AmCham Update Vol. 4 #24

Talks with Gov't on Commodity Balance System, AmCham and IBM Breakfast Forum, BI Launches Export Earnings Framework, Indonesia’s First Solar Panel Factory on the Way

Mar 03, 2023

BI Launches Export Earnings Framework

Bank Indonesia (BI) has officially launched Foreign Currency Term Deposits (TD Valas) for export earnings (DHE). Some 19 major banks have established agreements with BI to facilitate the deposit of foreign currency gained from exports with attractive interest rates. BI has set the interest rate for export earnings from 4.6 to 5.2 percent, with a progressive rate in accordance with deposit length and amount, according to Bahana Securities.

The interest rate, which is relatively higher than those in other countries, is aimed at providing incentives to exporters. Indonesian exporters now allegedly stash most of their export earnings in Singapore, whose interest rates sit at 4.12 to 4.68 percent. The export earnings regulation is yet to be released, but the framework serves as a crucial cornerstone for DHE implementation.

AmCham will monitor and seek more details on the issue. Industrial players have said the regulation could potentially impact business operations here, especially because of the 30 percent threshold of export earnings retention.

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Adapting to the New Commodity Balance System

The new Commodity Balance (NK) system was the topic when Deputy for Commerce and Industry at the Coordinating Ministry for Economic Affairs Ali Murtopo hosted an in-person courtesy meeting with AmCham Indonesia on March 2 at his office.

Representing many different sectors, some of AmCham's biggest company members shared their insights and concerns on the NK system, especially how its implementation could be improved in the near future. Companies highlighted different complexities from each of the sectors, but noted that the process to obtain import permits (PI) should have been expedited to prevent any disruptions. In response, the Deputy was quite eager to provide constructive advice and assistance.

The lively discussion came to the conclusion that the government and the private sector should continuously collaborate to support government policy reforms. AmCham looks forward to having many more engagements with the Ministry.

AmCham Cares: McDermott

In Batam, the heart of McDermott’s fabrication operations in Indonesia, the year 2022 was marked by a busy schedule of giving back to the local communities through various initiatives that addressed their unique needs. The company credits the success of these efforts to the unwavering support of its people who are always ready to roll up their sleeves and make a positive impact.

Its blood donation program aims to tackle the ever-persisting issue of blood shortages in the country. Last year alone, employees, contractors, and partners collectively donated over 150,000ml of blood to the Red Cross. The initiative themed Give Blood to Give Life not only brought together volunteer blood donors but also served to educate the community, shedding some light on how such a small action saves the precious lives of people in need of blood for transfusions in hospitals every year.

McDermott's commitment to improving community welfare also extends to addressing the issue of childhood malnutrition. In Batam, the company took a noteworthy initiative to improve the nutrition of children suffering from stunted growth – a prime indicator of chronic or recurrent malnourishment. Through this initiative, McDermott donated healthy food packages to a group of 20 children who were enrolled at the Tanjung Sengkuang Local Health Center for a period of six months. These children belonged to underprivileged families and were proposed and medically examined by the local health authority.

To ensure the success of this initiative, McDermott's Corporate Social Responsibility team made home visits to follow the health progress of the children and also met with their families to provide support and guidance. This program not only addressed the immediate nutritional needs of the children but also helped to create awareness about the importance of good nutrition in preventing childhood malnutrition.

In recognition of its sincere and consistent commitment to humanitarian service in Batam, the company was recognized by the Red Cross for its unwavering dedication to making a positive impact on the lives of the local community through its social responsibility initiatives.

AmCham and IBM Breakfast Forum

AmCham Indonesia and IBM hosted the “Government 4.0: Utilizing Data to Optimize Government Decision Making” breakfast forum on March 3. The event brought together distinguished experts to discuss ways for government agencies to integrate data and utilize new technologies to enhance public services.

The forum opened with remarks from AmCham Managing Director A Lin Neumann, along with IBM Asia Pacific General Manager Paul Burton, who said IBM had recently launched the IBM Academy for Hybrid Cloud and AI in Batam. IBM Indonesia President Director Roy Kosasih also spoke of key ways to achieve successful digital transformation, and IBM Ecosystem General Manager Kate Woolley discussed the need for strategic partnerships in accelerating digital adoption.

The panel of speakers included Expert Staff on Digital Transformation, Creativity and Human Resources, at the Coordinating Ministry of Economic Affairs (CMEA) Edwin Rizal Manansang; and Chief Operating Officer of the Digital Transformation Office at the Ministry of Health Daniel Oscar Baskoro.

Edwin spoke of the importance of AI and data in the digital transformation process, along with digital talent development and Indonesia’s 2045 Vision. Oscar talked about health data interoperability to improve healthcare service delivery, highlighting the newly launched SatuSehat health platform, which replaces the PeduliLindungi Covid-19 tracking and tracing app.

Participants raised questions on how to narrow the disparity in digital skills within government institutions. A representative from the Central Java provincial government said that as the region rapidly develops, there needs to be an equal amount of skills growth to meet industry needs, while encouraging greater participation from US companies to support this. Among our participants, we also had the Director General of Immigration Silmy Karim of attendance.

Indonesia’s First Solar Panel Factory on the Way

Indonesia's first solar panel factory is being built by the National Energy Council (DEN), in cooperation with two state-owned companies LEN and PLN, and one private company, Agra Surya Energy. A budget of Rp 4 trillion is needed to build the solar module factory, said DEN Secretary General Djoko Siswanto.

With the rising prices of the panel’s components from China and Indonesia’s ability to only assemble them, building Indonesia’s own panel factory has become more important than ever. There will be the development of 857 megawatts floating solar power plants and potentially 25 billion tons of silica sand in Indonesia.

The Indonesian Quartz Miners Association (HIPKI) said Indonesian silica sand has the potential to supply global needs, since the government lifted the export ban in 2021. China is one of a few countries who want to invest in silica sand smelters in Indonesia, with $3 billion investment needed.

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February Inflation Hits 5.47%

Inflation rose to 5.47 percent year-on-year (YoY) in February from 5.28 percent in January. Price increases in transportation and food and beverages were the main drivers, with the former contributing 1.63 percent and the latter 1.87 percent to the national inflation rate.

Anticipating further price fluctuations due to the upcoming Ramadan season, the Ministry of Trade has pledged to ensure an efficient food supply chain by identifying suppliers of basic needs, supply and demand data integration across the country, and cooperation with digital platforms and e-commerce.

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Jokowi Reminds Ministers to Accomplish All Targets by 2024

President Joko Widodo reminded all his ministers to finish their work programs and complete targets by 2024, in a full cabinet meeting on March 2.

"Do not leave any affairs unattended, as we have to complete everything by 2024," he said. of the remaining 18 months of his administration.

The President referred to general development targets, such as economic growth between 5.3 percent and 5.7 percent, poverty reduction to 6.5 percent to 7.5 percent, and a human development index between 70 and 74.

Minister of National Development Suharso Monoarfa said the President reiterated eight goals of the government’s work plan for 2024: extreme poverty eradication, increasing education and healthcare access, revitalizing industry and research, strengthening competitiveness, low-carbon development, increasing infrastructure connectivity, building a new capital city, and conducting the 2024 election.

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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard

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