Jokowi Signs Omnibus Financial Law, Indo-Pacific Business Forum, Rice Imports to End, Dec Trade Surplus Narrowed
Jan 16, 2023
Omnibus Financial Bill Becomes Law
President Joko Widodo signed the omnibus Financial Sector Development and Strengthening Reform Bill on Jan 12, following its passing by the House of Representatives (DPR) on Dec 15 last year. Effective immediately after its issuance, Law 4/2023 (UU PPSK) has officially revised 17 different laws in the financial sector.
Minister of Finance Sri Mulyani Indrawati said the law was meant to further financial sector reform with five aims: strengthen financial sector authorities, governance improvement, long-term deepening of the financial sector to support development, consumer protection, and financial innovation.
The government will arrange the corresponding implementing regulations in the form of Government Regulations (PP) and regulations from Bank Indonesia, the Financial Services Authority (OJK), and the Deposit Insurance Corporation (LPS). The government aims to complete the implementing regulations within two years, as mandated by Article 339 of the law.
Indo-Pacific Business Forum Promotes Inclusive and Sustainable Growth
The United States and Japan governments co-hosted the fifth Indo-Pacific Business Forum (IPBF) in Tokyo, Japan on Jan 12. Adopting “inclusive and sustainable growth” as the theme, discussions centered around the Indo-Pacific Economic Framework (IPEF) initiative, as well as the agenda for the United States’ APEC host year, Japan’s G7 presidency, and cooperation through the Indo-Pacific Quadrilateral Dialogue.
The forum highlighted 16 new commercial initiatives and announced seven new US efforts to advance an open, connected, prosperous, secure, and resilient Indo-Pacific. In relation to IPEF, the US Trade and Development Agency (USTDA) announced two calls for proposals: one for infrastructure development activities which support IPEF pillars, and another to extend the USTDA portfolio in Pacific Island countries.
During a virtual meeting with the IPEF Ministerial Meeting in December last year, participating countries underscored the need for tangible benefits under the IPEF scheme. Coordinating Minister for Economic Affairs Airlangga Hartarto, as Indonesia’s lead negotiator, shared a number of Indonesia's green energy pilot projects, and conveyed a willingness to host the second round of IPEF negotiations in March in Bali.
As part of its Diversity and Inclusion commitment, Microsoft Indonesia continues to establish more partnerships with organizations across Indonesia through a number of programs.
The first is Code; Without Barriers, to enable female developers, coders, and other technical talent to contribute toward inclusive economic growth, encourage innovation and better reflect the societal makeup of their region. Telkomsel, G20 EMPOWER Indonesia, XL Axiata, Bank BTPN, and PLN have started their journey in this program.
The second is Microsoft Enabler, an initiative that brings together non-profit organizations, employer partners, and people with disabilities to create an inclusive work environment where everyone can be who they are at work. Komisi Nasional Disabilitas and Panasonic Gobel Life Solutions Sales Indonesia have been taking part in this program.
The third is a mentorship program for adults with autism, organized alongside Disabilitas Kerja. Through this program, a number of Microsoft Indonesia employees will provide mentoring sessions for selected adults with autism. This mentoring includes the adaptation process in the workplace, and the development of technical and non-technical skills, tailored to the interests and competence of each adult with autism.
“Just as our world will only be complete with diversity, it also requires diverse thinkers, creators, and innovators, to be able to meet the various demands of life. We believe diversity and inclusivity are the keys to limitless innovation,” said Krishna Worotikan, CFO and Diversity & Inclusion Lead of Microsoft Indonesia.
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Minister of Trade Zulkifli Hasan said rice imports will halt at the end of January, after initially saying they would be permitted until the end of March, in response to the delay of rice imports and the upcoming major harvest season. So far, the National Logistics Agency (Bulog) has only imported 120,000 tons of rice, while the ministry has issued permits to import 500,000 tons. Zulkifli said domestic production by farmers would fulfill domestic demand.
Bulog confirmed Indonesia will begin receiving rice imports from Vietnam, which will be released to the market before the major harvest season to ensure price stability. Zulkifli said he would revoke import permission if Bulog does not finish importing rice by the target date.
Indonesia's trade surplus fell from $5.16 billion in November, 2022 to $3.89 billion in December due to a decrease in exports, Head of Statistics Indonesia (BPS) Margo Yuwono said. Non-oil and gas exports, including steel, iron, and metals, decreased significantly, while imports increased by 14.15 percent compared with the previous month.
The surplus fall was mainly caused by sluggish export performance due to falling commodity prices and weakening global demand, Bank Mandiri Chief Economist Faisal Rachman said.
Despite the fall, Indonesia’s trade balance has been in surplus for 32 consecutive months, and had an annual trade surplus of $54.46 billion for 2022, fueled by high global commodity prices.
Revitalizing Ships Needed to Open New Export Routes
Indonesia needs to modernize thousands of its outdated ships and develop new shipping routes for exports. Indonesian Chamber of Commerce and Industry (KADIN) Head of the Permanent Committee for Sea Transport Nova Y Mugijanto said Indonesia needs to upgrade its maritime transport system for better quality. Major trade routes also need to be created throughout the whole country and not only be Java-centric, to create a competitive maritime transport system.
However, huge investment is required. The price of a single merchant ship ranges from Rp 50 billion to Rp 100 billion, while the larger ships used for international trade are even more expensive. Nova also said there is demand for further direct routes between Indonesia and the BIMP-EAGA nations (Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area). In February, Indonesia will host the 2023 Maritime BIMP-EAGA conference, which aims to open up new export channels and attract foreign investment.
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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 is the Managing Editor.