indonesia, this gives I ndonesi a n companies a significant incentive to work w i t h in with the UCA, by satisfying their customers concerns, therefore gaining an advantage, if they can ensure compliance. This is perhaps where there is an unrealized opportunity: seize the advantage and encourage companies to make sure they are in compliance with the UCA. Industry Associations and

Chambers therefore have an interest in ensuring their members are aware of the law and its effect beyond just the borders of Washington State and the Port of Seattle, and may take this as a wakeup call to seize this opportunity. Mike Mudd is the Senior Partner of Asia Policy Partners, LLC (www.asiapolicypartners.com) an Asian based technology consultancy specializing in trade related business and has represented SME’s at APEC events for the past 5 years. He is also the chief representative of the Open Computing Alliance (www.opencomputingalliance. org) in the Asia Pacific region. He may be contacted at mmudd@ asiapolicypartners.com

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June 12, 2011 A3

Interview

A frequent lecturer and author, Dr. Norton is best known for his work The Balanced Scorecard, which has been the subject of many conferences and articles. He is the co-author, with Robert S. Kaplan, of eight Harvard Business Review (HBR) articles and five books: The Balanced Scorecard, The Strategy Focused Organization, Strategy Maps, Alignment and The Execution Premium. Dr. Norton’s books have sold more than one million copies in 23 different languages.

DAVID P. NORTON

Master of Business Strategy By Filly Sumayku

D The success of a country is always determined by the success of its private sector, as it creates jobs, jobs value, ultimately allowing its GDP/capita to rise. So the government can start by making it easier for to companies to grow.

avid P. Norton is a founder and director of several organizations specializing in systems and processes to improve the execution of business strategy, including Palladium Group, Balanced Scorecard Collaborative, and Renaissance Worldwide. Dr. Norton has founded and built a series of professional service firms during the course of his career, each focused on leading edge issues of management, from information technology and knowledge management to the discipline of strategy management. A frequent lecturer and author, Dr. Norton is best known for his work The Balanced Scorecard, which has been the subject of many conferences and articles. He is the co-author, with Robert S. Kaplan, of eight Harvard Business Review (HBR) articles and five books: The Balanced Scorecard, The Strategy Focused Organization, Strategy Maps, Alignment and The Execution Premium. Dr. Norton’s books have sold more

than one million copies in 23 different languages. The Balanced Scorecard concept was selected by the editors of the Harvard Business Review as “One of the most influential management ideas of the past 75 years.” Dr. Norton was also voted as one of the “World’s 12 Most Influential Management Thinkers” by Sun Top Media’s Thinkers 50. Drs. Norton and Kaplan were honored with the “Champion of Workplace Learning and Performance Award” by the The American Society for Training and Development (ASTD). Dr. Norton is the preeminent authority, along with Robert Kaplan, on how to institutionalize strategic thinking using The Balanced Scorecard (BSC). Dr. Norton codeveloped this extraordinary tool for defining and executing business strategy. He co-authored with Kaplan, the three essential books on The Balanced Scorecard. In his presentations, Dr. Norton helps companies make effective strategic thinking and execution an essential part of their business, both at the top (through the equivalent of a Chief Strategy Officer) and throughout the organization. Utilizing the Balanced Scorecard concept, Dr. Norton allows

complex organizations to effectively clarify, manage and implement their business strategies with a rigor never possible before. Dr. Norton’s first book, The Balanced Scorecard: Translating Strategy Into Action, shows managers how to use this revolutionary tool to guide their strategic investments in people, systems and new products for long-term growth. Dr. Kaplan and Dr. Norton describe a multistage system that enables organizations to gain measurable benefits from carefully formulated business strategies. Together, these books and the presentations based on them, represent some of the most valuable breakthroughs in business strategy in recent times. Dr. Norton’s research and lectures have tremendous value for any company seeking to plan and sustain value creation over the long term. Dr. Norton has extremely broad and practical experience working with companies of all kinds and at all levels on their strategic capabilities. And he has unusual depth in developing the strategic potential of human resources. Dr. Norton earned a BS in electrical engineering from Worcester Polytechnic Institute, an MS in operations research from the Florida Institute of Technology, an

MBA from Florida State University, and his doctorate in business administration from Harvard Business School. An effective speaker who loves doing keynotes, Dr. Norton is one of the most significant figures transforming business today. The President Post’s Filly Sumayku recently interviewed Dr. Norton when he visited Indonesia in June.

cated than quality but the method that we develop works in any kind of organization from the government to non-government, profit and non-profit organization. We can use these ideas on companies in Indonesia to make them more effective, become better exporters and so forth.

What is needed by Indonesia to improve its business sector?

Every business, whether large or small, has customers that they have to understand. Every business like manufacturing, engineering, big or small, has people and has money invested by shareholders. All businesses have the same structure. You must try to develop your people to improve the way they work so they can satisfy customers.

The success of a country is always determined by the success of its private sector, as it creates jobs, jobs value, ultimately allowing its GDP/capita to rise. So the government can start by making it easier for to companies to grow. We can see the best example in Japan. In 1960s Japan was a poor economy and still recovering from World War II. Some private sector companies introduced total quality of management (TQM) and they succeeded very well. The government saw that and picked that idea and spread it across Japan to all companies. In ten years Japan became a leading force in manufacturing in the world because they mastered quality. I think the opportunity here is very similar, instead of quality we’re talking about execution, the ability to execute strategy. It’s more compli-

Is your concept on business strategy also applicable in Indonesian SMEs?

How would you motivate startup companies or young entrepreneurs? When you are a beginner, one of the things you are looking for is investors to give you money to help your business. The investors will not give you money unless they believe you can manage money. For small businesses or entrepreneurs trying to become big businesses you got to build a picture of where you are today and

For small businesses or entrepreneurs trying to become big businesses you got to build a picture of where you are today and a picture of where you want to be three years from now. And then you show how you are going to get there, what you must do with your people, how you exercise leadership and so on.

a picture of where you want to be three years from now. And then you show how you are going to get there, what you must do with your people, how you exercise leadership and so on. You create this path to the future then you sit down with the investors and explain to them what you are trying to do. The most important thing to all business players is to have a vision, and communicate it to the organization, and focus, focus, focus.

The President Post

A4 June 12, 2011

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The World 50 Years of NAM and Its Future Challenges The Non-Aligned Movement (NAM) celebrated its 50th anniversary in an event that was commemorated in Bali in May. The golden jubilee presented a momentum of reflection to determine the direction of NAM for the next 50 years and beyond based on its vision, basic principles and experience since the Cold War era.

T

he NAM was founded during the collapse of the colonial system and the independence struggles of the peoples of Africa, Asia, Latin America and other regions of the world, and at the height of the Cold War. During the early days of the Movement, its actions were a key factor in the decolonization process, which led later to the attainment of freedom and independence by many countries and peoples and to the founding of tens of new sovereign States. Throughout its history, NAM countries have played a fundamental role in the preservation of world peace and security. The NAM has its origin in the Asia-Africa Conference (AAC) held in Bandung, Indonesia, in 1955. Prime Minister Jawarahal Nehru, the Indian senior statesman, along with the presidents of Indonesia, Soekarno, and Egypt, Ab-

www.lensaindonesia.com

del Gamal Nasser, led the conference. The principles that would govern relations among large and small nations, known as the “Ten Principles of Bandung”, were proclaimed at that Conference. In Africa at that time, out of 43 nations only five were independent, while the rest were still colonies of Britain, France, Belgium and Germany. The newly independent states took the Bandung Principles as their common ground and spirit to leverage up their bargaining power politically, socially and economically.

the initiative of a number of Third World leaders at that time. As the name implies, NAM member countries only have one single option, which is not to be an instrument of any political interest or tool in service of either superpower. In the course of its long history of over five decades, however, NAM experienced hard times, which likely caused them to lose clear orientation, especially after the disintegration of the Soviet Union and the emergence of US as the world’s only superpower. Indonesia’s key role to host the NAM golden jubilee may stand as a profound example. It can share its experiences and best practices with the Middle East and North African countries on how to manage multidimensional crises during the transition from an authoritarian, militaristic and centralistic regime to a decentralized and democratic system.

Six years after the AAC, the leaders of Asian and African countries have reiterated their collective commitment against global injustice and hegemony under the domination of the two superpowers (the US and Soviet Union). This collective commitment was a determinant factor in the birth of the NAM during its first summit in Belgrade (Sept 1-6, 1961), at

Prominent scholar Hikmahanto Juwana said that there must be a reformulation of the NAM’s role because there are now no longer western and eastern blocs, so that is what the NAM has to do to remain relevant. He added that NAM members, which are mostly developing countries, must show its stand and build a common view, which is one of NAM`s big-

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Indonesian Foreign Minister Marty Natalegawa identified five ways that could be done by the NAM countries to be able to make a contribution for the culture of peace and global security, development of politics as well as the improvement of democracy and good governance. gest challenges. The NAM had been unable to play significant roles in the international arena. It finally focused on issues that were not controversial, which among others included poverty, population, environment, climate change, smuggling, narcotics and trans-national organized crime. Nevertheless, after 50 years of its birth, poverty, injustice, and backwardness are still prevalent in the world. The Millennium Development Goals Report 2010 says the gap between developed countries and underdeveloped has become wider, and that the population of developed

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countries has average incomes 72 times the population of developing countries. On its 50th anniversary a collective dream has to be renewed to address the existing global injustice, extreme gap between countries and the existing political crises and social. The NAM’s values and principles, combined with a new, forward-looking posture, which are more focused and action-oriented, should be able to strengthen the NAM’s role in the next 50 years. Indonesian Foreign Minister Marty Natalegawa identified five

ways that could be done by the NAM countries to be able to make a contribution for the culture of peace and global security, development of politics as well as the improvement of democracy and good governance. First, integrating the spirit of multilateralism within the NAM. This can be done by considering efforts to solve the challenges in the 21st century that require international cooperation. Several issues in the multilateral cooperation that need to be championed are, among others: reforms on the UN’s Security Council, revitalization of the UN’s General Assembly, and reforms on the global finance and economic architecture. Second, partnership is key. Natalegawa emphasized that interconnected challenges and opportunities in a more complex world demand a network of partnerships. The NAM must build partnerships with regional organizations and mechanisms. Regarding issues of mutual concern in the partnership, Natalegawa touched on issues of weapon disarmament, climate change as well as food and energy security as examples. Third, the NAM must stride forward with sustainable efforts in strengthening its capacity. “We

need to ensure that the NAM is able to respond to the world’s challenges effectively and efficiently coupled with coordinated measures,” said Natalegawa. The NAM must also have added values and relevance for its member countries. For example, he mentioned programs under the NAM Cooperation Centre, including the NAM Centre for South-South Technical Cooperation (NAM CSSTC) and the NAM Centre for Science and Technology of the Non-Aligned and Other Developing Countries (NAM S&T Centre). Fourth, NAM must always firmly uphold truth and justice values. Palestine is the example of how the NAM needs to fight for those values. Indonesia, according to Natalegawa, would always be ready to support capacity improvement of the Palestinians. This is considered important to support the Palestinians’ readiness so that in the future they can really enjoy their sovereignty. Fifth, the NAM must be more responsive to bring the benefits for the interest of the people in member countries. The sectors that could be immediately felt by the people are social and economic development as well as the improvement of democracy and good governance.

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June 12, 2011 A5

ASEAN Foreign Direct Investments:

South-South Investment Flows This South-South Investment trend could open up a new chapter and a new niche in the global economy. This will be the big challenge ahead for the developing countries. The East Asian countries and ASEAN (including Indonesia) could increasingly play a leading role in that respect.

Figure 1. FDI INFLOWS INTO ASEAN 2006

Source Countries

Value (mil USD)

ASEAN

2007 Share (%)

Value (mil USD)

Figure 2. FDI INFLOWS TO ASEAN BY SECTORS, 2000-2009 2008

Share (%)

Value (mil USD)

2009 Share (%)

Value (mil USD)

Share (%)

7,755.6

13.8

9,682.0

13.0

10,461.5

21.1

4,428.9

11.2

Australia

317.0

0.6

1,491.5

2.6

919.7

1.9

700.9

1.8

Canada

255.0

0.5

394.1

0.5

799.4

1.6

310.9

0.8

China

1,045.6

1.9

1,684.3

2.3

2,109.5

4.3

1,509.5

3.8

13,159.0

23.4

17,765.5

23.9

9,520.1

19.2

7,297.2

18.4

-282.0

-0.5

1,466.2

2.0

698.6

1.4

983.6

2.5

10,439.7

18.5

8,828.7

11.9

4,657.8

9.4

5,308.4

13.4

1,246.3

2.2

2,715.5

3.7

1,583.5

3.2

1,421.8

3.6

New Zealand

-209.0

-0.4

100.7

0.1

-165.1

-0.3

239.9

0.6

United States

3,018.3

5.4

8,067.6

10.8

5,132.6

10.4

3,357.7

8.5

European Union India Japan Republic of Korea

Others

19,609.4

34.8

22,199.2

29.8

13,782.2

27.8

14,064.1

35.5

ASEAN Total

56,354.9

100.0

74,395.3

100.0

49,499.8

100.0

39,623.0

100.0

A

SOUTH-SOUTH INVESTMENT most important development is taking place in the area of FDI (foreign direct investment): the early signs of a “SouthSouth” cooperation. South-South interactions will no longer be confined to trade but also gradually to encompass investment. This growth among developing countries in the FDI area is of great interest to East Asian countries, including ASEAN. This will open up a new chapter in the relations among developing countries. This trend is already at work in East Asia thanks to China, India, South Korea and Taiwan and to a smaller degree also within ASEAN. For example, investment is already coming to Indonesia, the Philippines and Vietnam from neighboring ASEAN countries. Other investors from East Asia, namely China, India and South Korea, are actively offering their investments to ASEAN countries. And in a big way to Indonesia Brazil has already set its investment in Indonesia in the area of mining. There are presently two trends at work in the development of South-South cooperation in the area of FDI: Firstly, according to UNCTAD (United Nations Conference on Trade and Development) in Geneva there was a strong rebound in FDI flows to developing countries in Asia and Latin America, offsetting the decline in inflows to advanced countries. Flows to the developing countries increased substantially from $275 billion in 2004 (representing 27% of total flows) to $620.7 billion in 2008 (representing 37%) with the largest share going to Asia, particularly to China, ASEAN and India. Secondly, there is the substantial increase of outward FDI flows from emerging countries, including East Asian countries such as China, India and South Korea. This is primarily due to the strength of their economies. Their outward FDI flows are reaching a total of $377 billion with the lion’s share directed to the South (developing countries). Another push factor is that emerging countries are successful in developing their own multinational companies. Their transnational corporations (TNC’s) are investing also in other coun-

tries following the examples of the TNC’s from Japan. These trends show that in the area of FDI’s a highly important development is taking place, namely the increasing role of the developing countries not only as recepient countries but also as supplying countries of FDI’s. Their share in global outflows is still limited but the predictions are for a rapid increase of their share. These developments are transforming the economic landscape of the developing countries, including ASEAN.

FDI INFLOWS INTO ASEAN For the international investment community ASEAN is looked upon as a potential destination. The reason is that ASEAN is increasingly known as a dynamic regional market. In addition ASEAN is seen as having relatively open policies towards foreign investors.

It should be noted that ASEAN has become the third largest source of FDI flows. This intraASEAN investment flows is a highly important trend in the development of the ASEAN economy. Since 2002 FDI flows into ASEAN rose significantly from $18 billion in 2002 to $69.9 billion in 2007. This is an enormous increase. The main reason behind this rise was that ASEAN demonstrated that it was capable to cope with the Asian Financial Crisis of 1997/98. ASEAN took immediate measures to restore and improve the financial situation, and began with their economic reform programs. However, the FDI inflows declined in 2008 to $60 billion as a result of the global crisis followed by lower figures in 2009 estimated to be as low as $39 billion. The prospect for 2010 and 2011, however, looks more promising. Looking specifically at the ASEAN 2009 figures one can see the following inflow from the main sources: 1) EU with $7,2 billion 2) Japan $5,3 billion 3) ASEAN $4,4 billion 4) United States $3,3 bil-

lion 4) RO Korea $1,4 billion. China and India came at a later stage namely in 2010-2011. They are not yet registered in the ASEAN statistics (see Figure 1).

ASEAN as a single regional market that has more drawing power than individual markets. This argument also applies to the question of production base.

It should be noted that ASEAN has become the third largest source of FDI flows. This intra-ASEAN investment flows is a highly important trend in the development of the ASEAN economy. ASEAN is not only on the receiving end but it can also be on the supplying side. Singapore and Malaysia have become prime investors for the region, including for Indonesia.

BIG CHALLENGE AHEAD

SECTORS FDI inflows to ASEAN is concentrated in the services and manufacturing sectors. The services sector accounted for about 50% of FDI inflows in 2008. The share of manufacturing was about 29%. It is not clear why the services sector is more attractive for investors (see Figure 2). It must be quite a disappointment for countries like Indonesia and Thailand with large natural resources to see that so far FDI flows into the primary sector (agriculture, mining and quarrying) has been quite low. It shows that these important sectors are not attractive enough for foreign investors. There are still too many obstacles in these areas. Yet these sectors must be developed into engines of growth for countries with large natural resources, such as Indonesia, Thailand, Malaysia and the Philippines. The ASEAN secretariat data suggest that Intra-ASEAN FDI flows are beginning to come up. So far the largest source countries are Singapore and Malaysia. Even Indonesia is being mentioned as a source (see Figure 3)

BOOSTING INVESTMENT

An important goal of ASEAN is to intensify the creation of an AEC (ASEAN Economic Community) by 2015. Under the AEC, ASEAN aims to transform the regional association (composed of 10 member countries) into a single market and production base, and to facilitate the free flow of investment within the ASEAN region. An integrated ASEAN supported with its relatively strong basic fundamentals would be able to bring a number of benefits to the region. ASEAN’s economic integration is expected to bring quite a number of benefits to ASEAN. As the global investment environment becomes more competitive, investors strongly prefer to see

Figure 3. INTRA-ASEAN FDI INFLOWS, 2009 (in mil. USD) Philippines

0.00

1.60

0.00

0.00

0.00

-29.38

7.30

0.00

0.00

0.00

0.10

0.00

0.00

0.00

0.54

0.00

0.63

312.9

0.45

0.00

0.00

2.22

872.60

9.79

66.15

1,319.47

0.00

0.00

0.00

0.00

65.90

0.32

0.00

66.22

0.00

-5.53

0.00

0.00

82.70

16.33

1.72

96.47

15.97

592.10

5.37

16.42

0.00

547.45

315.51

2,528.75

-370.89

6.86

-0.01

15.50

0.00

29.96

-226.78

0.00

0.00

Cambodia

0.00

0.00

0.00

Indonesia

0.00

2.91

0.00

LAO PDR

0.00

0.00

Malaysia

0.01

55.56

Myanmar

0.00

0.00

0.00

Philippines

0.00

0.00

1.24

Singapore

0.08

20.42

1,015.42

Thailand

0.00

23.87

50.72

17.20

4.41

11.21

7.30

6.50

0.10

15.49

937.00

-1.33

4.07

920.57

-2.40

TOTAL

Vietnam

0.00

Thailand

0.00

Singapore

Myanmar

0.05

Brunei Darussalam

Malaysia

0.00

Lao PDR

9.88

Indonesia

Cambodia

Brunei Darussalam

Host Country

Source Country

23.15

Vietnam

0.00

68.07

0.00

23.70

-467.60

0.00

0.00

59.00

1.76

0.00

-315.07

Total ASEAN

0.09

170.84

1,380.07

57.33

-269.73

19.53

18.68

2,037.60

585.77

428.72

4,428.91

Source: ASEAN Secretariat FDI Database

35.8

38.7

75%

44.2

49.2

44.7 63.4

56.8

55.4

62.1

67.9

26.4

21.5

50%

39.9

46.6

28.3

40.8

38.4 24.4

40.1

25%

27.5

24.2

14.7

3.2

0% 2000

2001

2002

10.0 2003

Primary & Others

2004

28.0

16.9

12.2

16.6

11.5

10.6

2005

2006

2007

2008

2009

Manufacturing

Services

Source: ASEAN Secretariat FDI Database

Source: ASEAN Secretariat FDI Database

By Atmono Suryo

100%

With the possible growth of South-South investment Indonesia may face a different but more positive investment environment. Investors from the South are eager to come to Indonesia, led by China, India and South Korea and other countries, including the Middle East and Latin America representing the South. Indonesia has been facing the problem of Western investors “sitting continuously on the fence”. The rather new investors from

Asia and Latin America seem to be more prepared to enter into areas not considered to be attractive enough by investors from the North, such as resources development coupled with the establishment of value-added industries and food production in the eastern part of Indonesia. Certain potential areas of manufacturing development (for domestic consumption and exports) also require a high degree of new investment. In the area of service industries large investments are required. Investors from the South can be of great help for Indonesia which needs the massive flow of investment to accelerate economic development.

At the same time there is also the opportunity for Indonesia to develop Indonesia TNC’s (transnational companies) to expand its business and investment activities in other countries. This may give the country additional foreign exchange income. This South-South Investment trend could open up a new chapter and a new niche in the global economy. This will be the big challenge ahead for the developing countries. The East Asian countries and ASEAN (including Indonesia) could increasingly play a leading role in that respect. The writer is former Indonesian ambassador to the EU.

An important goal of ASEAN is to intensify the creation of an AEC (ASEAN Economic Community) by 2015. Under the AEC, ASEAN aims to transform the regional association (composed of 10 member countries) into a single market and production base, and to facilitate the free flow of investment within the ASEAN region.

The President Post

A6 June 12, 2011

www.thepresidentpost.com

The Economy ECONOMIC UPDATES

Govt to Renegotiate Foreign Mining Contracts

Imports Reach All-time High of $14 b in April Indonesia`s imports reached an all-time high value of $14.89 billion in April, jumping 32.54% from the same month last year, the Central Statistics Agency (BPS) said. April`s imports represented a 2.8% increase compared to a month earlier, BPS Deputy Chief for Distribution and Services Statistics Djamal said here last month. According to BPS data, oil/gas imports in April rose $1.01 billion or 35.28% from the previous month. However, non-oil/non-gas imports fell $0.61 billion or 5.25% from the month before. “The oil/gas imports mostly consisted of crude oil and oil products,” he said.

The government respected the contracts but deemed it necessary to review what it sees as unfair contracts The government is considering to renegotiate investment contracts with foreign companies engaged in oil, gas and coal mining sectors, a minister said. In principle, the government respected the contracts but deemed it necessary to review what it sees

Meanwhile, non-oil/non-gas imports were dominated by machinery and mechanical appliances valued at $1.93 billion, he said. Cumulatively, the country`s imports in the January-April 2011 period reached $53.69 billion, up 30.32% from the same period last year, he said. In the four months through April non-oil/non-gas imports increased 27.63% to $41.40 billion and oil/gas imports jumped 40.29% to $12.29 billion from the same period last year, he said. He noted that China remained on top as the supplier of imported goods in the first four months of 2011 with $7.47 billion, or 18.03% of the overall imports and Japan came in second with $5.75 billion or 13.89%. Overall, imports from other ASEAN member countries contributed 23.74% and European Union 8.82% to the overall imports.

as unfair contracts, Finance Minister Agus Martowardoyo said at the State Palace here last month. “In 2011 there are many contracts of work that we need to review to see whether or not they represent a win-win solution and whether or not they are abnormal. That`s what we want to review and study,” he said. He stopped short of naming the foreign mining companies. “All of them. We cannot mention them. But they are mostly en-

Govt Raises Rp 5.45 t From Auction of State Bonds

gaged in natural resources management,” he said. Basically, the government intended to increase state revenues, create more jobs and give added value to the country`s natural resources so that it deemed it necessary to review the contracts, he said. In addition, the government also did not consider such crucial issues as environment management obligations when signing the contracts, he said.

Economy in 2012 to Grow by 6.5-6.9% The government has projected the domestic economy to expand by a range of 6.5-6.9 percent in 2012, or slightly higher than the economic growth forecast of 6.3 percent set under the 2011 state budget. Strong domestic consumption, solid investment inflows and improving export performance are expected to remain the engine of economic growth next year. The improving export performance will be inseparable from the good prospects of the world economy after it saw years of slowdown. “In 2012, the government believes that the global economy will be getting more prospective. For Indonesia, it will of course have a good impact on the national economy. Therefore, we are optimistic that the economy will accelerate to a level of 6.5-6.9%,” Finance Minister Agus Martowardojo said when explaining the frame of macro economy and fiscal policy of 2012 at a plenary meeting with the House of Representatives (DPR) here last month. In addition, the government would also pay special attention to the development of infra-

RI’s 2012 Economic Growth Projected Highest in ASEAN Indonesia`s economic growth in 2012 is predicted to be higher than those of other ASEAN countries, Finance Minister Agus Martowardojo said here last month. “The government will prepare a expansive fiscal policy in 2012 to support the economic growth,” Agus said when delivering the government`s response to the outlooks of House of Representatives Agus Martowardojo factions in the House plenary meeting. According to the finance minister, the government would make every effort to reach the economic growth of around 6.5% to 6.9% in 2012, although there would be a big enough challenge. The finance minister said the rate of Indonesian economic growth would be higher than Malaysia’s 5.2%, Thailand 4.5%, the Philippines 5.0%, and Singapore 4.4%. Public consumption and government consumption were also estimated to grow respectively by 4.8-5.2% and 6.0 -6.4%, while the investment would grow by 10.0-10.4% and need the funds of about Rp2,800 trillion. Agus said export and import were also predicted to increase respectively by 14.9-15.3% and 18.8-18.4%. He added that budget allocation policy would be made to support quality economic growth, to expand the creation of job opportunity, and to reduce the number poor people. “Policies will support the effort to expand employment, to increase people`s income, and to reduce the number of poor people,” the finance minister said.

Maritime Ministry Allocates Rp 212 b for Fishermen

Darmin Nasution structure facilities both in urban and rural areas. Among the sectors that will be high on the list of the government`s priorities next year will be energy and electricity, transportation, communication, health, and education. Among the global challenges were unequal global economic recovery, continuing crisis in Europe, global currency war and potential hike in the world oil price that would affect inflation, he added. Bank Indonesia Governor Darmin Nasution said early this year the prospect of the Indo-

The government raised Rp 5.45 trillion in funds from the auction of four series of state bonds. During the auction the government received total bids of Rp 14.7 trillion, Director General of Debt Management at the Finance Ministry Rahmat Waluyanto said in a statement last month. The bonds put to the auction were series SPN20120504, FR0055, FR0053 and FR0057. No bidder was declared a winner for the bonds series SPN20120504 which will mature on May 4, 2012. He said the Rp 5.45 trillion consisted of Rp 0.9 trillion from

The bonds series FR0055 due on September 15, 2016 carry a weighted average yield of 6.84906% and a coupon of 7.38%. The bonds series FR0053 due on July 15, 2021 carry a weighted average yield of 7.499% and a coupon of 8.25%. The bonds series FR0057 due on May 15, 2041 carry a weighted average yield of 9.2586% and a coupon of 9.5%. The issuance of the bonds is designed to meet part of financing the target in the state budget.

Minister Mari Vows to Raise RI’s Competitiveness nesian economy would remain strong, with gross domestic product (GDP) expected to reach 6.3% in 2011 and 2012. “The GDP in 2011 and 2012 is expected to grow at a brisk 6.3% each, particularly fueled by domestic demand and accelerated investment,” he said. The Indonesian economy grew by 6.5% in the first quarter of 2011, particularly driven by strong consumption and exports. Minister Agus said first-quarter economic growth was 55.7% contributed by public consumption. He said foreign investors` confidence in the Indonesian economy remained high as reflected by strong foreign capital inflows. Positive sentiments in the global stock exchanges had caused the share composite index (IHGS) to strengthen and prompted the rupiah to record the highest appreciation among the regional currencies. “In April alone, capital inflows in the state bond market reached Rp 9.85 trillion, the share market Rp 17.5 trillion and SBI (Bank Indonesia Certificates) Rp 9.71 trillion,” he said.

Trade Minister Mari Elka Pangestu hoped Indonesia would continue improve its competitiveness until it reached a position over the 40th level on the list of the World Economic Forum (WEF)`s Global Competitiveness Index (GCI). “We hope in the coming two or three years Indonesia`s competitiveness rating would increase and be registered at over the 40th level,” the minister said on the sidelines of the World Economic Forum - East Asia (WEF - EA) meeting here on Sunday. “We will also do our best to overcome corruption and public health problems. For these, we will take short and long term steps,” she said. The 2010-2011 WEF`s GCI report placed Indonesia`s competitiveness rating on the 44th list of 239 developing countries. Indonesia`s position was still over those of a number of developing states such as Brazil, South Africa and India but it is under those of Singapore and Malaysia. Several factors considered

Mari Elka Pangestu to be contributing to Indonesia`s competitiveness included fast economic growth, sound fiscal management, and increasing basic educational access. In the meantime, factors seen as having weakened the country`s competitive edge consisted of insufficient infrastructures, toads, ports, railways and the lack of power and energy supplies. In order to increase its competitiveness, Indonesia should also improve its health service, labor welfare, transparency and accountability of bureaucratic services.

Govt to Build Three LNG Terminals

The Maritime Affairs and Fisheries has set aside Rp 212 billion to improve the welfare of fishermen through several empowerment programs, a minister said. “On national scale we have prepared a fund of Rp212 billion for fishermen welfare improvement programs,” Maritime Affairs and Fisheries Minister Fadel Fadel Muhammad Muhammad said here last month. The minister said that the Rp 212 billion funds accounted for 33% of the total budget for the maritime affairs and fisheries ministry. He said that the improvement programs included housing for fishermen, villagers` fish pond empowerment, fishermen`s groups improvement and procurement of boats for fishermen through regional governments. The ministry would propose a budget of Rp 1.2 trillion especially for improving the welfare of fishermen in 2012, he said.

The government plans to build three LNG (liquefied natural gas) storage terminals which are expected to start operating in 2012, a senior energy official said. The Energy and Mineral Resources Ministry`s director general of oil and gas, Evita Legowo, said here recently the three LNG terminals would be built at three locations, namely Jakarta, Belawan (North Sumatra) and Arun in Aceh. “The operation of the terminals will reduce domestic gas supply problems,” she said. She said the LNG terminal in

Jakarta is expected to start operating in the first quarter of 2012 while that in Belawan in the second quarter and that in Aceh in the third quarter of that year. She said the government also plans to build another LNG terminal in Semarang, Central Java, which is expected to operate in 2013. The groundbreaking of the LNG terminal project in Jakarta was carried out recently by the director for general affairs of stateowned oil/gas company PT Pertamina, Waluyo. The project is carried out by

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PT Nusantara Regas, which is a joint venture of PT Pertamina and state-owned gas company PT PGN respectively holding 60% and 40% shares. The capacity of the floating terminal is planned at three million tons or 400 million cubic feet per day (MMSCFD) with an initial capacity of 1.5 million tons. The terminal will receive LNG from the refinery in Bontang, East Kalimantan, totaling 1.175 million tons a year based on a tenyear contract or totally reaching 11.75 million tons.

The gas will be used to meet the demands of Muara Karang and Tanjung Priok power plants in North Jakarta. The Arun terminal meanwhile will be modification of its old function as a supplying terminal into a storage terminal. The Arun terminal built by Pertamina wiil supply gas to fertilizer companies, power plants, paper and other industries. Evita said the Belawan terminal which would be built by PGN has received supply up to 140 MMSCFD. The gas from the terminal with

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a capacity of 200 MMSCFD will be used by PLN (state power company) totaling 140 MMSCFD and industries 60 MMSCFD. The LNG to be supplied to Belawan terminal totaling 140 MMSCFD will come from the shifting of exports to Sempra in the United States. Based on a contract, exports of LNG from Tangguh reach 3.6 million tons a year with the possibility for 50% of them or 1.8 million tons a year to be shifted to other buyers with a compensation fee of around one US dollar per MMBTU to Sempra.

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Around Jababeka Jababeka’s 2010 Net Profit Hit New High at Rp 62 billion The President Post/Nandi Nanti

Last year, Jababeka sold 107.3 hectares of industrial space, a nearly 600 percent jump from only 15.3 hectares in 2009. Total sales stood at Rp 712.35 billion in 2010, a 305 percent rise from a year earlier.

P

T Jababeka Tbk last week held its annual general meeting of shareholders at the President Lounge Menara Batavia, Jakarta, and announced that its net profit in 2010 stood at Rp 62 billion. “We set aside Rp 50 billion as company reserves and the rest is recorded as retained earnings to strengthen the capital structure of the company,” said Budianto Liman, Vice President Director of Jababeka. Last year, Jababeka sold 107.3 hectares of industrial space, a nearly 600 percent jump from only 15.3 hectares in 2009. Total sales stood at Rp 712.35 billion in 2010, a 305 percent rise from a year earlier. The company was established in 1989 and is the first listed industrial estate developer in Indonesia. It offers industrial, residential and commercial buildings and land for sale, as well as provides infrastructure services, which include water provision, waste water treatment, estate management. In addition, it develops and constructs power plants and sells electricity to state-owned power provider, PT Perusahaan Listrik Negara (PLN). Located 35km from the Jakarta Central Business District,

55km from the Tanjung Priok seaport and 65km from the Soekarno Hatta International Airport, Kota Jababeka-Cikarang is easily accessible via toll roads. A super-efficient and comprehensive infrastructure supports various facilities within the estate. It consists of 1,570 ha of light-medium industries and 1,400 ha of residential area. Jababeka’s other site is located in Cilegon, 85 km of west Jakarta and is connected via Jakarta-Merak toll road and railway. It covers 1,000 ha of medium & petrochemical industries. Kawasan Industri Jababeka (KIJA), as the primary choice destination for foreign direct investments, revives the company’s sales boom to the pre-crisis levels of 1996-97. Approximately Rp 109 billion have been recorded as sales in 2010, and as such the remaining Rp 750 billion will be booked in 2011. The demand of industry land is expected to increase due to the growth of economic activities, solid FDI inflows and the business sector’s expansion plans. Jababeka develops beyond property projects to support sustainable growth with sound plans for the future. The Bekasi Power Plant as of May 2011 operates at the level of 88.5%. Two gas tur-

Multicon and KAN Start Operations at CDP The presence of empty container depot operators will add more value to exporters, importers and users of other services.

Jababeka Board of Directors. From left to right: Vice President Director Hadi Rahardja, Director Setiasa Kusuma, President Commissioner Bacelius Ruru, President Director Setyono Djuandi Darmono, Vice President Director Budianto Liman, Director Hyanto Wihadhi.

Kawasan Industri Jababeka (KIJA), as the primary choice destination for foreign direct investments, revives the company’s sales boom to the pre-crisis levels of 1996-97. bine generators (GTG) have been installed, tested and commissioned. Two chimneys for heat recovery steam generators (HRSG) were installed, and a Steam Turbine Generator (STG) foundation has been completed while the

STG machine is still in the assembly stage. It is targeted to start operations by the end of 2011, selling electricity to PT PLN with a possible buyback in line with tenant demands, Budianto said. Another project is the Cikarang Dry Port, which is part of several programs by the Indonesian government, namely Customs Advance Trade System and Indonesian Blue Print Logistics, and is intended to streamline and boost the country’s competitiveness in terms of supply chain and distribution of goods. The SAFE Framework of the World Customs Organization and other international standard compliances shall be applied to enhance international trade and to bring value to supply chain players both in Indonesia and overseas.

In 2009, it commenced construction of a dry port on a 200-hectare area in Cikarang designed to handle up to 2 million twenty-foot equivalent unit (TEUs) containers until 2020. The cost to build BP is $141 million while the dry port costs $200 million. Jababeka is still working on improving its accessibility. “BP’s revenue will be reported in 2012 and is estimated to reach $80 million per year, while revenue of the dry port is included in 2011 revenue but the amount is still small. We are still waiting the completion of the entrance highway to the Jababeka area by which time the dry port is projected to earn about Rp 87 billion,” explained Budianto.

Global shipping companies are now able to enjoy the full benefits of the convenient process of import-export at Cikarang Dry Port (CDP). In May 2011, two empty container depot operators, PT Multicon Indrajaya Terminal (Multicon) and PT. Kharisma Astra Nusantara (KAN), began operations at CDP. Both companies provide empty container depot services in eastern Jakarta. For Multicon, the opening of their new office at Cikarang complements the presence of shipping

companies Maersk Line, MCC Transport and Safmarine at the CDP. Since its establishment in 1998, Multicon has become one of the largest empty container depot companies in Indonesia with a market share of nearly 20%. The opening of KAN in Cikarang reflects the firm commitment to support the operations of shipping companies, namely APL and CMA-CGM, which will also open its services in the CDP. The presence of empty container depot operators will add more value to exporters, importers and users of other services. Various container depot facilities and services such as empty containers, the cleaning and repair of containers are available at CDP to provide convenience to all parties.

Jababeka Event

Jababeka Industrial Estate in Manufacturing Surabaya 2011

Manufacturing Surabaya 2011 was held at the Grand City Convention and Exhibition Centre and proved to be a huge success in meeting the demand from the industry to keep themselves abreast of developments in new equipment. A total of 281 companies from 25 countries participated in the exhibition, Singapore and Taiwan. Jababeka, as one of the largest industrial estates in Indonesia, was also involved as an exhibitor in the Expo. As an industrial estate which houses more than 1,500 companies, both national and multi-national, and supported by the world-class facilities and infrastructure, Jababeka tried to offer superior products, including commercial office buildingx which are dedicated to the SME industry. The exhibition was opened by Ir Budi Setiawan, Head of Department of Trade and Industry, Province of East Java, on behalf of the East Java Governor. Ms Pauly Tan from the Singapore Manufacturers Association said that the event was very well organized and allowed people to gain many business opportunities.

For more information about Jababeka Events and our industrial estate, please call :

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Business BUSINESS BRIEFS Toyota Astra Financial to offer Rp 750 b bonds PT Toyota Astra Financial Services is to offer fixed rate bonds worth Rp 750 billion to expand its automotive financing business. The issuance of the bonds consists of three series with a maturity of one to three years and was part of strategies to diversify financing sources with attractive interest rate, Toyota Astra Financial Services President Director Buntoro Muljono said here recently. The bonds series A due in 370 days are issued at a coupon of 7.58.25%, series B due in 24 months at a coupon of 8.25-9.25% and series C due in 36 months at a coupon of 9-9.75%.

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PT Jaya Agra Lists Shares at BEI PT. Jaya Agra released 1.132 billion shares or 30% of its issued capital, fully paid in after initial public offering that raised Rp 566.202 billion. PT Jaya Agra Wattie Tbk. (JAWA) officially listed its shares at the Indonesian Stock Exchange (BEI) here last month at an initial offering price of Rp 500 per share. JAWA released 1.132 billion shares or 30% of its issued capital, fully paid in after initial public offering that raised Rp 566.202

billion. In the primary trading the price of JAWA shares rose eight percent to Rp 540 from an initial price of Rp 500 per share. “During offering we are oversubscribed 2.44 times of the number of shares released to the public. This is because the market has seen our business expe-

rience of 90 years in the plantation sector,” said JAWA president director Harijadi Soedarjo after the listing. 90% of the proceeds from the IPO would be used for planting and developing rubber and oil palm plantations to support the company`s business. Apart from that, he said, he also planned to build rubber factories in West Java and East Java each with a capacity of 150 kilograms per hour. The remaining 10% of the pro-

ceeds would be used for new land acquisition, working capital and capital expenditures, he said. “We would use 90% of the funds from the IPO for planting and developing rubber and oil palm plantations in South Kalimantan, building crumb rubber factories in South Kalimantan, West and East Java and other corporate actions,” he said. After the IPO Utama Hadi Surya holds 19.99%, Dwijaya Hadi Surya 19.99%, PT Sinar Kasih Abadi 21%, PT Aji Lebur

Local rating agency PT Pemeringkat Efek Indonesia (Pefindo) has assigned an AA rating to the bonds. Buntoro said proceeds from the issuance of the bonds would be used as working capital to expand automotive financing business. The financing sources would also come from external cash and banking loans. The company has appointed PT Trimegah Sekuritas Tbk, PT HSBC Securities Indonesia, and PT Indopremier Securities as bond issue underwriters. The bonds will be offered to the public on June 27-July 1 and listed at the Indonesia Stock Exchange on July 8.

Seketi 9.02%and the public 30%. Acting as underwriters for the IPO were PT Mandiri Sekuritas and PT OSK Nusadana Securities Indonesia. PT Jaya Agra Wattie is a rubber, oil palm, coffee and tea plantations company and has nine palm oil processing plants in Banten (West Java), East Java and South Kalimantan. It is the eighth issuer recorded at BEI this year to increase the number of listed companies to 426.

Telkom to spend 55% of 2010 profit on dividends

Toyota Astra Financial Services is a joint venture between Toyota Financial Services Corp., Japan and PT Astra International Tbk., which focus on automotive financing (Toyota) throughout Indonesia.

Bank Jatim posts Rp 347 b net profit The East Java provincial governmentowned Bank Pembangunan Daerah (Bank Jatim) booked a net profit of Rp 347 billion in the first four months of this year. The net profit was inseparable from the bank`s good performance over the period, PT Bank Jatim President Director Hadi Sukrianto said here last month. “We are optimistic that we can achieve the net profit target of Rp 1.2 trillion for 2011,” he said. As per April 30, 2011, the bank`s assets totaled Rp 23.08 trillion. Meanwhile, the amount of credits channeled in the four months through April reached Rp 13.907 trillion and the amount of third party fund placement stood at Rp 19.2 trillion.

B

PIAGGIO INVESTMENT: PT Piaggio Indonesia plans to open over 35 outlets in Indonesia. Its warehouse at Cikarang supplies spare parts for the scooters it produces.

State telecommunication operator PT Telkom Tbk has decided to allocate 55% of its last year`s net profit worth Rp 11.5 trillion as dividends. Telkom would pay dividends worth Rp 6.34 trillion in total, Telkom President Director Rinaldi Firmansyah said following a general shareholders meeting here last month. The dividends included interim dividends worth Rp 526.1 billion paid to shareholders on January 11, 2011, he said. The shareholders also agreed to buy back Telkom shares worth Rp5.1 trillion, he said. “There has been an increase in the amount of funds to buy back shares to Rp 5 trillion from Rp 3 trillion previously,” he said. Telkom Finance Director Sudiro Asno said the buyback program would be carried out in 18 months since the general shareholders meeting in May. “The share buyback will be carried out through the purchase of shares at the Indonesia Stock Exchange and the New York Stock Exchange,” he said. He said .37 billion of the 2010 net profit was allocated for partnership programs and Rp 115.37 billion for environmental conservation programs, or 1% of the net profit each. The remaining net profit worth Rp 5.1 trillion would be used as retained earning to develop the company`s Telecommunication, Information, Media and Edutaintment (TIME) business, he said.

The President Post/Nandi Nanti

The new Maserati Quattroporte Sport GT S sets another milestone in terms of sportiness in the high performance luxury sedan segment. It offers sporty handling which further enhances the Quattroporte’s already optimal dynamic balance. It features the evolution of sporty automatic gear-shifting software, designed to win over committed and demanding drivers, seeking an exciting driving experience. It also equipped with the “Sport” button, makes it possible to deploy the full power of the engine and produce a deeply enveloping and throaty exhaust note. The Quattroporte Sport GT S’s engine has been developed to favor maximum power output. Main technical data: • Displacement: V8 4,691 cc • Power: 323 kW (433hp) @ 7,000 rpm • Torque: 490 Nm ( 361 lb/ft) @ 4,750 rpm • Max engine speed: 7,200 rpm

Quattroporte Sport GT S is equipped with an automatic sixspeed transmission developed with sportiness of a new and specific gear-shifting strategy: the MC-Auto Shift mode, Manual Mode, and Manual Sport mode. • “MC AUTO SHIFT” mode: In order to optimize standing starts, the automatic gearbox offers the MC Start Strategy, which functions with the MSP off. The driver should press and hold the brake pedal, then start pressing the accelerator and releases the brake pedal only when the optimum revs are reached (between 23002500 rpm). This fast start strategy, recommended only for use on the race track and in a situation of complete safety, reduces the 0 to 100 Km/h (0-62 mph) time from 5.3 seconds to 5.1 seconds. • “MANUAL MODE”: In manual mode the gear-shift is directly controlled by the driver, allowing the engine to reach its top speed. • “MANUAL SPORT”/”AUTO SPORT” mode:

When down-shifting, the throttle blip is matched with the SPORT-mode exhaust sound to facilitate maximum driving enjoyment. Exterior New 20” Multi Trident Silver wheels are fitted as standard, together with red brake calipers and Dual Cast technology brakes. The exterior body color range includes all 19 colors available for the Quattroporte and the Quattroporte S. Interior The sporty look of the interior features new M-design seats with perforated Alcantara® and leather upholstery. The interior configuration range features 10 leather colors (Avorio, Sabbia, Cuoio, Marrone Corniola, Grigio Ghiaccio, Grigio Medio, Blu Navy, Rosso Corallo, Bordeaux, Nero)

The President Post

B2 June 12, 2011

www.thepresidentpost.com

Business Indofood Net Profit Up 42% to Rp 2.95 t

MNC Securities issues Rp 300 b bonds PT MNC Securities has issued bonds worth Rp 300 billion this year to strengthen its working capital, its president director said. The bonds called MNC Securities II would be classified into series A and series B with a maturity of three years and five years each, Wito Mailoa said in a public expose here last month. The bonds series A worth Rp 150 billion would carry a fixed interest rate of 11.75-12.5% and the bonds series B worth Rp 150 billion would carry a fixed interest rate of 12.5-13.25%, he said. Proceeds from the issuance of the bonds would be used as working capital to finance margin trading, increase portfolio investment and develop branch offices and technology, he said. “Nearly 95 percent of the proceeds from the issuance of bonds will be used to strengthen working capital and the rest to develop branch offices and technology,” he said. Local rating agency PT Pemeringkat Efek Indonesia (Pefindo) has assigned a `BBB` rating to the bonds. The rating outlook is stable. MNC Securities has appointed Panin Securities Tbk as a bond issue underwriter. The bonds were offered on May 24-30 and listed at the Indonesia Stock Exchange (BEI) on June 20.

Indofood net sales rose 2.7% to Rp 38.4 trillion last year compared to Rp 37.4 trillion a year earlier. meeting here last month. The dividends would be distributed among shareholders on August 9, 2011, he said.

Anthoni Salim Instant noodle maker PT Indofood Sukses Makmur Tbk (INDF) last year booked a net profit of Rp 2.95 trillion, a 42.2% increase compared with the year before, allowing it to allocate 40% of its last year`s net profit as dividends. “Shareholders agreed to distribute dividends at the rate of Rp 133 per share. This is a form of our appreciation to shareholders` support for the company so far. The dividend distribution is also a form of our optimism that we will be able to deal with challenges that may lie ahead,” INDF President Director Anthoni Salim said following a general shareholders

INDF Director Thomas Thjie said net sales rose 2.7% to Rp 38.4 trillion last year compared to Rp 37.4 trillion a year earlier. The general shareholders meeting also decided to allocate Rp 5 billion of last year`s net profit as retained earnings. Thomas added Grup Indofood had decided to allocate Rp 5.2 trillion for capital expenditure this year. Of the total, Rp 2.2 trillion would be used for agribusiness. Meanwhile, the capital expenditure of PT Indofood CBP Sukses Makmur, a subsidiary of INDF, would reach Rp 1.8 trillion. The fund would be used for the noodle division and food seasoning division as well as for construction of new dairy farm in East Java, he said.

Elnusa to Pay Rp 19 b in Dividends PT Elnusa Tbk, a subsidiary of state oil and gas company Pertamina, has decided to allocate Rp 19.17 billion of its last year`s net profit as dividends. “Shareholders have agreed to pay a dividend of Rp 266 per share on July 20, 2011,” PT Elnusa Tbk President Director Suharyanto said following a general shareholders meeting here on Thursday. Elnusa posted a net profit of Rp

63.9 billion last year. He said 5% of the company`s 2010 net profit will be allocated as general reserves and 65% as retained earnings. “Given the decision reached at the general shareholders meeting today, the company will use the 2010 retained earnings to expand its business, especially integrated upstream service as its core business,” he said.

Pertamina $500 m Bonds Oversubscribed 10 Times

CONSTRUCTION EXPENDITURE Workers doing construction work on a shopping center at Jalan Sudirman, Jakarta. Construction expenditure in 2011 is estimated to reach Rp 204 trillion. The President Post/Nandi Nanti

RI Products to be Promoted at Harrods The government will again hold an Indonesian product promotion fair at Harrods Department Store, London, England, from July 31 to August 27, 2011. The promotion`s theme is “Indonesia Creative Escapes” and is a part of Indonesia`s plan to have a much larger product sale during the Olympic Games in England in 2012, Hesti Indah Kresnarini, the trade ministry`s director general for the national export development, said here last month. “This year we don`t have our products in a window display only like last year, but in fact we sell our products in a 360-m2 area on the third floor of Harrods,” Hesti said. The products on sale are cul-

ture-based handicraft products such as batik, woven clothes, accessories, furniture and recycled goods. Other products being offered are sports equipment, music instruments, Spa products, coffee, tea, organic food, and spices. “We also promote Indonesian culinary. Apart from the the display, we also advertise the products on the plasma television available at Harrods,” she said. Earlier, Indonesia organized an integrated product promotion called “Remarkable Indonesia” at Harrods Department Store, London, from March 27 to May 1, 2010.

After the promotion, Harrods sent personnel to Indonesia to survey potential products to be sold at the largest department store in England. They went to several shopping malls, as well as to handicraft, fashion, jewelry and food production centers. The government hoped that the trade and tourism promotions at Harrods can create a better image of Indonesia and help smoothen the entry of Indonesian products to England in particular and Europe in general. Indonesia`s exports to England include footwear, coal, furniture, motor spare-parts, textile and textile products, natural rubber and coffee.

Freeport Pays Rp 5.6 t in Financial Obligations to Govt Freeport Indonesia`s contribution to the regional Gross Domestic Product (GDP) of Papua`s District of Mimika reaches 96% while for Papua province up to 68%. Meanwhile the company`s contribution to Indonesia`s GDP reaches 1.59%.

PT Freeport Indonesia has paid Rp 5.8 trillion in taxes and other financial obligations in the first quarter of 2011 (January to March) to the Indonesian government, the company says in a statement received here last month. The contributions include $346 million in corporate income tax, $165 million in employees` income tax, regional tax and other kinds of tax as well $51 million in royalty and $117 million in dividends for government. Total financial obligations that the company has paid from 1992 to Match 2011 to the government,

based upon the working contract of 1991, reach $21.1 billion. They consist of corporate tax income totaling $7.3 billion, the employees` income tax, regional tax and other kinds of tax totaling $2.3 billion and dividends reaching $1.2 billion. “Freeport Indonesia has invested about $7.2 billion in various social projects,” it says in the statement. Based on a study by the Institute of Social and Economic Research of the Faculty of Economics of state University of Indonesia (LPEM-UI) in 2010,

Freeport Indonesia`s contribution to the regional Gross Domestic Product (GDP) of Papua`s District of Mimika reaches 96% while for Papua province up to 68%. Meanwhile the company`s contribution to Indonesia`s GDP reaches 1.59%. Until 2010 total number of employees of PT Freeport Indonesia is recorded at more than 22,000, 30% of them local Papuans and less than two percent are foreigners. To increased the number of skilled workers especially from local Papuans in 2003 PT Freeport

Indonesia established the Mining Institute of Nemangkawi (IPN) as a training center for workers. Until now it has produced more than 1,500 trainees to work for PT Freeport Indonesia and contractor companies. In 2010 PT Freeport Indonesia allocated more than $185.5 million in various sustainable development programs. Of the total $72.9 million was for environmental management, $112.6 million for social development programs including $69.7 million through partnership funds for community development programs.

State oil and gas company PT Pertamina said its $500 million bond issue was oversubscribed ten times, suggesting that investors` confidence in the company remained high. “When the $1 billion bond issue was oversubscribed seven times, the $500 million bond issue was oversubscribed ten times,” Pertamina Finance Director Afdal Bahaudin said on the sidelines of a working meeting with the House of Representatives Commission VII here last month. Yet the company still had no plan to issue another bonds despite the over-subscriptions, he said. He said shareholders had agreed on the value of bond issues to up to $1.5 billion. Proceeds from the bond issues would be used to finance capital expenditures projected to reach Rp 37 trillion this year, he said. The other funding sources to finance the capital expenditures would come from loans and project financing, he said. Both Afdal and Pertamina spokesman M Harun declined to comment on whether proceeds from the bond issues would be used to finance its oil blocks in Cepu, West Madura or Angola. The $1 billion bonds will mature in 10 years and $500 million bonds in 30 years.

BULL to Offer 6.65 b Shares Oil and gas shipping company PT Buana Listya Tama Tbk (BULL) will conduct an initial public offering of 6.65 billion shares to finance its business expansion. The shares would be offered at Rp 155 each, PT Buana Listya Tama Tbk President Director Henrianto Kuswendi said last month. Proceeds from the issuance of the shares would also be used to repay debts and strengthen capital, he said. The plan to issue 6.65 billion shares had been adjusted to the company`s funding needs, he said, adding 38% of the shares would be offered to foreign investors and 62% to domestic investors. The company recently secured a number of new short-term contracts. “We are optimistic that BULL will be able to improve its performance this year and upcoming years,” he said. BULL currently leads the market for national energy logistic services, particularly oil and gas production services, he said. “The government`s decision to raise the target of oil and gas production coupled with good prospects of the Indonesian economy would make the market for national energy logistic services increasingly attractive,” he said. BULL has appointed PT Danatama Makmur as a share issue underwriter with JP Morgan, BNP Paribas, and Standard Chartered as sales agents.

GIANT JABABEKA

Now open at Indonesia Movieland Kota Jababeka

Giant Jababeka States its existency To Be The Leading Retailer In Indonesia. In line with its commitment to incessantly serve the Indonesian community, Giant as one of the leading retailer continue to expand throughout the country’s most potential region such as Jababeka, one of the promising industrial districts in East of Jakarta. Giant superstore Jababeka covers area of 10.000 m2 where rests 5.190 m2 building, making this Giant Hypermarket as the biggest and the most complete shopping destination within the industrial area of Jababeka. It sets-up in the strategic location of Indonesia Movieland Jababeka in order to make the customers easier to visit. LIke the other Giants, Giant Jababeka offers more added value for money through variety of products, brands and originalities. Everything of fresh foods; households and kitchenwares; daily apparels; to a wide array of living needs including hobbies, careers and lifestyle merchandises are available. It even provides Korean products, knowing that there is a community of Asian people living nearby. Other facilities such as Free play-land, Food court, ATM center, and other tenants for instance; Giant

Fruits & Vegetables

Daily Needs

Fried Chicken, Guardian, Pojok Busana, Pata-Pata of the BATA Group, Ditami Fried Chicken, Warung Bang Topan, Sumobento Express, Mr. Baso, Ice Cream Italiano, Crepes, Sweet Corn, Potato Donut, Teh Poci, 11 Push Cart and many more. Completed by free parking facilities , Giant Jababeka is ready to serve its customers. To festive its launching of the superstore,

Health & Beauty

Giant has prepared variety of interesting promotions such as crazy discounts starting from 27th May to the upcoming 7th June. Besides the opening promotion, the customers have a chance to participate in the famous brand-lucky draw program, known as the “MEREK TERKENAL 2011” with the prizes to win 2 units of Nissan March cars , 4 travel

vouchers worth of IDR 15 millions, 4 Honda Scoopy motorcycles, 4 Ipod Touch, 40 Digital Pocket Camera and 40 Shopping Vouchers worth of IDR 400 thousands. To get the lucky draw coupon, the customers only need to shop with minimum purchase of IDR 50 thousands including one of the sponsor’s products. By using Citibank Giant Credit Card, the customer will also entitle to double coupons allowing them to increase the opportunities of winning the prize. The promotion will be until 26th of June and the coupon can be submitted to the drop boxes at the deposit counters by the latest of 30th June 2011. The coupons will be gathered on the 16th July 2011 and the names of the winners will be announced in the medias and all over the store networks. Giant cares for a greener greener environment. Giant Jababeka has also adopted the “Green Lighting Solution” system using Philips Master LED Tube that has been proven to be 50% more efficient than the regular conventional TL. It is eco-friendly as well as mercuryfree. Moreover, all the Giant stores, including the Jababeka also uses ”biodegradable” plastic bags which are easy to deteriorate and will be destroyed less than 2 years, creating healtier soil and environment. Many achievements have been entitled to Giant, such as several MURI records in the social fields. Two of the most wellappreciated programs are the donations of 245 netbooks for 227 schools and the ”Giant Pulang Kampung”, an annual

event to provide free transportation for thousands of Giant’s customers to have their ”mudik” ritual tradition on the Ramadhan month. Last year, there were 7,000 customers for this program and this year Giant aims to have 10,000 customers to participate (not only for customers living in Jakarta, Bogor, Depok and Bekasi area, but also in Surabaya and nearby). From year to year, Giant – known as the biggest and most complete superstores in Indonesia has constantly expanded its networks. This shows in the first quarter of this year, 38 Giant superstores and 76 Giant supermarkets have been operated to serve Indonesian families. With almost 9 years of campaigning the low prices every day, Giant Jababeka is ready to contribute to the performance of Giant, one of the leading retailers in the country. (end)

Children Playground

ATM Center

Dairy Frozen

Giant Fried Chicken

Basic Needs

Bakery

Korean Products

Houseware

The President Post

B4 June 12, 2011

www.thepresidentpost.com

Investment RI Investment Up 27% in Q1 this Year Indonesia`s potentials mainly come from natural resources, such as geothermal energy source which comprise 40% of the world`s geothermal source and coal reserves which are huge. Investment in Indonesia has increased 27 pct in the first quarter of 2011 compared to last year`s. “The increase was triggered by the big interest of local and foreign investors in Indonesia,” head of the Capital Investment Coordinating Agency (BKPM) Gita Wirjawan said herelast month He said up to the first quarter this year French investment reached $5.2 billion. In the meantime, he added, South Korea`s Po Hang Steel Company was ready to invest $6 billion in the mining sector and steel production. On the form of business in the mining sector along with South Korean capital, he said they established cooperation with PT Krakatau Steel. “The cooperation will increase production capacity by 6 million

Gita Wirjawan tons in Krakatau Steel and a production of still 2.7 million tons, with the location of its operations in Cilegon,” he said. Investment in Indonesia in 2010, he added, reached Rp 208.5 trillion, 20% in the mining sector. “The remaining 80% is spread

in the sectors of manufacturing, agriculture, and services,” he said. On the other hand, he added, investment in Indonesia in 2010 increased significantly by 54.2% compared to that in 2009. He said investment outside Java in 2010 also increased significantly by 33% compared to that of the year before. “The economic growth in 2011 is predicted to be able to reach seven percent a year. Therefore to attract investment opportunities must be created and existing potentials exploited,” he said. He said Indonesia`s potentials mainly come from natural resources, such as geothermal energy source which comprise 40% of the world`s geothermal source and coal reserves which are huge.

Volkswagen to Build Factory in RI According to earlier reports, the investment value of the would be Volkswagen factory in Indonesia was about 35 million euro and it was expected to absorb 2,000 to 4,000 workers. European car maker Volkswagen will soon build a factory in Indonesia or at the end of 2011 at the latest, Industry Minister MS Hidayat said. “I have had a talk with them (Volkswagen) about their plan. They already have a blueprint on the project,” said Hidayat after attending the ASEAN-UE business summit at the Jakarta Convention Center (JCC) here recently.

ly in the automotive sector which had huge market potential. Hidayat, however, did not mention the amount Volkswagen would invest in Indonesia.

MS Hidayat Volkswagen had been exploring the possibility of setting up a production facility in Indonesia for the past three years and now it was hoping to realize it later this year, Hidayat said. Volkswagen`s intention to expand its business in Indonesia was in line with the European country`s plan to increase its investment in Indonesia, especial-

The minister said the German auto maker`s plan to set up shop in Indonesia was in line with the exhaust emission standards campaign in 2012 towards Euro-3. “This is good news for the domestic automotive industry because the European automotive industry has no base yet in Indonesia where the market is so far dominated by Japanese and Korean brands,” Hidayat said. According to earlier reports, the investment value of the would be Volkswagen factory in Indonesia was about 35 million euro and it was expected to absorb 2,000 to 4,000 workers.

Investors Eyeing Bio-Ethanol Potentials in C. Kalimantan Investors have begun to eye the cassava potentials of Pulang Pisau district of Central Kalimantan province, which could be processed into bio-ethanol energy, a regional official said. Acting Head of the local Agriculture and Animal Husbandry Service Muhajirin said here last month that Pulang Pisau had

abundant cassava production which could be processed and produce 750,000 liters of bio-ethanol per day. He said that the cassava-based bio-ethanol could be used as alternative energy, especially to meet the need of household fuel energy consumption. Muhajirin said that the district

was able to produce over 18,000 tons of cassava which so far was only used as a food stuff and as raw material for producing glue. The ethanol output which could reach 750 thousand liters per day could be supply to all districts to meet the need for energy of households in Central Kalimantan, he said.

Chinese Company to Invest in Plantations A Chinese company, PT Guandong Agribusiness, will invest in plantations in transmigration areas in Indonesia to create jobs for up to 28,000 workers. Indonesian manpower and transmigration minister Muhaimin Iskandar witnessed the signing of a memorandum of understanding for it in Guangzhou, China last month, along with the Guandong governor representing the Chinese government. “Workers to be involved in it could reach 28,300,” Muhaimin said in a press statement received here. The signing of the MOU was carried out by Lei Yong Juan from PT Guandong Agribusiness and Soedomo Margonoto from PT Pulau Sumbawa Agro as his Indonesian partner. “Initially sisal plantations will be developed in a 4,050 hectare area in Sumbawa along with a processing in-

dustry that will produce carpets, medical materials and others,” Muhaimin said. The initial investment is expected to absorb around 3,300 workers from transmigrants and local villagers living around the Tongo transmigration area in West Sumbawa. For the oil palm plantation development project in North Maluku the district government has allocated a total of 21,500 hectares of land. Based on it the investment would reach around Rp 200 billion ($22,727) and could absorb around 15,000 workers. For the sugar cane plantation project and its processing industry in Bener Meriah the district administration has permitted 37,000 hectares of land. The 22,000 hectare sugar cane plantation development and its processing industry will absorb an investment of around $136.362 and 10,000 workers. PT Guandong Agribusiness is

Muhaimin Iskandar a Chinese state-owned company established since 1951 and owns rubber, sugarcane, sisal and fruit plantations, plantatiions products and fisheries with a turnover at around 15 billion yuan or Rp 21 trillion a year. PT Sumbawa Agro meanwhile is the subsidiary of Kapal Api Group that will prepare the management and domestic market.

Chinese investors interested in infrastructure projects Chinese investors are keen on building a number of infrastrucure projects including bridges, toll roads, rainroad trains,

ports and airports, and environmentally friendly energy pojects in Indonesia, Indonesian ambassador to China Imron Cotan said. “Chinese investors are also interested to realize various development cooperation projects in those sectors under the PublicPrivate Partnership scheme,” the ambassador said in a press release here on last month. This was mentioned in the RIChina investment forum in Beijing on May 25, 2011. The forum was part of the Trade, Tourism and Investment (TTI) promotion program of the Indonesian embassy in Beijing in various cities in China to increase the flow of Chinese investments and tourism to Indonesia and expansion of market access for Indonesian products in China. Some 300 Chinese leading businesses like Sinohydro, China Road and Bridge Corporation (CRBC), Gezhouba,CITIC, China National Offshore Oil Company (CNOOC) and Indonesian businessmen attended the forum.

Indian Company to Build Railroad Track in S. Sumatra An Indian investment company has signed a cooperation agreement with the South Sumatra provincial administration for building 270 kilometers of railroad tracks from Tanjung Enim to Lampung. The track from the mining mouth in Tanjungenim to Lampung province is part of the efforts to increase coal production in the province, Gov-

ernor H. Alex Noerdin said in his written address read out by head of the South Sumatra Investment Coordinating Agency here on recently. The governor mentioned the readiness of the Indian investment company tp work with PT Abadi Global is an indication that the investment climate in the province has become increasingly conducive.

He said that in building the railroad the Indian investor would at least increase the coal production capacity by 10 million to 11 million tons per year to more than 35 million tons. The Indian investor has already prepared at least Rp 16 trillion to Rp 17 trillion and absorb a workforce of thousands of people, he said. Governor Noerdin has earli-

er said that South Sumatra is not only rich with coal deposits reaching 22.24 billion tons or 48.45% of the total national reserves, but also have other potential natural resources in the mining sector. He said the natural resources included 4.18 trillion standard cubic feet of natural gas and 757.4 standard cubic feet of natural oil.

The President Post

www.thepresidentpost.com

June 12, 2011 B5

Economic Highlights

No deflation, but no worries either By Helmi Arman and Anton Gunawan

T

he consumer price index rose 0.12% mo-m in May, which brought the year on year headline down to 5.98% (from previously 6.16%). This is higher than our forecast and consensus. Generally, though, the numbers confirm our projection of no deflation, but with the year on year headline still dropping below 6%. Rice prices have begun to creep up but spices are still lower month on month following ample supply. As the planting season comes, food prices may see a broaderbased rise going forward. But the year on year headline numbers may still decline; food production is expected to improve compared to a year ago as weather patterns return to normalcy. For example, estimates from the national weather agency (BMKG) shows rainfall in June this year falling close to normal levels throughout most of the country. This stands in contrast to a year ago, when many regions experienced above normal rainfall. Meanwhile, core inflation decelerated in May, partly due to a high base effect (higher gold price inflation last year). However, the prices of some manufactured items e.g. toiletries are still adjusting to the surge in raw commodity prices that happened late last year/early 2011. We expect continued passthrough for such items in the months ahead until core inflation reaches the 5–5.5% range. Separately, the BPS last month

also released foreign trade data for May, which showed the trade surplus narrowing slightly to $1.63bn (from previously $1.88bn). Imports of vehicles and parts (from Japan and probably Thailand) dropped following the Fukushima disaster. However, this was offset by surging imports of oil, both crude and refined, in the midst increased domestic ‘consumption’. The gap between subsidized and non-subsidized fuel prices was nearly 75% in April, providing strong incentive for illegal arbitraging activities.

Policy Implications The data is consistent with our expectation that BI will hold its policy rate at 6.75% this month. We expect the year on year figure to decline further in coming months, well into BI’s 2011forecast range of 4%–6%; this may stave-off concerns that BI has been “behind the curve”. Towards the end of the year, however, we are still expecting one more 25bps rate hike in Dec-10, given the expected rise in core inflation and prospects of fuel subsidy adjustments in early 2012. With regard to the IDR, we think BI will be measured in allowing for further currency appreciation (as they have been over the past month). However, the emphasis will be more towards the trade-weighted exchange rate as opposed to just the IDR/USD. Globally, we may continue to see risk-on/risk-off episodes amid continued uncertainty in Greece. However, with the Yuan strengthening momentum continuing, we do not rule out the IDR dip-

May-11 (Actual)

May-11 (Fcast)*

Headline CPI (% chg y-o-y)

5.98

5.88

6.40

6.16

6.65

Headline CPI (% chg m-o-m)

0.12

0.03

0.06

-0.31

-0.32

Headline CPI (% chg y-t-d)

0.51

0.42

0.45

0.39

0.70

Core CPI (% chg y-o-y)

4.64

4.62

4.70

4.62

4.45

 

May-11 (Cons.)

Apr-11

Mar-11

Source: Bloomberg, CEIC, *Danamon estimates

Chart 1. Indonesia CPI Inflation 14

% y-o-y, p.a.

12 10

Core inflation

Headline inflation Nov-08

May-09

Nov-09

May-10

Nov-10

May-11

Source: Bank Indonesia, CEIC

Chart 2. Indonesia Foreign Trade US$mn

US$mn

4000

Exports

16000

3000

14000 2000

10000

1000

8000 0

4000

Imports Apr-08

Oct-08

Trade balance (RHS) Apr-09

Oct-09

Apr-10

Oct-10

-1000 Apr-11

Source: Bank Indonesia, CEIC

ping below 8,500/US$ in the near term, although our year-end forecast remains at a more conservative level of 8,700/US$.

2011E* 2012E*

Real GDP (% y-o-y)

6.0

4.6

6.1

6.4

6.7

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

7.5

5.4

5.2

7.6

8.6

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

5.3

4.9

4.6

5.4

5.4

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

11.7

3.3

8.5

11.7

13.1

GDP (US$bn) — nominal

508

542

707

809

933

2,221

2,343

2,976

3,818

4,662

8.6

7.9

7.1

6.9

6.6

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

18.3

-14.3

32.2

13.0

17.3

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

36.9

-23.3

42.0

15.8

22.1

Trade balance (US$ bn)

22.9

30.1

31.1

31.6

29.9

Current account (% of GDP)

0.0

1.9

0.9

0.2

-0.2

Central government debt (% of GDP)

33

28

26

24

22

51.6

66.1

96.2

116.1

127.0

4.0

6.5

7.1

7.2

7.0

Currency/US$ (Year-end)

10,950

9,403

8,991

8,700

8,950

Currency/US$ (Average)

9,767

10,356

9,074

8,786

8,825

9.25

6.50

6.50

7.00

7.00

Consumer prices (% year end)

11.06

2.78

6.96

5.90

6.70

Fiscal balance (% of GDP; FY)

-1.0

-1.6

-0.6

-1.2

-1.0

S&P's Rating -FCY

BB-

BB-

BB

BB+

BBB-

International Reserves –IRFCL (US$ bn) Merchandise import cover (months)

12000

6000

2010

External Sector

4

May-08

2009

National Accounts

Open Unemployment Rate (%)

BI rate 6

18000

2008

GDP per capita (US$) — nominal

8

2

Indonesia: Selected Economic Indicators

Helmi Arman is Economist at Treasury & Capital Markets, PT Bank Danamon Indonesia, Tbk [email protected]

Other BI policy rate (% year end)

Source: CEIC, *Danamon Estimates

The President Post

B6 June 12, 2011

www.thepresidentpost.com

Property Asia Pacific Property Investment Report 2011

Sales Momentum Expected to Accelerate For the remaining three quarters of 2011, investment sales momentum is expected to gradually accelerate, as investor sentiment continues to be buoyant supported by strong economic growth.

T

he investment activity in 1Q 2011 across Asia Pacific was somewhat moderated following major investment improvement in 2010. The year ended with a significant 29% y-o-y increase and a 26% q-o-q increase. This surge in the last quarter of 2010 was due to low lending rates and evidence of sustained prime office rental recovery across the region. In 1Q 2011, investment sales were a total of $107.5 billion and though it marked a robust y-o-y growth of 14%, it was a decrease of 9% q-o-q. In comparison, the US’s investment sales contracted by 44% over the same period. This moderation can be attributed to a seasonal slowdown and investors reworking their strategies in light of the strong run up in capital values in some markets. On the whole, investors were largely optimistic in 1Q 2011 as Asia Pacific markets continue to be poised for a sustainable economic growth. China, supported by continued high economic growth in 1Q 2011, accounted for the bulk of known property investment volumes in the region. Commercial property sales in 1Q 2011 were a total of $0.93 billion and accounted for a mere 1.2% of the overall investment sales in China – indicative of a broad based investor interest in different property types as the overall property market in China showed significant strength. Property cooling measures in China implemented through capital controls and taxation measures have moderated overall property sentiment and sales in 1Q 2011. Investor interest for core/ core plus commercial properties was significant in Japan, Singapore and Hong Kong. Core markets such as Tokyo, Hong Kong and Singapore are still top picks for commercial property investors. Japan accounted for 20%, while Hong Kong and Singapore each accounted for 10% of total investment sales in Asia Pacific. Investor interest for commercial properties in these gateway markets has surged due to rental growth now strongly evidenced. Economic fundamentals continue to strengthen as occupier demand soars. These cities continue to attract the majority of international firms seeking to grow or establish

new headquarters in the region.

Country

City

Building

Retail and hospitality assets are expected to receive increased investor interest in response to rising consumerism and tourism in Asian cities. Rising affluence is contributing to stronger inter-Asian tourism, consumption and higher retail sales. Asian cities continue to attract increasing number of international tourists and business travel is expected to rise in key Asian cities. As companies report continued healthy profits, this will encourage allocation of more travel budgets for senior executives traveling in Asia, leading to more businesses for hotels in the four and five star categories and opportunities for growth as overall hotel revenue increase.

Investment Trends in Major Asian Countries Australia Property investment transactions in Australia reflected 72% qo-q decrease in 1Q 2011. This is in part a knee-jerk reaction to the strong Australian dollar which has increased the cost of financing; and natural disasters such as the floods in Queensland. Howev-

Property Price

Buyer Type

Purchase (USD Million)

Japan

Tokyo

Otemachi PAL Building

Mitsui Fudosan

Office

877

Singapore

Singapore

Capital Square

Alpha Investment Partners & NTUC Income

Office

705

Singapore

Singapore

16 Collyer Quay

NTUC Income

Office

524

Australia

Sydney

310-322 Pitt Street

Commonwealth REIT/MacarthurCook Property Investment

Office

207

Australia

Sydney

55 Clarence Street

Eureka Funds Management/ARIA

Office

86

Australia

Sydney

14 Martin Place

Abacus Property Group/Kirish

Office

98

Australia

Sydney

15 Bourke Road

Capital Corporation

Office

30

China

Shanghai

International Capital Plaza

CSI Propeties Limited

Office

174

China

Shanghai

Haichi

Treasury Holdings

Office

87

China

Beijing

The Fifth Square

China Minmetals Corporation

Office

684

South Korea

Seoul

Twin Trees

Hanii Engineering & Construction Co. Ltd.

Office

258

South Korea

Seoul

SK Building

SK Corporation JV SK Energy Co. Ltd. JV National Pension Service (NPS)

Office

505

India

Mumbai

Citibank

Citibank

Office

222

Outlook For the remaining three quarters of 2011, investment sales momentum is expected to gradually accelerate, as investor sentiment continues to be buoyant supported by strong economic growth. The resilience of the region, underpinned by easy liquidity, increased trade volumes and low unemployment rates, highlights the strength of Asia’s property market and its strong rebound from the global financial crisis. Investment sales recovery in 2H 2011 will continue as major Asia Pacific economies continue to outperform the rest of the world by a huge margin. Against this backdrop, the region’s prime commercial properties will continue to be favoured by investors due to the strong leasing demand from occupier expansion. The continued rental recovery in most markets will support underwriting by investors, including cross border regional or global investors who are keen in acquiring buildings in gateway cities like Singapore, Hong Kong and Shanghai.

India

MAJOR PROPERTY INVESTMENT DEALS IN 1Q 2011

Source: Cushman & Wakefield Research

MAJOR PROPERTY INVESTMENT DEALS IN 1Q 2011 India 0.8%

Taiwan 1.3% Malaysia South Korea 0.4% 0.7% Australia 2.8% Singapore 3.5%

Thailand 1.1%

Japan

Others 12.10%

Hongkong 1.8%

China 71.9%

Japan 3.6%

Source: Real Capital Analytics, Cushman & Wakefield Research

er, we think such investment holdback is temporary as there is both presence of foreign capital and continued positive investor sentiment throughout Australia. This positive outlook is underpinned by stable economic growth and increasing portfolio level opportunities with expectations of recovering rentals in the medium-term.

China Due to the government’s increasingly hawkish policy measures in residential real estate the investment capital has realigned its focus to the commercial real estate sector, especially in tier 1 and select tier 2 cities. With potentially more restrictive policy measures in store for the residential sector, more domestic and foreign investors are expected to focus on commercial real estate, a trend that was well demonstrated in SOHO’s recent purchase of five of commercial projects in Shanghai. The demand for commercial

property is likely to surge as the economic momentum continues. We expect investment volumes in China’s commercial real estate markets to remain strong for the rest of the year. China remains one of the top three destinations earmarked for foreign institutional investors. In Shanghai, excluding land transactions, there were seven transactions in Q1, totaling RMB 4.6 billion. Domestic investors accounted for 50.4% of the market share, including those from Taiwan and Hong Kong, while foreign investors accounted for 49.6%. By property type, office accounted for 44.5%, followed by mixed use 22%, retail 12.5% and hotel 21%.

Hong Kong The Hong Kong office investment market remains positive with the total number of sales transactions up to 1,036, marking a 6.5% q-o-q increase; and the total value of transactions was

The real estate market in India showed signs of recovery in 1Q 2011, evident from the increasing occupier demand especially in cities favoured by software and high tech industries such as Bangalore. The investment market continues to be dominated by owner occupiers and private investors. Transactions in the commercial space have gained momentum across the country. Some markets continue to see excess suburban supply thus presenting potentially lucrative buy opportunities. Improved market conditions from early 2010 have helped developers in improving their cash flows through leasing of commercial space and sale of residential units. The prospects for office properties in Bangalore are positive and rents are expected to recover on the back of persistent demand coupled with moderate new supply, while rents of office properties in Mumbai are expected to be stable in spite of substantial new supply.

HK$11 billion, a 6.3% increase. The current sentiment shows more positive appetite for commercial real estate assets relative to residential developments as restrictive policy measures continue to dampen growth prospects for residential prices. Rents of Grade A office properties in Greater Central increased by 6.8% q-o-q in 1 Q 2011, while prices rose by 7% qo-q in 1Q 2011. Investment sales activity is expected to increase in 2011, with office and retail performing particularly well. The strong demand for office space attributed to corporate expansions and economic growth is encouraging landlords to raise rentals aggressively. Rentals and prices for commercial assets are expected to increase in 2011 amid continued low interest rate environment, limited supply and strong demand in all sectors. Office rentals are expected to rise by 20-25% and capital values by 15-20% during 2011.

Tokyo’s investment sentiment was largely stable in 1Q 2011. Before the earthquake on March 11, sentiment was unmistakably positive with investors showing strong demand for all investment targets, especially residential despite the overall supply being limited. Investor interest in office and retail properties was encouraging as well. Tokyo’s investment market has stayed cautious instead of pessimistic. While foreign investors are adopting a wait-andwatch approach, Japanese institutions are continuing to invest across all property types.

South Korea The investment market in 1Q 2011 was primarily dominated by domestic investors. Total transaction volume for office buildings for this period was approximately $965.5 million. The quarter also witnessed the sale of

the SK building, POSCO ICT (former. POS DATA) building, Twin Trees (former Hankook Ilbo Hq), Dankook building and Daeheung building. In the near term, due to limited availability of prime buildings and abundant liquidity in the market, investors will most likely face an increasingly competitive bidding environment. The government will set up a debt clearer to buy non-performing loans and to contain systemic risks posed by the slumping property market. The proposed “the bad bank” will be operational by June, and will acquire KRW 1 trillion worth of non-performing loans at a 50 percent discount. This will put the promising projects back on track and weed out the less competitive projects, thereby significantly reducing the uncertainties posed by such loans.

Singapore Singapore’s investment sales marginally declined 41% q-o-q in 1Q 2011, largely due to fewer land sales awarded by the government and limited REIT acquisitions during the quarter. This decline also reflects the tight supply of buildings available for sale as office rentals are poised for a sustained recovery and owners are holding out of stronger positive rent reversions. Rents of Grade A offices in Raffles Place showed a q-o-q increase of 6.0% in 1Q 2011, while prices increased by 6.8% qo-q in 1Q 2011. In the months ahead, there will be positive momentum in the office market supported by rental growth. Singapore is one of the most favored markets in the region for cross border regional and global capital and we anticipate continuing interest until the year end. Investor interest is seen spilling over to secondary commercial buildings, including lower grade older suburban buildings which offer value add or redevelopment opportunities.

About Cushman & Wakefield Cushman & Wakefield is the world’s largest privately-held commercial real estate services firm. Founded in 1917, it has 230 offices in 60 countries and more than 13,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within five primary disciplines: Transaction Services, including tenant and landlord representation in office, residential, industrial and retail real estate; Capital Markets, including property sales, investment management, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, Consulting Services, including business and real estate consulting; and Valuation & Advisory, including appraisals, highest and best use analysis, dispute resolution and litigation support, along with specialized expertise in various industry sectors. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Centre at www.cushmanwakefield.com.

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June 12, 2011 B7

Management Palladium Strategy Execution Forum 2011 to be held in Jakarta The Palladium Strategy Execution Forum 2011 is entitled “Mastering the Strategy Management System”.

The Palladium Group is the home of the Balanced Scorecard Hall of Fame for Executing Strategy, a globally esteemed award recognizing public, private and government organisations that have excelled at implementing the Kaplan and Norton strategy execution management system and through it increased their value.

J

akarta, 29 April 2011. Global thought leaders and international experts on strategy execution will converge at the Palladium Strategy Execution Forum 2011 in Jakarta on June 14thst at the Ritz Carlton Hotel Mega Kuningan, to discuss and share world best practices on strategy execution. They will highlight leadership capabilities required to mobilize organisations for change and the processes that assist leaders in the formulation, communication and motivation of strategy execution. They will delve into how value creation can be achieved through organisational alignment and discuss several emerging approaches to break down cross functional silos within organisation. Leading the line up of global management thought leaders is Dr David Norton, founder and director of the Palladium Group and co-creator with Dr Robert Kaplan of the Balanced Scorecard and Matthew Tice, Managing Director, Palladium Asia Pacific. Addressing strategy execution issues for local companies will be Kresna CEO, Michael Stevens and Garuda Food CEO, Sudhamek AWS. The Palladium Strategy Execution Forum 2011 is entitled “Mastering the Strategy Management

System”. As we witness the current changes in the world economy we realize that there are corresponding implications for organisation in navigating growth and change through new strategies and of course, consequently, having the internal skills to effectively align the whole of the organisation to the new directions. “Executives in all types of organisations, be it public, private or government, realize that having a robust strategy management system, such as the Kaplan and Norton system, gives them a solid and effective framework through which to manage and implement strategy change, in way that consistently engages the whole of organisation”, says Matthew Tice, Managing Director, Palladium Asia Pacific. Such a powerful strategy execution tool in the hands of skilled executives has proven to reap high rewards for organisations all over the world. For example, global research shows that a staggering 80% to 90% of organisations are unable to execute the strategies they agree they should implement. Much of this problem stems from the emergence of a new economy, where intangible assets replaced the role of tangible assets as a source of value. The Balanced Scorecard, developed by Robert Kaplan and David Norton

in the 1990s, provided a means to these intangible assets. Research now shows that organizations that use the Balanced Scorecard as a foundation for their strategy management system have a 70% chance of outperforming their peer groups. More impressively, successful strategy execution has been shown to create increases in shareholder value of 50% to 150% over a three year period. The Palladium Group is the home of the Balanced Scorecard Hall of Fame for Executing Strategy, a globally esteemed award recognizing public, private and government organisations that have excelled at implementing the Kaplan and Norton strategy execution management system and through it increased their value. In the Asia Pacific region, Korea, India and the Philippines excel at generating Hall of Fame winners. During the past two years, the Philippines cities of Iloilo and San Fernando have won this illustrious award and have consequently are increasingly becoming coveted destinations for local and foreign investment. They managed to increase the per capita income whilst decreasing corruption. The implementation of the Balanced Scorecard by the cities has created a transparent and common platform for busi-

nesses, citizens and government agencies to strive towards common goals and outcomes in mutual support. Korea leads the region in terms of number of winners, via a mix of government agencies and public company winners – Korean Telecom, Busan Metropolitan City, Health Insurance Review & Assessment Services (HIRA), Korean Customs Service, Korean East West Power, KOTRA and the Ministry of Home Organisations, LGPhilips LCD Korea and E-Land, Korea’s leading fashion group. All have in common improved overall performance, increased workforce effectiveness and increased efficiency in executing strategy. India runs second with illustrious past winners such as Hindustan Petroleum Corporation, Infosys Technologies, Tata Motors, North Delhi Power, Lakshmi Machine Works and Trent – all well known, successful organisations. Indonesia has so far only produced one Hall of Fame winner – the SOHO group. Palladium Balanced Scorecard Hall of Fame for Executing Strategy award submissions are currently open and applications are available from The Palladium Group web site. http://www. thepalladiumgroup.com

About the Palladium Group The Palladium Group, founded by leading management thinkers Dr. Robert Kaplan and David Norton, is the global leader in helping clients address their most challenging and pressing Strategy Execution issues by providing an integrated set of services designed to deliver tangible results and leave lasting capabilities – the Execution Premium. Palladium has offices throughout North America, Europe, the Middle East, and Asia-Pacific. With a successful track record of over 700 clients, the Palladium Group is dedicated to understanding and addressing the strategic issues unique to the Asia-Pacific region. The Palladium Group’s work with the region’s most influential organisations means Palladium Group is uniquely positioned to guide clients in each of the Group’s six focus areas, namely Strategy Design, Strategy Management, Innovation, Leadership for Execution, Operational Performance, and Risk & Governance. For further information, please contact: Ms. Magdalena Toth Palladium Group APAC Phone: +61 2 8259 1000 [email protected] www.thepalladiumgroup.com

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B8 June 12, 2011

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Executive Highlights Bank Indonesia kept its benchmark rate unchanged at 6.75% for a fourth straight month in June amid easing inflation. In its policy statement, the central bank governors highlighted “decelerating” price pressures as a result of lower food prices. Underscoring the bank’s moderating inflation outlook, the bank’s governors omitted commentary made in previous sessions asserting they were prepared to raise rates in response to a rising inflation threat, although they also said they would remain vigilant monitoring accelerating price pressures. Headline inflation has moderated this year to 6% y-o-y in May from 7% y-o-y in January. Core inflation, however, has risen to 4.6% y-o-y from 4.2% y-o-y for the same period. Because of this, some analysts think Bank Indonesia is still behind the curve and needs to raise rates now as have other emerging markets like Brazil and India, rather than wait until price pressures pick up again. Although technically outside its mandate, BI is also sensitive to the effect of an interest rate hike on the Rupiah which has appreciated more than most regional currencies already, putting pressure exports from Indonesia’s generally weak manufacturing sector. (See “Rupiah” below)

Bank Indonesia said Q2 GDP growth would likely be higher than initially forecast on the back of stronger exports and accelerating investment growth. The bank is projecting full year 2011 growth at the upper end of its 6-6.5% forecast.

The rupiah is currently trading at a seven-year high of Rp8,500-8,550 to the dollar. Analysts expect the currency to continue strengthening over the short and medium-run, with moderating inflation pressures and Bank Indonesia’s continued support for the rupiah’s gradual appreciation “in line with trends of regional currencies” supporting this outlook. Continued global demand for Indonesia’s high-yielding capital assets amid a low interest rate environment in industrialized nations will also likely support the rupiah’s appreciation over the medium-term.

A consortium led by Japan’s electric power development co. Has been awarded a US$3.2 billion contract by state power utility PLN to develop a 2,000 MW coal-fired power plant in Central Java. Other members of the consortium were Japan’s Itochu Corp and local coal miner Adaro Energy. PLN president director Dahlan Iskan said the deal was a milestone because it was the first public-private partnership project that has been auctioned successfully. The project will be insured for a variety of risks including land clearance, licensing, construction and other operational and political issues by the Indonesian government’s infrastructure guarantee fund. Dahlan said that the project was crucial given that it would be the largest power plant in the coun-

try to date and would be using the latest technology to improve efficiency and limit carbon emissions. The consortium will operate with a 25-year power purchase agreement under a build, operate and transfer (BOT) scheme. The power facility is scheduled to start operations in 2017. Other projects in the pipeline this year that could potentially receive risk coverage from the Indonesian government include the US$750 million Manggarai-Soekarno Hatta international airport railway line and the US$200 million Umbulan water treatment facility in Pasuruan, East Java.

U.S. telecom giant AT&T has received a multimedia services operator (MSO) license, the first foreign telecoms operator to receive this license in Indonesia. The sector was opened to foreign investment through a revision in the government’s negative list (DNI) issued last year allowing 95% foreign ownership of communications services. AT&T owns 95% of its local subsidiary. Choo Hock Lye, general manager of AT&T’s southeast Asia operations, said the MSO would enable the firm to offer a wider range of services and make it easier for the company to do business with multinational customers. AT&T already offers VPN and data services like Ethernet to multinationals through local service providers, but the new license will now allow the firm to provide these services directly to corporate clients. Among the new services AT&T will be able to offer with the new license include managed LAN, managed IP and managed application services. AT%T will also be able to provide globally managed network services directly, along with simpler contracting and billing arrangements. Analysts estimate the Indonesian market for corporate multimedia and telecom services at around US$10 billion per year.

BP has said it plans to invest US$10 billion in Indonesia over the next 10 years.

The deals comprised a US$450 million commercial facility from Deutsche Bank and HSBC; a US$400 million facility from the China Development Bank to fund equipment purchases from Chinese manufacturer Huawei; and a US$350 million facility from HSBC and Swedish export credit agency EKN to fund equipment purchases from Ericsson. The loans all carry a tenor of 7.5 years. Gassan Hasbani, chief executive officer of Axis’ parent firm Saudi Telecom Co., said the loans were one of the largest Islamic financing deals in Asia and would help fund the firm’s five-year plan to increase user penetration and modernize its operations. He asserted that Indonesia had great potential for growth in the telecom sector given its increasingly affluent, young and tech-savvy population. Axis currently has a 4% market share of Indonesia’s mobile telephone market and is looking to raise this to 10% over the next five years. The firm is also planning to increase the number of telecom towers it operates to 15,000 units over the next three years from 4,000 units currently. Saudi Telecom currently has an 80.1% stake in Axis.

While visiting Jakarta, Chief executive officer Bob Dudley said the global energy giant plans to build a third and possibly fourth production line at its LNG facility in Tangguh, Papua. The US$5 billion Tangguh plant currently has two production lines with a combined production capacity of 7.6 million tons of LNG per year. It is supported by gas fields with natural gas reserves totaling 28 trillion cubic feet. The facility started commercial LNG shipments in 2009 with multi-year contracts to supply 2.6 million tons per year to China, 1.2 million tons to South Korea and up to 3.7 million tons to Sempra Energy in the U.S. The firm is also looking to develop coal-bed methane (CBM) blocks after signing four coal-bed methane production sharing contracts in the Barito basin in South Kalimantan earlier this year. William Lin, BP’s president of Asia Pacific exploration & production, has stated that the deals would help create a material CBM position for

Selected Instant Indicators GDP GROWTH (%)

% 8

175

7

165

6

155

5

145

4

135

3

125

2

115

1

105

0

95 07 06

Q1

09 08

Q3 Q1 Q2

10

Q4

Q3

Q3

Q2 Q4

Q2

2007

2008

2006

Index

Q1

Q1

Q4

Q3 Q2

Q1

Q4

2009

Q1

Q3 Q2

2011

INFLATION 66 CITIES 107.4

General

Pertamina raised a total US$1.5 billion from its maiden international bond issue.

106.0

Food WPI

105.4 103

100

97

A US$1 billion, 10-year issue received US$7 billion in orders and was ultimately priced at a yield of 5.5%, the tight end of initial guidance, highlighting strong demand from global investors. U.S. investors bought 42% of the 10-year debt, Asian buyers 36% and European investors 22%. A US$500 million, 30-year issue, meanwhile, received US$5 billion in bids and was priced at 6.625%, also at the tight end of initial guidance.. Distribution of the 30-year bond was Asian investors 40%, U.S. buyers 37% and European investors 23%. The bonds were rated Ba1 by Moody’s and BB+ by S&P and Fitch international ratings agencies, equivalent to Indonesia’s sovereign rating. Citi, Credit Suisse, HSBC and local firms Danareksa Sekuritas and Mandiri Sekuritas managed the deal. Proceeds from the deal will be used to develop the Cepu block in East Java, the West Madura offshore block as well as to finance acquisitions including the purchase of an oil and gas block in Angola. Pertamina has an ambitious target of producing one million barrels of oil equivalent per day (boepd) by 2015 versus 470,000 boepd currently. The company reported extremely modest net profits of US$1.8 billion on revenues of US$48.7 billion in 2010.

M 10

Jun

J

Aug

S

O

Nov

Jan 11

D

2010

F

Mar Apr M 2011

EXPORT AND IMPORTS (US$ Million) Exports Imports

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Apr 10

M

Jun

J

Aug

S

O

N

2010

Dec Jan 11

Mar Apr

F 2011

*Q4 2000=100

COMMODITY PRICES

Sumatran Light US$/barrel 113

Mal$ per metric ton 4,250

Crude Oil-LHS

108

4,000

Palm Oil-RHS

103

3,750 $ 102.13

98

3,500 M$ 3,475

93

3,250

88

Telecom operator Axis has secured Islamic financing deals worth US$1.2 billion to finance its business expansion.

3,000 83 78

2,750 $74.50 2,500

73 M$ 2,499 68

2,250 M 10

Jun

J

Aug 2010

S

O

N

D

Jan 11

F

A US$640 million loan will be provided to state power utility PLN to help fund the 1,000-MW upper Cisokan storage power facility near Bandung, West Java. The facility generates energy by transferring water from reservoirs built at different heights to drive turbines, and then subsequently pumping water back to the higher reservoir at off-peak times. The Cisokan project will make Indonesia one of very few developing countries to have this kind of power plant. The facility is scheduled to be completed by 2016. Another US$250 million loan will be provided to the public works ministry to support its western Indonesia national roads improvement project. The project aims to upgrade 716 km of existing roadways in western Sumatra by expanding the roads, laying new asphalt, improving drainage and replacing bridges.

lamic bank assets totaled Rp100 trillion as of end-2010, up from Rp67 trillion a year earlier on rising demand for Islamic banking services.

Coal miner Bayan Resources has secured a US$185 million loan from Standard Chartered and ANZ to fund the acquisition of nine mining concessions in East Kalimantan.

Korea aerospace industries has reached an agreement to sell 16 t-50 supersonic trainer jets to the Indonesian Air Force in a US$400 million deal.

Company president director Chin Wai Fong said the new concessions would help the miner boost its coal production to around 25 million tons by 2013 from a projected 15 million tons this year. He said the new output would help it meet growing global demand for coal, particularly from India which currently accounts for 30% of Bayan’s exports and is the firm’s main international buyer. India is projected to see a surge in coal demand as new power plants there come on stream over the next several years. Bayan Resources is 20% owned by Korea Electric Power Corp. The miner has coal resources totaling more than four billion tons from its mining concessions across Kalimantan.

The South Korean manufacturer beat out Russia’s Yakovlev Yak-130, the Czech Republic’s Aero Vodochody L-159 and Italy’s M-346 for the contract. Lockheed Martin Corp. will provide the avionics systems, flight control systems and wings for the T-50, while the engines will be supplied by General Electric Co. Delivery of the trainer jets is scheduled for 2013, and will replace 38 aging BAE Systems Hawk 53 trainer jets currently in use. The latest deal reflects a broader effort by the Indonesian air force to upgrade its assets. In November last year the air force purchased eight Embraer EMB-314 Super Tucano light attack aircraft to replace its 1970s-era Rockwell OV-10 Broncos. In January earlier this year it awarded Arinc Engineering Services a US$67 million contract to modernize five of its Lockheed Martin C-130B transports. The Indonesian air force is also reportedly looking to upgrade its 10 Lockheed Martin F-16A/B fighters, and possibly purchasing another 24 ex-U.S. Air Force F-16s.

Mar Apr M 2011

Local food and beverages producer Garudafood is finalizing a deal to divest a minority stake.

Shareholders of local Islamic lender Bank Muamalat are moving forward with efforts to divest a majority stake.

GarudaFood owners the Tudung Group has shortlisted several investors to purchase a 30% stake in the company, worth an estimated US$200 million. The local business group is reportedly looking to complete the sale before the end of June. Global private equity firm Carlyle Group is the frontrunner to purchase the stake, with Japanese beverage producer Suntory and international investment firms 3i Group and TPG also reportedly submitting bids. GarudaFood produces a wide range of popular products, from peanuts, biscuits to energy drinks. In addition to the domestic market, the firm exports its goods to more than 25 countries. Sudhamek Sunjoto, president director of GarudaFood, said the firm was aiming to boost sales to Rp20 trillion by 2015. He asserted that the firm was planning significant investments in the palm oil sector to better integrate its supply chain

Potential buyers reportedly on the shortlist include Bank Permata, the Qatar Islamic Bank and Singapore’s Overseas-Chinese Banking Corp (OCBC). Bank Muamalat, Indonesia’s oldest Islamic bank, has nearly 400 branches across the archipelago plus an office in Malaysia. According to its chief financial officer Hendiarto, Muamalat had around Rp20.4 trillion in assets as of end-2010, with asset growth projected to reach 50% this year. The executive added that the lender also planned to quadruple its holdings of syaria-compliant debt this year. Bank Muamalat’s shareholders include the Islamic Development Bank at 32.8%, Boubyan Bank Kuwait at 24.9% and Atwil Holdings Ltd at 18%. Analysts say investor interest in Bank Muamalat reflects the high growth potential of Islamic banking in Indonesia. According to Bank Indonesia, Is-

Q4

2010

109

106

The World Bank has approved loans totaling US$890 million to help finance crucial power and roadway projects in Indonesia.

and production process. The company is also looking to make a strong push to expand exports to China and India.

Index* 2000=100

By Quarter

Year on Year

the firm in a highly prospective basin. BP is also currently developing a CBM block in East Kalimantan.

Business Highlights are contributed to The President Post by CASTLEASIA/ PT Jasa Cita from information supplied to members of their CEO Forum, the Indonesia Country Program. They are reprinted here with permission. For more information about CASTLEASIA programs, please contact Juliette or Wijayanti at 62 21 572 7321 or email [email protected] subject CEO Forum

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Amazon E-books Now Outselling Print Books (CNN) – As further proof of how digital media dominate today’s entertainment, Amazon announced last week that its customers now buy more e-books for its Kindle device than all print books -- hardcover and paperback – combined.

G

iven that people seem to spend more and more of their time peering at glowing electronic screens, this was probably bound to happen. Still, the swiftness of this sea change – three-and-a-half years after the Kindle hit the market – appeared to catch even Amazon by surprise. “Customers are now choosing Kindle books more often than print books. We had high hopes that this would happen eventually, but we never imagined it would happen this quickly – we’ve been selling print books for 15 years and Kindle books for less than

four years,” said Jeff Bezos, Amazon’s CEO, in a statement.

analysts predict they could reach 20% within a year or two.

Amazon introduced the Kindle e-reader in November 2007. By July 2010, Kindle book sales had surpassed hardcover book sales, and six months later, Kindle books overtook paperback books to become the most popular format on Amazon.com, the online retailer said. Of course, these stats only represent sales of books on Amazon. com, the only place consumers can buy e-books for the Kindle. When sales of books from other websites and brick-and-mortar stores are factored in, e-books still represent a small minority of all titles purchased, although some

The growth of electronic books has been a bright spot in an otherwise struggling publishing industry. Sales revenue from ebooks were up 145.7% in March of this year compared with March 2010, according to the Association of American Publishers. At the same time, adult hardcover sales increased 6%, while mass market books – less-expensive paperbacks – grew by 1.2%. Consumers wanting to read books electronically can now choose from many competing devices, including Sony’s Reader, Barnes & Noble’s Nook, and a variety of touchscreen tablets, in-

cluding Apple’s iPad. Amazon has repeatedly slashed the price of its Kindle e-reader, which now costs $139 (or $114 for a model loaded with on-screen ads.) The Web retailer said it has sold more than three times as many Kindle books so far in 2011 as it did during the same period in 2010.

Amazon introduced the Kindle e-reader in November 2007. By July 2010, Kindle book sales had surpassed hardcover book sales, and six months later, Kindle books overtook paperback books to become the most popular format on Amazon.com.

Why People Still Use BlackBerrys (CNN) -- It’s the smartphone everyone owns -- and no one seems to like. Peek into any executive conference room in America, and you’re bound to see one – or a dozen – of these anachronistic smartphones: BlackBerrys, their keys clicking like rain on a tin roof. Those red lights flashing, training their owners to pick them up on a second’s notice: An e-mail! A BBM! Answer me! To owners of Android-based phones and the iPhone, particularly in the U.S., the BlackBerry is starting to look more than a little too old-school. These phones don’t really run apps. They don’t store much music. Their screens, in general, are much smaller than those of smartphone competitors, meaning it’s difficult or impossible to browse the Web comfortably or watch online video.

People are addicted to the clickclacking keyboard; they love the blinking red light on the top, which alerts users to new messages; and many just happen to have the phone because it’s required for work.

A new BlackBerry phone – the Torch – was unveiled last week by maker Research In Motion. Even hard-core BlackBerry users don’t seem that enthralled by it. Meanwhile, a survey released by the Nielsen Co. last week found the majority of U.S. BlackBerry owners – 58 percent – want to buy another kind of phone, usually an Android or iPhone, when they upgrade.

But here’s the kicker: Despite the fact that the BlackBerry isn’t hip, high-tech or cheaper than its main competitors, the phones are still the most popular (or at least the most common) in the U.S. market, and they’re growing internationally. It turns out, according to a handful of interviews with BlackBerry users, there are three basic reasons: People are addicted to the click-clacking keyboard; they love the blinking red light on the top, which alerts users to new messages; and many just happen to have the phone because it’s required for work. Ask a BlackBerry user what they like about their phone, and they’re bound to mention the keyboard. Ask them why that keyboard is so great, and they’ll go into sensual detail about the click of the keys, how the buttons are raised just so and how the “shift” key – oh, the shift key! – is just as easy to use as those on a full-size computer keyboard. “The keyboard is definitely a hook for RIM, and it’s interesting to see that the marketplace, in general, has conceded it to RIM,” said Kevin Michaluk, found-

er of the BlackBerry fan website Crackberry.com. “Everyone sees the iPhone, and they think apps. And I think everyone sees a phone with a keyboard, and they think BlackBerry, whether it is or isn’t.” This comes at a time when most smartphones – including the iPhone – are moving toward touchscreen-only interfaces, where users tap on glass to type instead of pecking away at tactile keys. The details of how the BlackBerry keyboard feels are what make it addictive, said Nan Palmero, a writer for another fan site, BlackBerryCool.com. “They really go to great lengths to raise plastic in certain ways on the keys,” he said of the tactile keyboard’s design. “They kind of describe it as guitar frets: Your hand naturally knows where to go and where to be.” Palmero said he can type up to 40 words per minute on his phone. Michaluk said he can hit 65. Neither has to look at the keyboard. Kevin Kovanich, a 23-year-old BlackBerry user in Chicago, Illinois, who responded to a CNN Tech question about the phones on Twitter, said he loves that he

can still “rock the keyboard” even though his thumbs are “larger than average.” “It is really nice how far the buttons stick up -- and you can really feel that click,” he said. “It doesn’t feel like you’re making any mistakes ... no matter how big your fingers are.” On top of every BlackBerry, there’s a little sliver of a red light, and it blinks at you when a new message or call comes in. People get seriously addicted to that light, Michaluk said. “You put a blinking red light on a device, and when that light blinks, you jump,” he said. “It’s Pavlovian training, right? For me, really, it’s my connection to my people. And second, it’s my connection to the world in terms of news and everything.” He added: “It’s one of those things that always calls you back to your BlackBerry.” Of course, other phones have ways of alerting people to new messages, too, but none has the same feel as that BlackBerry light, users said. It’s not designed to run flashy applications, for playing games

or for uploading pictures to Facebook and Twitter. It started out a business-minded device, and RIM has continued to market it as a business-friendly device, although recent ads have pitched it as a leisure phone for young multitaskers as well. Part of the allure is that the BlackBerry is known for being secure. It encrypts messages, which makes business owners more comfortable giving the phones to their employees, who may share sensitive documents and e-mails over the phones. This issue came into focus this week as the United Arab Emirates and Saudi Arabia threatened to stop BlackBerry service for this very reason: because they wanted to get inside private messages on the phones and couldn’t. “See someone typing away furiously on a Blackberry? They’re probably sending a top-secret email,” she writes. “See someone intently focused on an iPhone? They’re probably playing with the Bubblewrap or Lightsaber Unleashed apps. Regardless of what a Blackberry user is really doing, the phone itself just seems so much more straight-laced and serious than the iPhone.”

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C2 June 12, 2011

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Technology Driving Indonesia’s Competitiveness through Technology Microsoft, Modernisator and the Investment Coordinating Board (BKPM) presented a forum on promoting Indonesia’s national competitiveness in an effort to reach Indonesia’s Vision 2025.

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overnments nowadays are challenged to ensure the competitiveness of their countries and to show solid economic performance. A country’s competitiveness provides a foundation that enables its human and natural resources to attract global attention – either as a trade partner or as a prime location for foreign direct investment. In terms of national competitiveness, Indonesia is ranked 44th out of 139 countries in the World Economic Forum (WEF) Global Competitiveness report for 20102011, an impressive gain mainly driven by a healthier macroeconomic environment and improved education indicators. However, there are still room for improvement in several areas, especially infrastructure, health situation and technology readiness. The ICT industry’s role as an important enabler of growth and competitiveness will open up enormous opportunities for advances and help Indonesia transform itself into a knowledge-based society moving forward with a strong innovation-driven economy. Microsoft, Modernisator and

ronment is set up as a solid foundation for a growth economy, the benefits of technology to small and medium businesses as well as enterprises will become increasingly clear. BKPM chief Gita Wirjawan said that Indonesia’s competitiveness in the World Economic Forum (WEF) will improve this year. “Indonesia is committed to creating favorable conditions for both domestic and international investors,” he said.

the Investment Coordinating Board (BKPM) presented a forum on promoting Indonesia’s national competitiveness in an effort to reach Indonesia’s Vision 2025. “As one of the emerging markets in Asia Pacific, Indonesia is well placed to boost national competitiveness. To increase competitiveness and productivity, Indonesia must have a strong fundamental focus on education and capacity for innovation, where the role of technology is essential to drive national competitiveness in moving towards an innovation-driven economy,” said Orlando Ayala, Microsoft Corporation’s Chairman of Emerging Markets and Chief Advisor to the Chief Operating Officer. Ayala suggested that if Indonesia wishes to boost its ICT development, its human resources should be restyled. Indonesia plans to reach its 2025 vision with four Mid-term Development Plans (RPJMs). Currently it is in the second stage, which is to realign plurality, improve the quality of human resources, building capacity and technology, and strengthen the competitiveness of the economy. Once the microeconomic envi-

From left to right: Sandiaga Uno, Chairman of Saratoga Capital and Co-founder of Modernisator; Orlando Ayala, Microsoft Corporation’s Chairman of Emerging Markets and Chief Advisor to the Chief Operating Officer; Gita Wirjawan, BKPM chief.

The ICT industry’s role as an important enabler of growth and competitiveness will open up enormous opportunities for advances and help Indonesia transform itself into a knowledge-based society moving forward with a strong innovation-driven economy.

Indonesia International Communication Expo and Conference 2011 a Successful Event ICC 2011 is a comprehensive coverage of the telecommunication industry, combining the trade show with entertainment and educational features, covering a gross exhibit area of over 12,000 sqm. Indonesia International Communication Expo & Conference (ICC) 2011 was successfully held on June 8-12 2011 at The Jakarta Convention Center (JCC). The expo, themed “The Borderless World of Communication”, integrates B2C & B2B exhibitions focusing on Cellular Operator infrastructures business, along with the development of the ICT industry itself. The expo is intended to bridge cellular operators and infrastructure vendors. The exhibition is connected to the Indonesian Computer Festival 2011, which was held on the same date and at the same site. This collaboration is intended to accommodate people’s need on ICT products. According to Bambang Setiawan, general manager of IT Division Dyandra Promosindo, the rapid growth of ICT industry (Information Communication Technology) in Indonesia was the reason to implement this exhibition.

Citing an example, Bambang said that the number of cellular phone subscribers, as of December 31, 2010, stand at 240 million. In addition, the number of Internet users is expected to reach 45 million people, representing 20 percent of Indonesia`s total population. Social media networking also increased dramatically, allowing people to connect for 24 hours. ICC 2011 is a comprehensive coverage of the telecommunication industry, combining the trade

show with entertainment and educational features, covering a gross exhibit area of over 12,000 sqm. The five-day exhibition is an expansion of the previous wellknown exhibition called “Indonesia Cellular Show (ICS)”. ICS – it is held annually since 2004 – has been acknowledged as Indonesia’s prime ‘Business to Consumer’ (B2C) telecommunication expo. ICS attracted more than 196,000 visitors last year.

Indonesia boasts many advantages in attracting foreign investment, including abundant natural resources, a large number of consumers, fiscal and monetary stability and sound economic fundamentals. Gita is optimistic that Indonesia will succeed like India and China in improving the ICT industry. This means government investment on ICT should increase by at least 10% of total GDP, unlike the current rate of only 0.07%. Sandiaga Uno, a young Indonesian businessman, hopes in the next five years the ICT industry in Indonesia will be advanced, meaning the government should budget $52 trillion for investment, of which $12 trillion is for infra-

structure development, to bolster Indonesia’s competitiveness. Innovation is key; capacity for innovation in Asia Pacific has grown tremendously thanks to huge spending on R&D and the availability of scientific and engineering talent. Thus, as an engine of economic growth in the region, it is crucial for Indonesia to have a clear agenda for economic development which underscores the importance governments place on ICT as an economic driver and a building block for national competitiveness. Ayala added, “Microsoft has the global experience to partner with the government to advance national priorities. To transform the country into a knowledge-based society with a strong innovation driven economy, Indonesia will need to look at accompanying issues and have solid pillars to start laying the foundation for the future of the country. Microsoft Indonesia has its pillars aligned with the Indonesian national agenda, which are fostering local innovation and content creation, creating jobs and workforce development, transforming education and promoting transparency and good governance.”

The President Post

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June 12, 2011 C3

Education Foreign Interest to Study in Indonesia Rises but Constrained by Visa Procedures The government should be able to simplify the process for obtaining visas and limited stay permit cards as this is one of Malaysia’s keys of success in recruiting foreign students. By Jhanghiz Syahrivar

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ndonesia IS the 18th richest country in the world based on the data from the International Monetary Fund (IMF) data in 2010, and the country is a member of the G-20, a group of 19 countries with the world’s major economies plus the European Union (EU). Moreover, according to the World Trade Organization (WTO) in 2010, Indonesia is also the 27th largest exporting country in the world. With a population of 240 million people (the 4th most populous country in the world) combined with massive land and sea area of 5 million km2 (the 15th largest country in the world), Indonesia is expected to become the 8th richest country in the next 20 years. To increase foreign reserves every year, Indonesia is not only boosting its exports but also enhancing the role of its tourism sector in attracting foreign tourists. This became evident when the government initiated the change of Indonesia’s last year tourism slogan “Visit Indonesia”, which many considered “less selling” by many, to “Wonderful Indo-

nesia” this year. No less than Rp 60 billion was spent by the Culture and Tourism Ministry to build 567 new rural tourism facilities. Despite the relentless efforts and huge funds to increase foreign reserves and improve Indonesia’s image internationally, there are still other potential sectors that could be cultivated to bring in foreign reserves, such as the education sector. Have a look at Malaysia, which successfully earns foreign reserves from their education sector. Recent reports say the number of foreign students who study in the country has increased exponentially from 54,474 foreign students in 2009 to 75,819 foreign students in 2011. According to the Indonesian Embassy in Kuala Lumpur, the number of Indonesian students currently studying in Malaysia stands at 14,000. One can imagine millions of Ringgit profits earned by the Malaysian government each year from the education sector alone. Indonesia could also bring in foreign reserves like neighboring countries Malaysia and Singapore have, given the fact that quality of education, particularly tertiary education, in Indonesia is not in-

ferior to that of the two countries. Besides, by giving more opportunities to foreign students to study in Indonesia, Indonesian students can benefit by way of cultural exchanges, networks and connections. Moreover, Indonesia can improve its image as a conducive and safe study destination in Southeast Asia. President University is one of few top universities in Indonesia that actively attracts foreign students to study in Indonesia. The University, founded by Prof. Dr. Juwono Sudarsono, S.D. Darmono and Susilo Bambang Yudhoyono as honorary advisor, provides a cultural exchange program that recently attracted American college students from Iowa State University to stay and learn the cultures and heritages of Indonesia. As one of few international standard universities with the largest number of foreign students, President University also actively promotes itself abroad to attract students from China, Vietnam, South Korea, the Philippines, Singapore, Malaysia and many others to study in Indonesia. The management of the University guarantees that the quality of education in the University is not inferior to the educational quality in neighboring countries. President University is among eight universities in Indonesia listed in Nuffic NESO (Netherlands Education Support Office) as a

university with international standard of higher education in Indonesia. The University is prominent in local and international societies for being able to align theory and practical learning effectively. No wonder the University’s graduates are highly sought after by many national and multinational companies in Indonesia and abroad. Attracting foreign students is not easy as this must be supported by the efforts and commitments from the Indonesian government and embassies abroad to promote some of the best universities in Indonesia, particularly the universities with international standard of higher education which use English as their primary language of instruction. The government should also be able to simplify the process for obtaining visas and limited stay permit cards as this is one of Malaysia’s keys of success in recruiting foreign students. Meanwhile, universities in Indonesia can help by offering and promoting academic and non-academic uniqueness in order to attract foreign students to study in Indonesia. Jhanghiz Syahrivar is an Education Observer and Asst. to Lecturer of Faculty of Economics, President University.

GEPI: Bolstering the Development of Entrepreneurship in Indonesia As its 2011’s major milestone in bolstering the development of entrepreneurship in Indonesia, Global Entrepreneurship Program Indonesia [GEPI], in collaboration with Global Entrepreneur Program of the US State Department, is organizing two key international events in July: GEP Entrepreneurship Delegation [EDEL] and Regional Entrepreneurship Summit [RES]. Hosted by Minister of Trade Dr Mari Pangestu, the Regional Entrepreneurship Summit [RES] is scheduled to have US Secretary of State Hillary Rodham Clinton as the keynote speaker. These events come at a time of renewed global interest in Indonesia’s investment prospects and its commitment to set entrepreneurship as a central pillar of development. Both two key events aim to catalyze the entrepreneurship agenda in Indonesia and connect Indonesia’s rapidly growing startup community with major investors and entrepreneurship networks in the US and Asia. The first event GEP Entrepreneurship Delegation [EDEL], is scheduled on 19 – 21 July in Jakarta and will enable investors and mentors from Indonesia and the US to see and study the business plans of aspiring Indonesian entrepreneurs. GEP EDEL will also work as platform of introduction of promising Indonesian start-up companies to the Delegation for further investment. During EDEL, 32 startups from Tech and Non-Tech Sectors - under the category of Ear-

ly Stage and Growth Stage - will pitch to the Delegation. The Delegation consists of prominent US investors and academics that voluntarily make time commitment to be involved in this program and voluntarily bear the cost of travel. Organized by GEP in the US State Department, the Delegation will nominate 8 finalists to attend the second event: Regional Entrepreneurship Summit [RES]. “EDEL will be a significant opportunity for tech and non-tech sector startups, to challenge and win opportunities to global network for their business. We are inviting Indonesian startups to register by 19 June as the cut-off date and explore this global opportunity,” Giuseppe Nicolosi, Vice Chair – GEPI, said.

international speakers to Bali and high level participants from US, ASEAN countries along with India and China.

“The Tech and Non-Tech Startup entries will be categorized under Early Stage and Growth Stage, with Early Stage is one that already has a product or service being developed, a committed entrepreneur, but maybe no customers or revenue. The later, Growth Stage, is one that already has a product or service, customers and revenue, but maybe not yet profitable,” Shinta Widjaja Kamdani, Vice Chair – GEPI explained.

GEPI is an umbrella organization that aims to work in partnership with the many organizations and companies focused on developing entrepreneurship in Indonesia to do a number of things including: • Raising the awareness of entrepreneurship and innovation in Indonesia • Working together to provide what we might call the right ecosystem for emerging entrepreneurs • Working together with entrepreneurship groups and the Government of Indonesia to improve the enabling environment for entrepreneurship • Working together to ensure that emerging entrepreneurs can have access to finance and domestic and international angel investors • Helping to facilitate entrepreneurs and innovators to go regional and global

Presenting the theme “Emerging Entrepreneurs – The Next Big Chapter”, the second event, Regional Entrepreneurship Summit [RES], is scheduled on 22–24 July 2011 in Bali. This will be hosted by the Minister of Trade Dr Mari Pangestu, whom has slotted the event into the ASEAN calendar as one of the key ASEAN activities hosted by Indonesia in 2011. The Regional Entrepreneur Summit will present prominent local and

About Global Entrepreneurship Program Indonesia [GEPI] GEPI is part of a wider global initiative, Global Entrepreneurship Program, which grew from an initiative of President Barack Obama and it is now a core program at the US State Department guided by Secretary of State Hillary Rodham Clinton. Founded by 13 Indonesia prominent business leaders, GEPI aims to to promote entrepreneurship as a key pillar of economic development among developing countries and catalyse Indonesia’s entrepreneurship strategies.

The President Post

C4 June 12, 2011

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Culture-Tourism Richard Gere Makes Spiritual Journey to Borobudur www.usatoday.com/Slamet Riyadi, AP

Hollywood actor Richard Gere was last week in Indonesia to visit the Borobudur Temple, a cultural symbol of the greatness of Indonesian ancestors as epitomized by Kamadatu, Rupadhatu, and Arupadhatu.

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or Gere, a Buddhist, the visit was not just an ordinary trip but more a spiritual journey. His interest in Buddhism began when he traveled to Nepal in 1978 with the Brazilian painter, Sylvia Martins. He is a practicing Buddhist and an active supporter of the Dalai Lama as well as a strong advocate of human rights in Tibet. He is a co-founder of the Tibet House, creator of The Gere Foundation and chairman of the board of directors of the International Campaign for Tibet. Gere puts a high premium on the sincerity and practices of Buddhism, and meditates daily. As he sees it, meditation helps him set his motivation for the day. Says Gere: “Meditation may be the path to overcoming narcissism. That is why Buddhism has become the opiate of choice for me.” “The journey to Borobudur is important as it connects me with my teacher, Dalai Lama, and for my own study,” he said as he arrived at the Borobudur Temple, Magelang, Central Java. He did the ritual ceremony on Borobudur Monday at 4.30am. The ritual was conducted by Mahaguru Badhra Ruci from Thailand. It started with the Pradaksina by encircling the main

structure of the Borobudur three times and holding a prayer. Later, Gere read Parita in the company of seven monks. Many visitors took part in the ritual, which was followed by meditation for 25-30 minutes in a very calm and quiet ambience. He ended the ritual by lying on the ground for a few seconds with the monks and did a Peace Walk from the 9th floor of the temple to the yard. Gere, who recently turned 61, also watched the colossal dance performance of Mahakarya Borobudur at the Aksobya open stage on Sunday evening. The Mahakarya Borobudur performance recounts the history of the construction of the Borobudur Temple by King Smaratungga. Julia Roberts, his partner in “Pretty Woman”, was in Bali two years ago to make “Eat, Pray, and Love”. Remarked Gere: “I will not make a movie that Julia Roberts made in Bali. I’ll make a movie about the history of the discovery of this temple. I am very eager to make this film.” The historic temple was discovered by the British GovernorGeneral Sir Thomas Stamford Raffles in 1814.

Gere’s visit is at the invitation of Jero Wacik, Minister of Culture and Tourism. Jero said that the invitation was initiated when he visited Borobudur after the Mt. Merapi eruption. “I came with UNESCO officials and we decided to find a figure to raise the profile of the Borobudur after it had closed off due to the ash from the eruption. The figure should have close relations with the Borobudur, and that person is Richard Gere,” said Jero. Director of PT Taman Wisata Candi Borobudur, Prambanan and Ratu Boko, Purnomo Siswoprasetjo, stated that Gere’s visit is expected to boost tourism in the area, home to several other Buddhist and Hindu temples and the ancestral seat of Javanese culture. Before flying to Yogyakarta with his wife, Carey Lowell, and son, Homer James Jigme, Gere was in Jakarta to meet with President Susilo Bambang Yudhoyono and Jero. In the meeting they discussed humanitarian activities. “Gere said he would like to be involved in major humanitarian events here,” Jero said.

Exports of Bali`s Paintings up 36.55% The value of Bali`s painting exports increased 36.55% from $46,667 in March 2011 to $63,997 in April 2011, a regional government spokesman said. “But in terms of volumes the painting exports declined 22,21% form 3,296 to 2,564 pieces,” Bali Regional Government Spokesman I Ketut Teneng said here last month. He said that the painting exports were based on data in Bali trade and industry office only. Many of Balinese artists` canvas products are purchased directly by foreign tourists who came to Bali for holidays, he said. “They came to Bali for holidays and purchased paintings and arts collections directly and as such are not recorded officially,” he said. A total of 2.57 million foreign tourists visited Bali in 2010. Ketut also said that besides paintings, Bali also recorded in an increase in its ceramics exports. The value of Bali`s ceramic exports in the first quarter of 2011 was recorded at $909,732 or an increase by 129.27% with that in the corresponding period a year earlier, which was $396,799. “But in terms of volumes Bali`s ceramic exports dropped 21,22% from 248,391 pieces to 196,691 pieces,” I Ketut Teneng said. He said that Bali`s ceramics products with different designs and ornaments had enough competitive edge and were preferred by consumers in international markets. The Bali ceramics export items vary, including unique household ahd furniture ornaments. He said that Bali`s exports of plaited handicraft products increased by 120.92% to $875,979 in the January-April 2011 period and increased by 120.92% compared to last year`s only $395,517 in the same period. “The foreign exchange revenue was for the shipment of 645,892 pieces of handicraft articles in those four months, up by 59.94% compared to the only 403,823 pieces in last year`s same period,” I Ketut Teneng said.

Semarang’s Tourism Icon Soon Ready for Visitors Central Java Governor Bibit Waluyo has mobilized tens of soldiers to help accelerate the renovation of Lawang Sewu, a famous landmark in Semarang. The soldiers helped rearrange the environment around Lawang Sewu, the governor said when inspecting the renovation work at Lawang Sewu, here last week. The renovated Lawang Sewu is expected to be officially inaugurated by First Lady Ani Bibit Waluyo Yudhoyono on July 5. Lawang Sewu (which means “Thousand Doors” and was built during the Dutch colonial era) will become a main tourist attraction for the Central Java Visit Year 2013.

Batam Designated as ASEAN Batik Trade Center In late 2009, the UN Educational, Scientific and Cultural Organization (UNESCO) officially recognized batik as an Indonesian cultural heritage. Batik was considered not only as part of Indonesian cultural heritage but also recognized as a representation of humanity`s culture for its rich value and cultural inheritance. The Trade Ministry has designated Batam city in Riau Islands province as an ASEAN Batik Trade Center, a local trade official said. “The Trade Ministry approved the designation of Batam city as an ASEAN Batik Trade Center yesterday,” spokesperson of Batam`s Indonesian Chamber of Commerce and Industry (Kadin), Nada Faza Soraya, said here last month. She said the selection of Batam as an Asean Batik Trade Center was agreed on during an ASEAN summit in Jakarta early this month. According to her, it was the Kadin Indonesia Foundation and Indonesian Batik Foundation that had asked the Trade Ministry to name Batam as a batik trade center in the ASEAN region. Nada said due to its strategic location and sea border with several Asean countries, the city was designated as the Asean batik trade center. In late 2009, the UN Educational, Scientific and Cultural Organization (UNESCO) officially recognized batik as an Indonesian cultural heritage. Batik was considered not only as part of Indonesian cultural heritage but also recognized as a representation of humanity`s culture for its rich value and cultural inheritance. “The Indonesian community need to know various kinds batik motif after it has been internationally recognized,” Nada said, adding that every detail of batik had the value of a decent life that has to be maintained. According to her the color and motif of batik also reflects the regions in Indonesia because every region has its own typical motif.

Ministry Targets 7.7 m Foreign Tourists in 2011 The Culture and Tourism Ministry has set itself the target of 7.7 million foreign tourist arrivals this year, a tourism official said. “We are optimistic that the target will be achieved,” Rita Sofia, promotion section chief of the Marketing Directorate for Java of the Tourism Ministry, said here last month. Speaking on the occasion of the opening of an exhibition on Central Java tourism , Rita said that the target this year was higher than that of last year, which was only seven million. She said that the number of domestic tourists this year was also expected to increase to 237 million from 234 million in 2010.

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President Opens Bali Arts Festival The festival is conducted in conjunction with the Bali World Cultural Forum and the National Utsawa Dharma Gita 2011 as a starting point to create global culture with local wisdom. President Susilo Bambang Yudhoyono has opened the 33rd Bali Arts Festival last week. The Bali Art Festival, involving both local and international artists, is a regular annual event organized by the Bali provincial administration. President Yudhoyono open the art festival on Friday evening at the open theater of Denpasar Cultural Park.

President Susilo Bambang Yudhoyono (second right) walks with Culture and Tourism Minister Jero Wacik and Bali Governor Made Mangku Pastika to open the XXXIII Bali Arts Festival.

Themed “Desa Kala Patra: Self Adaptation into Multicultural Concepts,” the festival is a grand art festivity this year

for a month-long performance of dances, music, poetry, and handicraft exhibition. Held from June 11 to July 9, 2011, the Festival started with a traditional opening parade led by Bali Governor Made Mangku Pastika. The festival is conducted in conjunction with the Bali World Cultural Forum and the National Utsawa Dharma Gita 2011 as a starting point to create global culture with local wisdom. The main agenda of the Bali Arts Festival are stage performances, competitions, meetings

and seminars, and handicraft exhibition of small industry. Each year the Bali Arts Festival introduces the fed classical dances of the island such as the legong, gambuh, kecak, barong, baris, mask dances and the like. It is based on the theme around which new “dance choreography” is produced and old village dances and activities revived. Over the years, the whole range of classical Balinese stories - Ramayana, Mahabharata, Sutasoma, Panji - have been turned into “colossal” Sendratari Ballets.

* *20June-16July 2011

The President Post

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June 12, 2011 C5

Travel Tanjung Lesung A Wonderful Spot for Development Opportunities With full commitment to develop Tanjung Lesung as an international tourism destination, the local administration aims to build an airport in Panimbang, about 10 minutes away from Tanjung Lesung.

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anjung Lesung in Banten is one of the most potential areas in Indonesia that can be turned into a new favorite international tourism destination. Sitting on a 1,500-hectare peninsula, the area offers extensive ocean frontage and beautiful sandy beaches. This popular destination is 170 km and three hours’ drive away from Jakarta and approximately 120kms from Soekarno Hatta International Airport. With full commitment to develop Tanjung Lesung as an international tourism destination, the local administration aims to build an airport in Panimbang, about 10 minutes away from Tanjung Lesung. The local administration is optimistic it can realize the plan to build the airport. It will therefore allocate budget of more than Rp 600 million for feasibility study and for the master plan. The airport also proposed to facilitate transportation access to South Banten and is expected to bring in investors to invest in the mining sector in the southern part of the region such as Cibali-

ung and Bayah. However, the airport will only be big enough to accommodate small aircraft with seat capacity of less than 20 persons. According to the plan, the airport will only serve certain routes such as Jakarta, several cities in Java, and parts of Sumatra. A plan to build a 84-km Serang-Panimbang highway has also been laid out. The project will connect Tanjung Lesung and Jakarta – Merak highway that will shorten traveling time from Soekarno Hatta International Airport to the area to only 1 hour and 15 minutes. Tanjung Lesung is a great destination with a wide range of investment opportunities. Its developer, PT. Banten West Java Tourism Development Corporation (BWJ), is inviting prospective land buyers and developers to collaborate and to submit their bids. Tanjung Lesung sits on a peninsula on the western coast of Banten, bordering the Sunda Strait. The land area is rich in natural beauty and attractions while the sea is home to vibrant and thriv-

ing marine ecology. It has a launch point to one of the best national parks in Indonesia, Tanjung Ujung Kulon, which is a UNESCO World Heritage property and has the backdrop on one of the world’s most famous landmarks, Anak Krakatau Volcano. This area will truly become a world class sailing, yachting and cruising destination. It has a semi sheltered waters that will bring the best conditions for any kinds of water sports as well as Ariel sports like gliding, hot air ballooning, parasailing and seaplane scenic flights over the famous Anak Krakatau Volcano and other islands. The nature of the low lying land form will allow for the development of one of the biggest waterfront canal estates in the entire region, with approximately 1,000 allotments. The land form will also allow for the development of a Venetian styled city center. Modern infrastructures such as electricity, telephone, mobile phone network, satellite TV, high speed internet access, water treatment plant, waste water treat-

Merak Cilegon

Soekarno-Hatta International Airport

Serang Future Toll Road

Tangerang

Jakarta

Pandeglang TANJUNG LESUNG Labuan Bogor Ujung Kulon

JAVA ISLAND

ment plant, security service, good road infrastructure and beautiful scenery will add to the attraction. PT Banten West Java is an expert in resort planning and development and has been widely recognized as a special consultant in the development of the area. BWJ shareholders are respected local businessmen with rich experience in such businesses as property, textile and garment, chemicals and various other manufactured goods.

Tanjung Lesung sits on a peninsula on the western coast of Banten, bordering the Sunda Strait. The land area is rich in natural beauty and attractions while the sea is home to vibrant and thriving marine ecology.

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Pictorial Events Taxt & Photos by Nandi Nanti

Breakfast Dialogue Breakfast Dialogue at The Financial club Jakarta, themed “The 2014 Elections and What They Mean” with James Van Zorge, Principal and Founder Van Zorge, Heffernan and Associates. The event was attended by professionals, namely Tanri Abeng and other businessmen.

IABC (Indonesia Australia Business Council) Gala Dinner IABC (Indonesia Australia Business Council) held a gala dinner at Mandarin Hotel, Jakarta. It was attended by professionals and delegations from both countries, namely Noke Kiroyan, Micky Hehuwat, Yedi Sondy, HS Dillon and Marzuki Darusman.

“Accelerating Economic Development: To Boost Investment”

The Palladium Group Strategy Execution Forum 2011

The speakers at the forum were Gita Wirjawan, Chairman of Investment Coordinating Board of the Republic of Indonesia, and Stefan G Koeberle, Country Director of the Word Bank. The event was held at The Financial Club Jakarta and attended by businessmen and professionals.

The Palladium Group Strategy Execution Forum 2011, themed “Mastering the Strategy Management”, was held at Ritz Carlton Mega Kuningan, Jakarta. The Founder of Palladium Group, Dr. David P. Norton, and CEO of Garuda Food Sudhamek were the speakers at the forum.

Celebrating the 484th Anniversary of Jakarta Celebrating the 484th Anniversary of Jakarta, Arlinda Frota presents a porcelain painting exhibition themed “Impressions of Jakarta” at AlunAlun Indonesia, Jakarta. Arlinda started to paint porcelains by using batik motifs.

South Korea–Indonesia ICT Training Center Inauguration The ICT Center at Jababeka Cikarang was inaugurated by Minister of Communications and Information Tifatul Sembiring. It was built thanks to donations from the South Korean government amounting to of $ 8,900,000.

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June 12, 2011 C7

Living

LOVE LIFE & WORK Happiness is like a cat. If you coax it or call it, it will avoid you; it won’t come. But if you pay no attention to it and go about your business, you will find it rubbing against your legs and jumping into your lap. By William J. Bennett

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want to offer a graduating class four pieces of advice, general but personal advice to each one of you about the parts of the real world to which you are being transferred. I don’t wish to speak of life in the government or of public policy or some burning public issue of the day, but rather of some steady and enduring issues of every day. Of the particular blessing of civilization and literature and history and philosophy that has advised us about these things. My first piece of advice, my longest one: Try to like life. Be goodhumored about your mortality. I

don’t mean that you should like all parts of your life, or all parts of the world, or that you should be happy with everything that occurs in your life – you certainly won’t be. My advice is that your attitude be one of optimism, engagement and interest, and that’s largely under your control. Writing about disappointment, the great novelist George Eliot once wrote, “Everything depends not on the mere fact of disappointment, but on the nature affected and the force that stirs it.” Let disappointment, when it comes, and it will come, stir you, stir your force. So that is practical optimism that I recommend to you. If you think about it, living with interests and engagement is an attitude to which there is simply no reasonable alternative. Beware the cynics; beware the dampers. Cynicism, gripping a state of chronic disappointment and complaining about the world, is no way to have life work for you or to live it. And those who start out feigning cynicism soon become cynics for real. Cynicism corrodes. It corrodes passion. It corrodes commitment. So take into your en-

In-flight Wish List: How would you make air travel fun? If you could wish for anything on a flight, what would it be? Emirates’ suites are pretty cool. But we can do better. “There are only two emotions in a plane: boredom and terror,” Orson Welles once said. www. cathaypacific.com

The man spoke the truth. Locking yourself into a metal tube with two hundred strangers for several hours is hardly one of life’s most pleasurable pursuits. Surely it doesn’t have to be that way? Etihad has the right idea. The UAE airline recently announced it would be employing chefs to tailor-make meals for passengers in its Diamond First class cabins, offering “a five-star restaurant style of service in the sky.” That inspired us to come up with 10 more things that could turn air travel from a chore into a delight. Some are a little fantastical, we admit, others more doable. After gleaning inspiration from our list, what suggestions would you make to ensure your flight is less boredom and terror, more bliss and tranquility? CNNGo’s in-flight wish list:

1. Massage/manicure/pedicure/spa services. After that tan-

trum at check in because your bag was 0.3 kilos overweight and therefore $100 more expensive, you need to be kneaded. A little room with soft lighting, incense, whale music and pretty people in white coats whispering, “Is the pressure ok?” will do just the trick, thanks. Children’s cabin. We heard the movie “Snakes on a Plane” was originally going to be “Kids on a Plane” but that was deemed too terrifying. Stick the little ones in a sound-proof room with plastic balls, slides and perhaps even a few seats they can kick in the back. Problem solved.

2. Boot the beverage cart. As if the threat of deep-vein thrombosis wasn’t enough, airlines also

insist on knee-capping us twice a flight with the drinks trolley and forcing those trying to get to the toilet to detour up into First Class and down the other side. Get rid. If people want a drink they’ll ask for it.

3. Singles’ seats. Every singleton flying hopes against hope they’ll be sat next to their dream date who’ll be hoping the same thing. Give those an option for a ‘singles seat,’ located next to other ‘singles seats’ for a chance of love in the air. 4. Free Wi-Fi. If Singapore Airlines can introduce in-flight Internet, why can’t everyone? 5. Allow movies to finish. Anyone who started “The Sixth Sense” within an hour of landing just thinks it’s a slightly stupid movie about a kid who sees ghosts. If there are 30 minutes to landing and another 15 minutes of taxiing, then there’s time for the movie to end.

6. Wet room. Bath tubs, showers, Jacuzzis … nothing passes time better than a bit of a splash around. 7. Proper child facilities. Decent diaper-changing options, proper kiddie cots and baby minders in the cabin crew might help stop all the screaming and crying. And that’s just the parents.

8. Decline the recline. As if being stuck in the middle seat on a 12-hour flight between two fleshy strangers wasn’t bad enough, the guy in front then decides to put his head in your lap. One or two inches is plenty enough pushback. 9. Viewing section. Air travel provides some of the most amazing views of the earth we’ll ever see. Why not make an entire section of the plane transparent to make the most of the opportunity?

Keep an open mind. An open mind is a very good thing. But don’t keep your mind so open that your brains fall out.” terprises what the writer E.M. Forster calls “pluckiness.” Pluckiness of spirit. Take good will and take a good sense of humor. My second piece of advice is a corollary of the first. Look forward to work, don’t dread it. Look forward to it and approach your work with passion and engagement. Listening to my contemporaries, I can tell you that I have found over and over again that those men and women who like what they do from day to day are happier than those who do not like what they do, even if the latter make twice or three times or five times as much money as the former. Think of your work in terms of what you know and what you love. Try to expand the number of things that you know and love. There are blessings, ladies and gentlemen, blessings to be won in this way, blessings to be won from work that cannot be won from idleness or leisure. The humanities have long taught that work killed fewer hearts than boredom or idleness do. Modern medical science bears this out. Perhaps for some of you, your

first job may not be the one you really want. It certainly wasn’t for me. That’s not unusual. The idea that every person should be able to choose the job he or she wants is in fact, as history goes, a very new idea, still a relatively rare reality. So if that’s your situation, the only reasonable thing to do is to make the best of it. But, while making the best of it, don’t let your passions dry. Don’t lose the passion to do what you know and what you love. We are at our best when we do that which we know and which we love. In the movie “Chariots of Fire,” the great English runner Eric Liddell told us he loved to run. “When I run,” he said, “I feel God’s pleasure.” I think all of us have the opportunity to feel God’s pleasure through us, but only if we’re willing to stay at it. To be at one with one’s work, whether it is dentistry or running or sales or teaching or farming or even government, is worth a very great deal. My third piece of advice has to do with an old issue and a contemporary occupation. You see

it all the time on television, and they talk about it in the movies, and no doubt the subject is still a late-night dormitory conversation. That subject is called happiness. My advice to you, strange as it may sound, is not to seek happiness. There are all sorts of people who think that happiness is a condition that can be sought, then caught and then maintained indefinitely, kept in a jar or in a cage. Some also believe that the quality of a life is determined by the number of hours of happiness you can chalk up. That’s not true. The thing is, the irony is, that you will have a much better chance of finding happiness if you don’t bother your head about it, if you worry about other things. No doubt, some of you have already discovered that happiness is not the same as pleasure. Pleasure comes and pleasure goes, but happiness is a different thing. The point is, as Robertson Davies has written, “The nature of happiness is such that happiness retreats the more intensely you pursue it.”

Happiness is like a cat. If you coax it or call it, it will avoid you; it won’t come. But if you pay no attention to it and go about your business, you will find it rubbing against your legs and jumping into your lap. So forget pursuing happiness. Instead, pursue learning, pursue work, pursue honor, pursue your commitments and keep them, pursue the truth, pursue decency, look honestly for God. Be faithful to your spouse, to your children, to your friends, to your country. Forget pursuing happiness; pursue other things and with luck happiness will come to you. Finally, the fourth and last piece of advice, is about your mind. A very smart man, a philosopher, once said, “The sole purpose of education is to be able to detect when a man is talking rot.” I hope you know it when you hear or read it. I hope you haven’t read it today. For this advice, this very brief last piece of advice, is about your mind. Here I offer this saying: “Keep an open mind. An open mind is a very good thing. But don’t keep your mind so open that your brains fall out.”

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C8 June 12, 2011

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Health

Can diabetes cause fatigue, body ache?

www.wallcoo.net

Fatigue in anyone should be evaluated by a health care provider to exclude all possible causes and to get counseling on how to treat it. www.thestrokefoundation.com

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an diabetes be a (possible) cause of fatigue, leg and lower back aches? The answer is that diabetes itself probably is not the cause of your fatigue, lower back and leg aches. The things that cause type 2 diabetes (also called adult onset diabetes), such as a weight problem and lack of exercise, are commonly the cause these symptoms. Fatigue incorporates three components: 1. The inability to initiate activity. 2. Reduced ability to maintain activity. 3. Difficulty with concentration and memory. Fatigue should be distinguished from sleepiness, shortness of breath on exertion and muscle weakness, although these can also be associated with fatigue. Fatigue lasting six months or more is referred to as chronic fatigue. Chronic fatigue is not necessarily the entity known as chronic fatigue syndrome, which is a diagnosis after exclusion of all other causes. Fatigue in anyone should be evaluated by a health care provider to exclude all possible causes and to get counseling on how to treat it. Other medical causes of fatigue are the side effect of drugs, thyroid dysfunction, high calci-

um levels, rheumatologic illnesses, adrenal, kidney or liver problems. Some infections such as tuberculosis or hepatitis can cause fatigue, and indeed, fatigue can be their only symptom. Depression is also a major cause of fatigue.

If a root cause of the fatigue cannot be found, it can often be treated with cognitive behavioral therapy or graded exercise therapy. A regimen of activity and exercise is frequently successful. While unusual, uncontrolled diabetes can be the cause of fatigue. These patients generally also have other symptoms of diabetes such as excess thirst, frequent urination and blurred vision. Some drugs used to treat

diabetes can cause fatigue by causing anemia or a metabolic change known as lactic acidosis. These are unusual side effects. Many patients use the word fatigue to complain of sleepiness. A significant proportion of adults and especially a significant proportion of those who who are obese have obstructive sleep apnea. This is a condition in which the sleeping person literally stops breathing for a few seconds, several times a night. Each time, they wake up to start breathing again. People with obstructive sleep apnea usually do not realize that they disrupted their sleep several times during the night. This leads to sleepiness throughout the day because the person literally did not get a good night’s sleep. Sleep apnea is commonly treated with a continuous positive airway pressure machine, commonly known as CPAP, which increases the pressure of air breathed in during the night. If a root cause of the fatigue cannot be found, it can often be treated with cognitive behavioral therapy or graded exercise therapy. A regimen of activity and exercise is frequently successful.

Eggs-actly How Many Eggs Are Too Many? One ordinary egg doesn’t contain too much cholesterol, if you believe the hype coming from egg producers and their aggressive advertising campaigns. But a recent article in the Canadian Journal of Cardiology reminds people that just one egg yolk can exceed the recommended daily limit of 200 milligrams (mg) of cholesterol for people at risk of cardiovascular disease. One large egg can have up to 275 mg of cholesterol. When compared to fast foods like the much-maligned Double Down meal from KFC (150 mg of cholesterol), one egg yolk is higher in cholesterol. Even Hardee’s Monster Thickburger®—with two-thirds of a pound of beef, three cheese slices and four bacon strips—has slightly less cholesterol (210 mg). That doesn’t mean that burgers and fried chicken are better choices. The saturated and trans fats in foods matter too—but don’t forget about dietary cholesterol. “At a time when inactivity, obesity and diabetes are increasing internationally...it seems very unwise to reverse the longstanding recommendations on limiting cholesterol consumption,” the authors wrote. “In our opinion, stopping egg consumption after a myocardial infarction [heart attack] or stroke would be like quitting smoking after lung cancer is diagnosed: a necessary act, but late.” High levels of cholesterol have been linked to heart attack, stroke, circulation problems and other conditions, including death. The American Heart Association (AHA) recommends that healthy people consume no more than 300 mg of cholesterol per day; for those with high LDL (“bad”) cholesterol or for people taking a blood-cholesterol lowering medication such as a statin, the daily limit is 200 mg. People who enjoy eggs and want to continue eating them (including as an ingredient in meals and desserts) should find other ways to lower their cholesterol intake, for example, by using only egg whites or limiting consumption of other foods that are high in cholesterol.