1 - Kesbangpol

Indonesia Update
Gen (Ret) TNI. Luhut B. Panjaitan
1
Outline
1
Latest Social and Economic Situation
2
Infrastructure Execution Update
3
Political and Legal Update
4
Conclusion
Coordinating Ministry for Political, Legal and Security Affairs
2
Outline
1
Latest Social and Economic Situation
2
Infrastructure Execution Update
3
Political and Legal Update
4
Conclusion
Coordinating Ministry for Political, Legal and Security Affairs
3
Confidence in the Government Rebounded in July – August 2015
Consumer
Confidence
Index toKepada
the Government
Indeks
Kepercayaan
Konsumen
Pemerintah
160
Mega-Hamzah
SBY-JK
SBY-BOED
JW - JK
145
129.9
Penurunan
harga BBM
130
119.7
Kenaikan
BBM I
115
Harga bahan
pokok naik
Kenaikan
BBM IV
Inflasi
meningkat
108.8
Kenaikan
BBM II
100
Kenaikan
BBM III
J-15
M-15
N-14
J-14
M-14
N-13
J-13
Kenaikan
BBM IV
M-13
N-12
J-12
M-12
J-11
M-11
N-10
J-10
M-10
N-09
J-09
M-09
N-08
J-08
M-08
N-07
J-07
M-07
N-06
J-06
M-06
N-05
J-05
M-05
N-04
J-04
M-04
N-03
J-03
M-03
N-02
85
N-11
Isu Kenaikan
BBM
Consumer confidence in the Government, which experienced a series of decline since the beginning of
the year, has shown strong rebound in July 2015. Our latest data in August 2015 also shows moderate
improvement.
Source: Danareksa and Kantor Staf Presiden
Coordinating Ministry for Political, Legal and Security Affairs
4
...Due to Strong Improvement on Most Components,
Except for Legal..
180
160
MegawatiHamzah Haz
SBY-JK
SBY-Boediono
Jokowi-JK
Infrastructure
140
Security
120
100
Economic
Development
80
Legal
Price Stability
60
40
Jun-01 Mar-02 Dec-02 Sep-03 Jun-04 Mar-05 Dec-05 Sep-06 Jun-07 Mar-08 Dec-08 Sep-09 Jun-10 Mar-11 Dec-11 Sep-12 Jun-13 Mar-14 Dec-14
The highest improvement is on price stabilization component due to the Government’s successful effort in
maintaining prices during the fasting and Idul Fitri period.
Source: Danareksa and Kantor Staf Presiden
Coordinating Ministry for Political, Legal and Security Affairs
5
The Price of Food Components is Relatively Stable
Price of Medium Rice
Price of Curly Chili
10,000
10,009
9,500
9,000
8,500
8,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Ags
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Aug, 28
7,500
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
2014
2015
32,653
2014
2015
Price of Egg
Price of Red Onion
35,000
33,810
Jan
Feb
Mar
Apr
May
Jun
Jul
Ags
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Aug, 28
10,150
10,500
22,960
25,000
30,000
25,000
19,820
25,524
20,000
15,000
20,000
22,602
15,000
5,000
-
-
Jan
Feb
Mar
Apr
May
Jun
Jul
Ags
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Aug, 28
5,000
Source: Ministry of Trade
2014
2015
Coordinating Ministry for Political, Legal and Security Affairs
Jan
Feb
Mar
Apr
May
Jun
Jul
Ags
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Aug, 28
10,000
10,000
2014
2015
6
Purchasing Power is Still High…
Indeks Kepercayaan Konsumen
110
100
Penurunan
harga BBM
91.6
Kenaikan
BBM V
90
Kenaikan
BBM I
80
70
73.3
Kenaikan
BBM II
65.3
Kenaikan
BBM III
J-04
A-04
J-04
O-04
J-05
A-05
J-05
O-05
J-06
A-06
J-06
O-06
J-07
A-07
J-07
O-07
J-08
A-08
J-08
O-08
J-09
A-09
J-09
O-09
J-10
A-10
J-10
O-10
J-11
A-11
J-11
O-11
J-12
A-12
J-12
O-12
J-13
A-13
J-13
O-13
J-14
A-14
J-14
O-14
J-15
A-15
J-15
60
Kenaikan
BBM IV
Harga bahan
pokok naik
Inflasi
meningkat
Even though Purchasing Power, as shown in Consumer Confidence Index (CCI), has been declining since
Nov 2014 due to increase in subsidized fuel prices, the current level is relatively higher compared to the
last 5 years
Source: Danareksa and Kantor Staf Presiden
Coordinating Ministry for Political, Legal and Security Affairs
7
However, We Need Positive Sentiments to Push Consumption and
Investment Spending...
Growth in Credit and 3rd Party Fund Jan 2003- Apr 2015
45.0%
During economic uncertainty, precautionary
motives trigger increase in growth of 3rd
party fund, and lower growth of credit
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
Jan-03
Apr-03
Jul-03
Oct-03
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
0.0%
Credit (YoY)
3rd Party Fund (YoY)
Source: BI and OJK
Coordinating Ministry for Political, Legal and Security Affairs
8
Debt Level is Still Relatively Low Compared to Other DevelopedEmerging Countries
Total Debt to GDP 2014
Source: McKinsey
Coordinating Ministry for Political, Legal and Security Affairs
9
Outline
1
Latest Socio-Economic Situation
2
Infrastructure Execution Update
3
Political and Legal Update
4
Conclusion
Coordinating Ministry for Political, Legal and Security Affairs
10
Reallocation from Fuel Subsidies to Infrastructure and
Education/Social Spending in 2015
Reallocation of
Fuel Subsidy
Rp 211 T
+K/L Spending
Rp 148 T
+Ministry of
Public Works
Rp 34 T
+Special
Allocation Fund
Rp 21 T
+Village Fund
Rp 12 T
+Fertilizer
Subsidy
Rp 4 T
Others
Rp 26 T
+Irrigation
Development
Rp 9 T
+Agricultural
Development
Rp 4 T
+Road
Development
Rp 5 T
+Others
Rp 3 T
+Ministry of
Transportation
Rp 20 T
+Ministry of
Social Affairs
Rp 14 T
+Ministry of
Agriculture
Rp 17 T
+Others
Rp 63 T
Coordinating Ministry for Political, Legal and Security Affairs
11
Key Initiatives to Speed Up Budget Absorption
1
Direct Appointment to SOE
To speed up execution of infrastructure projects, Government tasking SOEs (i.e Jasa
Marga) to take over stranded projects owned by private investors (i.e SoloKertosono Toll Road Project). In addition to that, Government also directly appoints
SOEs which have capability to build priority projects, therefore cutting time for
tender process by up to 1 year
2
Optimal Use of Land Compensation Law
To be able to use land compensation law, Head of Local Government (Province)
needs to issue Location Determination Permit to the developer. Previously,
Governors were quite reluctant to issue this permit due to social repercussions.
However, today the central government is actively pushing the governors to issue
the permits, once the projects have qualified to use the permits
3
Tender Process Starts As Soon As Parliament Approves The Budget:
Starting this year, The Government will start tender for 2016 key infrastructure
project as soon as the Parliament approves the budget (Oct 2015). Therefore
budget absorption next year will be higher
Coordinating Ministry for Political, Legal and Security Affairs
12
Ministry of Public Works and Housing: Budget Absorption is
Catching Up
Ministry of Public Works and Housing Have Rp 94 Trillion of Infrastructure Budget (30% of Total Budget)
100.0%
90.0%
93.0%
80.0%
70.0%
73.1%
60.0%
56.1%
50.0%
40.0%
31.9%
30.0%
22.5% 30.2%
20.0%
10.0%
44.3%
15.5% 24.3%
0.2%
0.9%
1.0%
1.2%
2.2%
4.0%
9.5% 16.9%
4.7%
10.9%
6.7%
Plan
c15
De
-1
5
No
v
5
ct
-1
O
Se
p15
Au
g15
5
Ju
l-1
-1
5
Ju
n
ay
-1
5
M
-1
5
Ap
r
-1
5
ar
M
Fe
b15
Ja
n
-1
5
0.0%
Realiza on
Source: Ministry of Public Works and Housing
Coordinating Ministry for Political, Legal and Security Affairs
13
Direct Appointment on LRT Jabodetabek Construction
Government has issued Presidential Decree to directly appoint Adhi Karya as developer of the
Project. Total project cost for phase IA is US$ 1 bn, and will be completed within 36 months
Coordinating Ministry for Political, Legal and Security Affairs
14
Commitment to Use Land Compensation Law
Batang Power Plant Project
•
•
•
•
•
•
Power purchase agreement is signed
on October 2011 (Before Land
Compensation Law 2012).
Therefore this project is not able to
use the land compensation law.
In 1Q 2015, Government ask opinion
to Attorney General whether the
project is permitted to use land
compensation law. The opinion is
issued in early 2Q-2015
Location Determination Permit is
issued by Governor of Central Java in
May 2015
On 28 August 2015, President Jokowi
inaugurated the construction of the
project.
Government will ask developer to put
compensation fund for the remaining
uncompensated land (~10ha) in the
court.
Source: Ministry of Public Works and Housing
Coordinating Ministry for Political, Legal and Security Affairs
15
Trans Java Toll Road Update: Rp 54 Trn Investment
No
1
2
3
4
5
6
7
8
9
Total
Route
Cikampek-Palimanan Pejagan-Pemalang Pemalang-Batang Batang-Semarang Semarang-Solo Solo-Ngawi Ngawi-Kertosono Kertosono-Mojokerto Mojokerto-Surabaya Cikampek-Surabaya
Length (km)
117
58
39
75
73
90
87
41
37
617
Investment (Rp Trn)
13.78
5.52
4.08
7.23
7.3
5.14
3.83
3.48
3.79
54.15
Completion
2015
2018
2019
2019
2019
2018
2018
2017
2017
2019
Land Compensation
100%
42%
2%
20%
62%
90%
67%
91%
82%
66%
Source: Ministry of Public Works and Housing
Coordinating Ministry for Political, Legal and Security Affairs
16
Outline
1
Latest Socio-Economic Situation
2
Infrastructure Execution Update
3
Political and Legal Update
4
Conclusion
Coordinating Ministry for Political, Legal and Security Affairs
17
Cabinet Reshuffle: Professional and Vast Bureaucratic Experience
Political, Legal, Security Affairs
Tedjo Edhy
Luhut Panjaitan
Economic Affairs
Sofyan Djalil
Darmin Nasution
Maritime Affairs
Indroyono S
Gen (Ret) Army Luhut Panjaitan:
• Previous position: Chief of Staff,
Minister of Trade and Industry,
Chairman Toba Sejahtera
• 4 stars general, >30 Years in
Special Forces, founder 1st
Indonesia Anti-Terror Group
• Graduated from National
Defense Univ. and George
Washington Univ.
Dr. Darmin Nasution:
• Previous position: Governor of
Bank Indonesia, Director
General of Tax, Head of
Bapepam (now OJK/FSA)
• Lecturer in University of
Indonesia, obtain graduate and
doctorate degree from
University of Paris, Sorbonne.
Trade
R. Gobel
Rizal Ramli
Coordinating Ministry for Political, Legal and Security Affairs
Tom Lembong
National Development Planning
A. Chaniago
Dr. Rizal Ramli
• Previous position: Chairman of
Bulog, Coordinating Minister of
Economic Affairs
• Founder Econit Advisory Group
• Graduated from Bandung
Institute of Technology and
PhD from Boston University
Thomas Lembong
• Previous position: Investment
banker Morgan Stanley,
Farallon Indonesia, Founder of
Quvat Private Equity Group
• Graduated from Harvard
University
Sofyan Djalil
Chief of Staff
Luhut Panjaitan
Dr. Sofyan Djalil
• Previous position: Coordinating
Minister of Economic Affairs,
Minister of SOE, Minister of
Communication and Informatics
• Graduated from University of
Indonesia and Fletcher School
of Law and Diplomacy.
Teten Masduki
• Previous position: Chief of
Indonesia Corruption Watch
(ICW(, Secretary General
Transparency International
Indonesia.
• Awarded Ramon Magsaysay in
2005
Teten Masduki
18
Outline
1
Latest Socio-Economic Situation
2
Infrastructure Execution Update
3
Political and Legal Update
4
Conclusion
Coordinating Ministry for Political, Legal and Security Affairs
19
What Are The Key Messages ? (1)
1
Cabinet Reshuffle to Improve Coordination Among Government Officials:
All the new Coordinating Ministers have vast experience in bureaucracy (they
had been appointed as key ministers/head of government institutions in
previous administrations), and have strong leadership skills.
2
Focus on Economy and Alignment with Law Enforcement:
All the new Coordinating Ministers have vast experience either in business or
having education background in Economics. Law enforcement should be done
wisely and without creating public controversy that may disrupt economic
recovery.
3
Government is Committed on The Improvement of Infrastructure
Infrastructure is the key, especially in the transportation sector and electricity.
The government is committed to fund the infrastructure development, including
deregulating any regulation that may slowdown the process.
Coordinating Ministry for Political, Legal and Security Affairs
20
What Are The Key Messages ? (2)
4
Food Price Stability is one of the Top Priorities
President Jokowi understands that affordable food price is important for the
people. Therefore ensuring the supply is his first priority. However in the mid to
long term, he aims for Indonesia to achieve self fulfillment on the key food
items
Coordinating Ministry for Political, Legal and Security Affairs
21
Thank You
22