November 4, 2014 edition
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Sidelines
Sengkuni
Interview
SUDIRMAN SAID, ENERGY AND MINERAL RESOURCES MINISTER:
Exposing the mafia is not a minister's job
Environment
Merging the Environment and Forestry Ministries
Interview
IN the new Indonesian cabinet, energy and mineral resources are classified as a 'hot' yet powerful sector. One example is the government's plan to raise fuel prices, an issue which is about to reach boiling point. It was in this state of affairs Sudirman Said found himself last week, when he began his job as Indonesia's minister of energy and mineral resources. Understandably, the 51-year-old Sudirman immediately set out to adopt a cautionary approach. During this interview with Tempo, he distanced himself from the fuel price issue. "Let's give the question of fuel price a pass," he said, adding that it would just unsettle the public. "Most importantly, Pertamina is ready and a team has been formed [to handle this]."
In the days ahead, Sudirman's work in managing the energy sector is bound to multiply, particularly in stamping out corruption and the 'mafia'. He feels, however, that exposing syndicates involved in energy-related criminal activities is not part of his job description. "That's not the task of the minister, but the law enforcers," Sudirman stressed. Not so long ago, his predecessor, Jero Wacik, was indicted by the Corruption Eradication Commission (KPK).
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Environment
President Joko Widodo's merging of the environment and forestry ministries has received mixed reviews.
Walhi and Greenpeace oppose the move. Leaders from both non-governmental organization argue that the Environment Ministry should be kept independent and strengthened so as to better oversee the Forestry Ministry, rather then combined with one of Indonesia's most corrupt institutions.
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Asean & Beyond
In the approximately 40-square-meter room, tables, computers, printers, photocopiers and scanners competed for space. In between, there were large piles of maps, shoulder bags and dozens of identity card cases. The staff members of the accreditation section for observers and journalists at the Independent Election Commission (ISIE) in Tunis, capital of Tunisia, looked defeated at the piles of stuff scattered around
"We've had to take thousands of telephone calls," a staff member told Tempo. Two weeks ago, the Tunisian legislative election was less than 48 hours away. "We're overwhelmed," the staff member added.
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Investigation
More and more foreigners are buying property on the islands of Lombok and Sumbawa in West Nusa Tenggara. Some of them are simply looking for a cheaper place to retire, but others are looking to capitalize on the region's rapidly growing tourism industry. They buy beautiful land along the beaches and even in protected forest areas.
Foreigners must often work around the law, which prohibits foreign ownership of Indonesian land. Some set up foreign capital investment companies and ignore certain requirements for their operation. Others employ Indonesians as nominees to sign the papers.
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Opinion
PRESIDENT Abdurrahman Wahid did not go too far when during his administration he described the House of Representatives (DPR) as a "kindergarten". The conduct of the 2014-2019 DPR legislators in the past few weeks, including one irate person kicking a table during a plenary session, has been pretty embarrassing, not to mention the creation of a 'shadow DPR leadership'. It is infantile behavior which could be most damaging to the public interest if it is not immediately resolved.
It all began with the enactment of the Legislative Institution Law, known as the MD3 Law, in July. This law made it easier for the parties supporting Prabowo (Gerindra, Golkar, the National Mandate Party, Justice and Prosperity Party and the Democrat Party) to take control of the DPR and People's Consultative Assembly (MPR) leadership positions by proposing a packet system (five members must be supported by five party factions), a cunning strategy that contradicts the principles of democracy, and which in turn had a negative impact on the Indonesian Democratic Party of Struggle (PDI-P) and its supporters.
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Indicator
President Joko Widodo reshuffled some ministries and formed new ones for his new cabinet. The ministries affected by the reorganization are Public Works, Public Housing, Tourism, Education, Forestry and Environment. Joko also formed a new coordinating ministry: Maritime Affairs.
Due to these changes, Golkar Party Chairman Aburizal Bakrie reminded Joko that the 2015 State Budget does not account for the new organizations, especially the new ministry. According to Aburizal, the 2015 State Budget has already been officially approved and allocated to ministries established during President Susilo Bambang Yudhoyono's term. "Thus there will be a problem in the usage of funds and in the implementation of his programs," Aburizal said.
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National
The two coalitions in the House of Representatives (DPR) are still squabbling over control of parliamentary committees. The Red-White Coalition, which backed failed presidential candidate Prabowo Subianto in the July election, used its strong majority in House to seize control of the leadership of every one of its internal bodies. In response, the Great Indonesia Coalition, which backs President Joko Widodo, named a shadow leadership.
The coalitions were fighting over 63 chair and deputy chair positions on the various House commissions and internal bodies. After the Red-White camp took control of the House speaker and deputy speaker positions a few weeks ago, the pro-Joko camp offered two proposals for sharing seats: one along party lines, the other along coalition lines, according to Arif Wibowo, a legislator from Joko's Indonesian Democratic Party of Struggle (PDI-P).
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Economy
CURRENCY
Cabinet Line up Hurts the Rupiah
President Jokowi's cabinet lineup did not impress the market with the rupiah tumbling to a low of Rp12,169 per US$, a day after the announcement. The rupiah continued to wobble throughout the week, before ultimately closing at Rp12,085 on Friday, just 0.17 percent weaker than it was a week ago. A day earlier, the Government announced regulations designed to limit the risk exposure of volatile currency swings that could hurt companies with large foreign currency borrowings should the rupiah weaken further. Regulators want to avoid another 1997/8 financial crisisand are now insisting that companies have at least a BB global rating before they can borrow in foreign currency. Furthermore, these companies have to hedge at least 20 percent of their foreign currency loans and maintain a foreign currency asset to foreign currency liability (liquidity) ratio of 50 percent. Under this scheme at least 70 percent of the company's exposure to currency swings is hedged or protected. The Government appears to be anticipating and preparing for a potentially weaker rupiah should short-term foreign funds flow back to the US, with US interest rates on the rise and the US economy showing better results than other major economies. Everyone is hoping this will happen gradually, thus making it easier for the market and its players to adjust to.
Cabinet Line up Hurts the Rupiah
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Cover Story
ENTERING the final quarter of this year, Muliaman Hadad is forced to do acrobatics. Fierce competition within the banking industry in recent months has caused Muliaman, who is chairman of the Financial Services Authority (FSA), great anxiety. "I have to cut the banks' business plans. Credit growth was still 20 percent, we reduced it to 16-17 percent, to slow down the race for liquidity," the former deputy governor of Bank Indonesia told Tempo two weeks ago.
For quite some time, growth in customer funds could not keep up with growth of credit. As of August this year, 92 percent of third-party funds in banks have been disbursed as loans. Not much money is left. The scramble to attract customers has become aggressive. A war of interest rates is inevitable, and in the long run, this could affect the economy. If it is allowed to go on, small banks not strong enough to compete, would collapse.
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Tempo Talks
Improving Connectivity, Boosting Cooperation
This year, Indonesia and India mark 75 years of diplomatic relations. However, the ties between the two nations have existed much longer, predating the establishment of the Republic of Indonesia and the Republic of India. These connections span social, cultural, religious, economic, and trade aspects. But do those close ties of the past have any bearing on the present relationship? Why is there no direct flight between the capitals of the two countries?
Indian Ambassador to Indonesia and Timor-Leste, Sandeep Chakravorty, shares his views on this matter at TEMPO TALKS.
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