BI prepares for ASEAN integrated payment system

Payment issues: Deputy Trade Minister Bayu Krisnamurthi (second right), accompanied by Artajasa president director Arya Damar (right), inspects a booth during the Integrated Payment System seminar in Jakarta on Wednesday. The seminar aimed at informing business players about the integrated payment system ahead of the ASEAN Economic Community in 2015. (Antara/Prasetyo Utomo)

Jakarta Post – Bank Indonesia (BI) is currently developing tools to create a more time-efficient and low-cost payment system ahead of the launch of the ASEAN Economic Community (AEC) in 2015, when there will be a free flow of goods, services and people among ASEAN member countries.

“We are working to develop a more integrated national payment system before having an integrated payment system within the ASEAN region,” BI payment system executive director Rosmaya Hadi said at a seminar held by electronic payment service provider PT Artajasa Pembayaran Elektronik on Wednesday.

With the new system, the Indonesian banking industry will have a new real-time gross settlement system (RTGS) in which bank customers can carry out multicurrency transactions on a real-time basis, she said.

“With this system, a bank customer can carry out multicurrency transactions in only minutes through non-cash payments,” she said, adding that BI would launch the new system this year.

Rosmaya also said the Indonesian central bank and its counterparts in five ASEAN members, including Malaysia, the Philippines, Singapore and Thailand, had agreed to prepare for an integrated payment system.

“Central banks of the ASEAN 5 have formed task forces on trade settlements, retail payments, monthly remittances, capital market settlements and standardization to formulate a set of regulations and schemes with which we will have an ASEAN integrated payment system,” she said.

Under the regional integrated payment system, people in ASEAN will be able to make financial transactions through ATMs, credit cards or electronic money without sacrificing much time and money.

According to a report by the ASEAN Working Committee on Payment and Settlement Systems (WC-PSS), the integrated payment system will reduce bank charges (such as foreign exchange spread among ASEAN currencies and handling fees), and encourage regulated non-bank remittance service providers to adopt international/common standards in retail payment systems.

Of all the ASEAN member countries, only Indonesia, the Philippines and Thailand currently have full ATM interoperability, according to an Asian Development Bank Institute report published in 2013.

“When the AEC commences, ASEAN member countries will have greater need for an integrated payment system as people from across the region will have to carry out transactions from and to their home countries,” said Deputy Trade Minister Bayu Krisnamurthi at a similar event. [Click here for full article…]

Floods cause chaos across Greater Jakarta

Losing battle: A man removes trash from the inundated Buddhist Amurva Bhumi Temple (Hok Tek Tjeng Sin) in Setiabudi, South Jakarta, on Wednesday. The temple was flooded on Tuesday night due to rising water levels in the nearby Krukut River. The temple authorities said they hoped the floodwater would recede soon so that devotees could celebrate the Lunar New Year on Friday. Flooding is an annual challenge for the temple ahead of the Chinese New Year. (JP/P.J. Leo)

Jakarta Post – The floods returned on Wednesday after incessant rain hit the capital overnight, forcing hundreds of residents to wade back to evacuation shelters.

Unlike the recent flooding, more commercial districts and main thoroughfares were affected by floodwater that snarled up traffic for several hours in the morning.

“It took seven hours for me to drive to Jl. Senopati [in South Jakarta] from Bekasi. The traffic jam was unbearable. It was the worst ever congestion this month,” Fika, a commuter, said.

The city police’s Traffic Management Center (TMC) reported dozens of inundated locations.

The underpass of Cawang toll road from Halim heading to Rawamangun was under 60 centimeters of water, while in the Pondok Jaya area in Mampang Prapatan, South Jakarta, floodwaters reached a depth of 100 centimeters.

Some streets, including Jl. Patra Raya in Duri Kepa in West Jakarta and Jl. Kemang Raya in front of Kem Chicks supermarket in South Jakarta, were paralyzed as the inundation was between 50 cm and 70 cm.

Transjakarta bus operators had to reroute seven of 12 corridors to avoid flooding, while commuter rail operator PT KAI Commuter Jabodetabek canceled the service from Bogor in West Java to Kampung Bandan in North Jakarta as the latter station was flooded.

According to Hari Tirto, head of the meteorology information subdirectorate with the Meteorology, Climatology and Geophysics Agency (BMKG), the flooding was a result of heavy rainfall that particularly hit downstream areas in West, East, Central and South Jakarta.

The intense rain was forecast to continue during the evening and into the next two days, he said. [Click here for full article…]

Indoensia warned of financial contagion

Jakarta Post – Amid the recent financial turmoil in Turkey and other emerging economies, Indonesia’s biggest fund managers carry a warning: Watch out for domino effects.

Though predicting increases in Indonesian equities this year as elections boosted spending, UK-based Schroders and Canada-based Manulife Asset Management warned that the recent sell-off among portfolio investors in Argentina and Turkey might also hurt Indonesia, as they were all seen in the same asset class of emerging economies among investors.

The local units of the financial services giants are the two biggest fund managers here, with managed assets worth Rp 90 trillion (US$7.4 billion) combined.

“Would there be any spillover into other emerging markets? Yes, there would. What happens in Turkey may lead to spillovers in South Africa, Indonesia, India — almost all emerging economies will feel the impact,” Michael T. Tjoajadi, the chief executive officer of Schroder Investment Management Indonesia, said on Wednesday.

In response to recent capital outflows and a weakening currency, Turkey’s central bank held an emergency late-night meeting on Tuesday that concluded with drastic interest rate hikes, with its one-week repo rate raised to 10 percent from 4.5 percent.

Recently, global fund managers also dumped their assets placed in Argentina, after seeing the country grapple with alarming levels of inflation and currency depreciation, both of which had already hit double digits, raising the specter of a potential default in South America’s third-largest economy. [Click here for full article…]

Syrian Conflict Draws Indonesian Jihadis Into Fray: IPAC

A man gestures near a damaged car at a site hit by what activists said were barrel bombs dropped by government forces in Aleppo’s Dahret Awwad neighborhood on Jan. 29, 2014. (Reuters Photo/Hosam Katan)

Jakarta Globe – Indonesian extremists have turned their attentions to the Syrian war, a bloody two-year battle soaked in sectarian division and apocalyptic prophecy, as radical Islamist groups push for a two-pronged “global jihad” to establish an Islamic caliphate in the Middle East, a new report by the Institute for Policy Analysis of Conflict read.

“The conflict in Syria has captured the imagination of Indonesian extremists in a way no foreign war has before,” the report, titled “Indonesians and the Syrian Conflict,” read. “For the first time, Indonesians are going overseas to fight, not just to train, as in Afghanistan in the late 1980s and 1990s, or to give moral and financial support, as in the case of Palestine.”

The Ministry of Foreign Affairs estimates that at least 50 Indonesians have joined the estimated 8,000 foreign nationals fighting in Syria. The emergence of non-Syrian fighters, which include ex-mujahideen from Afghanistan and Al Qaeda-linked militants, has thrown the situation in Syria into a deeper state of chaos as rebel groups fighting to topple the regime of Syrian President Bashar al-Assad fight both alongside and against members of violent terrorist groups waging a holy war of their own.

The Indonesian radicals, many members of the Jemaah Islamiyah (JI) terrorist network and its affiliated Islamic boarding schools, may have been inspired by the popular book “The Two-Arm Strategy;” which argues that the upheaval caused by the Arab Spring provided fertile ground for a two-pronged jihad in Yemen and Syria — both sites of religious and historical significance.

The war’s sectarian lines have also stoked anger in Sunni-majority Indonesia where scenes of violence against Sunni Muslims by Assad’s Shia Muslim loyalists received regular coverage in by domestic media outlets. The anger, combined with a reluctance by JI — the organization behind the 2002 Bali bombings — to stage further attacks on Indonesian soil and the religious connections between the Syrian war and several hadith on the Islamic doomsday, might inspire more Indonesians to join the war, the report read. [Click here for full article…]

Indonesia, Radical Islam & America’s Pivot to Asia

RealClearDefense – Political Islam is on the rise in Indonesia and rising alongside it is the country’s importance to U.S. national security. As the pendulum of American attention swings toward Asia in a calculated “pivot” aimed at countering shifting realities in the regional power balance, a familiar foe deploying equally familiar and sinister tactics threatens to destabilize this key partner in the vitally important Southeast Asia region: Islamic extremism.

While the shift in American resources and attention to Asia may be driven by broader geopolitical and economic interests, as outlined in the president’s national security strategy, the threat of domestic religious radicalism and terrorism remains real in Indonesia. Without strong leadership, this internal threat will have a profound impact on Indonesia’s ability to be the strategic regional partner the U.S. needs it to be.

A wide-ranging partnership between the U.S. and Indonesia will be crucial to ensuring peace, stability, and an equitable balance of power in the region, but Indonesia must first be stable domestically to fulfill its partnership role regionally and internationally. Consolidating democratic principles and institutions, eradicating government corruption, and electing strong leadership through free and fair elections are the building blocks Indonesia must establish to defeat religious extremism, ensure domestic stability and effectively participate in a partnership critical to both our national security interests.

Islamic extremism is not new to Indonesia. Al Qaeda and other terrorist organizations have taken advantage of our vast archipelago nation of 17,000 islands and porous borders to use as a base of operations since the fall of the dictatorial Suharto regime in 1998. Many experts also believe much of the terrorists’ ideology is homegrown rather than imported from abroad. However, despite several potent terrorist acts in the years following September 11^th, Indonesia has remained committed to being a secular society. And the moderate, pluralistic, and inclusive beliefs of the world’s largest Muslim population have held the growth of Islamic radicalism in check – until recently. [Click here for full article…]

Indonesia Population Approaching U.S. Revives Birth Control

A family travels on motorcycle in Jakarta. Indonesia’s population growth rate remained at 1.49 percent for the decade ending 2010, according to the latest figures published by its statistics office.

Bloomberg – Indonesian President Susilo Bambang Yudhoyono wants families to stop at two children to prevent a burgeoning population overwhelming schools and services. Asih, a cleaner in Tangerang, near Jakarta, is stopping at seven.

“In my family, we always had a lot of children, and as long as we still had something to eat, why do family planning?” said Asih, 35. “Now I have two children in primary school and more that will have to go in the next few years and I have no money to pay school fees. Seven kids are enough.”

Facing slower investment and one of the highest youth unemployment rates in the Asia-Pacific region, the government is concerned the demographic dividend that attracts companies seeking a young, cheap workforce will become an economic time bomb. As Indonesia’s growth slows, the world’s fourth-most-populous nation isn’t generating enough quality jobs to keep up with the population, the International Labour Organization said.

That prospect has brought the revival of a birth-control program begun 46 years ago by former President Suharto, who managed to halve the fertility rate to about 2.6, where it’s been stuck ever since. The government wants to cut the rate to the replacement level of 2.1 within two years to prevent the 250 million population doubling by 2060.

“We have to go back to the policies of the Suharto era, to make strong campaigns and bring the fertility rate down,” said M Sairi Hasbullah, head of Indonesia’s statistics bureau for East Java province. “It’s not going to be easy to provide food, education, health facilities and infrastructure for 500 million people. It’s a big danger for Indonesia.” [Click here for full article…]

The Trickle-Down Effect

Setya Novanto, Golkar Party Treasurer, undergoing an examination at the Corruption Eradiaction Commission (KPK) building, Jakarta on Tuesday (7/1). ANTARA/Wahyu Putro A

Temp.Co – The alleged involvement of Setya Novanto and Idrus Marham in former Constitutional Court chief Akil Mochtar’s bribery scandal has triggered suspicions that this case may be more than the maneuvers of one individual. Setya is the Golkar Party treasurer, while Idrun Marham is the party’s secretary-general, senior officials with links to other important people. As such, it is fair to deduce that the bribery scandal they are charged with may have involved the party itself.

The Corruption Eradication Commission (KPK) has questioned both men as witnesses. The commission should not stop there. It needs to seek the truth behind suspicions that bribe money found its way into party coffers or was used to cover the organization’s operating costs. The KPK, through the Akil case, has a chance to reveal the old-fashioned practices that have never been previously proven: that the party played a role in the bribery related to several disputed regional elections.

The ‘hand’ of the party was evident in the Akil Mochtar scandal, when the judge was caught by the KPK last October accepting money from Hambit Bintih, the then regent of Gunung Mas, Central Kalimantan. It was revealed that the middleman involved was Chairun Nisa, Golkar’s deputy secretary-general, who is also being detained by the KPK.

Did Chairun Nisa play a lone hand? Was his party ignorant of his ‘astuteness’? The KPK must continue its investigation until it uncovers the party’s role in such undertakings.

In addition to the Gunung Mas affair, Akil Mochtar is also involved in the Lebak case in Banten. We hope that the ongoing KPK investigation into the election of regional heads in East Java and Palangkaraya, Kalimantan, will clarify the role of the party in such deceptions.

In East Java, Idrus and Setya left clearer tracks. The telephone conversation between Akil and Zainudin Amali, the local Golkar Party chairman, exposed the actions of the two men. Zainudin told Akil about the role of Idrus and Setya in the bribes. Zainudin is known to have been the link man between Akil and the incumbent governor in the gubernatorial election. In Palangkaraya, Idrus appears to have been the middleman when elected Mayor Riban Satia handed over Rp2 billion to Akil. [Click here for full article…]

House of Representatives Passes National Energy Policy

Jakarta Globe – The House of Representatives passed the National Energy Policy in a plenary meeting on Tuesday, securing renewable energy requirements for the coming decades.

“This is a significant point in the nation’s journey,” said Energy and Mineral Resources Jero Wacik. “At the moment we have a definitive National Energy Policy which has been agreed on by the House of Representatives. That way all energy programs should be based on and referred to the National Energy Policy.”

President Susilo Bambang Yudhoyono signed the policy before it went to the House.

The new policy will phase out fuel and electricity subsidies and stop coal and gas exports. The country netted $31.3 billion from the sale of oil and gas last year, but most of the proceeds were used to fund Rp 310 trillion ($25 billion) in energy subsidy. Indonesia plans to spend Rp 282 trillion on electricity, oil and fuel subsidies this year.

Deputy Speaker of the House Sohibul Iman, who led the plenary meeting, said that one significant point of the agreement was the incorporation of the principal of just economy into the process for setting energy prices, considering conservation and sustainability as part of the cost of production, alongside consumers’ purchasing power.

Jero said that the new policy would reduce gasoline dependency and increase the use of renewable energy.

At the moment, gasoline accounts for 49 percent of Indonesia’s energy usage. The new policy will seek to decrease that portion to 23 percent by 2025, while increasing the use of gas and coal.

Jero also said that Indonesia had the potential to exploit geothermal, solar, water, biomass and wind energy sources. [Click here for full article…]

Next government told to focus more on infrastructure

Jakarta Post – The Indonesian Chamber of Commerce and Industry (Kadin) has proposed a set of recommendations for the next government, which is expected to take office in October, to deal with the current economic slowdown.

“The new government must pay attention to several key issues that will hugely affect business players,” said Kadin chairman Suryo Bambang Sulisto in a press conference on Monday.

He said the new government should shift fuel subsidy spending to infrastructure development to facilitate the distribution of goods and reduce logistics-related costs.

In Indonesia, a businessperson has to spend around US$2,225 on a 12-meter container delivery with an average lead-time of 5.4 days, while according to World Bank data, in other countries one generally only spends $341 and has an average lead-time of only 2.8 days on a similar delivery.

Suryo said the next government could, for example, use the approximate Rp 300 trillion ($24.6 billion) the current government spent on fuel subsidies to construct railways for transporting logistics without hassle.

“Kadin suggests that the new government build a new railway along southern coast of Java, coupled with the construction of a railway connecting Java and Sumatra islands,” Suryo said, adding that the government needed to prepare around $150 billion for such multiyear projects.

The construction of a new railway along the south Java coast would potentially create new cities in the areas, he said.

He also highlighted another problem that business players faced as Bank Indonesia (BI) had raised its key rate by 1.75 basis points to 7.5 percent since June last year to tighten liquidity and maintain the stability of the rupiah. [Click here for full article…]

Prabowo Subianto – Economic interests of investors in Indonesia : Convergence and divergence

Jakarta Post – Throughout history there have been many examples of foreign investment that was exploitative and destructive, while in other cases foreign investment yielded positive returns to both the overseas investor and the target country — most likely a developing, sparsely populated one.

The classic example is British investment in the American colonies, which built vast fortunes for those involved in cotton, tobacco and other commodities.

Eventually the wealth that was generated enabled an educated class to struggle for political freedom — much as independence movements in Asia have sprung up in the most prosperous colonies, with Malaysia, Vietnam and Indonesia among them.

We won our independence but continue to seek foreign investment to build our nation. This is a regrettable reality, considering how other previously poor nations such as South Korea and Japan have outpaced us.

The question for 2014, then, is how to strike a deal with the foreign investor, whether it is a joint venture or a multinational operation entering Indonesia. We welcome them — but demand fair treatment.

One of the inaccurate charges leveled against me, which I would like to correct, is the notion that I am somehow against foreign investment in Indonesia and, if elected, would tend toward nationalization of businesses currently controlled by multinational interests.

Considering the wisdom of allowing a specific project to go ahead, it is important to define the interests and objectives of all concerned. Foreign investment is not charity. Those who place their hard-earned capital in an industry, business or resource extraction operation in another country naturally expect a return — a somewhat higher return than they would reap in their own country, where there are fewer legal, economic, political and social variables and, thus, considerably less risk. [Click here for full article…]

Scholars, intellectuals endorse Prabowo’s bid

The Jakarta Globe – A group of university professors and intellectuals announced on Wednesday its collective endorsement of Gerindra Party presidential candidate and chief patron Prabowo Subianto, giving the retired army general another moral boost ahead of the upcoming presidential election. Former Bandung-based Padjadjaran University rector Yuyun Wirasasmita, who read the group’s endorsement during a gathering […]