AmCham Update Vol. 5 #30

An AmCham Night of Hellos and Goodbyes, Prabowo Victory Confirmed, BI Maintains 6% Benchmark Interest Rate, $1.95B in Foreign Exchange from Natural Resource Exports

Mar 22, 2024

An AmCham Night of Hellos and Goodbyes

AmCham Indonesia held a memorable A Night of Hellos and Goodbyes reception to bid farewell to outgoing managing director A Lin Neumann, and welcome new MD Lydia Ruddy at the Glass House at the Ritz-Carlton Jakarta, Pacific Place on March 21.

Scott Hanna, Chair of the AmCham Board of Governors, and Vice-Chair Douglas Ramage played key roles with their heartfelt introductions helping create an intimate atmosphere despite the large number of attendees. Lin expressed his gratitude to long-time members, friends, and staff for their support during his eight-year tenure as managing director and throughout his eventful career in Indonesia. Scott presented him with an American flag as a farewell gift, marking the end of Lin's term.

A special moment occurred when Lin handed over a cowboy hat to Lydia Ruddy, symbolizing the transition of leadership, amid cheers from participants at the symbolic gesture.

The soiree was graced by the presence of notable individuals such as Dino Patti Djalal, Founder of Foreign Policy Community of Indonesia; Tom Lembong, Director of Consilience Policy Institute; Jeffery P Cohen, Mission Director at USAID Indonesia; and Eric Hsu, Counselor for Commercial Affairs at the US Embassy.

The success of the reception was made possible by the support of valuable sponsors EY, Freeport Indonesia, Sinar Mas, and PwC, as well as beer sponsors Carlsberg and San Miguel. Their contributions enhanced the experience for all attendees, making it a truly memorable occasion.

Prabowo Officially President-elect

Minister of Defense Prabowo Subianto and Surakarta Mayor Gibran Rakabuming Raka were the winners of the 2024 Presidential Elections, securing 58.58 percent of the vote, announced by the General Elections Commission (KPU) with its final votes tally, on March 20.

US President Joe Biden congratulated President-elect Prabowo on his lead in the quick count polls last week, with US Secretary of State Antony Blinken also congratulating Prabowo on his official victory, praising the nation’s robust democracy. World leaders including Australian Prime Minister Anthony Albanese, Singaporean Prime Minister Lee Hsien Loong, Malaysian Prime Minister Anwar Ibrahim and Chinese President Xi Jinping also extended their congratulations.

Prabowo said there would be a smooth transition of power from President Joko Widodo’s administration, with his incoming administration prepared to continue President Widodo’s policies once inaugurated.

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Gov't Announces 14 New Strategic Projects

The government has introduced 14 new National Strategic Projects (PSN), with construction scheduled to commence this year and aiming for completion by the end of 2024, Coordinating Minister for Economic Affairs Airlangga Hartanto said.

With a focus on job creation and independence from state budget (APBN) reliance, the projects span sectors including toll roads, transportation, energy, ports, airports and information technology. Among the approved projects are the Pantai Indah Kapuk Tropical Concept, Surabaya Waterfront, Neo Energy Morowali, Harbour Road II North Jakarta and Bandung Intra Urban Toll. The projects will be supported financially by the private sector.

Efforts are underway to resolve land disputes related to the projects, with the Agrarian Reform Consortium identifying 73 cases over three years. Minister of Agrarian Reform and Spatial Planning Agus Harimurti Yudhoyono emphasized the importance of clear land status for ensuring legal certainty in project implementation, underscoring the need to address these issues promptly.

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AmCham Cares: Johnson & Johnson

The Johnson & Johnson Global Secondment Program, a signature program of J&J’s Talent for Good corporate social responsibility (CSR) strategy, is managed by the J&J Global Health Equity Employee Engagement Team%u200B. Launched in 2014, the program empowers J&J’s global employees to take part in life-changing skills-based volunteering assignments to help raise public health standards in communities around the world.

Through these secondments, J&J’s employees are enabled to grow personally and professionally, and bring new insights and learning back to their work at J&J.With the commitment to prioritize the needs of partner organizations and match them with the best J&J employees with the right skill sets, J&J can address partners’ greatest needs and strengthen and transform health systems.

Yayasan Project Hope (YPH), a non-profit foundation registered with Indonesia's Ministry of Law and Human Rights and an affiliate of the global health organization Project HOPE, has been a J&J Global Secondment partner since 2022. In 2023, AYoung Shin, Clinical Research Manager, J&J Innovative Medicine Korea, was selected for a business operations and process management secondment with YPH, in support of its mission to strengthen the capacity of healthcare workers in Indonesia and to improve access to quality health services for Indonesians.

During her six-month secondment, AYoung dedicated 40 percent of her working hours to help YPH improve its organizational capacity in management and optimize organizational accountability to provide solid administrative evidence for donor grant and public reporting purposes.

She worked closely with YPH to develop standard operating procedure (SOP) documents and to strengthen the skills of YPH staff in implementing various new procedures and processes, including anti-bribery and corruption guidelines, an ethical code of conduct, SOPs for archiving, project performance review, staff hiring, and more.

By establishing standardized procedures, YPH can operate smoothly, meet compliance standards, and provide administrative evidence for donors.

READ THE FULL ARTICLE HERE!

BI Maintains 6% Benchmark Interest Rate

Bank Indonesia (BI) held its benchmark 7-day-reverse repo interest rate at 6 percent, deposit interest rate at 5.25 percent, and lending facility interest rate at 6.75 percent, during its Board of Governors Meeting, on March 20.

Despite a decline in bank deposit rates from 4.62 to 4.52 percent in February, BI Governor Perry Warjiyo said BI's decision adhered to a pro-monetary policy, aiming to stabilize the rupiah exchange rate and pre-emptively control inflation within the target range of 2.5 percent-1 percent for 2024, keeping the rate unchanged for four months following a 25 basis points (bps) increase in Oct 2023.

Warjiyo remained optimistic on investor confidence post the 2024 elections, citing increased investment activity in expanding sectors such as trade, transportation and hospitality. Rising capital expenditure has spurred investment credit growth, resulting in projected economic growth for 2024 ranging from 4.7 percent to 5.5 percent. He further emphasized strong economic growth due to robust domestic demand fueled by household consumption.

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$1.95B in Foreign Exchange from Natural Resource Exports

Foreign exchange earnings (DHE) from natural resources (SDA) stored in foreign currency term deposits (TD) remained stable at $1.95 billion as of March 20, 2024, said Bank Indonesia (BI).

There was a slight rise in exporters to 160 companies in March, up from 158 last month, indicating stability, said Senior Deputy Governor Destry Damayanti. However, it represents a significant rise from the initial 50 participating companies. She also emphasized positive trends in the data, highlighting an increase in local currency settlements (LCS) in February, at $495 million, a 9 percent year-on-year increase.

The Foreign Exchange Term Deposit of Export Earnings (TD Valas DHE) monetary instrument was launched by BI in March 2023. It supports the government mandated 30 percent minimum placement of DHE domestically for SDA exporters. It enables exporters to deposit foreign exchange earnings through appointed banks with BI, following market mechanisms. It encourages exporters to retain their DHE domestically, fostering rupiah stability and domestic economic strength.

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OJK Considers Lifting P2P Lending Moratorium

The Financial Services Authority (OJK) is weighing up rescinding the moratorium on peer-to-peer (P2P) lending , said OJK Chief Executive Officer of Financing Institutions, Venture Capital Companies, and Other Financial Services (PVML) Agusman. The OJK is considering factors such as public demand for financial industry lending and ways it can benefit public interest, as important benchmarks before deciding on removing the moratorium, he added.

This follows the OJK’s issuance of its Information Technology-Based Joint Funding Service (LPBBTI) Development and Strengthening Roadmap in November2023, which initially imposed the moratorium, effectively halting the issuance of licenses for new online loan providers. The OJK originally said it would remove the moratorium between the third and fourth quarters of last year.

Indonesian Fintech Association (AFPI) Director of Corporate Communications Andriansyah Tauladan said the OJK may issue a new regulation on P2P lending this year, particularly addressing the current Rp 2 billion lending funding cap, which AFPI recommends extending to Rp 5 billion-Rp 10 billion.

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Get to Know Our Members: BSA | The Software Alliance

BSA | The Software Alliance is the leading advocate for the global software industry before governments and in the international marketplace. Its members are among the world’s most innovative companies, creating software solutions that help businesses of all sizes in every part of the economy to modernize and grow.

With headquarters in Washington, DC, and operations in more than 30 countries, BSA pioneers compliance programs which promote legal software use and advocates for public policies that foster technology innovation and drive growth in the digital economy.

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Update is AmCham’s regular newsletter on developments related to investment, the economy, regulations and issues related to doing business in Indonesia. It comes out three times a week. It is edited by AmCham Managing Director Lydia Ruddy and written by the AmCham Staff. Paul L Goddard is the Managing Editor.

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