Media Monitoring

BPK audit: OJK spending excessively

Tuesday, 11 Jun 2019
BPK audit: OJK spending excessively
The Financial Services Authority (OJK) logo is seen on the frontispiece at its headquarters in Jakarta. (kontan.co.id/File)
GENERAL NEWS AND HEADLINES
 
Ex-Jakarta police chief named treason suspect
Media Indonesia, headline

Former Jakarta Police chief Comr. Gen. (ret) M Sofyan Jacob became the latest public figure to be named a suspect of treason during a series of protests and riots that erupted after the General Elections Commission (KPU) announced the victory of the incumbent, President Joko “Jokowi” Widodo, on May 21.

Sofyan was the fourth big name to face treason charges after fellow supporters of losing candidate Prabowo Subianto, namely campaign team spokesman and lawyer Eggy Sudjana, campaign team spokesman Lieus Sungkharisma and Prabowo’s close aide and former Army Strategic Reserves Command (Kostrad) chief of staff Maj. Gen. (ret) Kivlan Zen.

Jakarta Police spokesman Sr. Comr. Argo Yuwono said the police had solid evidence to name Sofyan a suspect. Police have launched an investigation into Sofyan’s role in the May 21-22 unrest after activists of the Jokowi-Maruf Center filed a report against him. “There are video recordings that [show] Sofyan’s motives and involvement in a treason attempt,” Argo said.
 

CSOs call for independent fact-finding team
Koran Tempo, headline

A number of civil society organizations (CSOs) are calling on the government to form an independent fact-finding team to unveil the truth behind alleged human rights violations during a series of riots in Jakarta on May 21 and May 22. They are worried that the National Police is not transparent in handling the cases. With the National Commission on Human Rights (Komnas HAM) already forming its own investigation team, some CSOs have demanded a joint team that will involve the National Police and other state institutions.

Jakarta Legal Aid Institute director Arif Maulana said the independence of the team mattered, so as to avoid impunity, as occurred in past human rights abuses.

Similarly, Commission for Missing Persons and Victims of Violence (Kontras) researcher Rivanlee Anandar said an independent team was central to assess police neutrality and impartiality in the cases.

As of early June, Kontras has received seven reports related to the May 21 – 22 riots, with some of the victims of shooting reported to have died of “other injuries” in the official police report, and other detainees being captured without warrants or access to lawyers.
 
 
Thousands flee from floods
Republika, headline

Torrential rain has caused floods that forced thousands of people to abandon their homes in Central Sulawesi, South Sulawesi, Southeast Sulawesi and East Kalimantan, the National Disaster Mitigation Agency (BNPB) has reported.

BNPB spokesman Sutopo Purwo Nugroho said Monday that 4,198 people had been evacuated from North Konawe, Southeast Sulawesi. Simultaneously, floods affected 2,904 families in South Sulawesi and 541 others in Central Sulawesi, while destroying more than 3,600 hectares of farmland and public infrastructure.

Separately, the Meteorology, Climatology and Geophysics Agency (BMKG) has issued a heavy rainfall warning in those areas and predicts that West Sumatra, Bengkulu, Bangka Belitung, North Kalimantan, East Kalimantan, North Sulawesi, North Maluku, Maluku, Papua and West Papua will be affected between June 11 and June 15, as the Madden Julian Oscillation (MJO) affects weather conditions in Indonesia.
 

Urgent need to improve public transportation: Expert
Kompas, headline

Bandung Institute of Technology transportation expert Sony Sulaksono is calling on the government to improve public transportation in line with President Joko “Jokowi” Widodo’s ambitious highway and toll road projects, so as to avoid traffic congestion that marked the recent Idul Fitri exodus from recurring.

Transportation Ministry data showed declining public interest in public transportation during this year’s exodus, while the number of private vehicles significantly increased. The ministry noted that the number of public transportation passengers declined by 8.5 percent during the recent holiday travel period to 12.73 million from 13.9 million in 2018.

Air transportation passengers dropped the most to 2.5 million in 2019 from 3.5 million in 2018. The number of passengers on public buses declined by 13.7 percent to 2.63 million from 3 million in 2018.
 

Karen Galaila Agustiawan sentenced to 8 years
The Jakarta Post, p.1

Karen Galaila Agustiawan – a former president director of state-owned oil and gas company Pertamina, was sentenced to eight years in prison by the Jakarta Corruption Court on Monday after being convicted in a case involving the Basker Manta Gummy (BMG) Block in Australia.

The case began in 2009 when Pertamina acquired a 10 percent stake of Roc Oil to work on the BMG Block through its subsidiary PT Pertamina Hulu Energi.

The sentence was less than prosecutors’ demand of 15 years imprisonment, but she was also fined Rp 1 billion (US$70,000) by the court.

Karen immediately filed to appeal the verdict.

Court Justice Emilia Djaja Subagja read out the verdict, saying the defendant had violated investment procedures and caused state losses of Rp 568 billion. Karen was also deemed to have ruined the company’s good governance.

The panel of judges said in their verdict that Karen had colluded with Pertamina’s former financial director Ferederick ST Siahaan, former mergers and acquisitions manager Bayu Kristanto and legal and compliance counsel Genades Panjaitan in her acts of corruption.

Karen was named a graft suspect in April last year and detained in September by the Attorney General’s Office, when she was charged with corruption.
 
 
BUSINESS AND ECONOMICS NEWS AND HEADLINES 
 
G20 to set tax rules for digital technology firms
Kompas, economy
 
Group of 20 finance ministers agreed during their meeting in Fukuoka, Japan, on Sunday to establish common rules to close loopholes currently being used by tech giants like Facebook to reduce their corporate taxes.
 
Commenting on the tax plan, Indonesia ICT Institute executive director Heru Sutadi said the Indonesian government should be able to take advantage of the initiative by requiring digital giants, such as Google and Facebook, to set up a business entity in Indonesia and have a local office to record all transactions taking place in the country.
 
“Right now, 90 percent of goods sold on e-commerce platforms are from overseas,” said Heru. “By maximizing the digital economy, our economy will be able to grow by up to 7 percent,” he added.
 
Institute for Development of Economics and Finance (Indef) economist Nailul Huda said products offered by digital companies were mostly in the form of services, making it harder for the government to identify their transactions and tax them accordingly.
 
“Therefore, there needs to be a new definition on goods that will be taxed, as well as the business entity,” Nailul said.
 
 
Govt to roll out red carpet for foreign airlines
Bisnis Indonesia, p.1
 
The government is considering rolling out the red carpet for international air carriers to operate in Indonesia. Their entry is expected to push up competition in the local aviation industry, which is currently dominated by state-owned carrier Garuda Indonesia and private airline Lion Air.
 
Susiwijono Moegiarso, secretary to the coordinating economic minister, said on Monday that the government was discussing the possible entry of foreign airlines into the domestic market. He expressed confidence that this could create healthy competition in the local aviation market.
 
However, aviation observer Gerry Soejatman said he was pessimistic about the initiative. He said the low domestic airfares in the past were possible only thanks to cross-subsidizing by the major local airlines. “This will make foreign carriers think twice about entering Indonesia,” he said.
 
The surge in airfares had taken its toll on last month’s inflation during the Idul Fitri holiday.
 
Statistics Indonesia (BPS) head Suhariyanto said airfares contributed 0.30 percent to year-on-year inflation of 3.32 percent in May. He reminded the government to remain cautious of a further airfare increase during the next holiday season at the end of the year to prevent further inflation.
 
 
BI might follow trend to lower interest rate
Bisnis Indonesia, p.4
 
Bank Indonesia (BI) has hinted that it would follow other central banks in the region to lower interest rates amid the United States’ central bank’s more dovish stance on interest rates.
 
BI Governor Perry Warjiyo said BI would reassess its policy mix on interest rates, liquidity, macroprudential easing, financial deepening, payment systems and sharia finance to adapt to the downward trend in interest rates in the region.
 
PT Bahana Sekuritas chief economist Putera Satria Sambijantoro said it was the right moment for the central bank to lower interest rates following S&P’s recent decision to upgrade Indonesia’s credit rating, as well as due to the US Federal Reserve’s more dovish stance and the weakening US dollar. A number of central banks in Asia have recently lowered their benchmark interest rates.
 
However, PT Bank Negara Indonesia (BNI) economist Ryan Kiryanto said an immediate cut in the central bank’s interest rate would be too risky. The government should instead wait to assess inflation, which might rise in June due to an increase in household spending during the Idul Fitri holidays.
 
The BI board of governors’ upcoming meetings will be held from July 17 – 18 and August 21 – 22, before the Fed’s Federal Open Market Committee (FOMC) meetingsfrom July 30 – 31 and Sept. 17 – 18.
 
 
Rupiah gains slightly following rating upgrade
Kontan, headline
 
Standard & Poor’s (S&P) decision to upgrade Indonesia’s long-term credit rating from BBB- to BBB has helped strengthen the rupiah. The currency’s exchange rate rose by 0.13 percent to 14,250 per US dollar on Monday. The middle rate also increased by 1.07 percent to Rp 14,231 per US dollar.
 
Samuel Asset Management economist Lana Soelistianingsih said the rating upgrade made Indonesia’s financial market more attractive, as reflected in foreign net buys in the bond market, which reached Rp 480.81 billion ($33.75 million) on Monday. The 10-year government bond (SUN) also increased to 7.71 percent from 8 percent in May.
 
 
BPK audit: OJK spending excessively
Kontan, p.1
 
In its second half of 2018 audit, the Supreme Audit Agency (BPK) made eight notes on the financial reports of the Financial Services Authority (OJK), especially those related to the collection and use of funds raised from the financial industry.
 
First, there was no clear basis for calculating funds collected from the financial industry between 2016 and 2018. Second, planning and budgeting were not in line with requirements.
 
Third, the funds used to rent office space in the Wisma Mulia 1 and 2 buildings were excessive, since not all the buildings were used. Fourth, there was a lack of clarity on data sources and remuneration was higher than necessary.
 
Fifth, the road map for infrastructure spending exceeded both needs and budget capacity. Sixth, there was a difference in budget limits set by the House of Representatives. Seventh, there was a shortfall in the amount collected since some taxpayers didn’t comply. Eighth, land bought in Papua, Solo and Yogyakarta was not used to support operations.
 
Responding to the audit, OJK spokesperson Sekar Putih Djarot said the institution was currently making improvements in proposing future budgets to the House of Representatives.