Media Monitoring

Jiwasraya requests Rp 32.89 trillion bailout

Monday, 11 Nov 2019
Jiwasraya requests Rp 32.89 trillion bailout
Office of state-owned insurance company PT Asuransi Jiwasraya in Jakarta (kontan.co.id/Cheppy A Muchlis)
GENERAL NEWS AND HEADLINES
 

Less military money going to new weapons
The Jakarta Post, headline

Despite defense being the largest line item in the annual state budget, the government has fallen behind its targets for modernizing weaponry systems due to the mounting amounts spent on personnel and maintenance of older equipment.

At the end of the second phase of its 15-year-old weaponry modernization program, the Minimum Essential Force (MEF), the government has only reached 62.8 percent of implementation, far behind the targeted 72 percent, making it a challenge to complete the program as scheduled in 2024.

Despite the surge in budget allocation, data obtained by The Jakarta Post show a downward trend in the Defense Ministry’s allocation for Indonesian Military (TNI) weaponry system modernization between 2015 and 2020 from 18 percent of the total defense budget to 9 percent. The 2020 defense budget will total Rp 127 trillion (US$9.06 billion), up 16 percent from Rp 109 trillion this year. Compared to six years ago, next year’s allocation marks an increase of about 25 percent.

Amid the downward trend in the modernization budget, the TNI instead requested an increase in the budget for its newly formed Special Operations Command (Koopsus), the purpose of which is still being questioned by the public. For 2020, the TNI has proposed 1.9 trillion alone for it after allocating Rp 1.5 trillion in 2019.
 

NasDem tips four governors as 2024 presidential candidates
Kompas, p.2; Republika, p.3; Koran Tempo

The NasDem Party has started eyeing four governors as its presidential candidate for the 2024 election. They are Jakarta Governor Anies Baswedan, West Java Governor Ridwan Kamil, Central Java Governor Ganjar Pranowo and East Java Governor Khofifah Indar Parawansa. “These potential governors deserve support,” said the party’s deputy chairman Zulfan Lindan.

According to Zulfan, NasDem will hold a convention to select its future presidential candidates administered by the party’s central executive board and regional executive boards.

As many as seven party executives had initially nominated chairman Surya Paloh as a presidential candidate in 2024. Zulfan, however, asserted that NasDem would not support the candidacy.

“It is impossible. Pak Surya has no interest [in contesting the 2024 presidential race]. We see potential candidates in the younger generation,” added Zulfan.
 

Direct regional elections still relevant
Republika, p.3

The Association for Elections and Democracy (Perludem) is certain that direct regional elections remain workable across Indonesia and offer a solution to corrupt practices that have tainted selection of regional heads such as vote-buying.

“We are sure that the direct regional election system is still appropriate for Indonesia,” executive director of the election watchdog Titi Anggraini said on Sunday. According to Titi, abolishing direct regional elections would not necessarily remove the negative consequences of the electoral system. Home Minister Tito Karnavian had previously said that direct regional elections were prone to money politics.

“I’m wondering if the current system is still relevant after 20 years. While it has many benefits in terms of democratic participation, there are also disadvantages. It is costly,” said Tito.

Titi said it would be counterproductive to blame the current system without identifying the real causes of the problem, which she said included the incomplete legal framework to prevent money politics.
 

President to select deputy education minister
Koran Tempo

Presidential spokesman Fadjroel Rachman said President Joko “Jokowi” Widodo was currently weighing up several potential candidates to fill the newly established posts of deputy education and culture minister and deputy Indonesian Military commander.

Fadjroel denied allegations the positions were created to accommodate political parties that supported Jokowi’s reelection bid but had yet to receive their rewards. They parties are the Indonesian Justice and Unity Party (PKPI), the Hanura Party and the Crescent Star Party (PBB).

When asked for confirmation, President Jokowi said he had yet to decide whether to appoint more deputy ministers.
 

Papuan local council rejects plan to create new provinces
The Jakarta Post, p.2

Papuan People’s Assembly chairman Timotius Murib said on Wednesday that the assembly had rejected the government’s plan to create two more provinces in the country’s easternmost region.

Previously, Home Minister Tito Karnavian said that he already received proposals from local figures regarding the establishment of two new provinces, namely South Papua and Pegunungan Tengah Papua. However, it turned out that the Papuan People’s Assembly, a state-sanctioned representative council consisting of Papuans, did not agree with the plan.

He said that according to the article new provinces can only be created after receiving approval from the assembly and the provincial legislative councils. He said the two institutions would only give their approval after assessing social conditions, human resources, financial capability and possible development in the future.

After examining the aforementioned determining factors, he said the assembly had concluded that it was not the right time to form new provinces. The assembly also noted that the previous establishment of West Papua province, as well as a new regency, did not make a positive impact for the locals from political, economic and cultural perspectives.
 
 
BUSINESS AND ECONOMICS NEWS AND HEADLINES

Jiwasraya requests Rp 32.89 trillion bailout
Bisnis Indonesia, p.3; Kontan, p.1
 
State insurance company PT Asuransi Jiwasraya asked for a bailout of Rp 32.89 trillion (US$2.35 billion) from the government to solve its financial crisis during a hearing with the House of Representatives Commission XI on Thursday.
 
Commission XI member Rudi Hartono Bangun said the House was unlikely to approve the request because there was not yet a clear mechanism for the bailout regarding whether the funds would come from the State-Owned Enterprises Ministry or the Finance Ministry.
 
The House also invited the Financial Services Authority’s (OJK) executive head of non-bank financial institution supervision, Riswinandi, to join the meeting, but the OJK representative was not present.
 
The House is now preparing to call Jiwasraya’s former management to attend the next meeting.
 
The financial problems Jiwasraya currently faces were caused by past bad investment decisions. Of Jiwasraya’ total investment, 22.4 percent, equal to almost Rp 7 trillion, was placed in stocks. However, only 5 percent was placed in LQ-45 blue chip stocks. Also, while 59.1 percent was placed in mutual funds, only 2 percent went to funds managed by top fund managers.
 
Jiwasraya president director Hexana Tri Sasongko admitted to the House that most of the assets the company owned were difficult to sell or illiquid.
 
 
OJK promises to improve fintech customer protection
Investor Daily, headline
 
Financial Services Authority (OJK) chairman Wimboh Santoso has promised to further improve the protection of financial technology (fintech) customers against fraud and data misuse.
 
In his keynote speech at the Digital Outlook Forum 2020 seminar, he expressed his concern that a number of fintech companies, especially those involved in online borrowing, had misused the data of their clients.
 
As reported by The Jakarta Post recently, Legal Aid Institute (YLBHI) branches in Java had received hundreds of complaints from borrowers who had their personal data breached by P2P companies that were not registered with the OJK.
 
According to some female borrowers, their personal data and pictures were shown in pop-up advertisements online claiming to offer sexual favors in exchange for money to pay off their debts.
 
Wimboh said at present, the existing law only protected the personal data of customers of banking, insurance and capital market sectors, as well as taxation. The OJK, therefore, supported the government’s plan to issue the law on personal data protection.
 
As of October this year, the Investment Alert Task Force (SWI) has processed 1,477 illegal fintech companies since 2018. The OJK has continuously reminded fintech companies to register with the OJK and has advised customers to only borrow money from fintech companies registered with the OJK.
 
 
Govt flip-flops on nickel ban, allows exports until January
The Jakarta Post, p.2
 
A week after announcing a temporary ban on nickel ore exports, Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan has announced exports are to be permitted until January 2020.
 
In what observers have deemed a regulatory flip-flop that could disrupt the country’s business climate and regulatory certainty, Luhut said Thursday evening that the ban “has been lifted for companies compliant with existing regulation”.
 
Luhut added that once the planned permanent ban comes into effect in January 2020, all domestic selling prices for nickel “will be pegged at the average international price for one year”, minus tax and shipping costs.
 
“On Monday, I will hold a meeting at the BKPM headquarters between the BKPM and nickel associations […] to follow up on ore exports,” BKPM head Bahlil Lahadalia told reporters shortly after the coordination meeting at Luhut’s office.
 
 
Govt introduces safeguard policies to protect local textile industry
Bisnis Indonesia, p.3; Kontan, p.2
 
The Finance Ministry has issued three ministerial regulations (PMK) to temporarily impose safeguard tariffs to protect the domestic textile industry against an influx of textile imports.
 
PMK No. 161/2019 imposes an import duty of Rp 1,405 (10 US cents) on yarn products other than sewing thread that are made of synthetic and artificial staple fiber.
 
Meanwhile, PMK No. 162/2019 imposes an import duty ranging from Rp 1,318 to Rp 9,521 per meter on imported fabric products. Lastly, under PMK No. 163/2019, curtain products, such imports of curtains, inner blinds, bed nets and other furniture items, are subject to an import duty of Rp 41,083 per kg.
 
The Indonesian Trade Safeguard Committee (KPPI) found that an influx of imported textile products into the local market had seriously harmed the domestic textile industry.
 
To compete against imported textiles, local producers have been compelled to sell their products below production cost. With the import duties, the local textile industry is expected to be more competitive.
 

Govt to mend policy on renewable energy to remove uncertainty
The Jakarta Post, p.8
 
The government plans to issue a presidential regulation on renewable energy early next year to improve the investment climate in the exploration and production of renewable energy in Indonesia.
 
Energy and Mineral Resources Director General Sutijastoto, who heads the team drafting the regulation, said in Jakarta Nov. 6 that his office had talked to various business organizations and government bodies for input.
 
Sutijastoto did not elaborate on the draft’s content, but the head of the geothermal division at the Indonesian Chamber of Commerce and Industry (Kadin), Fauzi Imron, who participated in discussion on the draft regulation, said the new regulation would, among other things, fix the pricing rules on renewable energy.
 
The new presidential regulation on renewable energy was initiated earlier this year by former energy minister Ignasius Jonan, but his term ended before the ministry could issue the regulation. Jonan handed over his position to current Minister Arifin Tasrif in September.