April 5, 2016 edition
The heated debate pitting two powerful ministries on whether the LNG (liquified natural gas) plant of the US$15 billion Masela offshore gas project should be built offshore as a floating LNG facility or built onshore several hundred kilometers away on either Aru or Tanimbar island has finally subsided. Recently, President Jokowi finally decided to side with Coordinating Maritime Minister Rizal Ramli, who argued for an onshore LNG plant as it would have a broader 'multiplier' impact on the region's local economy.
In contrast, the mines and energy ministry agreed with the two project sponsors, INPEX from Japan (with 65 percent interest) and Shell from the Netherlands (with 35 percent), an offshore, floating LNG plant built right next to the gas field would be more cost- and time-efficient. They argued that an offshore option would not require building either a 600- or a 200-kilometer-long pipeline across Indonesia's eastern Arafura sea, depending on which island is chosen. Also, it does not require costly and time consuming land clearings and permits to build an onshore facility.
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More Economy articles in other editions
March 29, 2016 edition
A verification meeting at the Central Jakarta Commercial Court last Tuesday morning did not provide the relief Said Reza Pahlevy was hoping for.
Said, Pertamina Patra Niaga's director of administration and finance, said he was feeling dejected as negotiations on the postponement of debt payments by Asmin Koalindo Tuhup were not going according to plan.
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March 22, 2016 edition
In June, the United Kingdom (UK) will hold a referendum on whether to stay in or leave the European Union (EU). A few years ago, it was Greece that faced the same dilemma. Although there are different reasons behind these two countries wanting to leave the EU, one underlying similarity is the loss of a degree of sovereignty.
Some 10,000 kilometers away, the Association of Southeast Asian Nations (ASEAN) has just launched its ASEAN Economic Community (AEC) and, in its early inception, is already struggling to make itself relevant, both internally to its member states as well as to the external world.
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March 15, 2016 edition
DWIMAWAN Heru Santoso had hardly a moment to breathe last week. As Jasa Marga's assistant vice president of corporate communication, he was put in charge of preparing meetings ahead of the the rollout of a new e-toll card. "The last of these meetings will be held tomorrow," he told Tempo last week.
Located at the entrance to the Jatiasih Toll Road in Bekasi, Jalantol Lingkarluar Jakarta, a subsidiary of Jasa Marga, is set to launch its Combined State Banks E-Toll (Himbara) card this Monday. The card is the result of a memorandum of understanding (MoU) signed between Jasa Marga and four state-owned banks on August 31 last year: Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), and Bank Tabungan Negara.
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March 8, 2016 edition
The tumbling of oil prices has rippled through the world economy in varying and unexpected ways. The same holds for its impact at home. Here, the government's oil revenue has shrunk and with the sluggish economy, tax revenue continues to fall below government targets. As a result, the government is reassessing its 2016 budget and is reluctantly forced to reduce its spending. Furthermore, not only is government revenue down, but the alternative funding source of issuing government bonds or borrowing is reaching its limits. The country's debt service ratio is already at 56 percent and the budget deficit to GDP is getting close to the legally mandated 3 percent. Given the lukewarm relationship with the House of Representatives, tweaking the debt limit is a step the government, understandably, wants to avoid.
So, unable to rely on exports and government spending to revive the economy, the government is forced to rely on the two remaining growth drivers, which are investments and consumption. The government has already opened the economy to foreign investment, as far as is politically acceptable, and any growth impact is still a long way down the road. This is why the emphasis now is on boosting consumption. And related to this is also why reducing bank lending rates for bank loans to grow, then spur consumption and eventually the economy, is a major priority.
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March 1, 2016 edition
When the 2008-2009 global financial crisis exploded, fingers were pointed at banks. Wall Street was identified as the glutinous giant, the harbinger of disasters. Now, that feeling of animosity is starting to infect Indonesia.
Indeed, banking here is very profitable. One simple yardstick is the net interest margin (NIM), the bank's profits from the difference between interest on deposits and interest on loans. In 2015, the NIM of Indonesian banking was 5.39 percent, almost triple the NIM of Singaporean banking which was lower than 2 percent. DBS, a Singaporean bank with the biggest assets in Southeast Asia, clocked a mere 1.94 percent NIM compared to BRI's 7.8 percent.
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February 23, 2016 edition