Media Monitoring

RI’s digital economy on track to dominate SE Asia

Wednesday, 09 Oct 2019
RI’s digital economy on track to dominate SE Asia
Source: Google, Temasek, Bain & Company joint report.
GENERAL NEWS AND HEADLINES
 
DPD sets conditions for amendment  
Koran Tempo

The majority of Regional Representatives Council (DPD) members will only support a constitutional amendment proposed by factions in the People’s Consultative Assembly (MPR) if the revision accommodates demands to strengthen the council.

“We [the DPD] basically agree to the amendment as long as it empowers us,” said Fadel Muhammad, MPR’s deputy speaker representing the DPD. The Golkar politician said DPD members were discussing which parts of the Constitution needed amending so as to strengthen the council. The DPD version of constitutional amendment will be proposed in the next session.
 

Jokowi gains support from labor union
The Jakarta Post, p.3

Amid protests by various groups signaling widespread distrust of the government, President Joko "Jokowi" Widodo may have gained support from an unlikely source: labor unions.

Jokowi met with leaders of the nation’s two-largest labor unions at Bogor Palace on Monday, apparently to discuss a planned revision of the 2003 Manpower Law. After the meeting, All-Indonesia Workers Union Confederation (KSPSI) president Andi Gani Nena Wea and Confederation of Indonesian Trade Unions (KSPI) chairman Said Iqbal expressed their support for the Jokowi administration.

While the KSPSI has supported Jokowi since the 2014 presidential election, Said's endorsement came as something of a surprise given that the KSPI had been a vocal supporter of Gerindra Party chairman Prabowo Subianto's presidential bid.

Said Iqbal, however, has denied that any personal agendas were behind the meeting and also rejected the idea that it showed fractures in the labor movement.

He also denied that there were any political deals made during the meeting. Said had been promised the position of manpower minister by Prabowo last year and had seemed to imply that the possibility was still open, telling reporters after the meeting that the President was "considering" his suggestion that "the labor ministry be headed by [someone] from a labor union".
 

PDI-P: Do not push President to issue Perppu
Republika, p.2

Indonesian Democratic Party of Struggle (PDI-P) politician Masinton Pasaribu has called on all parties to refrain from pushing President Joko “Jokowi” Widodo to issue a government regulation in lieu of law (Perppu) to revoke the controversial amendment to the Corruption Eradication Commission (KPK) Law. Masinton said there were other options to respond to the revision, for instance, filing a judicial review with the Constitutional Court and legislative review at the House of Representatives (DPR).

The PDI-P, according to Masinton, deems a Perppu as a form of constitutional dictatorship, which endangers democracy. “The President holds the executive power. [He] cannot be pressurized to issue a Perppu,” he said.

Masinton questioned parties that had insisted on a Perppu issuance even though the newly amended KPK Law had not come into force yet. Mounting pressure to issue a Perppu came from every layer of society such as antigraft activists, students and civil society.
 

House leaders agree on deputies’ field of duty
Media Indonesia, p.3

Leaders of the House of Representatives have agreed on division of labor among the four deputy speakers. Deputy Speaker Azis Syamsuddin of the Golkar Party will oversee political and security affairs, while Rachmat Gobel of the NasDem Party the fields of industry and development, Sufmi Dasco Ahmad of the Gerindra Party will coordinate economic and financial affairs and Muhaimin “Cak Imin” Iskandar of the National Awakening Party (PKB) will oversee with people’s welfare.

The House factions, however, have yet to complete the distribution of leadership seats in the House’s auxiliary bodies. As stipulated in the Legislative Institutions (MD3) Law, the House’s auxiliary bodies will be led by the five political parties that gained the most votes in the election. In this case, the parties are the Indonesian Democratic Party of Struggle (PDI-P), Gerindra, Golkar, NasDem and the PKB.
 

Gerindra eyes agriculture minister post
Republika, p.3

The Gerindra Party has said that it is interested in the agriculture minister seat if it joins the government of reelected President Joko “Jokowi” Widodo. Gerindra deputy chairman Sufmi Dasco Ahmad said gaining the post would allow it to follow through with its food security plan proposed to Jokowi.

“If we [Gerindra] join [the government], we might get the post [agriculture minister]. It is the President’s prerogative, though,” Dasco said Tuesday.

He said the party had offered insight on food security, energy, security and economics to Jokowi. The post of agriculture minister for Gerindra, therefore, would help Jokowi realize food security, Dasco added. However, Gerindra cannot force the ruling coalition to accept the concept, he said.
 
 
BUSINESS AND ECONOMICS NEWS AND HEADLINES
 
Industry to prepare curriculum for vocational schools
The Jakarta Post, p.1
 
More activities are expected at SMK 2 Bangkalan state vocational high school in Madura, East Java, after the school sealed a partnership with Honda motorcycle distributor Mitra Pinansthika Mulia.
 
With the partnership, SMK 2 Bangkalan becomes the 19th vocational school in the province specialized in motorcycle mechanics. The graduates will get at least nine international standardized certificates of expertise.
 
In other industries, Indonesian Textile Association (API) chairman Ade Sudrajat Usman said the association and the Industry Ministry had signed agreements to provide trainings at SMKs. During the last three years, the association has provided trainings at 1,200 SMKs.
 
More such programs and partnerships between vocational schools and industries are expected to come to fruition as the government will team up with industry groups in its efforts to revitalize vocational schools across Indonesia.
 
Education and Culture Minister Muhadjir Effendy said the ministry had been working with the Indonesian Chamber of Commerce and Industry (Kadin) to determine curriculum, students’ competence and certification standards for vocational schools.
 
 
Market turmoil will unlikely affect securities companies’ earnings market
Bisnis Indonesia, headline
 
The on-going turmoil in the stock market will unlikely affect the financial performances of local securities companies as they are still able to collect fees from the securities transactions they handle.
 
The gross value of share transactions at the Indonesia Stock Exchange (IDX) in the third quarter this year increased by 15.32 percent to Rp 1.10 quadrillion (US$77.61 billion) from Rp 952,98 trillion in the same period, last year.
 
The securities companies raise their revenues from transaction fees that vary between 0.01 and 0.18 percent per transaction.
 
Securities companies also earn income from underwriting bonds or other debt instruments issued by companies.
 
Bank Indonesia’s recent move to cut interest rates might encourage corporations to raise funds through the issuance of debt securities
 
To date, the total value of funds raised through the issuance of bonds totals Rp 103.02 trillion. Last year, the value reached Ro 122.96 trillion.
 
The bourse expects 31 new listings this year. According to IDX data, from January to September, 39 companies were listed on the bourse. With the addition of 31 companies before year-end, the total number of companies listed this year will be 70, fewer than the 75 companies listed last year.
 
 
RI’s digital economy on track to dominate SE Asia
The Jakarta Post, p.12; Kompas, p.14
 
Indonesia’s digital economy is on track to dominate Southeast Asia as its market value is projected to triple to US$130 billion by 2025 from $40 billion in 2019, with e-commerce and ride-hailing sectors spearheading the growth.
 
According to the annual “e-Conomy Southeast Asia” study, conducted by American tech giant Google, Singaporean holding company Temasek and management consulting firm Bain & Company, the e-commerce and ride-hailing sectors are firing on all cylinders with the former growing at a compound annual growth rate (CAGR) of 88 percent from 2015 to 2019 with a gross merchandise value (GMV) of $21 billion and the latter grew at a CAGR of 57 percent with a GMV of $6 billion.
 
“The e-commerce and ride-hailing sectors are growing rapidly [in Indonesia] due to large funding and tight competition from local and regional players,” aid Google Indonesia managing director Randy Jusuf during a press conference about the study on Monday. He added that the sectors had also enjoyed the fruits of adopting digital payment systems.
 
Meanwhile, Indonesian E-Commerce Association (idEa) chairman Ignatius Untung told The Jakarta Post that there were some challenges to be addressed to realize the projection, citing the lack of infrastructure and a skills gap as the main factors that could hamper the country’s digital economy.
 
 
IDX releases new rule on stock trading in acceleration board
Kontan, headline
 
The Indonesia Stock Exchange (IDX) has issued a new regulation on the trading of stocks on the exchange’s acceleration board recently introduced to accommodate small and medium-scale companies including startups that do not qualify to be listed on the main board.
 
The  new regulation was launched following the issuance of the listing regulation on the exchange’s acceleration board on July 22, which provides more lenient requirements than the listing requirement for the main board.

They can, for example, use a more straightforward accounting standard and pay cheaper listing fees.
 
According to the Financial Services Authority (OJK) Regulation No. 53/POJK.04/2017 there are two kinds of companies that can enter the acceleration board, namely small companies whose assets are less than Rp 50 billion (US$3.53 million), and medium scale companies with assets valued between Rp 50 billion and Rp 250 billion.
 
The share price at the IPO starts at Rp 50 per share, while the lowest prices on the regular market and cash market may reach Rp 1 per share.
 
Despite the low price, this acceleration board is intended for institutional investors, not retailers. "Institutional investors can evaluate companies," said the IDX trading director Laksono Widodo on Monday.
 
 
Pepsi out, Coca-Cola jacks up production as industry sales decline
The Jakarta Post, p.12
 
As the food and beverage industry faces a persistent decline in carbonated drink sales in Indonesia that is sending Pepsi out of the market, competitor Coca-Cola is expanding its operations in the country.
 
The famous American carbonated soft drink Pepsi will no longer be available in Indonesian stores and restaurants in the near future as its producer is to sever relations with its local partner, food giant Indofood CBP (ICBP), on Thursday.
 
In an official statement on Monday, publicly listed ICBP said its subsidiary, Anugrah Indofood Beverage Makmur (AIBM), had decided not to renew its latest five-year agreement with PepsiCo Inc.
 
Indonesian Food and Beverage Association (GAPMMI) chairman Adhi S. Lukman said the move was expected since sales of carbonated drinks have continued to decline in the past few years.
 
Bucking the trend, however, Pepsi’s competitor Coca-Cola just recently launched an additional US$24 million production line in Pasuruan, East Java, for affordable small sparkling package (ASSP) bottles that are expected to reduce plastic waste and promote sustainable packaging in Indonesia.