The President PostT H E S P I R I T O F I N D O N E S I A

www.thepresidentpost.comPublished by President University /// Display until June 12, 2010 /// N0. 12

Indonesia set for dramatic property boom next yearOnce the 1960 law is revised the international business community will see many multinational companies rewriting their relocation strategies with an eye on Indonesia.

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PROPERTY

Drajat Panjawi: Corporate Affairs Director, Microsoft Indonesiandonesia is an important market in a global economy. Its projected GDP growth is 7% by 2011. It will soon join BRIC, and we are an enabler in accelerating economic growth.

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INTERVIEW

Garuda Indonesia’s debts fully paid off in 2016The debts consisted of US$320 million owed to the London-based Export Credit Agency (ECA), US$131 million to Floating Rates Notes (FRN) of creditors in Singapore, and US$105 million to PT Pertamina and Angkasa Pura I and II.

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BUSINESS

IDR 20,000

THE ECONOMY

Sri Mulyani: Q1 economic growth estimated at 5.7% Thanks to Indonesia`s positive economic stability which was supported by capital inflow, increase in foreign exchange, rupiah appreciation, strengthening of stocks index and positive investors` perception.

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JAKARTA (TPP) – Finance Minister Sri Mulyani Indrawati’s sudden – and dramatic – move to assume a high ecehelon position at the World Bank lends pres-tige to Indonesia’s international standing.

The architect of ongoing and sweeping bureaucratic and finan-cial reforms in recent years, Mu-lyani has earned a reputation as an “Iron Lady” for her strong re-solve.

The score of reactions to her resignation underscores the re-markable impact she has had in recent years. She is credited for guiding the country through the global economic meltdown and helping forge its current push into the elite ranks of top-tier emerg-ing economies.

President Susilo Bambang Yudhoyono praised her, saying “we are losing one of our best ministers.”

“Her position at the World Bank is strategic and honorable. I agree to Sri Mulyani’s request to be the World Bank’s managing director,” Yudhoyono added.

“Sri Mulyani has worked hard to develop fiscal policies and con-duct a number of reforms in her respective field”.

Legislators at the House of Representatives Commission XI on Finance and Banking say that her replacement must display the same commitment, integrity and capacity.

“Her replacement must have both high integrity and guts. As the treasurer of the nation, the fi-nance minister is the bastion that bridges the interests among the government, the people, busi-nesspeople and investors,” says

Sri “Iron Lady” Mulyani: Indonesia’s Brilliant Reformer

one of the commission deputy chairmen, Achsanul Qosasi from the Democratic Party.

Numerous names such as Ang-gito Abimanyu, Agus Martowar-doyo and Darmin Nasution have been touted as the possible suc-cessor of Mulyani.

Anggito is the head of the fis-cal policy at the Finance Minis-try and has been appointed the deputy finance minister.

Agus Martowardoyo is pres-ident director of Bank Mandiri, while Darmin is the acting Bank Indonesia governor and former tax office chief under Mulyani.

Coordinating Minister for the Economy Hatta Rajasa is the act-ing finance minister before the president appoints a permanent replacement.

Mulyani’s decision to move to Washington was carefully mon-itored by foreign investors, who are big buyers of Indonesian as-sets in the past 18 months, driv-ing a surge in local stocks, bonds and the rupiah.

They have been largely attract-ed by the pace of reform and lib-eralization in the region’s largest economy, and the prospect of a surge in demand for its resourc-es including timber, palm oil and coal.

Foreign investors have bought a net Rp 40 trillion ($4.4 billion) in government bonds this year, double the purchases all of last year, taking their net holdings to a record Rp 148 trillion, rep-resenting 24.6 percent of all out-standing government debt.

Indonesia’s resilience through-out the 2008-2009 global finan-cial crisis has shown that macro-economic and fiscal policy is on a

firm footing thanks to the sound policies of technocrats including Mulyani and Vice President Bo-ediono, the former central bank governor.

Inflation remains tame and in-terest rates are at a record low of 6.5 percent. Economic growth was also expected to be 5.7 per-cent this year and as much as 6.3 percent in 2011, Mulyani said last month.

Prospects for an investment grade rating are probably un-changed. Indonesia is expected to achieve an investment grade credit rating within the next three years.

That would make the country in the same league with BRIC na-tions — the top emerging market investment destinations of Brazil, Russia, India and China.

Prospects for that upgrade should not be affected by Muly-ani’s move, although there may be concerns about the future of civil service and other reforms.

With Mulyani in such a high-profile position, Indonesia could benefit further from rising inter-national recognition of its poten-tial, particularly as a G-20 mem-ber and a country that is widely expected to join the emerging market elite.

Joachim von Amsberg, World Bank country manager for Indo-nesia, said that “reforms are em-bedded in government in the overall leadership of the country. I think they are no longer depen-dent on a single person. That’s why we are quite confident that I think Indonesia will continue to do well.”

In announcing the appoint-ment of Sri Mulyani Indrawa-ti as Managing Director of the World Bank Group, World Bank President Robert B. Zoellick said that as Indonesia’s Minister of Fi-nance since 2005, Ms. Indrawa-ti has guided economic policy for one of the biggest states in the world, navigating successfully in

the midst of the global economic crisis, implementing key reforms, and earning the respect of her peers across the world.

“She has been an outstanding Finance Minister with in-depth knowledge of both development issues and the role of the World Bank Group,” Zoellick said.

“As a member of the Senior Team she will play a key role in helping to lead the Bank as we move to strengthen client sup-port, implement our reform pro-gram, and anticipate future chal-lenges.”

Prior to her position as finance minister, Mulyani served as state minister and chair of the Indo-nesian National Development Planning Agency. During 2008-2009, she served as coordinating minister of economic affairs, and in 2002-2004 she was an execu-tive director on the Board of the IMF.

She has been on the faculty of the University of Indonesia and was a visiting professor at the An-drew Young School of Public Pol-icy at Georgia State University.

In accepting the appointment Mulyani said: “It is a great hon-our for me and also for my coun-try to have this opportunity to contribute to the very important mission of the Bank in changing the world.”

“Ms. Indrawati brings a unique set of skills and experience to the World Bank Group, from the vantage point of an advanc-ing Middle-Income country that still faces significant challenges of poverty,” says Zoellick.

“She has received global recog-nition for her success in combat-ing corruption and strengthening good governance,” Zoellick not-ed.

“She has been a leader in the developing world on climate change, and active in the in-ternational arena through the G-20, APEC, ASEAN and oth-er groups.”

Mulyani earned a Ph.D. in

The architect of ongoing and sweeping bureaucratic and financial reforms in recent years, Mulyani has earned a reputation as an “Iron Lady” for her strong resolve.

T rade Minister Mari Pangestu said the government had opt-ed for “special talks”

with China on the Asean-China Free Trade Agreement (ACFTA) as renegotiating the accord calls for payment of huge compensations and the involvement of other Asean member countries.

Speaking at a meeting with the House Commission VI here late last month the min-ister said the government had made efforts to allay public worries that ACFTA would lead national industrial prod-ucts becoming less competi-tive in domestic markets, in-cluding conducting special talks with the Chinese gov-ernment.

In a press statement, she also said that there were op-tions of postponing the im-plementation of the ACFTA and renegotiating, particular-ly 228 tariff items on which Indonesia feared it would lose the competition with Chinese products.

“The option taken is to hold special talks with the Chinese government because renego-tiating the agreement will be costly, as Indonesia must then pay huge amounts of compen-sation and also involve oth-er Asean member countries,” she said.

The option of special talks was more comprehensive and not only limited to the ques-tion of 228 tarif items and as such is considered more bene-

ficial, she added.She went on to say that if the

government chose renegotiations, the option must be done in line with articles in the ACFTA. Ac-cording to Article 6 of the ACF-TA Indonesia must increase the compensations value close to the modification value.

The value of the 228 tariff items was expected to go up to US$1.2 billion upon renegotia-tion compared to only US$43 million if the option was not tak-en.

The minister said the option would also require Indonesia to notify all parties with supply-ing interest, in this case all Asean members and China.

“This may prompt other Asean members to also ask for compen-sations from Indonesia,” she said.

She said the settlement of the option would also take time be-cause each tariff item to be rene-gotiated had to be checked.

“The option could also hurt the country s image as it would demonstrate the country s uncer-tainty, and this could affect oth-er sectors such as investment,” she said.

She added that by choosing special talks Indonesia would not be required to notify all parties with supplying interest so that it need not give compensations to other Asean member countries.

“Its settlement will also be rel-atively short. Also, Indonesia will not have to pay compensations to China,” she said.

She said the special talks option was more comprehensive with re-gard to increasing the competi-tiveness of the industries feared

to lose in the competition as a re-sult of the ACFTA.

She added the agreement was comprehensive because it was not only for boosting trade to become more balanced, but also mutually beneficial covering steps to increase competitiveness, investment, infrastructure devel-opment, credit facilities and oth-er kinds of cooperation.

On April 2, 2010 in Yogyakar-ta Minister Mari and her Chi-nese counterpart, Chen Dem-ing, agreed among others to form a working group to analyze data and information of the two-way trade and recommended various steps with focus on products in the list of 228 tariff objects such as steel, textiles and textile prod-ucts and shoes.

The working group involves the ministries of economic af-fairs, trade, industry, finance, ag-riculture and manpower.

It will also monitor trade bal-ance and anticipate possible hikes of imports in the two countries.

“The group will make recom-mendations and determine steps needed to respond them,” she said.

She said her office would also set up a new directorate, Direc-torate General of Standardiza-tion and Consumer Protection, to monitor imported products es-pecially with regard to their qual-ity so that consumers would not be hurt.

“The new directorate will sup-port the implementation of stan-dardization of national products to meet competition in the global market,” she said.

Mari: Renegotiating ACFTA a Burden, Too Costly

Economics from the University of Illinois and a BA in Economics from the University of Indonesia. She has received numerous hon-ors and awards, including Eu-romoney Magazine’s Global Fi-nance Minister of the Year, and Emerging Markets’ Best Finance Minister in Asia.

She has also been regularly on Forbes’ List of the 100 Most Pow-erful Women.

In her new role Mulyani will supervise Latin America and Ca-ribbean, Middle East and North Africa, and East Asia and the Pa-cific. She will also oversee the In-formation Systems Group.

The appointment follows an international search process. Mu-lyani will join the Bank on June 1, enabling a transition period with Juan Jose Daboub who completes his four year term as Managing Director on June 30.

Economist Dradjad Wibowo from the coalition-aligned Na-tional Mandate Party (PAN) wel-come the appointment, saying it was a great honor for Indonesia politically and economically.

“I support Sri Mulyani to be the World Bank’s managing di-rector,” Dradjad said, adding that there were many candidates that were capable of replacing her.

Meanwhile, Finance Min-istry inspector general Heki-nus Manao said the ministry re-mained determined to continue the reform process.

Says Democratic Party law-maker Didi Irawadi Syamsud-din: “We should all be proud of her.”

Even the Golkar Party, which led the charge against her in the House, wished her well, with House Deputy Speaker Priyo Budi Santoso saying Golkar ap-preciated the move because it was a “prestigious position” that would allow her to pursue poli-cies that would favor Indonesia.

Chairman of the Constitutionsal Court) Mahfud MD: “I empathize with her; I would have done the same if I were her.”

John Prasetio, deputy chairman of the Indonesian Chamber of Commerce and Industry (Kadin): “This is a very positive thing, we Indonesians have to be proud and welcome this move. I think she will also continue to help develop our economy.”

Golkar Party Vice Chairman Priyo Budi Santoso: “It’s a win-win solution, it is also sort of an escape clause.”

Peter Fanning, the chairman of the International Business Chamber: “Her departure is a step backward. The business community will be disappointed, but there are many good people who can replace her.

American business consultant James Castle: “A pleasant surprise. Her commitment to reform would be missed. I think it’s great for her

and good for Indonesia to have someone in that position.”

ON SRI MULYANI’S RESIGNATION TO JOIN THE WORLD BANK

ViewpointThe President Post www.thepresidentpost.comMay 12, 2010A2

In light of the Greek bail-out in the first week of May 2010 of Euro 110 billion or more for the next three years by the European Union

and the International Mone-tary Fund, the Economist’s re-cent warning (“Curb your en-thusiasm” April 22, 2010) now seems too moderate on the pes-simistic side, although the British publication did warn of the “dan-gers both for sluggish Europe and bubbly emerging economies’.

Southern Europe is in fact fast approaching a comatose econom-ic condition with Greece leading the way towards economic stag-nation and socio-political in-stability. The EU and IMF bill Greece has to pay for the bailout comes at the highest price. Prime Minister Giorgios Papandreou announced “great sacrifices (to) avoid bankruptcy” consisting of: reducing the budget deficit from 14% to 4% of Gross Domestic Product (Euro 245 billion). The contraction of the Greek econo-my is expected to reach 4% with drastic salary cuts for civil ser-vants and pensioners, facilitations

A Cautionary Warning on theWorld Economic Recovery

for company retrenchments of their work force, increases in sales taxes (+ 10% for fuel, alcohol, and tobacco) and property taxes, reductions in public health care, and eventual privatization of util-ities and public transport.

The price Greece has to pay for

the bailout is very steep and is the result of years and years of easy borrowing (and difficult repay-ment) on abundant money mar-kets, grandiose projects (the Ath-ens Olympics), corruption and tax evasion, as well as national statistics manipulations, with some help from Wall Street oper-ators. But first and foremost the Greek bailout is now becoming as societal, financial, and econom-ic experiment in how far a rela-tively developed Western coun-try can go in imposing sacrifices to a population without creating a social and political upheaval or explosion. Briefly said: a “societal experiment” that has never been tried before… Strikes and dem-onstrations have multiplied in Greece in spite of the moderat-ing influence of trade unions and their support for the PASOK so-cial-democrat government.

This experiment pertains to all of the PIGS countries, an un-flattering designation referring to Portugal, Italy, Greece, and Spain to which should be added Ireland and Iceland (seeking EU mem-bership) so as to become PIIIGS. PIGS countries had easy finan-cial times (borrow now pay later) and are at present facing econom-ic hardships with the downgrad-ing of Portugal’s and Spain’s debts by Standard and Poors. These two countries now have to pay surging interest rates to borrow money. To overcome their pres-ent plight they may have to im-pose similar sacrifices to Greece. Spain is in a particular predica-ment with unemployment fig-ures at 20% and the bursting of the bubble in the housing sector. Estimates on the amount needed to overcome the Southern Euro-pean crisis are at Euro 600 billion and, according to some observers, “now we are talking real money”. Perhaps it is the “real money” for saving the Euro currency and, in the final analysis, for preserving the European Union from eco-nomic disintegration through a cascade of sovereign debt de-faults by governments. This may

explain Berlin’s change of mind, in light of Germany’s repeated refusals in bailing out the Greek economy previously.

But ultimately, what applies

to the PIGS countries in societal and economic experimentation could also be true for the US and the United Kingdom where au-thorities also had to channel tril-lions of dollars of public funds to the financial and banking sec-tor at the expense of government spending on infrastructure in-vestments, economic stimulants for industrial companies, edu-cation, health care, employment creation. In the US in particu-lar some states are practically in bankruptcy while the southern part of the country is facing the catastrophic disaster of the BP oil spill in the Gulf of Mexico after Hurricane Katrina.

Hopes are therefore pinned on the “bubbly” economies or the countries least affected by the cri-sis - the so called emerging mar-ket economies. China’s economy is growing at double digit and In-dia is expected to grow at 9%, while Brazil is projected at 7%. Russia may be lagging but Indo-

By Erwin Ramedhan

nesia, as a member of G20, is an-ticipating a growth rate at more than 6%.

IMF expectations are at 3%

growth in the US (with a rela-tively weaker growth in the real sector compared to the finan-cial), 1% in the Euro zone, and 1.3% in the UK. It may seem too weak for a strong world econom-ic recovery and could explain the reasons behind the beginnings of a strategic repositioning of the world economy. Making cheap money available to stimulate growth in Europe and America has mainly resulted in the flow of that money to emerging market economies.

And faster growth in the BRIC + I (Brazil, Russia, India, China + Indonesia) economies is facing the threat of inflation and bub-bles. The government of China has for example taken stern mea-sures to stop the surge in prop-erty prices and speculation and thus prevent enormous amounts of bank credits from eventually becoming worthless loans. More-over, China’s (past) single mind-ed export strategy to America and European countries is now

diluted because of their weak-ened economies. The yuan could strengthen, the giant Chinese do-mestic might market grow, and exports could be reoriented more towards the markets of the emerg-ing economies. India for her part is attempting to fight inflation by hiking interest rates, without too much success at present.

During this latest crisis econ-

omists have been wondering whether the crisis was V,U,W, or L shaped. The answer in fact depends on where the ques-tion is asked. V or U shaped for many Asian countries, it seems to have a bad W configuration for the US and European coun-tries. The worst is perhaps glob-ally for the industries and their workers where the L shape of the crisis can be seen in the stagnant or rising unemployment figures. And, as conventional economic wisdom has it, employment only improves five years after a crisis is over. This is all the more true when money, and not produc-tion, makes money.

The writer is lecturer at President University

IMF expectations are at 3% growth in the US (with a relatively weaker growth in the real sector compared to the financial), 1% in the Euro zone, and 1.3% in the UK. It may seem too weak for a strong world economic recovery and

could explain the reasons behind the beginnings of a strategic repositioning of the world economy.

And faster growth in the BRIC +

I (Brazil, Russia, India, China + Indonesia) economies is

facing the threat of inflation and

bubbles.

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The President Post

Request the pleasure of your company at Business Dialogue

LEADERSHIP IN INDONESIABy:

Anies Baswedan, Ph.DRector of Universitas Paramadina

Will present: National Leadership

Prof. Dr. Komaruddin HidayatRector of UIN Jakarta 2006 - 2010

Will present: Spiritual Leadership

Robby DjohanCEO of PT CITRAINVESTA ADHIDANA

Will present: Corporate Leadership

Tuesday, May 18th, 20107:30 - 10:00 AM (Registration at 7:00 AM)

Breakfast followed by Dialogue

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Dress code: Business Attire

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Lita - Tel. (021) 2505090 0r email to:lita@financialcub.co.id & fcj@financialclub.co.id

The President Postwww.thepresidentpost.com May 12, 2010 A3

Interview

An Hour with ABS Ali Basyah SuryoCEO/Chief Editor

The President Post

What’s the main reason for Microsoft (MS) to invest in In-donesia?

Indonesia is an important mar-ket in a global economy. Its pro-jected GDP growth is 7% by 2011. It will soon join BRIC, and we are an enabler in accelerating economic growth.

Meanwhile, 40 million Indo-nesians have access to computers, an encouraging figure for further growth in the future.

Meanwhile, its 240 million population is one-third of APEC, another factor that says much about the country’s potential.

The Indonesian business com-munity is in a great position to prepare themselves for cloud computing. By the end of the cal-endar year cloud computing will be here. The business model will help our local partner to develop ecosystem in Indonesia.

MS Citizenship plans to nar-row the digital gap by trans-forming education, fostering innovation and enabling job op-portunities.

What is MS’s perception of the Indonesian market? How is MS committed to Indonesia;

DRAJAT PANJAWICorporate Affairs Director, Microsoft Indonesia

can you elaborate on its invest-ment plan in this country?

Indonesia has a huge growth potential, as Internet access cov-ers 38.8 million users, while broadband penetration is one million.

There has been a broadband explosion: 700.000 growth in the past five quarters.

Internet access with mobile phones represents the fastest growth, with mobile phone ship-ment reaching 30 million.

MS Indonesia has been here for 15 years and employs 100 peo-ple directly. We work with more than 4,000 partners to help them become successful.

According to IDC every one Indonesian Rupiah invested in an MS ecosystem will earn earn 23.5 Rupiah.

MS ecosystem accounts for 31% of IT employment in the country.

The IT industry is growing by another 120.000 jobs by 2013.

On community develop-ment, what programmes have MS embarked on to help Indo-nesia? Anything on affordable PC programmes?

Everything MS brings to Indo-nesia is meant to help the country develop its potential and reach their goals through our business and citizenship initiatives.

We also enable people to get jobs; there are now 120 Commu-nity Technology Centers (2.4 mil-lion farmers and migrant workers trained), WebsiteSpark for small medium businesses (140) and Bi-zSpark Startup (100).

Indonesia has 12,500 i-cafes, which is a primary source of in-ternet access for communities.

70% of its users are in the 15-24 age bracket.

Primary usage are Facebook, email and chatting, though 48% of all PCs here are not yet Win-7 ready.

Within the realm of educa-tion, can you elaborate on your programmes for learning?

Indonesia has 45 million stu-dents and 2.7 million teachers.

20% of its State Budget is al-located for education. There are now 5,600 universities, with a student to PC ratio of 1: 3,600.

We need to narrow the digital gap quicker. We are transform-ing education by coming up with

“Partners in Learning” (PIL), which provides access to afford-able software and skill trainings.

PiL has reached more than 14 million students and 200.000 teachers in 20.000 schools in 30 provinces.

We also foster innovation, as we have five Microsoft Innova-tion Centers (MICs) in five lead-ing universities.

In 2008 & 2009 Indonesian students won global awards at Imagine Cup by developing ap-plications for environmental pro-tection and for detecting malaria disease with mobile phone cam-eras.

In addition, DreamSpark has 120.000 students.

We are also engaged in biodi-versity research with the Minis-try of Research & Technology (RISTEK) and local governments such as Wakatobi Regency and Papua Province.

Indonesia is a country com-prising of hundreds of islands. How is MS reaching out to var-ious communities, including rural ones, so that they are not left behind in today’s connect-ed world?

MS sees technology as a bridge between communities, as Indo-nesia has 17,508 islands.

Java island is the country’s eco-nomic powerhouse with 110 mil-lion people.

We are engaged in nurturing Community Technology Skill programme in partnership with local NGOs specifically designed for rural communities.

MS has 120 Community Tech-nology Centers in 20 provinces, reaching 2.3 million farmers.

As Indonesia is the second rich-est country in the world in terms of biodiversity, MS has started working with local governments and related ministries to support biodiversity research in Indone-sia using MS Technology – High Performing Computer (HPC), MS pivot, photosynth, clouds and others.

Interoperability is a critical ele-ment to the success of this project. We want to make sure a col-laboration among research communities in Indonesia is possible and well imple-mented in a mixed tech-nology environment.

In conclusion, let me say that MS cannot work alone to solve all of the problems

in the community. We want to have a positive human impact in Indonesian citizens.

As such, we need to have a strong partnership with the gov-ernment, academia, businesses, and NGOs.

Neutral Technology policy is an important foundation to establish a stronger and closer partnership as well as to foster inno-vation and fair com-petition in order for the ICT industry to grow in Indone-sia and accelerate the country’s economic growth.

Indonesia is an important market in

a global economy. Its projected GDP growth

is 7% by 2011. It will soon join BRIC, and

we are an enabler in

accelerating economic

growth.

O ur discussions with gov-ernment CIOs show that these executives are increasingly examining

open-source solutions as a way to reduce licensing costs at the desktop and laptop levels. This follows the decision of several countries’ central governments to encourage more open-source uti-lization. However, many CIOs come to the conclusion that the promise of cost savings doesn’t yet justify a full rollout of open-source solutions.

One local government organi-zation moved its MS Office suite to open source a few years ago to reduce licensing costs and cope with a tighter IT budget. The CIO has reported that the orga-nization is currently in the pro-cess of developing a more collab-orative relationship with other local government agencies and businesses. But most of the tech-nology tools that enable quicker, more integrated communication and collaboration (such as unified communications or team collab-oration) do not fully support open-source formats. Therefore, the CIO is considering moving away from Open Office, unless the central government’s strong support for open-source solutions

How Open is Open Sourcein the Office?

drives an increased vendor com-mitment to developing full in-teroperability with communica-tions and collaboration offerings.

Another central government agency is testing Open Office on mobile devices to enable field workers to update and exchange documents anywhere, anytime, thus increasing their productivi-ty and fostering greater collabo-ration with external parties. But early testing has not shown pos-itive results, and the project is likely to be abandoned for now. According to the CIO, “Most of mobility solutions do not fully support open-source formats, and as a result, the inability to proper-ly view and edit open-source doc-uments via mobile devices may jeopardize our investment in a multiyear mobility strategy and undermine its promise to deliver business agility.”

A third local government or-ganization is planning to move a number of users to Open Of-fice, following the national gov-ernment’s renewed focus on open source. The users who have been selected across several depart-ments are more likely to exchange documents with other govern-ment agencies or interact with citizens. From a pure licensing-cost perspective, the open-source solution would be less expensive, but the CIO reports that the fol-lowing factors have deterred the organization from moving ahead with the Open Office pilot:

Migration costs and training •requirements.Interoperability issues caused •by the different versions of Office documents being ex-changed and editedCosts due to lack of interoper-•ability such as higher help desk support on technical issuesUser complaints due to dif-•ficulties in properly viewing/reading/editing documents

CIO CALL TO ACTIONGovernment CIOs who are

considering a migration to open source for office productivity tools should do the following:

Carefully consider the big pic-•

ture, and do not just focus on pure licensing cost savings. Fac-tor in costs for migration, inte-gration and testing, training, upgrades and maintenance, as well as user perception.Do not consider open-source •projects as isolated initiatives; put the open-source proj-ect into a broader perspective. When planning to leverage technologies that enable real-time communication and de-liver greater employee produc-tivity and collaboration with external parties, be aware that a wide range of open-source for-mats may not be supported by vendors’ solutions.Thoroughly investigate and •understand governments’ posi-tions on open source and how committed they are to ensur-ing that vendors develop solu-tions that can be easily and ef-fectively integrated with open source.Understand all the situations •in which the organization uses and shares documents, espe-cially with other departments/agencies and constituents. Ac-count for mobile device ac-cess to ensure that Office Suite or file format changes do not break an existing process.Continue to monitor the prog-•ress of open-source office pro-ductivity tool suites. Gartner estimates these will be more mature in two to three years.

BOTTOM LINECIOs should not only focus

their attention on licensing sav-ings when running an open-source pilot but also take into account their collaboration and mobility strategies. Integration issues with collaboration and mobility suites, as well as exist-ing software, are likely to be ma-jor hurdles to the success of the pilots.

Business ImpactThe benefits of open-source

solutions are often negated by the loss of productivity, increased costs of interoperability and the increased difficulty in linking to suppliers and customers.

Some government organizations have

already implemented open-source solutions

or are conducting open-source trials in an attempt

to reduce licensing costs for end-user

computing. But some of our Executive Programs

members have reported that hidden costs and

technical incompatibility issues with collaboration,

mobility suites, as well as existing software, will

generally not yet favor the adoption of open-source

solutions.

By Alessandro Misiti - Executive Client Managerand Robert Ringdahl - Executive Partner (Gartner, Inc.)

The WorldThe President Post www.thepresidentpost.comMay 12, 2010A4

END OF THE TUNNEL

After the sharpest de-cline in more than 70 years, world trade is finally going up again. As a result of the financial cri-

sis, world trade went down steep-ly (by 12%) last year in 2009, at a higher rate than predicted be-fore. In addition to the area of fi-nance, the drop of world trade had a devastating effects on Asia, including Indonesia.

It was, therefore, quite an en-couraging news for the world trading community when at the end of March the Geneva-based WTO came up with the news that “world trade is set to rebound in 2010 by growing at 9.5%”

That world trade will move up from -12% last year to 9.5% this year should indeed be seen as a spectacular rise with a number of encouraging effects.

Firstly, the rise of world trade •could help to beef up the global economy which is predicted to recover only at a subdued rate. As stated by WTO Direc-tor General Pascal Lamy “we see the light of the tunnel and trade promises to be an impor-tant part of the recovery”Secondly, it would mean that •global consumption and global

THE GLOBAL ECONOMY:

World Trade Expanding, Finally

By Atmono Suryo

demand is out of the mud. Im-mense sums of funds amount-ing trillions of dollars were spent by the governments of many countries, developed and developing, to implement the stimulus programs as strongly supported by the G20 at their meeting in November 2008, attended also by Indonesia. Thirdly, in this era of global-•ization and multilateral trade there will be the constant need for joint policies and joint ac-tions. Apparently, no one coun-try can act on its own, not even strongest economies as the US, the European Union or Japan. Fourthly, now that global trade •is coming up again, the biggest threat seems to be the ques-tion of protectionism. Protec-tionism can trigger trade wars, big or small, and would cripple world trade

There are still different views and predictions about the prob-lem of global recovery. There are still some risks which can derail global recovery. One of the risks concerns the downfall of world trade again.

KEY ISSUESThere are a number of key is-

sues which were referred by the

WTO that deserve our attention, especially on the side of those in Indonesia who are directly in-volved in the world trade sector:

The multilateral trading sys-•tem has proven its value. WTO rules and principles are being observed by the world trade community, in particular members of WTO. The imple-mentation of the multilateral goals can be done at the bilat-eral trade levelThis system has kept markets •open and has served as a plat-form from which trade can grow and the global economy improves. This open market system has been to the advan-tage of the Asian countries Even when world trade tum-•bled deeply in 2009 there was the absence of a major increase in trade barriers WTO warns that protection-•ism would derail global eco-nomic revival

The developments suggest that the multilateral trading system with its strict rules and princi-ples is there to stay. The absence of such system can be the begin-ning of all kind of trade wars.

It is recognized, however, that the system has still its many faults and shortcomings. Further nego-tiations will be needed to remove these shortcomings, especially in areas affecting the interests of de-veloping countries, such as agri-culture, which is highly protected in advanced countries.

The goal of this system is to create an open market multilater-al trading system. This may not be to the liking of many conser-

vative politicians in Indonesia, as they are in principle against any-thing which can be regarded as part of liberalism.

The question is whether the country can afford to be one the few countries that would detach themselves from global econom-ic trends. The trend of open mul-tilateral trade is basically accepted by the world trading society.

DISMAL 2009In terms of global trade the year

2009 was not only dismal but in fact disastrous year. The decline of world exports and imports was much deeper than the decline in world GDP, which fell to –2.3% compared to –12.2% in 2009. The worst affected countries were in North America and Eu-rope. Asia was also worse off with a decline of -11.1% for exports.

Throughout the years 1965-2009 world trade fluctuated quite heavily but the decline in 2009 was the worst of all. It de-clined by – 7% in 1975, -2% in 1982 and -0.2% in 2001,and -12% in 2009.

Trade in US$ terms dropped

even further than in volume terms, caused in large part to fall-ing prices of oil and other primar-ily commodities. This trend also happened to Indonesia; the coun-try also experienced the boom and bust development of oil and primary commodities.

To recall: the recession was triggered by the sub-prime mort-gage crisis in the United States. What began in the US finan-cial sector spread in an instant to the real economy, including trade

area, with global repercussions. Going all the way to Asia, includ-ing Indonesia, though it landed up more softly in that country.

The main effect was the sud-den drop in global demand and spending on various goods, espe-cially consumer goods and con-sumer durables such as cars, as well as investment in goods and industrial machinery.

G-20Much will depend on the G20

to reshape in the first place the in-ternational financial system and to improve the area of trade fi-nance. Being a respected mem-ber of the G20 and a prominent country in ASEAN, Indonesia will be challenged to give its due share to find the right interna-tional solutions in those two im-portant areas.

fIGuRE 1: VOLuME Of WORLD MERCHANDISE ExPORTS (1965-2009)

Exports

Value Annual percentage change

2009 2005-09 2007 2008 2009

World 12147 4 16 15 --23

North America 1602 2 11 11 --21

United State 1057 4 12 12 --18

Europe 4995 3 16 11 --23

European Union (27) 4567 3 16 11 --23

Asia 3566 6 16 15 --18

China 1202 12 26 17 --16

Japan 581 --1 10 9 --26

India 155 12 23 30 --20

ASEAN 9 814 6 12 14 --18

fIGuRE 2: DEVELOPMENTS Of ExPORTS 2007-2009

Source: WTO

Source: WTO Secretariat

That world trade will move up from -12% last year to 9.5% this year should indeed be seen as a spectacular rise with a number of encouraging effects.

0

-5

-10

-15

5

10

15

199319891981 1985 1997 2001 2005 20091977197319691965

1000

800

600

400

200

0

1200

1400

1600

1800Value in billion US$

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Total Trade: 1,710

Extra-ASEAN: 1,252

Intra-ASEAN: 458

The President Postwww.thepresidentpost.com May 12, 2010 A5

The Economy

RI to increase power capacity to 15,000 MW

Indonesia is able to increase its electricity capacity to 15,000 megawatts to support its economic growth target of seven percent in 2014 by developing new power generating plants, Chief Economic Minister Hatta Radjasa said here last month.

He said the government had to build power generators to increase the capacity of its electricity and to boost its economic growth to seven percent before 2014 so that it would be able to increase the competitive edge of its industrial products in the world market.

Hatta said that if Indonesia was able to increase its power capacity to 15,000 MW this year, it would be able to avoid rotating its power cuts.

Another global sukuk to be issued in October

The government will issue another global sukuk (sharia bonds) in October 2010 to meet part of financing target in the 2010 state budget.

The bonds will be issued prior to the issuance of retail sukuk in the fourth quarter of 2010, Director General of Debt Management at the Finance Ministry Rahmat Waluyanto said here last month.

The government issued global sukuk with a nominal value of US$650 million in April 2009 using an ijarah sale and lease back scheme, and was oversubscribed seven times.

RI, Japan sign three air agreements

The consultative meeting between Japanese and Indonesian air transportation

authorities last month produced three important deals covering liberalization of flight entry points, additional flight to Narita, Japan, and expansion of code-sharing system.

The agreement on the liberalization of entry points is the mutual liberalization of incoming flight entry points from partner countries.

With regard to flight capacity, the two sides could increase it to a maximum of 75 flights per week, or double the current position.

With regard to additional route to Narita, Indonesian airline companies may increase their flight routes to Narita from seven to 14 times a week.

RI s forex reserves reach uS$77 billion Indonesia’s foreign exchange reserves reached more than US$77 billion in

the year ended April 29, acting Bank Indonesia (central bank) Governor Darmin Nasution said.

He noted that rising capital inflows were responsible for the steady increase in the reserves.

The increased capital inflows also had had an impact on the rupiah’s appreciation against the US dollar, he said.

The central bank would make every possible effort to maintain the local unit at the level of Rp9,000 per dollar so it would be acceptable to all parties, he said.

Bali s per capita income up 14.1 pct Bali s per capita income averaged Rp16.21 million last year, an increased of

14.1 pct compared to the Rp14.20 million in 2008.“The per capita income is expected to increase to Rp22.5 million by 2013,

almost double that in 2008,” publication and documentation chief of Bali s public relations and protocol bureau I Ketut Teneng told Antara last month.

Teneng also said that the seven main programs of the Bali provincial administration are focused on the interest and empowerment of the people in the sectors of education, health, agriculture, small industries, tourism, small and medium businesses, and cooperatives, in addition to conservation, regional cultural development, employment and increased infrastructure.

ECONOMIC UPDATES

ASEAN ECONOMIC COMMuNITY

W ithin fast-moving East Asia, there are key countries such as China,

Japan, South Korea and also ASEAN (the association of ten South East Asian Coun-tries). Geographically, India is a South Asian country, but it is often associated with East Asia initiatives.

ASEAN, which was formed on 8 August 1967, is often rat-ed as an association that moves too slowly. As critics would say, it is an association of “no action and talk only”. But oth-ers would then say that, con-sidering the peculiar situation in South East Asia, ASEAN is moving on the right way, very cautiously but persistently.

Throughout the last few de-cades the situation in Asia has changed considerably. ASE-AN has no doubt played a prominent role and has con-tributed its share in close co-operation with the other key countries in the region. ASE-AN is well respected and is on many occasions in the “driv-er’s seat”

East Asia has by and large achieved political stabili-ty. There are no big issues in the area of security. Econom-ic growth of Asia led by Chi-na has surpassed growth in other regions of the world. It is expected that Asia should now take the lead to expedite global recovery and boost eco-nomic growth.

Having gone through the Asian Financial crisis of 19978/98 and the global re-cession of 2008/09, ASEAN should now be in a position to shift gears and be on the fast track, in particular to im-plement the goal to build an ASEAN Community by 2015 supported by three pillars: Po-litical-Security Community, Economic Community and Socio-Cultural Community.

ASEAN ECONOMIC COMMuNITY (AEC)v

With regard to the ASE-AN Economic Community, ASEAN aims to transform itself during 2010-2015 into

a single market and production base. This implies that within the ASEAN Economic Community (AEC) there will be:

free flow of Goods •free flow of Services•free flow of Investment •

The ASEAN Economic Com-munity will cover a very large population of more than half a billion people, creating a huge re-gional market. ASEAN’s human resources consist mostly of people younger of age with a fast grow-ing middle-income group.

The association has a consider-able size of total GDP combined with good growth rates of 4.4% in 2008. ASEAN has the poten-tials to become a more dynamic and competitive regional growth center and one of the key pillars of the East Asian economy—this will be the challenge for ASE-AN.

Key points:ASEAN has a population of •584 million (in 2008) and is third in the world after China and India with populations of over one billion people. After ASEAN comes EU (European Union) with 496 million. ASEAN has a workforce of •285 million; they are relative-ly young, educated, multilin-gual and highly trainable. In addition, there is the increased mobility of well-trained profes-sionals in the region. With regard to GDP in bil-•lion US dollars, ASEAN ranks fourth in the global economy. This fact is not sufficiently ap-preciated by ASEAN countries themselves. EU has the largest economy, followed by the US, Japan, China and ASEAN.

Figure 1 show that ASEAN’s position (as a combined force) in the global economy is quite strong; it is the fifth largest econ-omy in the world. This should give ASEAN a prominent place in the world community of na-tions. But there is the need for ASEAN to be more united in their actions and policies and to become a united and strong pow-erhouse.

TRADE

ASEAN has concluded Free Trade AgreementS (FTAs) with China, Japan, and the Republic of Korea. It has signed the first region-to-region FTA with Aus-tralia and New-Zealand. A Free Trade Agreement in goods will soon be signed with India.

According to the WTO, In-donesia belongs to the 30 largest trading countries in the world. It should be realized, however, espe-cially by Indonesian traders, that in terms of trade Indonesia is now fourth in ASEAN after Singa-pore (14th in the WTO ranking with US$270 billion), followed by Malaysia (21th with US$157 billion) and Thailand (25th with US$!52 billion.

It is clear that the Indonesian trading community has to do its utmost to catch up with the oth-er ASEAN countries and be more competitive.

fREE fLOW Of INVESTMENTBetween 1998 and 2007, FDI

inflows into ASEAN experienced rapid growth as can be seen from the graph below. The largest flow comes from the European Union, followed by ASEAN, Ja-pan and the US. Until 2008 Chi-na’s share was still small. ASEAN itself has thus become an impor-tant supplier of investment with-in ASEAN. This trend is already happening in Indonesia in vari-ous fields.

FDI inflow to ASEAN by sec-tors indicates that services receive the largest share, followed by manufacturing and mining and quarrying (Figure 4).

NATURAL RESOURCES

The ASEAN Secretariat has the following to say about ASE-AN’s natural resources: “ASEAN has one of the world’s richest bio-diversity and natural resources in oil and gas reserves and min-erals, among others. These pro-vide abundant opportunities for resource-based industries. ASE-AN Member States are among the world’s largest producers and exporters of rubber and rubber products, furniture and wood-based products, palm oil-based products, oleochemicals, tin, gems and precious stones, trop-ical fruits, rice, oil and natural gas”.

ASEAN’S POSITION IN THE WORLD ORDER

Slowly but surely through-

Building the AseanEconomic Community

By Atmono Suryo

out the years ASEAN has gained strength not only in Asia but also in the global setting. Armed with its strong political clout ASE-AN has shown that in many re-gional forums and undertakings it has been able to be in the driv-er’s seat.

ASEAN’s strategic goal to cre-ate an ASEAN community with the ASEAN Economic Commu-nity as one of the three pillars (which places ASEAN as a single integrated market) will give the association a stronger econom-ic position in Asia, along and al-most on a par with China, Japan and India.

This position should be well understood by the Indonesian community to prepare itself for the upcoming ASEAN Econom-

With regard to the ASEAN Economic Community, ASEAN aims to transform itself during 2010-2015 into a single market and production base. This implies that within the ASEAN Economic Community (AEC) there will be free flow of Goods, free flow of Services, and free flow of Investment

EU27 18,142

USA 14,265

Japan 4,924

China 4,402

ASEAN 1,507

India 1,210

ANZ (Australia New Zealand) 1,139

ROK (Rep. of Korea) 947

FIGURE 1: ASEAN IN THE GLOBAL ECONOMY

Billion US dollars

Source: ASEAN Secretariat

Total Population 583.7 million

Total Land Area 4.4 million sq. km.

Total Gross Domestic Product US$ 1,506.2 billion

GDP Growth 4.4 per cent

Total Trade US$ 1,710.4 billion

Total Exports US$ 879.14 billion

Total Imports US$ 831.23 billion

Intra-ASEAN Exports US$ 242.5 billion

Intra-ASEAN Imports US$ 215.6 billion

Intra-ASEAN Trade 26.8 per cent of ASEAN total trade

FDI Inflows US$ 60.2 billion

Intra-ASEAN FDI Inflows US$ 11.1 billion

fIGuRE 2: ASEAN BASIC INDICATORS

Source: ASEAN Secretariat

ic Community with its free flow of goods, services and invest-ment. It is therefore of prime im-portance during the coming five years that all efforts be made to strengthen the domestic Indone-sian economy.

As of next year, 2011, Indo-nesia will again assume ASE-AN’s chairmanship. It is gener-ally expected that Indonesia will take firm leadership to strength-en ASEAN, internally as well as in its relations with the regional and international world, and put ASEAN on the map as one of the key economic regions in the glob-al economy.

The writer is former ambassador to the EU.

Source: ASEAN Secretariat

Source: ASEAN Trade Database

fIGuRE 4: fDI fLOWS TO ASEAN, 2004-2008

fIGuRE 3: ASEAN TRADE PERfORMANCE

40.0

30.0

20.0

10.0

Year

50.0

60.0

70.0

80.0

US$ billion

2004 2005 2006 2007 2008

35.3

39.655.0

69.5

60.2

ASAN’S MANDIRI JAYA MOTOR

A Role Model in Entrepreneurship at JababekaWhen Asan and his wife Servi left

Pontianak, West Kalimantan, for Java some years ago, what they were thinking about was simple: find the right location to start a new business on Indonesia’s most densely popu-lated island.

The family made the decision to leave their hometown after learning about the success story of their son who had four years earlier arrived in Cimandiri, Cikarang, Bekasi regency to start a new business.

Asan and Servi initially stayed at their son’s new house while exploring every possibility for setting up a new venture.

Asan roamed Jakarta and its vicin-ity to look for new business opportu-nities and eventually stopped by Kota Jababeka, a new township on the eastern outskirt of Jakarta.

There, for the first time, Asan drew the conclusion that this must be the right place he had for months been looking for.

The new industrial site was adorn-ing itself and Asan’s business instincts convinced him that very soon this would be one of the most sought-after integrated townships he should not miss.

He began to ask around and ob-

served the township for himself till he got the conviction that soon Jababeka would be inhabited by a lot of people and the presence of numerous mul-tinational companies would turn this area into a “city of the future” that would be suitable for business and

decent living.With this conclusion, Asan finally

made the right decision: withdrawing from his savings a handsome amount of Rp260 million to buy a Pinangsia Commercial unit, one of Jababeka’s bestselling properties.

The shop that he bought did not ap-pear to be a prospective place when he first stepped in. It was surrounded by swamps, and yet his imaginations convinced him that this would, some-how, be one of the busiest spots in the not-so-distant future.

Despite the then condition of the site, Asan was fully convinced he had made the right choice. He paid it up through a one-year installment scheme and then on a new era of suc-cess.

The first chapter of his success sto-ry began with the opening of Mandiri Jaya Motor, a workshop that has since its establishment become a point of attraction in Jababeka.

The first floor of his shop was used

for spare parts; and it is also the site of his workshop where people can get their vehicles repaired.

The couple and their three daugh-ters have since then lived on the sec-ond floor.

The garage opens every day at 8 a.m. and closes at 6 p.m.; sometimes even 9 pm when they have a lot of customers. Every day they repair at least 20 vehicles from among many that come to them.

Not long after it was opened, the garage began to sell motorcycle ac-cessories as well. Now they intend to expand the operation, thanks to rising demand.

Earlier this year they were known to have made plans to start the ex-pansion after the Chinese New year.

Some years have passed since Asan started the business and he is now looking ahead with greater confi-dence that Jababeka will become a lot more popular due to the existence of so many multinational companies.

Like the growth of Jabebeka that has been so remarkable over the past few years, so does Asan’s vehicle repairs business which has brought him a handsome amount of profit.

He used part of this to buy a 135 square meter plot of land in nearby Cikarang as an investment, believing that land prices will con-tinue to soar so he will collect a handsome amount of profit when he sells it one day.

As an example, the price of property as big as his—which was only Rp260 million a few years back—is now Rp350 million.

But he does not intend to sell his property yet; in fact he wants to buy more, considering the stra-tegic nature of Jababeka as both an industrial center and a nice liv-ing environment. The township has gained the reputation of be-ing one of Indonesia’s cities of the future.

With this conclusion, Asan finally made the right decision:

withdrawing from his savings a

handsome amount of Rp260 million

to buy a Pinangsia Commercial unit, one of Jababeka’s

bestselling properties.

Hatta Rajasa

Narita International Airport

The Economy

The President Post www.thepresidentpost.comMay 12, 2010A6

F inance Minister Sri Mulyani Indrawati told House Commission XI on financial affairs at

a hearing here last month that Indonesia s economic growth in the first quarter of this year is ex-pected to reach 5.7 percent, or at least 5.5 percent based on the 2010 growth target.

She said that in the revised budget, the growth ranges for the private consumption was set at between 3.6 and 4 percent and the government consumption at between 9.7 percent and 9.8 per-cent.

The range of fixed gross cap-ital investment (PMTB) was set at between 7.1 and 7.2 percent and that of exports, which are ex-pected to sharply increase was es-timated at between 21.7 percent and 21.9 percent.

“The assumption for exports increased from 3.7 percent in the fourth quarter of 2009 and that of imports reached 1.6 percent,” the minister said.

She said that the condi-tions could be made thanks to

Indonesia s positive econom-ic stability which was support-ed by capital inflow, increase in foreign exchange, rupiah appre-ciation, strengthening of stocks index and positive investors per-ception.

“This is also supported by the inflation rate which until March 2010 only reached 0.99 percent, or 3.34 percent year-on-year and stability of Bank Indonesia s key rate at 6.5 percent,” the finance minister said.

According to the minister, the improvement in the mac-ro assumptions of the country s economy is also thanks to the improvement of the global econ-omies, which in various Asian, European and American coun-tries were getting better than ear-lier expected.

ADB: RI ECONOMY TO GROW 5.5% IN 2010

Rising private consumption and investment will allow the In-donesian economy to grow by 5.5 percent in 2010 from 4.5 percent last year, according to the Asian Development Bank’s (ADB) an-

nual flagship economic publica-tion.

The global economic reces-sion had only had a moderate im-pact on the Indonesian economy, ADB in its Asian Development Outlook 2010 (ADO 2010) re-leased last month, said.

“Economic activity is forecast to quicken this year and return to the pre-recession levels of 2011, based on increasing domestic de-mand and supportive macroeco-nomic policies,” ADB said in its press release.

Despite the achievements, rais-ing investment in infrastructure and generating enough jobs re-main major challenges.

Good harvests, an appreciat-ing rupiah, and lower global food and fuel prices paved the way for inflation to abate to its lowest in almost a decade.

Inflation decelerated from 12.1 percent year-on-year in Septem-ber 2008 to 2.8 percent in De-cember 2009, averaging 5.0 per-cent in 2009.

The unemployment rate de-clined slightly from 8.1 percent in February 2009 to 7.9 percent in August 2009, but employment in the formal sector increased by just 0.8 percent, or 260,000 jobs in this period.

Lower food inflation and gov-ernment cash payments for poor households in early 2009 con-tributed to a decline in poverty incidence by about 1 percentage

State revenues are projected to increase Rp2.8 trillion this year following changes in the macro economic assumptions in the state budget as agreed on by the government and the House of Representatives (DPR), a finance ministry of-ficial said.

“The increase in state reve-nues will come from tax and excise receipts,” Head of the Fiscal Policy Board at the Fi-nance Ministry Anggito Abi-manyu said at a hearing with the House Commission XI at the parliament building here last month.

At the meeting, the House Commission XI and the gov-ernment agreed on the as-sumed economic growth target of 5.8 percent in the re-vised 2010 state budget. The figure represented a 0.3 per-cent rise compared to the pre-vious forecast of 5.5 percent.

Indonesia was one of the few countries in Asia to register healthy growth last year amid the global financial crisis. Its econ-omy grew 4.5 percent, the third highest among G20 countries af-ter China and India.

The government and the House also agreed to raise the tar-get of the rupiah s exchange rate to Rp9,300 from Rp10,000 per dollar and lower the inflation rate target to 5.3 percent from 6.00 percent previously.

Anggito said the tax ratio was expected to reach the level of 11.8 percent with tax receipts project-ed to increase Rp1.7 trillion to Rp599.1 trillion from Rp597.4 trillion.

He said customs and excise re-ceipts were projected to increase Rp100 billion to Rp81.1 trillion from Rp81 trillion and income tax on oil and gas to go up Rp1.2 trillion to Rp55.8 trillion from Rp54.7 trillion.

T he national meeting be-tween the head of state, cabinet ministers, pro-vincial governors and

stakeholders has recommended strengthening domestic financ-ing.

“The target for 2014 is for the debt ratio to the GDP to drop to 24 percent and tax ratio to rise to 14.2 percent,” the coordinating minister for the economy, Hatta Radjasa, said here last month.

When presenting an expose on recommendations of the working group on economic development before President Susilo Bambang Yudhoyono and other partici-pants of the meeting at Tampak-siring Palace, Hatta said efforts to increase domestic financing could be done by increasing efficiency in tax collection and sharpening the allocation of budget for sub-sidy or ministries based on “well targeted spending” principles.

Minister Sri Mulyani: Q1 Economic Growth Estimated at 5.7%

He said they could also be done by developing long-term financ-ing through diversification of fi-nancing sources to include pen-sion and insurance funds.

They could also be done by “expanding financing instru-ments through bond issuance for certain projects such as infra-structure,” he said.

He said optimalization could also be done by developing ac-credited non-banking financing institutions and supporting in-stitutions in the regions such as credit insurance and credit infor-mation bureaus.

The meeting closed by the head of state that day also recom-mended increasing efficiency in financing with regard to boost-ing domestic financing by em-powering banks for agricultur-al and fishery sectors as well as for small and medium businesses and processing industries.

He said efficiency in the bank-ing system should also be im-proved so that it would be more responsive to signals of monetary policies from Bank Indonesia.

Hatta said effectiveness in fi-nancing could be also improved by raising sovereign rating to an investment grade immediately by among others maintaining mac-ro-stability, accelerating infra-structure development and main-taining budget credibility as well as by “immediately finishing the bill on financial system safety net.”

With regard to social welfare development Hatta said recom-mendations covered three areas namely evaluation of pro-peo-ple programs, just development and efforts to achieve the MDGS goals for 2015.

President Yudhoyono in his closing speech said the recom-mendations would be put in the presidential instructions to be signed soon for distribution to and implementation by all gov-ernors.

In the Photo: Sri Mulyani, The Minister of Finance left, Armida Alisjahbana, Chairperson of Bappenas, and Purnomo Yusgiantoro, The Minister of Defense, as the distinguished speakers at Infrastructure Asia 2010 Conference “Breaking Down the Barriers to Public-Private Partnerships”

Sri Mulyani emphasized that in Public-Private Partnerships both sides have to share and contribute in the cost side, risk management side also in the management of the infrastructure partnership itself.

She said that the conditions could be made thanks to Indonesia`s positive economic stability which was supported by capital inflow, increase in foreign exchange, rupiah appreciation, strengthening of stocks index and positive investors perception.

point to 14.1 percent in the 12 months to March 2009.

Financial indicators strength-ened as the year progressed. The rupiah appreciated against the US dollar by 18.2 percent in 2009, recovering from deprecia-tion in late 2008. Capital inflows picked up, along with the econo-my, from March.

Yields on government bonds fell significantly, stock prices climbed, and credit default swaps returned to levels seen before the crisis.

Foreign direct investment is ex-pected to rebound and domestic

investment will be encouraged by the quickening pace of economic activity, tax breaks, a better mar-ket for raising equity capital, and improved credit availability.

In value terms, merchandise exports in January 2010 soared by 59 percent, and imports by 45 percent, from depressed levels in the prior-year month.

For the full year, exports are forecast to rise by about 11 per-cent, based on the forecast in-crease in world trade and firm prices for commodity exports. Stronger domestic demand will propel imports by about 16 per-cent, ADB predicted.

Photo: The President Post/Nandi Nanti

National Meeting Recommends Bolstering Domestic FinancingHatta said efforts to increase domestic financing could be done by increasing efficiency in tax collection and sharpening the allocation of budget for subsidy or ministries based on “well targeted spending” principles.

State Revenues to Increase Rp 2.8tthis Year

“The target for 2014 is for the debt ratio to the GDP to drop to 24 percent and tax ratio to rise to 14.2 percent,”

Hatta RajasaCoordinating Minister of Economic Affairs

The House Commission XI and the government agreed on the assumed economic growth target of 5.8 percent in the revised 2010 state budget.

Photo: The President Post/Nandi Nanti

The President Postwww.thepresidentpost.com May 12, 2010 A7

Industry

Mr. Johnson (not his real name) is not new in the packag-ing business. He started it

many years back by compiling used carton boxes from scaven-gers and rearranged them into usable carton boxes for packag-ing. He had been in the business for many years until at one time he was able to build his own cor-rugated box company. The de-velopment of the plant was fi-nanced by an Indonesian bank. He did that day after day until his business instinct told him to move further upstream. Finally he seized the opportunity by ac-quiring a bankrupt paper com-pany in Europe and brought the plant and machinery to Indone-sia. That is certainly not an easy task. In fact, the number of con-tainers needed to move the facto-ry reached 100. That is certain-ly a logistical nightmare, but he managed to do it successfully.

The plant was re-installed in Ja-karta, re-painted and also supple-mented with a brand new power plant and other critical equip-ments. Now he enjoys a “new” factory with a daily production of around 400 tons of carton pa-pers. That is still somewhat below the full production capacity that he may reach within this year.

Mr. Johnson was certainly able to read the signs of the times. He knew exactly that the demand for carton boxes has increased expo-nentially and will continue grow-ing at a very fast rate. Therefore, serious dependency on the pro-ducers of carton boxes will put his company in a precarious situa-tion. All the more so if the market for carton paper is a seller’s mar-ket. This perception was also felt by his colleagues. However, mov-ing upstream is being in an en-tirely different business as he did with the corrugated box business. Aside from the technical knowl-edge factor, moving upstream also means a quantum leap in fi-nancial needs. With strong deter-mination, not to mention “guts”, he finally overcame the myriad of problems that stood in the way of his success. The last hurdle that he succeeded to overcome was financial assistance. Luckily he could secure strong financial back up from one Indonesian pri-vate bank. He felt relieved—his dream finally came true.

The story of Mr. Johnson re-flects the trend that is currently happening. The rate of growth

of the Indonesian manufacturing industries, based on anecdotal ev-idence and not official statistics, is quite high. Unilever Indone-sia is another success story. The Indonesian branch of Unilever Plc of the United Kingdom al-ways enjoys double digit growth for many years. In fact, the first 70 years of its existence in Indo-nesia saw the company reached a sales value of US$1 billion for the first time. However, five years af-terward, the company could add another US$1 billion in its sales value. The management has now raised the bar by increasing the target by doubling the sales in four years time. That is certain-ly not an easy task. In fact, the previous rate of growth has been second after Vietnam in the rank of Unilever global business. But as we all know, Vietnam start-ed with a much lower base than Indonesia. In Rupiah terms, the sales value of Unilever Indonesia grew by 22.5 percent in 2008 and by 18.9 percent in 2009.

and weaknesses of two countries, Thailand and Indonesia. Thai-land is better in almost all cate-gories, but Indonesia has a large market that cannot be ignored. The decision to put the factory in Indonesia was executed by acquir-ing an industrial land in Jababeka Industrial Park, east of Jakarta, in August 2007. The company was extremely fast in developing the factory. In fact, in March 2008 the factory already started oper-ations. The new factory, which I visited recently, looks like the cos-metics department of an upscale department story: flashy and very clean. In its inaugural opening, it was said that the factory is the largest skin care factory in Asia.

Currently, the skin care facto-ry almost reaches its full capaci-ty. Therefore, the company has decided to build a second facto-ry this year, two years ahead of the initial plan. With the rate of growth of over 40 percent, the demand for the product will hit full production capacity very soon. Once the factory is com-pleted, we can expect the title of the “largest skin care factory in Asia” to remain in Unilever Indo-nesia’s hands. Such a high growth certainly requires strong supplies back up. Packaging for the prod-ucts is also something that should grow at the same rate with this product. Therefore, packaging companies such as owned by Mr. Johnson experienced high order time.

Aside from Unilever Indonesia, other consumer goods companies also enjoy a very strong growth in the past few years. This re-flects the dynamism of the “pop-ulation based economy” that has been hinted by Goldman Sachs, Pricewaterhouse Coopers and others. But the rise of the Indo-nesian manufacturing industries is not limited to consumer prod-ucts only. The automotive indus-try, for instance, also enjoys hefty growth in the past few years. In fact, in the first quarter of 2010, Indonesia enjoyed the largest sales of cars. Traditionally, Indo-nesia always ranked third in ASE-AN car sales after Thailand and Malaysia. In fact, in 2009 Indo-nesia continued to remain third in ASEAN after Indonesian car sales dropped by almost 20 per-cent to 486.000 units. Mean-while, Thailand and Malaysia enjoyed a much lower rate of de-cline in 2009. In 2010, however, our car sales in January, February and March continuously rank ed-above the other two countries.

In the motorcycle industry, sales have exceeded 6 million units in 2008. This production record may be exceeded in 2010 as the performance of the first quarter of 2010 has shown a rate of growth of 36 percent. The in-dustry uses 97 percent local con-tent, so that industries that pro-duce parts and components also enjoy a similar growth rate. One interesting feature of the growth was the shift of consumers de-

mand from manual transmission motorcycles to automatic trans-mission. Introduced only a few years ago, the share of automat-ic motorcycles has reached over 40 percent of overall products. In fact, higher valued motorcycle, with a larger size such as Kawasa-ki Ninja, has penetrated the mar-ket successfully in the past few years. All these trends reflect the growing influence of the Indone-sian middle class.

Indonesia also seems to be a re-gional production base for a cer-tain number of electronic prod-ucts. While fulfilling the high rate of growth of the domestic market, Indonesian exports of electronic products continued to climb back after a few months of interruption by the global crisis. Polytron, an indigenous Indone-sian electronic industry, experi-enced a high rate of growth in the past few years. In fact, they saw a pattern where higher value prod-ucts received stronger demand relative to lower priced products. That certainly attests to the rise of the Indonesian middle class.

The rise of the Indonesian population-based industries cre-ated demands for upstream in-dustries. Pohang Steel of Korea (POSCO) developed a plan, in partnership with the Indonesian state-owned steel makers Kraka-tau Steel, to build factories that could multiply the current pro-duction of the Indonesian Kraka-tau Steel. The demand of steel for

the automotive and motorcycles industries as well as various other products increased exponentially so that importing steel from oth-er countries will create a certain kind of dependency. With car production capacity approach-ing 1 million units, the produc-tion of high quality steel will be able to meet such demands. The Indonesian packaging industry,

The Rise of Indonesia’s Manufacturing Industries

By Cyrillus Harinowo Hadiwerdoyo

Indonesian manufacturing industries, in contrast to the issue of “de-industrialization”, continues to grow at a fast pace. It could be expected that “Vision 2030” as launched by President SBY can be realized soon.

UNILEVER SKIN CARE FACTORY: Currently, the factory in Jababeka Industrial Park almost reaches its full capacity. Therefore, the company has decided to build a second factory this year, two years ahead of the initial plan. With the rate of growth of over 40 percent, the demand for the product will hit full production capacity very soon.

Photo: www.unilever.co.id

Indonesia also seems to be a regional

production base for a certain number of electronic products. While fulfilling the

high rate of growth of the domestic market, Indonesian exports of electronic products continued to climb

back after a few months of interruption by the

global crisis.

One of the interesting stories from Unilever Indonesia is the production of its skin care prod-ucts such as Ponds, Vaseline and the Indonesian brand “Cit-ra” (“Image”). The high rate of growth achieved on the sales of those products in Asia prompt-ed the management at the Lon-don headquarters to build a fac-tory in Asia to cater to the entire region. Having considered a long list of various Asian coun-tries, including India and Chi-na, the management finally and seriously considered the strengths

which uses plastic materials such as polyethylene and polypropyl-ene, also feels the same way. Con-tinuous rate of growth on such products will certainly increase the demand of PE and PP. Very soon the production capacity of petrochemical industries such as Chandra Asri has to be expand-ed. If not, other investors will cer-tainly build such a factory.

Indonesian manufacturing in-dustries, in contrast to the issue of “de-industrialization”, contin-ues to grow at a fast pace. It could be expected that “Vision 2030” as launched by President SBY can be realized soon.

The writer is an economist and a regular columnist in major periodicals.

Photo: The President Post/Nandi Nanti

THE GROWING AuTOMOTIVE INDuSTRY: As the nation’s economy improves significantly, so does its automotive industry, marked by a sharp rise in the sales of its products.

EducationThe President Post www.thepresidentpost.comMay 12, 2010A8

This year we see a boom in the num-ber of students en-tering President University. From less than a few hun-

dreds in the last four years, PU is now enjoying a steep climb in student population that signals a “boom year” for the academe, so that efforts must be strengthened and enhanced to keep the stu-dent numbers rising in the years to come.

One can say that this achieve-ment could be attributed to the competent handling of the mar-keting programs by the Universi-ty’s able-bodied Marketing team supported by other important business units. Well, it is, and it cannot be doubted that without these men and women PU will not be seeing its star shine in the academic community.

However there are other verita-ble reasons for this achievement. PU implements strategic flagship programs that attract prospec-tive students and parents to start paying the University a second look in choosing the best school for their children. These flag-ship programs are fully conduct-ed in English in a cross-cultural

environment by faculty members with overseas education and qual-ifications.

These flagship programs have been a big draw to parents who are willing to shell out extra mil-lion Rupiahs just to ensure that their children are accepted in PU. Nevertheless, it is apparent that the internship and career devel-opment programs give the par-ents a “safety net” assurance that every Rupiah they invest would produce positive returns. So if you’re a parent, you would be very interested about a university that does not give you a run for your money, but one that ensures that your child obtains employ-ment after they graduate, or bet-ter yet, start working even before they graduate.

President University is the first and only university in Indonesia that provides two semesters of in-ternship and apprenticeship op-portunities to its students. The internship is part of the academ-ic curriculum and is “a must” re-quirement to obtain a degree at PU. The aim of this program is simple: to expose students to re-alistic work environments in or-der for them to learn many skills and capabilities that will prepare

them when they enter the work-force after leaving school.

To ensure that this goal is achieved for the students, the University established a specif-ic structural unit called the IN-TERNSHIP AND CAREER CENTRE (ICC) that is tasked with planning, organizing, and controlling the implementation of this program. The ICC opens and builds relationships with partner organizations, industries, and enterprises to open potential job opportunities for PU students and graduates.

As of this writing, there are about 500 organizations par-ticipating in this program, and many of them big names like the Jababeka Group of Compa-nies, Mattel, Chevron, Conoco Philipps, Samsung, Kraft, Nes-tle, Bank Danamon, HSBC, As-tra Honda, Unilever, Ernst and Young, Intercontinental Hotel, and many more from all indus-trial sectors like manufacturing, service, telecommunications, ho-tels, trading, securities, transpor-tation, property, etc.

To ensure better continuity of the internship relationship, PU has also drawn and signed 22 MOUs with IT companies like

Mobiz Technologies, PT Ber-ca Hardayaperkasa, PT Aspri-net, public accounting firms such as KAP Kosasih and Nurdiya-man, Bank Danamon, and even PT Sari Coffee, the manager of Starbucks Coffee chains in In-donesia. Students may also take their internships abroad and PU has established connections with some overseas organizations spe-cifically for this purpose.

Another strategic service that PU gives to its students is helping them find jobs three months be-fore they graduate, and still con-tinue to help them find jobs six months after they graduate. This service is FREE, and is provided by the ICC through its numer-ous programs like Job Fairs, Ca-reer Days, Campus Hiring, and company referral hiring system. To date, PU has a 93% absorp-tion rate, meaning that except for those who have chosen to pur-sue postgraduate studies or be-come entrepreneurs, almost all PU alumni are employed. Many graduates work with big multi-national companies and enjoy above standard salaries and ben-efits plus training and develop-ment opportunities. To a parent this is a very interesting program

fROM ENROLLMENT TO EMPLOYMENT:

PU Internship Program Paves the Way for Joband Career Opportunities to Students

By: MJ Arquisola

IMPORTANT PLuG-IN TO ALL COMPANIESINTERESTED IN INTERNSHIP:

PU Internship Cycle is now OPEN to allFaculties of Communications students who are about to do their

internship from September 2010 – April 2011. The Engineering and Computing Faculties will open their internships

in January – August 2011.

If you are interested to join our internship program, please contact Mr. Ali Nurhasan, ICC Coordinator, Tel no: (021)89109762 ext.208 or email to:

icc_pu@yahoo.com for more details and information.

that in itself results in positive ROI for every Rupiah spent with PU.

Students enrolled in the intern-ship program are given academic support services to ensure contin-uous good quality of internship. Rules and regulations have been established to ensure a structured handling of the program, and there are policies that protect in-terns health hazards at work, for example. Moreover, students are each assigned a mentor that ac-tually conducts scheduled visita-tions on site to check on the stu-dents’ progress and how they fare with their superiors and co-work-ers at work.

Aside from this, the ICC con-ducts regular evaluations with the companies to find out prob-lems and issues with the interns and ways necessary to correct them. And before students go for internship, they take part in skills development seminars in order to ensure that they are ready and prepared when they start their in-ternship.

“I personally define intern-ship as the combination of op-portunity, creativity, and per-sonality in which we can develop ourselves to become a better per-

son with potentially good career or business in the near future,” says Fransisca Komala, an alum-ni of PU. She is currently work-ing with a large bank. Another student, Evan Pujonggo, a grad-uating student from IT, says that “Internship will provide us real working experience useful for our future. Thus, it should be re-lated to our own major, because we can apply the theories we’ve learned in class on a real working environment.”

Thus the internship and career development programs serve the dual purpose of not only skills and capability development but also create real job and career op-portunities for students. These

President University is the first and only university in Indonesia that provides two semesters of internship and apprenticeship opportunities to its students. The internship is

part of the academic curriculum and is “a must” requirement to obtain a degree at PU.

are strategic programs, and as it brings many benefits to students, PU will continue to support these programs and give it the strategic attention and resources necessary to enhance the delivery of quality service to its students.

In the next article, we will tell you why we have many repeat customers or companies who seek PU interns, and why they like them. It’s very valuable infor-mation, so stay tuned.

MJ Arquisola MHRM is currently Head of the Academic Bureau and Manager of the Internship and Career Centre, PU. She also teaches in the Faculty of Economics.

The President Postwww.thepresidentpost.com

Display until June 12, 2010 /// N0. 12Published by President University

Business BPanasonic to move audio digital factoryto Indonesia

Japan’s electronic giant Panasonic Corp. plans to move its audio digital factory from China to Indonesia this

year.Labor costs in China are no longer competitive, says Rinaldi Sjarif, the vice

president of Panasonic’s Indonesian unit, PT Panasonic Gobel Indonesia.The principal has decided to move its production operation from China to

Indonesia as production costs are cheaper in the country, Rinaldi said.

Telkom posts Rp11 trillion in profit

State telecommunications operator PT Telkom last year posted a net profit of Rp11.33 trillion, up 6.7 percent from a year earlier.

Income rose 6.4 percent to Rp64.60 trillion from Rp60.7 trillion, leading to a 6.7 percent rise in net profit, PT Telkom President Director Rinaldi Firmansyah said in a press statement last month.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 5.6 percent to Rp36.6 trillion, he said.

Ad spending up 26% to uS$1.4 bln in Q1

Advertisers in Indonesia spent Rp13.02 trillion (US$1.44 billion) in the first quarter of this year, up 26 per cent from the same period last year.

The increase was partly caused by higher cost of advertising, Ika Jatmikasari, associate director of Nielsen Media Indonesia, said.

Television advertisements recorded the highest increase of 31 per cent to Rp8 trillion, Jatmikasari said, noting that normally the highest growth was recorded in newspaper ads, which rose only 19 per cent to Rp4.6 trillion.

She said telecommunications products dominated advertisements with spending at Rp1.302 trillion or an increase of 54 per cent year-on-year.

Two Russian airlines to fly to RI

The Transport Ministry is set to licence two Russian airline companies to fly to Indonesia this year.

The two Russian airlines, Transaero and Aeroflot, would serve direct flights linking the two countries starting at the end of this year, Air Transport Director Tri S Sunoko said in a press statement last month.

Transaero so far flies the Russia-Denpasar charter route twice a week and now plans to operate scheduled flights, he said.

Russia`s state-owned Aeroflot would fly from Moscow to Denpasar vice versa as of December 2010, he said.

four banks pledge Telkom Rp3.5 trillion

State telecommunications operator PT Telekomunikasi Indonesia Tbk (Telkom) has obtained a standby loan commitment of Rp3 trillion to Rp3.5 trillion from four domestic banks.

“A standby loan agreement will be signed in May 2010,” Telkom Finance Director Sudiro Asno said last month.

He said 90 percent of the loans would come from three state banks and the rest from a private bank.

The company posted a net profit of Rp2.78 trillion in the first quarter of 2010, a 12.9 percent increase compared to the same period last year.

BUSINESS BRIEFS

National flag carrier PT Garuda In-donesia is set to pay in full its remaining

debts of US$561 million by 2016.

“The schedule and re-structuring of the company s debts have been approved by the creditors,” President Di-rector of Garuda Indonesia Emirsyah Satar said after a non-deal roadshow in Hong Kong last month.

He said the debts of US$561 million in March 2010 con-sisted of US$320 million owed to the London-based Export Credit Agency (ECA), US$131 million to Floating Rates Notes (FRN) of credi-tors in Singapore, and US$105 million to PT Pertamina and Angkasa Pura I and II.

The schedule of debt repay-ment to ECA has been ap-proved to be paid until 2016 with principal installments and interest of US$45 million per year.

Payments of Garuda s debts to Pertamina and Angkasa

Garuda Indonesia’s Debts Fully Paid Off in 2016

Pura have started since 2009.Emirsyah said Garuda s capac-

ity to pay its debts to the creditors is due to improvements of its per-formance.

“In 2009 Garuda s net prof-its for the first time reached Rp1 trillion, which had encouraged the company s management to continue increasing the value of the company,” he pointed out.

However, he did not dare to set a projection of the company s in-come and profit in 2010, saying only that Garuda this year allo-cated US$100 million in capital expenditures.

The funds will be used for business expansion such as open-ing new routes, increasing servic-es related to information technol-ogy and aircraft replacements.

GARuDA INDONESIA TO uSE 24 NEW AIRCRAfT SELLING 16 OLD ONES

In a related development, Gar-uda will sell or return to lessors 16 old Boeing 737 aircraft of 300, 400 and 500 series in its bid to modernize its fleet.

Emirsyah said 23 new Boeing 7373-800NG are due to arrive in the country from Boeing’s facto-

ry in Seattle. Another new Airbus A330-

200 is to come from Toulouse, France.

Currently Garuda has 72 air-craft, he said, adding that with 16 planes to go and 24 coming in the airline will have a fleet of 80 aircraft.

Garuda has projected to reach a five-star service standard in 2012 by constantly improving its services and increasing the num-ber of its aircraft.

“Insya Allah (God willing) in the next two years we will reach a five-star rating,” Emirsyah said after signing a memorandum of understanding (MoU) on ticket-

ing with PT PLN in Jakarta last month.

He said currently Garuda has won the status of a four-star Sky Track like Emirates.

“There are only 26 airline companies in the world enjoy-ing four-star status, and Garuda is the 27th. Even the Dutch air-line KLM is on a three-star sta-tus,” he said.

For that purpose, Emir added, Garuda will increase the number of its planes to 116 by 2014, from the current 68 units with destina-tions to 36 cities.

“This year we also plan to open another 12 domestic and interna-

tional destinations,” he said.Garuda is currently also busy

with building corporate market by signing an MoU with a num-ber of state enterprises and big companies in Indonesia on tick-eting.

“We have so far signed MoUs with 28 state enterprises to devel-op the corporate market,” he add-ed.

Last year Garuda signed MoUs with 580 major companies in In-donesia with a total income of more than Rp580 billion.

This year, Garuda has project-ed its earnings from sales to big companies at Rp2 trillion under similar cooperation schemes.

P T Timah (Perse-ro) Tbk reported last month its oper-ating performance

and unaudited financial state-ments ans that of its subsidiar-es for the period that ended on 31 March 2010.

The report mentioned the company’s net profit of Rp 141.8 billion, which is an 882% increase over the same period in 2009 of Rp 14.4 bil-lion.

The basic earnings per share

also increased by Rp 3,- over the period of 2009 to Rp 28,- per share in the first quarter of cur-rent year.

The increase in net profit is due to improvement in the world av-erage price of tin metal along with the recovery in consumer purchasing power.

The average price received by the company during the first quarter 2010 was US$16,970/Mton, which is 51% higher than that of last year (US$11,221/mton).

The highest price was 18,355/Mton and the lowest was 14,950/mton.

Meanwhile, the average ex-change rate was 20% lower than that of same period in last year, from Rp11,671 to Rp 9,475 per US Dollar.

OPERATION PERfORMANCERefined tin sales volume dur-

ing the first quarter 2010 fell 11% from 11,014 Mton in the first quarter of 2009 to 9,770 Mton.

Production of refined tin de-creased from 10,462 Mton in the first quarter 2009 to 9,266 Mton in the first quarter 2010.

Meanwhile, total tin-in-con-centrate production during the first quarter of 2009 went up by 40%, from 5,288 ton Sn to 7,397

ton Sn. Factors affecting the increase in

ore production is higher produc-tion of ore from inland mines, which was 5,241 ton or 93% higher than that of the produc-tion last year, which was 2,722 ton.

Ore production from offshore mines during first quarter 2010 slightly decreased, from 2,566 ton Sn to 2,156 ton Sn.

PT Timah also plans to in-crease its tin production to 50,000 tons this year through performance enhancement and increasing the number of suction boats for exploration.

“In 2010 we expect our tin ore production to reach 45,000 to 50,000 tons, up from 35,000

tons last year,” company spokes-man Wirtza Firdaus said here re-cently.

He said the company now has eight suction boats and plans to build bigger ones to achieve the production target.

Revenue from sales during first quarter 2010 is Rp 1,835.4 Bil-lion or 16% higher over the same period in 2009 of Rp 1,587.5 bil-lion.

The amount comes from re-fined tin sales which is Rp 1,541.2 billion and the remind-er is Rp 294.1 billion from non tin sales.

Total asset in the first quarter 2010 is Rp 4,933.9 billion, a drop of 2% over last year’s total value of Rp 4,855.7 billion due mostly to a drop in inventories.

PT Timah Posts Rp 141.8 B Net Profit in Q1

The debts of US$561 million in March 2010 consisted of US$320 million owed to the London-based Export Credit Agency (ECA), US$131 million to Floating Rates Notes (FRN) of creditors in Singapore, and US$105 million to PT Pertamina and Angkasa Pura I and II.

The increase in net profit is due to improvement in the world average price of tin metal along with the recovery in consumer purchasing power.

Photo: www.airlinersgallery.wordpress.com

Garuda will increase the number of its planes to 116 by 2014, from the current 68 units with destinations to 36 cities.

Aeroflot, Russia’s state-owned airlines

BusinessThe President Post www.thepresidentpost.comMay 12, 2010B2

Photo: The President Post/Nandi Nanti

The ministry of state enterpris-es will propose 10 state-owned companies to go public in 2011, Mustafa Abubakar has said.

“We have made ready at least 10 companies for privatization through an initial public offer-ing next year,” the state enterprise minister said at his office here last month.

He said the process of privati-

State telecommunications operator PT Indosat Tbk. booked a net profit of Rp285.9 billion in the first quarter this year which was up Rp119.5 billion or 139.2 percent from the same period last year.

“The growth is driven by improved parameters in com-pany operations,” its president director, Harry Sasongko, said in a press statement received here by The President Post last month.

In the first three months of this year the company earned Rp4.73 trillion, which was 2.5 percent higher than Rp4.616 trillion recorded before.

Operating expenses rose 11.4 percent to Rp3.968 tril-lion from Rp3.56 trillion ear-lier.

The company s EBITDA (earning before interest, tax, depreciation and amortiza-tion) was recorded at Rp2.244 trillion, up 3.3 percent from Rp2.173 trillion.

Its EBITDA s margin was Ten State-Owned Companies to Go Public in 2011

recorded at 47.13 percent, up 0.3 points from 47.1 percent before.

“We keep seeing continued im-provements marked by compa-ny earnings growth and the in-creasing number of customers,” he said.

In the first three months of this year the subsidiary of Qatar Tele-com added 5.98 million more customer numbers.

So, total numbers until the end of March 2010 are 39.1 millions, rising 17.6 percent from 33.3 numbers at the end of Decem-ber 2009.

Although seasonal dynamics usually hinders performance dur-ing the first quarter, this year s first three months have been a good start for Indosat.

“We keep working hard to as-sure more added value for cus-tomers and stakeholders,” he said.

The company s debt until the end of March 2010 reached Rp24.937 trillion up 8.6 percent from Rp22.970 recorded before.

PT Indosat’s Profit Up 139.2% in Q1

zation would be further discussed by the team of the Privatization Committee.

“Selection of companies to go public is still underway. However we are ready with 10 companies which will be prioritized for the privatization,” he said.

He did not mention the names of the companies that will be list-ed at the Indonesia Stock Ex-

CHEVROLET CRUZE:New Model for Comfortable, Safe DrivingJeannifer filly Sumayku

PT General Motors Autoworld Indonesia (GMAI) has launched Chevrolet Cruze and begun its first sale in Indonesia as of mid-

March this year. Entering the market as a compact

sedan with a coupe-like proportion (notchback), the all-new Chevrolet Cruze is expected to lead in the D-segment class by way of its futuristic exterior design and sporty, comfort-able and relieved modern interior, complemented with an abundance of features and technologies.

Chevrolet Cruze carries 1.8-liter en-gine DCVCP DOHC (Double Continu-ous Variable Cam Phaser) and is avail-able in two variants, namely manual transmission 5-speed and automatic transmission GM Tiptronik 6-speed (the only one in its class). They are, respectively, priced at Rp 309 million and Rp 335 million (on the-road in Jakarta).

“Chevrolet Cruze is more stable than other Chevrolet models in In-

donesia,” says Managing Director of GMAI Mukiat Sutikno.

“After proving its superiority in the European and Asian markets—im-mediately after it was launched in the United States—Chevrolet Cruze will show its mettle in the medium sedan segment in the Indonesian market,” Mukiat added.

Chevrolet Cruze first appeared at the Paris Motor Show 2008 and was selected as one of the ten best cars worldwide (World Car of the Year 2010) by 59 international automotive journalists.

Besides the award, Chevrolet Cruze also achieved 5-star ratings in impact tests conducted by Euro NCAP (Euro-pean New Car Assessment Program), CNCAP (China New Car Assessment Program), as well as in ANCAP (Aus-tralasian New Car Assessment Pro-gram).

The technical development project of Cruze, which is coded J300, was started in 2006 under the control of GM’s European headquarters in Rüs-selsheim, Germany.

As for the design work, the entire creative team collaborated in the fa-cility of GM DAT (GM Daewoo Auto Technology) in Incheon, South Korea.

Before reaching the point of design and the most perfect technique, GM designers and engineers created 221 prototypes for testing in Australia (Holden), Canada, China, South Korea (GM Daewoo), Sweden, United King-dom, and the United States.

Tests were carried out at regions of extreme low and high temperatures in order to achieve the best durabil-ity conclusions. The Cruze’s road test covered desert and snow-covered mountains, totaling 4 million miles or equal to 160 times of travel around the earth.

The result: Chevrolet Cruze earned praise from not only consumers but also the international media.

U.S. President Barack Obama even called the Chevrolet Cruze “The Car of the Future”, and once embellished the hood of a Chevrolet Cruze with his signature .

The car’s overall dimension is

4,597mm by 1,788mm wide and 1,477mm high, while the axle reaches 2,685mm with the front wheel foot measuring 1,544mm and 1,558mm of rear wheel foot.

The Cruze’s interior combines fash-ion values and function that charac-terize a new modern sedan for pre-mium consumer needs.

Besides offering spacious atmo-sphere with elements of a new de-sign, the dual cockpit configuration of Chevrolet Cruze has an impressive concept of personalization, both for the driver and passenger.

To achieve reliable performance, Chevrolet Cruze, which has garnered a Euro 3 specification (special for In-donesian market), is equipped with a new generation of engine, a 1.8-liter DOHC DCVCP.

GM global products that use the Delta II platform is able to reach an energy level of 141 at 6200 rpm (revo-lutions per minute machine) and 176 torques at 3,800 rpm.

Chevrolet Cruze’s fuel supply sys-tem of Multi Point Injection com-

change, saying only that some of the companies are operating in the plantation and construction sectors.

According to records, some of the companies once proposed for privatization are plantation com-panies PT Perkebunan Nusan-tara (PTPN) III, PTPN IV and PTPN VII and construction company PT Waskita Karya.

The plan had been discussed at the House of Representatives but due to poor market conditions as a result of a financial crisis in 2008 it had been postponed.

Regarding Waskita Karya, the company still had yet to put its balance sheet in order and finish its restructuring.

Other state-owned companies

Some of the companies once proposed for privatization are plantation companies PT Perkebunan Nusantara (PTPN) III, PTPN IV and PTPN VII and construction company PT Waskita Karya.

once mentioned to go public are Perum Pegadaian (pawn service) and PT Pelindo II (port manage-ment).

“The government has encour-aged state-owned companies to go public with a view to making their management more trans-parent and promoting good cor-porate governance to increase their value,” Mustafa said.

Chevrolet Cruze first appeared at the Paris Motor

Show 2008 and was selected as one of

the ten best cars worldwide (World

Car of the Year 2010) by 59 international

automotive journalists.

bined with Double Continuously Variable Cam Phaser (DCVCP) is based on sophisticated technology that can combine accurately performance and fuel efficiency in various driving condi-tions.

With this technology, Chevrolet Cruze is able to create spontaneous acceleration with low consumption of fuel.

The results of fuel consumption test conducted by Indonesia GM team shows that Chevrolet Cruze con-sumes 1:14 (1 liter for 14 kilometers) in the city with normal traffic (not in a severe traffic jam) and 1:17 (for 1 liter for 17 kilometers) in a condition of constant velocity of 80 km per hour when speeding on the highway.

Chevrolet Cruze also offers a stan-dard safety featuring a key with immo-bilizer systems and alarm, brakes with the support of ABS (Anti-Lock Braking System), EBD (Electronic Braking Dis-tribution) and BA (Brake Assist).

These last three features suggest that Chevrolet Cruze will able to ad-just to different road surfaces, both

wet and sandy, optimally.In Indonesia Chevrolet Cruze is

equipped with glass panes of bul-let-resistance capacity combined with solar control windows.

The Chevrolet Cruze that is mar-keted in Indonesia is available in five colors: Red Velvet, Light Gold, Poly Silver, Pewter Gray, and Car-bon Flash Black.

In the photo:Steve Carlisle - President Director GM ASEAN, Mukiat Sutikno- Managing Director PT GM AutoWorld Indonesia, Debora Amelia Santoso- Marketing & PR Director PT GM AutoWorld Indonesia

In the first three months of this year the company earned Rp4.73 trillion, which was 2.5 percent higher than Rp4.616 trillion recorded before.

IHSG’S NEW RECORD LEVEL: The Indonesian bourse composite index (IHSG) hit the 2.995,302 mark, several points behind the psychological level of 3.000, thanks to a buoyant Wall Street and positive sentiments on domestic shares.

The President Postwww.thepresidentpost.com May 12, 2010 B3

Investment

Capital Investment Coordi-nating Board (BKPM) Chief Gita Wirjawan expressed op-timism that investment in In-donesia will grow 10 percent to 15 percent in the first quar-ter of this year.

After an expose at the Asia Pacific Ministerial Confer-ence here last month, he said Indonesia s economy was viewed positively by investors.

The country s economy, which grew 4.5 percent amid world economic meltdown in 2009, would be an added val-ue for the country, he said.

“Investors believe the the atmosphere in our country is conducive,” he said.

He added he plans to an-

D ayaindo Resources (KARK) plans to go ahead with its rights is-sue plan at the end of

June despite facing a legal dis-pute.

Dayaindo Corporate Secretary Dayaindo Endang Wijaya said the company will use the pro-ceeds to finance its acquisition plans and to strengthen its work-ing capital.

Endang said Dayaindo will submit documents to the Capi-tal Market and Financial Institu-tion Supervisory Agency (Bape-pam-LK) for effective statement for the rights issue in early May and use its 2009 financial state-ment.

Dayaindo SVP Investor Rela-tions Frederik Watimena said the company already has a standby buyer for the rights issue but that it was still optional.

“The company will acquire a

Ramayana Lestari Sentosa Tbk (RALS) denied rumors which claimed that it still owed the gov-ernment tax payment, saying that the claim was irresponsible and untrue.

“The reports are untrue and a lie which were spread by irrespon-sible people,” RALS legal counsel Mucthar Luthfi in a press state-ment in Jakarta.

Muchtar said Ramayana is a public company and that its fi-nancial statements are audited by a credible public accountant. He said that the retailer pays more than Rp250 billion in tax a year to the state.

“Up until now, the company never has any tax payment ar-rears,” he defended.

He elaborated that the 2004 tax case involved the company’s president commissioner Paulus

Cellsafe International Group, a regional stem cell biotechnolo-gy company, is to expand its bio-technology business and research and development activities in In-donesia following a strategic part-nership with PT Kimia Farma TBK (Kimia Farma).

Cellsafe, through its subsid-iary, PT Cellsafe International, last month signed a memoran-dum of understanding (MoU) with Kimia Farma, a leading in-

The Capital Investment Coordinating Board (BKPM) has approved in the first quar-ter of this year 20 new foreign investment projects worth US$16.9 million in Batam, Riau Islands province.

The projects come from Singapore, Malaysia, Taiwan, Australia, Norway, South Ko-rea and the Netherlands, head of marketing and public rela-tions of BP Batam, Rustam H

T he ability of American companies to invest in Indonesia - the world s fourth most-populous

country - through the support of the Overseas Private Investment Corporation (OPIC) was im-proved last month by the conclu-sion of an agreement between the two countries.

A US Embassy media release made available to The President Post said OPIC Acting President Lawrence Spinelli and Gita Wir-jawan, Chairman of Indonesian Investment Coordinating Board, signed on April 13 the investment support agreement at a ceremo-ny in Washington, D.C. attend-ed by Indonesian Vice President Boediono.

The new agreement updates a 1967 pact between the Unit-

BKPM Chief Sees Q1 Investment Growing at 10-15 pct

nounce investment results of the first quarter of this year next month.

Regarding the revised assump-tions in the national budget, Gita said they were still on the right track.

He said the fact that the as-sumed economic growth figure had been revised from 5.5 per-cent to 5.8 percent would not change the target of investment growth, especially with regard to gross fixed capital formation (PMTB).

“We need PMTB to grow 7.8 percent to support 5.5 to 6.0 per-cent growth. So it is still on the right track,” he said.

He said the PMTB must reach 10 percent to 11 percent in 2012 to be able to support the 2014 budget that is expected to reach Rp2,000 trillion.

Hutapea, said last month.He said the number of approv-

als this year was higher than in the same period last year, which was recorded at 18.

Meanwhile the value of in-vestment projects approved this year rose 1.43 percent from US$16,649,493 in the same peri-od last year.

Their businesses include ship building/repair, restaurant, recre-

BKPM Approves 20 Foreign Investment Projects in Batam

ation and trading.Other businesses include elec-

tronic component, machinery/processing equipment/metal works, electricity control equip-ment, oil and gas mining sup-porting services, rubber goods, garments, housing, property de-velopment, business consultan-cy and management, loading and uploading services, metal pro-cessing and metal goods.

Gita Wirjawan, BKPM Chief

OPIC Signs New Investment Agreement with Indonesia

ed States and Indonesia by add-ing OPIC products such as direct loans, coinsurance and reinsur-ance to the means of OPIC sup-port which U.S. companies may use to invest in Indonesia.

Noting the importance of de-veloping a “mutually-advanta-geous economic relationship” between the two countries, the agreement affirms “a common desire to encourage economic ac-tivities in the Republic of Indone-sia that promote the development of the economic resources” of In-donesia.

“Indonesia offers a large and dynamic market for U.S. invest-ment, which in turn will support Indonesia s economic growth, a prospect that is only improved by the conclusion of today s agree-ment,” said R. Spinelli.

“We look forward to working closely with both U.S. and In-donesian companies to facilitate new levels of investment in Indo-nesia,” he added.

Spinelli noted that over its 39-year history OPIC had commit-ted more than $2.1 billion in financing and political risk in-surance to 110 projects in Indo-nesia.

Currently, OPIC is providing more than $94 million in sup-port to six projects in Indonesia, in the energy, manufacturing and services sectors.

OPIC was established as an agency of the U.S. government in 1971.

It helps U.S. businesses invest overseas, fosters economic de-velopment in new and emerging

markets, complements the pri-vate sector in managing risks as-sociated with foreign direct in-vestment, and supports U.S. foreign policy.

Because OPIC charges market-based fees for its products, it op-erates on a self-sustaining basis at no net cost to taxpayers.

OPIC s political risk insurance and financing help U.S. business-es of all sizes invest in more than 150 emerging markets and devel-oping nations worldwide.

Over the agency s 38-year his-tory, OPIC has supported $188 billion worth of investments that have helped developing countries to generate over 830,000 host-country jobs. OPIC projects have also generated $72 billion in U.S. exports and supported more than 273,000 American jobs.

Dayaindo to Proceed with Rights Issue Plan Amid Legal Dispute

coal and nickel mine land and infrastructure business in Cen-tral Kalimantan,” Frederick told journalists in Jakarta.

Meanwhile, on the bankrupt-cy lawsuit filed by Alam Baru Mandiri (ABM) against the company, Frederick said it was wrongly addressed. ABM had ac-cused Dayaindo of failure to meet its Rp3.17 billion debt obligation and thus filed for a bankruptcy suit against the company in the Central Jakarta District Court.

“The (court) summon was wrongly addressed. The sale and purchase agreement involved Dayaindo’s subsidiary Risna Karya Wardhana Mandiri,” he said.

Frederick stressed that Dayain-do did not have a contractual ob-ligation to ABM. He said that Risna Karya Wardhana Mandi-ri (RKWM) requested for coal delivery from ABM and that

RKWM had made payment ac-cording to the agreement be-tween both sides. He attributed the late payment from RKWM to ABM’s negligence for not sending invoice and other docu-ments.

Dayaindo received a court sum-mon as defender in a bankruptcy suit on 28 April 2010. The case prompted the Indonesia Stock Exchange to suspend its shares from trading at the bourse.

Meanwhile, ABM through its lawyer Indra Prasetya said that the sale and purchase agreement with Dayaindo was made in Oc-tober 2009.

He added that the compa-ny has evidence of a blank check payment from Dayaindo for the third shipping and that it read payment for coal.

“We agreed on 80% advanced payment during bill of landing and that has been made in four

phases. The remaining 20% should be made once the certifi-cate from Sucofindo is issued. We already obtained it, but we still haven’t received the payment. We have also tried to talk to them but Dayaindo continued to avoid it. This means it doesn’t have good will,” he elaborated.

Ramayana Denies TaxArrears Rumor

Tumewu, who was accused of not paying personal income tax payment of Rp7,994,617,750.

However, Paulus has paid his Rp7,994,617,750 tax arrears plus fine which is four times the amount of the tax arrears, bringing the total amount to Rp31,978,471.000.

As the result, the finance min-ister sent the attorney general let-ters dated 16 October and 31 Oc-tober 2006 to ask for a halt on the legal process of Paulus’ case be-cause he had paid his tax arrears plus fine.

In a separate development, RALS has invested Rp85 billion to build a mall in Depok that can absorb up to 650 workers.

Ramayana President Director Setiadi Surya said he is certain the new mall will not kill the tra-

ditional market business in De-pok.

“There is only one traditional market in Cinere and it is run by the private sector,” he said.

Setiadi also announced the company’s plan to invest in Jay-apura this year, which is aimed to support the government’s goal to boost independence of regional governments.

“We will invest in Abepura, Jayapura this year because we want to expand across Indone-sia and help the regional govern-ment to become more indepen-dent,” he explained.

Ramayana is a publicly listed company with business lines in the department store, children’s entertainment center, and food court. The company has 105 out-lets across Indonesia and employs up to 50,000 workers.

Cellsafe to ExpandBiotech Activities

tegrated healthcare services com-panies in Indonesia.

Cellsafe Executive Director Lau Kin Wai said the compre-hensive partnership involved co-branding and co-marketing ar-rangements that would allow the group to harness the vast resourc-es and in-depth market knowl-edge of Kimia Farma.

Kimia Farma operates one of the largest network pharmacies

in Indonesia, with more than 400 outlets and owns more than 80 pharmacies in different hospi-tals.

“Cellsafe has set up one of the largest stem cell cryogenic labo-ratories in Indonesia. With this partnership, we will be construct-ing a new state-of-art stem labo-ratory at a co-located facility with Kimia Farma Diagnostic,” he said after the MoU signing.

Ed KrancherManaging ConsultantHay Group Jakarta

ManagementThe President Post www.thepresidentpost.comMay 12, 2010B4

What the Leader at the Top Wants to Know:How to Create a Winning Top Team

Lusi LubisManaging ConsultantHay Group Jakarta

The leader at the top of an organization,

typically the CEO or Presidents director, is challenged with

many complex issues on a daily

basis where increasingly complex

information needs to be synthesized

and critical decisions need to be made

promptly . Leading a big organization is too complex to

be done by one person. This is

where a leadership team comes to play

and can help the top leader with the critical functions to be performed. The

leading of a team of leaders can be a difficult exercise for

the leader at the top. Members of the top team have often strong personalities and their own ideas

what needs to be done.

This leaves the top team leader

with a burning question: “How can

I create a winning top team that is

able to formulate and execute the right strategy, is able to achieve

the organizations objectives and can

collectively respond in a decisive and swift way to the

challenges that the organization faces?”.

In this article Hay Group shares knowledge from rigorous research, in-terviews, observations and extensive top team coaching and top team

intervention experiences. We will discuss six key issues that the top leader (in this article further re-ferred to as CEO) needs to face when creating a top team and six conditions that can be put in place to increase the team’s ca-pabilities which will enable their success.

ISSuE 1: WHAT KIND Of TEAM DO I WANT, If ANY?

There are many reasons why the CEO needs a top team: to help formulate and execute a strategy, to help reach company objectives, or to assist in quick-ly responding to market condi-tions. Our research shows that in essence there are four types of teams:

Information sharing (or align-•ment) teamConsultative team - advises the •CEO on specific topicsCoordinating team -which •deals with company wide is-sues, and focuses on execution of the company’s strategyDecision-making team - which •focuses on concerns of the whole organization

Condition 1: You must have a real team

In order to create an effective leadership team, the team must be bounded, stable and interde-pendent. Creating a bounded team means that it is clear who is, and who is not on the leadership team. An unbounded team is one in which each member has a dif-ferent perception of who is on the team. It seems obvious that it must be clear who is on and who is not on the team. But in our re-search and team coaching experi-ence we see that most often this is not clear at all. Often there are many different opinions who is really on the team and who is not. Many times we find that of let’s say 12 people in the room, answers can range from all 12 are team members to only 4 people form really the team.

In addition, the team must be stable, meaning the members are kept in place for some length of time, without turnover; and the members must be interdepen-dent and share accountability for a common purpose.

An interesting observation is that when teams are large, this might be evidence that there is more than one team present try-ing to act as one. For example CEO’s often include members who are primarily concerned with daily operations as part of the more strategic decision making team. As a result neither the stra-tegic agenda nor the operational one is adequately addressed.

ISSuE 2: DO YOu KNOW WHAT THE PuRPOSE Of YOuR TEAM IS?

Often CEO’s have a hard time explaining to their leadership team what its purpose is. Why is it so difficult? The purpose of the team may not be immediately ap-parent to the team, or to it’s lead-er. A leadership team’s purpose is not the same as the purpose of the organization, and it’s not just an exercise in execution.

The CEO must find a way to express to the team what its unique value-added purpose is. They could, for example, be in-volved with the initial pub-lic offering, going international, acquiring another company, di-versification, growing into an in-vestment holding instead of an operating holding, or helping to bring new products to market. The mix of skill sets and compe-tencies of the top team must be attuned to the unique value add-ed purpose of the team.

Condition 2: A compelling purpose

Great leadership teams have

three key components to their purpose:

The purpose is clear - they •must be able to envision what the company looks like when they have reached their goalThe purpose is challenging - •it must be a stretch to achieve, but not impossibleThe purpose is consequential - •it must have a vital impact on the company

From our experience and re-search we see that most team members feel their work is very important and is challenging, but most are also unclear about the exact purpose of the team. Is it about providing a joint strategic direction is it on evading emerg-ing crisis, is it on information sharing about individual func-tions, is it on ... what is it on? If your not clear on the purpose, how then to achieve the objec-tives of the team. Actually most often, if there is no clarity on the purpose of the team there will also be some unclarity on the ob-jectives of the team. Also remem-ber that a top team does not only have to deal with strategic issues. In fact, it’s quite common for top teams to deal with tactical issues that are critical to the organi-zation. Just be sure to pick your (right) top team fights.

ISSUE 3: WHO SHOULD BE ON THE TOP TEAM?

Often the CEO ends up with the wrong people on the team? The first (wrong) assumption is that direct reports should be on the team. However we find that the best performing top teams consist of leaders who are there because they can contribute to the top team purpose, not be-cause they are a direct report of the CEO. Secondly, some CEO’s feel the best choice for the top team are the star performers of the company. Although these shining stars may appear to be the

best choice for top teams, they of-ten have a mindset of looking out for their own division as individ-ual performers, rather than hav-ing the company-wide vision that is necessary for contributing to a leadership team. Sometimes the CEO must make the hard call of removing or not allowing a top performer to the top team in fa-vour of the greater good of the top team.

Condition 3: The right peopleThe third essential condition

is for the CEO to get the right people on the team, and get the “de-railers” off. It requires mak-ing tough decisions and having some hard conversations. The top team needs people who can take an enterprise perspective and be involved in all issues brought to the table, and not focus solely on their own area of responsibil-ity. It also needs people who can work collaboratively and with in-tegrity.

How do you as a CEO know if there are de-railers on the team? Watch for team members who seem to have difficulty in see-ing other people’s perspectives, undermine others, bring out the worst in other members of the team, and often lack integrity. However, you need to be cautious when labelling someone a de-rail-er. A person is not a de-railer sim-ply because they have a differing opinion, or they create conflict in the team. Team members can often display conflict behaviour if the mission of the team is not clear or there are great challeng-es to be overcome; this does not mean they are de-railers. Nev-er assume that a leadership team will operate smoothly and with little debate. In fact, it’s good for a leadership team to have confron-tational, robust, passionate and

heated discussions about impor-tant issues to arrive at the right supported decision.

These first three conditions make up the three essentials for any leadership team, and they are all inter-related: create a real team, make sure it has a compel-ling purpose, and make sure the right people are on the team (see the top part of the picture). If you as a top team leader can not do these three things to a reasonable degree, then it’s better to not have a team at all.

ISSuE 4: MEMBERS THINK MEETINGS ARE A WASTE Of TIME

The fourth challenge a CEO faces in directing the top leadership team is when members think that meetings are a waste of time. This usually occurs when either the group is too large or the tasks members are asked to do as a team are trivial relative to their individual leadership roles.

When planning an important meeting, the leader of the team should be sure the agenda is clear, the intended outcomes are clear, and members are prepared to discuss and make decisions. Nothing is more frustrating to leaders than spending hours, or even days in a meeting, only to emerge with few or no decisions having been made.

Condition 4: Sound structureCreating a sound structure for

teams is an enabler to success. Three ways to create a sound structure include:

Keep the team as small as pos-•sible; in the single digitsEnsure the agenda is meaning-•ful and linked to the purpose of the teamEstablish norms of conduct •– members must understand what is always done, and what is not done during meetings and outside

In our research and top team intervention experiences we found that these three qualities are important starting points for having an outstanding leadership team. Poor teams have less sound structures. When a poor team starts building on a clear meet-ing agenda and outcomes, are on the same page regarding the do’s and don’ts of the top team and the team is within the single dig-it size, within a couple of months real progress is noticeable to all team members.

The CEO can ensure that meetings are an effective use of time by following a few simple steps: choose the agenda items, set the norms of preparation, and ask members to distribute mate-rials in advance of the meeting. These simple steps will add to the effectiveness and efficiency of the meeting, will reduce the irritation level on the meeting process, will put more focus on the real issues at hand and even provides room for a relaxed atmosphere, creativi-ty and some laughter. Also a good assistant to the top team can work wonders here.

ISSuE 5: HOW COME THE TEAM IS NOT AS PRODUCTIVE AS IT COuLD BE?

What gets in the way of a team's productivity?

The team lacks useful data•Rewards that undermine col-•laborationMeetings logistics: Poor space, •little time, allowed interrup-tions

Condition 5: A supportive context

Excellent CEO’s create a con-text that supports the team's pro-ductivity. There are four basic components to a supportive con-text:

Rewards alone do not cre-•ate collaborative behaviour, but if used the wrong way, re-wards can actually undermine the team's effectiveness. Re-wards should not be used in a way that creates competition amongst team members. This fosters mistrust amongst team members.Provide needed information, •especially financial data in an accessible format.Provide any consultation or •training needed to build their expertise or knowledge base.Provide administrative sup-•port, space, minimization of interruptions and the time needed to be effective.

The challenge is to think about what obstacles the team has to

working effectively, both with-in a meeting context and outside the meetings, then to come up with solutions that help the team interact and work more effective-ly. You can for example start with meeting out of the office for the first few meetings to let every-body feel what it is like to work in a focused environment that fos-ters the needed teamwork.

ISSuE 6: ALL THE BASICS ARE IN PLACE BuT THE TEAM IS STILL STuCK?

When all previous discussed conditions are in place, and still there is little or no progress in team effectiveness, the team could be stuck. If this is the case it could be beneficial to bring in an external team coach who is skilled in working with exec-utive leadership teams. At that point the team will not benefit from providing all the individu-al team members with a coach. More beneficial is to have the team coached as a whole to per-form and behave as one team.

Condition 6: Expert team coaching

Three conditions that can be put into place when a team is stuck are:

Team coaching - as an entity•Use an external coach who is •skilled in working with leader-ship teamsPlace the same importance on •leading the top team as you would in interacting with ev-ery other constituency

The purpose for bringing in the coach must be clear to all top team members. The coach should not become a facilitator of meet-ings, but rather needs to focus on coaching the team. The coach-ing can have the characteristics

of relationship building, it can be a task-focused intervention or a combination of both. It is impor-tant to assess the team’s situation before choosing for a certain ap-proach. When aiming for a task focused intervention the dynam-ics of interrelationships should not be forgotten. When aiming for relationship building the pur-pose and tasks of why the team was brought together should not be neglected. Flexibility on react-ing to the team’s most immedi-ate and prominent needs is key when going through the process of team coaching.

Top leaders tend to pay a lot of attention to dealing with boards, shareholders, analysts, or key cus-tomers, but if one group suffers from a lack of the CEO’s atten-tion, it is the leadership team. It's a matter of making the leadership team a priority. The way forward for teams that are stuck is to con-sider external team coaching, and for the leader at the top to place priority on leading the top team.

These last three conditions are enablers that accelerate top team development, and avoid the team getting stuck. Having a sound structure, providing a support-ive context, and engaging team coaching help leadership teams succeed (see the bottom part of the picture).

CONCLUSIONLeadership teams are critical to

an organization’s success. Time commitment in creating a cohe-sive team at the top is well worth the investment. The key success factors that the CEO needs to keep in mind are to have a real team, with clear boundaries, the right people, and a compelling direction. Good leaders enable their top teams to succeed by pro-viding a supportive context with useful information, administra-tive support, and time for them to do their work. They also pro-vide a sound structure, by keep-ing team membership relative-ly stable and establishing norms of conduct for how team mem-bers are to engage with each oth-er inside meetings and out. And lastly, they bring in external team coaches when needed.

About Hay GroupHay Group is a global consult-

ing firm that works with lead-ers to turn strategies into reality. We develop talent, organise peo-ple to be more effective, and mo-tivate them to perform at their best. With 86 offices in 47 coun-tries, we work with over 7,000 cli-ents across the world. Our clients are from the public and private sector, across every major indus-try, and represent diverse business challenges. Our focus is on mak-ing change happen and helping organisations realise their poten-tial. Visit www.haygroup.com.

TEAM LEADERSHIP

RightPeople

SolidStructure

SupportiveContext

CompellingDirection

TheEssentials

TheEnablers

Team Coaching

Real Team

SIx CONDITIONS fOR HIGH PERfORMING TEAMS AT THE TOP(*)

(*)HayGroup Global Research on Highly Effective Teams at the Top.

The key success factors that the CEO needs to keep in mind are to have a real team, with clear boundaries, the right people, and a compelling direction. Good leaders enable their top teams to succeed by providing a supportive context with useful information, administrative support, and time for them to do their work.

Time commitment in creating a cohesive team at the top is well worth the investment.

The President Postwww.thepresidentpost.com May 12, 2010 B5

Leadership

Dr. Karan Singh MBA, DBA, Organization Development Consultant, is presently Management Development Director at President University, and Managing Consultant of PT King & Singh Consulting. In his seventeenth year in Indonesia, Dr. Singh has wide experience, across a range of multinational companies, in areas like corporate training, market entry strategy, integrated marketing (external and internal marketing), communications, and human performance improvement.

“Self Managed Work Teams are not for the faint of Heart” – Fred Eintra-

cht, a manager who pioneered Self Determined Work Teams (SDWTs) at Texas Instruments. Changing into a Team Leader is very difficult and not everyone makes it.

At the very outset, the first big issue is role clarification; “don’t control”, “don’t direct people any more”, “Lead instead of Man-age”, “Be a Coach instead of a Boss”, leave many a Leader con-fused about having a role at all.

Then the typical transition problems from a tried and trust-ed system to something quite dif-ferent. According to the author, there are 4 most common rea-sons for Supervisor Transition difficulty:

The change to SDWTs is of-1. ten seen as a net loss of pow-er or status.The Team Leader role has not 2. been well defined for most su-pervisors.Some Supervisors are con-3. cerned that SDWTs could be a threat to their job.

In what may be called a double 4. standard syndrome, many su-pervisors are expected to man-age in a way that is very dif-ferent from the way they are managed themselves.

1. POWER AND STATuSPeople are unwilling to give up

what they have all along come to value – Perquisites; as in the case of two senior level supervi-sors who had been asked to give up certain perquisites to create an egalitarian climate. One hesitat-ed to forego his preferred parking space and another his spacious office – both symbols of success in the corporate world.

Titles. “What am I going to tell my mother?” said the burly mid-dle-level supervisor from Shell Canada during a training session in which he objected to giving up his title of Director; and per-ceiving the loss as a demotion. In preventing these normal desires from interfering with workplace effectiveness, some companies are holding sessions for families of former supervisors to reduce the anguish and scepticism.

This would be even more diffi-cult to manage when one consid-ers ‘Culture’, and the ‘Power Dis-

tance’ variable within Culture. Creating SDWTs in companies within countries with high scores in Power Distance would pose a far greater challenge than in low Power Distance societies like the US, UK, Canada or Australia. ‘Power Distance’ as defined by Geert Hofstede is the degree of equality, or inequality, between people in the country’s society. A High Power Distance ranking in-dicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not al-low significant upward mobility of its citizens. A Low Power Dis-tance ranking indicates the soci-ety de-emphasizes the differenc-es between citizen’s power and wealth. In these societies equali-ty and opportunity for everyone is stressed.

2. WELL DEfINED ROLE Of TEAM LEADER

The loss of power concerns are reduced when organizations cre-ate appropriate and clear Team Leader Roles and give them an understanding of Boundary Con-ditions.This also clears a miscon-ception that SDWTs are a win-lose game which the workers win.

In addition, the process of imple-mentation of SDWTs when done in stages allows for education and preparation.

Pamela Posey and Janice Klein in identifying the ‘job description’ of the Team Leader conclude that the following three attributes are consistently associated with the most successful leaders:

The ability to create strong mu-•tual respect between the work-ers and the leader.Assuring that the job gets •done.Providing leadership in getting •problems solved.

In addition Kimball Fisher, au-thor of ‘Leading Self Directed Work Teams’ presents the essen-tial contrast between a tradition-al supervisor and a Team Leader (Figure 1)

3. JOB SECuRITYApart from Self-directed or

Self-managed ‘sounding’ like ‘no supervisors needed anymore’, there are ample examples that help reinforce this belief:

Dana corporation publicly •announcing the reduction of management levels from 14 to 6 due to moving responsibil-ities down into the organiza-tion.General Mills claiming that •much of productivity improve-ments accrued due to the elim-ination of middle manage-ment.Other companies like Mon-•santo and Tektronix having of-fered early retirement incen-tives to encourage downsizing, and then institute SDWTs

4. DOuBLE STANDARDSSeen as something “the top

tells the middle to do with the bottom”, SDWTs could not be implemented successfully if there is lack of visible attitude and be-

Can you do it?The Transition from Supervisor to Team Leader

By Dr. Karan Singh MBA, DBA

The change from “manager” to “leader” is the most difficult as most have been rewarded, recognized and promoted for their controlling skills and not for their savvy in Delegation, Coaching or Facilitation.

SUPERVISOR TEAM LEADER

Plan, organize, direct and control Ensure that resources are available for the team to produce on-time quality product and/or services

Meet cost, quality and delivery objectives Develop team maturity – coach and counsel

Manage daily problems Represent team in organization-wide activities

Coordinate activities and resources Train and lead team in problem solving

Plan and implement improvements Motivate team to achieve goals

Administer safety, housekeeping, and com-munications programmes

Assume responsibility for indirect tasks

FIGURE 1: THE ESSENTIAL CONTRAST BETWEEN A TRADITIONAL SUPERVISOR AND A TEAM LEADER

fIGuRE 2: THE RELATIVE DIffICuLTY Of CHANGING TO SDWT

Time

Tran

sitio

n D

iffic

ulty

NonManagers

Supervisors &Managers

haviour on the part of top man-agement.

The change from “manager” to “leader” is the most difficult as most have been rewarded, rec-ognized and promoted for their controlling skills and not for their savvy in Delegation, Coaching or Facilitation. And giving up con-trol for a human being is not that easy. Which reflects in the fact that it is harder for Team Leaders than Team Members to change

to SDWTs – as illustrated in the Figure 2.

While the change from Super-visor to Team Leader is much like most ‘Change’; difficult to imple-ment due to inertia and momen-tum. The good news is borne in the success of the various pro-grams in companies like Kodak and Procter & Gamble, with the tremendous results that have ac-crued due the implementation of Self Directed Work Systems.

TravelThe President Post www.thepresidentpost.comMay 12, 2010B6

At the entrance to the Bali Safari & Marine Park, visitors are wel-comed by a host of aquariums that houses an impressive and col-

orful collection of marine crea-tures you may never have seen be-fore unless you’re an avid diver.

But all that is nothing com-pared to the (at least) 400 amaz-ing animals representing more than 80 species, including those that are rare and endangered, that also occupy the 40-hectare park.

For starters, there are Sumatran elephants, Sumatran and Bengali white tigers and leopards. In ad-dition, komodo dragons, hippos and cheetahs, not to mention all sorts of reptiles that are kept out of harm’s way.

And if that’s not enough to satiate your zoological taste, li-ons, zebras, alligators, bears and primates – all roaming in large, near-natural settings, including a monkey-inhabited rainforest, a tiger habitat and a savannah-like landscape with wild beasts – are at your disposal in the theme park.

A few hours at the park is akin to experiencing an incredible ad-venture into a wildlife world, as a ‘safari journey’ offers visitors 40-minute close encounters with an array of fauna from the com-forts of specially-designed busses passing through their habitat.

Tourists with limited time on their hands may have to be coaxed into visiting the park, as Bali is not exactly a place you

go to marvel at the world of an-imals.

But after a while being with-in the premises – green, cool and clean—you get the unmistakable feeling that you should stay lon-ger than you had planned for.

And, perhaps, even revisit the place before you leave Bali.

The Bali Safari Park comes well recommended as it is a mem-ber of WAZA (The World Asso-ciations of Zoo and Aquariums), SEAZA (The South East Asians Zoo Associations), and CBSG (Conservations Breeding Special-ist Group).

It is operated by Taman Safa-ri Indonesia, which is also behind the very successful 130-hect-are Safari Theme Park in Bogor, West Java.

Opened in October 2007, the Bali Safari Park was designed by an American architect whose field of expertise is in designing animal-friendly wildlife theme parks around the world.

“The architect and his team took pains to develop a park that was as close as possible to the nat-ural habitats of its animals and to ensure that the conservation of rare and endangered animals is managed well,” said the park’s guide .

The venture currently employs over 250 people, that is expect-ed to rise to about 400 as more animals need to be cared for and

many more visitors are expected to visit the site.

The park offers a full range of amenities such as large restau-rants, a 1200-seat theatre and exhibition area, “Amazon Wa-ter Cruise”, the Safari Lodge, an environmental education centre, fun zones, a water park, amuse-ment rides and open recreational and picnic areas.

Fun Zone was designed for children below ten years of age who wish to amuse themselves on a carousel, riding in a Climbing Car or trying the Go Go Bounc-er.

One spot that stands out is the African-inspired Tsavo Lion res-taurant at the Mara River Safa-ri Lodge. It also happens to be the place where lions make their home, observable from the glass wall encircling the eatery. And that is as close an encounter as you can get with wild beasts without risking your life.

HOW TO GET THEREThe theme park is located

near Lebih Beach in Gianyar, a few minutes from Sanur and less than 30 minutes from Bali’s cap-ital city of Denpasar, at the Prof. Dr. Ida Bagus Mantra Km 19.8 highway.

All That FaunaText and photos by Taufik Darusman

You would think visiting a theme park in Bali is the last thing

vacationers would do, what with the limited

time they have and the abundant tourism and cultural sites in store in

the paradise island.

The park offers a full range of amenities such

as large restaurants, a 1200-seat theatre and exhibition area,

“Amazon Water Cruise”, the Safari Lodge,

an environmental education centre, fun

zones, a water park, amusement rides and open recreational and

picnic areas.

There are (at least) 400 amazing animals representing more than 80 species, including those that

are rare and endangered, that also occupy the 40-hectare park.

minor heart attack after she lost 100 pounds on a diet of Red Bull and the occasional fistful of dry cereal.

Despite the international publicity, Bacon doesn’t think desperate dieters will consider Robertson a cautionary tale. “There’s absolutely no bene-fit to fasting or detoxing,” she says. “Extreme diets are sim-ply bad for you and they don’t work. But every year people engage in magical thinking.”

HOW TO LOSE WEIGHT—SAFELY

If you’re overweight, slim-ming down is critical for your overall health. Even moder-ate weight loss can lower your risk of developing heart dis-ease, diabetes, and some types of cancer.

But it’s important to lose weight safely, which usually means slowly: Most experts recommend dropping just 1 to 2 pounds a week. And de-spite what some brand-name diets claim, the best way to do so is to exercise regularly and stick to a diet that limits sat-urated fat and sugars and em-phasizes fruits and vegetables, lean meats and fish, and whole grains.

“The key to losing weight is a combination of diet and exercise,” says Dr. Rosenfeld. “One alone will not do it.”

(health.com)

The President Postwww.thepresidentpost.com May 12, 2010 B7

Health

Dengue fever is a dis-ease caused by the dengue virus, which can be transmitted, to humans by the bite of an infected

Aedes mosquito. Mosquitoes are infected when they take a blood meal from a dengue-infected per-son. There is no human-to-human transmission of the disease.

The incubation period of den-gue fever normally ranges from between 3 to 14 days. That means from the moment you are bitten by an infected mosquito, you may start developing fever and symp-toms 3 to 14 days later.

Dengue fever is characterized by the sudden onset of fever, (which can last up to 7 days) and is accompanied by intense head-ache, body aches, joint pains, loss of appetite, nausea, vomiting and the development of generalized skin rashes. However dengue in-fection can occur in children with-out many symptoms other than persistent fever, lethargy and loss of appetite.

Dengue virus can also cause

a more serious infection known as the dengue haemorrhagic fever. This presents similarly to dengue fever but is associated with more severe bleed-ing problems (e.g. gum bleeding, nose bleeding and bleeding into the skin and internal organs).

There is no specific treatment for dengue or dengue haemorrhagic fever. Patients with mild symptoms may only require rest at home with daily blood test to check the platelet level. The following is a set of advice to help you and your family to man-age dengue fever at home. This list is taken from the Ministry of Health of Singapore advisory for patients with dengue fever (please note that the list is not exhaustive and in the event of any uncertainty, the doctor should be consulted).

Ensure that you have adequate rest 1. if you are suspected or diagnosed to have dengue fever. Drink enough water to prevent dehydration.Protect yourself and your house-2. hold members from mosquito bites, e.g. by using mosquito repel-lent or mosquito coils.Dengue can make you prone to 3. bleeding. Therefore, you should watch closely for any of the follow-ing signs:

gum bleeding after brushing • your teethnose bleeds• easy bruising• sticky black stools•

vomiting of blood – this could • be either fresh blood or altered blood which resembles coffee-coloured substancesincreased menstrual bleeding•

Seek immediate medical attention 4. if you develop:

severe abdominal pain• sweating, with cold, clammy • hands and feet

Avoid medication containing as-5. pirin as it can increase your risk of bleeding.Avoid anti-inflammatory drugs 6. such as brufen or nurofen (ibupro-fen), voltaren (diclofenac), synflex (naproxen) or ponstan (mefenamic acid) as they may cause gastric erosions or ulcers and subsequent bleeding and exacerbate any bleeding tendency that you may develop.You need regular follow-up by your 7. doctor until he/she informs you that you no longer require close monitoring.If you feel unwell at any time, 8. please go to a clinic or hospital im-mediately for further evaluation and management.

If patients presents with severe nausea and vomiting, bleeding ten-dency or blood test showing very low platelet count as discussed above, they should be admitted. Support-ive care with intravenous fluids and frequent blood tests to monitor for complications of the disease such as

very low platelet count and organ functions are carried out for hos-pitalized patients. In severe cases, blood transfusions may be re-quired to support these patients.

There is currently no vaccina-tion available for dengue. There-fore prevention against contract-ing dengue fever comes through measures to prevent mosquito breeding around the house and to protect against mosquito bites.

To protect against mosquito bites one can wear long-sleeved clothes, use mosquito coils and electric vapour mats, or use insect repellent over the exposed parts of the body. Adoption of good daily habits such as clearing block-ages from the roof gutter, clearing leaves and stagnant water from drains, removing water from pot-ted plants daily, avoiding the use of pot plates and changing the wa-ter in vases everyday will also help to eliminate the chances of mos-quito breeding (picture adapted from www.dengue.gov.sg)

For any medical-related en-quiries, you may wish to contact Raffles International Office (Ja-karta) at 62-21-57853979 or email enquiries_indonesia@raffleshos-pital.com.

Article contributed by: Dr Chng Shih Kiat (Deputy Director, Raffles Medical Group)

Dengue FeverDengue fever is characterized by the sudden onset of fever, (which can last up to 7 days) and is accompanied by intense headache, body aches, joint pains, loss of appetite, nausea, vomiting and the development of generalized skin rashes.

Linda Bacon, Ph.D, dreads swimsuit season, but not because she has anything against the beach.

Instead, the Califor-nia-based nutritionist fears what the season brings: scores of oth-erwise health-conscious citizens who subject themselves to de-privation diets (like the Master Cleanse) or intense exercise regi-mens, often in blazing hot weath-er, to look slimmer in revealing clothes.

Many unwittingly end up harming their health -- and pos-sibly even their hearts.

“Early June and January are the two times of year people do crazy, desperate things to get thin fast,” says Bacon, a nutrition pro-fessor at the City College of San Francisco, California, and the author of “Health at Every Size: The Surprising Truth About Your Weight.”

“They go on fasts, yo-yo diets, detox programs, and ‘cleanses’ without realizing that there are serious consequences to weight loss and nutrient restriction.”

That crash dieting doesn’t work and can be dangerous is a message that gets lost in the na-tional clamor over rising rates of overweight and obesity.

Thinking of trying a lemonade fast or cabbage soup diet? Here’s what to keep in mind if fitting into your skinny jeans or your Speedo is high on your summer agenda.

CRASH DIETS MAY HARM YOuR HEART

Cardiologist Isadore Rosen-feld, MD, a professor of clinical medicine at Weill Cornell Med-ical College, in New York City, and author of the forthcoming “Doctor of the Heart: A Life in Medicine,” opposes crash diets (less than 1,200 calories a day) and detox plans like the Master Cleanse.

The Master Cleanse involves consuming a mixture of water, lemon juice, maple syrup, and cayenne pepper -- and nothing else -- for several days.

He says these very low-calorie regimens are based on the false theory that the body needs help eliminating waste.

Research suggests rapid weight loss can slow your metabolism, leading to future weight gain, and deprive your body of essential nu-trients. What’s more, crash diets can weaken your im-mune system and in-crease your risk of dehydration, heart palpitations, and cardiac stress.

“A crash diet once won’t hurt your heart,” Dr. Rosenfeld says.

“But crash dieting repeat-edly increases the risk of heart attacks.”

Bacon adds that long-term calorie-cutting can eventu-ally lead to heart mus-cle loss. “Yo-yo dieting can also damage your blood ves-sels. All that shrinking and grow-ing causes micro tears that cre-ate a setup for atherosclerosis and other types of heart disease,” she says.

Chip Stinchfield, a 55-year-old shop owner in New Canaan, Connecticut, has experienced the cardiac effects of dieting first-hand. On the advice of friends, he went on a Master Cleanse for days and exercised vigorously. Another time he ate nothing but cottage cheese, beets, and peanut butter. Both were “quick, easy fixes” that helped him drop up to 10 pounds fast.

But both diets also gave him shortness of breath, heart palpita-tions, and “the feeling like I was going to have a heart attack.”

Under pressure from his fami-ly, who thought his dieting might disable or kill him -- like many extreme dieters, Stinchfield kept his doctor in the dark about his radical habits -- he eventually went back to sensible eating.BEWARE OF FAD DIETS

Experts have known for de-cades that extended crash diets can be dangerous -- especially when the diets become a fad.

In the late 1970s, an osteopath named Robert Linn published

“ T h e Last Chance Diet,” a best seller that advocated a miraculous “liq-uid protein diet.”

Following the lead of their fa-vorite celebrities, millions of peo-ple bought quarts of Dr. Linn’s liquid formula and embraced the diet (or one of many copycat ver-sions), averaging just 300 to 400 calories a day.

The diet seemed to work won-ders -- some people reported los-ing as many as 10 pounds a week on the formula. But then the news of sudden deaths began to trickle in.

An investigation led by the Food and Drug Administra-tion turned up nearly 60 deaths among liquid dieters. Although some of the deaths occurred in people with underlying diseases such as atherosclerosis (and there-fore could have been coinciden-tal), government researchers who examined otherwise healthy di-eters who died of ventricular ar-

rhythmias found that the pattern of deaths suggested “the effects of protein-calorie malnutrition on the heart,” including atrophy of the heart muscle.

Experts have since tried to pin-point the dangers of crash diets (technically known as “very low

calorie” diets). Shortages of potassium, magnesium,

and copper have been suggested as possi-

ble causes of the ar-rhythmias seen in crash dieters, and studies have also found that the diets can cause a drop in blood pressure and so-dium depletion.

The true ex-tent of the risk

posed by crash di-ets is unclear, how-

ever. Much of the research has been con-

ducted in obese people -- a population that can

actually benefit from these ex-treme diets -- and in most stud-ies the health of the participants is carefully monitored.

Experts stress that very-low-calorie diets should only be fol-lowed with a doctor’s supervision. But crash dieters are more like-ly to consult their friends than a doctor -- which can get them into trouble.

Brooke Robertson, 23, learned these lessons the hard way. Last spring the Auckland, New Zea-land, mom reportedly suffered a

How Crash Diets Harm Your HealthCrash dieting doesn’t work and can be dangerous is a message that gets lost in the national clamor over rising rates of overweight and obesity.

Photo: www.theofficediet.com

W e’ve all heard that car-rots play a huge role in overall eye health but what else can you eat to

improve the health of your eyes and reduce the risk of disease?

To keep your eyes in top shape, follow many of the same guide-lines suggested for maintaining a healthy heart like keeping your blood pressure and cholesterol in check, reducing saturated fat from the diet, taking control of your weight, and increasing your antioxidant intake. Start now by eating nutritious and vitamin-rich foods to reduce the risk eye disease, improve sight, and main-tain good eye health.

10 healthy foods for picky eatersKALE

The carotenoids lutein and ze-axanthin found in green leafy vegetables like spinach, Swiss chard, collards, and kale help to improve vision and reduce the risk of age-related macular degen-eration. The antioxidants in these foods act as natural sunglasses to defend the eyes from ultraviolet radiation as well as protect cells from being damaged.

BERRIESAmong the top sources of an-

tioxidants, berries play an im-portant role in decreasing can-cer risks, cardiovascular disease, and Alzheimer’s disease. Studies have also found the antioxidants in berries reduce the risk of mac-ular degeneration, cataracts, and other eyes diseases. Choose fresh strawberries, blueberries, or rasp-berries for a sweet snack, simple

Healthy Food forYour Eyes

dessert, or sal-ad topper.

CARROTSProbably the best-known food

for healthy eyes, carrots top the charts with disease-fighting vita-min A. Vitamin A helps to pre-vent night blindness and is es-sential for retinal health. It also reduces the risk of cataracts and macular degeneration. Like car-rots, other orange foods such as sweet potatoes, mangos, can-taloupe, and apricots provide healthy doses of vitamin A.

MILKMilk is a good source of ri-

boflavin and can help to reduce your risk of cataracts. It is also fortified with vitamin A, a lead-ing performer among eye health vitamins. Choose low-fat milk over whole milk to keep the sat-urated fat low and prevent plaque buildup in the eyes’ blood vessels. Cheese, eggs, and liver are oth-er good animal sources of vita-min A.

LEAN BEEFLean beef is an excellent

source of the mineral zinc that helps the body absorb antioxidants and fight dis-ease. Studies have found a relationship between zinc in-take and eye health, particu-larly retina health. Choose lean

cuts to reduce the

overall sat-urated fat from

your diet. Increase the zinc in your diet by choosing cheese, yogurt, pork, turkey, and forti-fied cereal.

SALMONOmega-3 fatty acids like the

ones found in fatty fish play a key role in retina health and help re-duce the risk of macular degen-eration. Aim to eat at least two weekly servings of fatty fish such as salmon trout, mackerel, sar-dines, or herring. Wild salmon is also a rich source of niacin, which helps reduce the risk of cataracts.

ALMONDSAnother antioxidant that’s crit-

ical in eye care is vitamin E from nuts, mangoes, broccoli and healthy oils like wheat germ, saf-flower, corn, and soybean. Vita-min E has been found to prevent and delay the growth of cataracts, so snack on almonds or cook your veggies in one of these good-for-you oils to get a jump-start on healthy eyes. (CNN)

Carbs makes you thin for life

Carbs fill you up

Carbs curb your hunger

Carbs control blood sugar and diabetes

Carbs speed up metabolism

Carbs blast belly fat

Carbs keep you satisfied

Carbs make you feel good—about you!

(Health.com)

Reasons Why Carbs Help You Lose Weight8

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The President PostOFFICEMenara Batavia 25th Fl. Jl. K.H. Mas Mansyur Kav. 126Jakarta 10220, IndonesiaPhone : (021) 572 7337Fax : (021) 572 7338Email : ceo@thepresidentpost.comWeb : www.thepresidentpost.com

PUBLISHED BYYayasan President University

CEO & EDITOR IN CHIEFAli Basyah Suryo

CONTRIBUTORSAtmono SuryoCyrillus Harinowo HadiwerdoyoTaufik DarusmanThomas W. ShreveJeannifer Filly SumaykuEka Putri

EDITORIAL & CIRCULATION DEPARTMENTEka Galliano

LAYOUT & DESIGNMohamad Akmal

SALES & MARKETINGDetia

PHOTOGRAPHERNandi Nanti

LivingThe President Post www.thepresidentpost.comMay 12, 2010B8

Age discrimination. Ask any baby boomer who’s been job hunting for several months and he’ll likely tell you a personal horror story.

Although the practice is ille-gal, many over-40 job hunters report that an employer was ex-cited about them as a candidate -- until they met in person, leaving the candidates with the sneaking suspicion that their age had ev-erything to do with not getting hired.

Can age discrimination be hampering your job search?

According to the survey results

of hiring managers, many em-ployers reported that they believe that someone under 40:

Will work for a lower salary•May seem more eager•Shows more initiative•Has a “fire-in-their-belly” atti-•tudeHas better computer skills•Seems more adaptable•Is less old-fashioned or stuck in •their ways

My advice: Don’t look old!

Your résumé, cover letter, net-working approaches and person-al presentation and how you per-form in the interview all must

show you have a lot to contrib-ute.

I had one 69-year-old client, Mary, who came to see me for coaching on interviews and sal-ary negotiations. Her hair was completely white, and her face showed the lines and wrinkles of age. Yet she was fascinating and vivacious and demonstrated exu-berance for life. Her résumé was full of recent accomplishments.

She went out to four interviews and got four job offers. Those four employers weren’t rejecting this 69-year-old woman, they were fighting over her.

Mary had mastered the se-crets to self-marketing and using her strengths and talents to prove to the employer she was an ideal candidate.

That is exactly what you must do to get ahead in today’s tough economy. Here are some key strategies and resources to imple-ment:

1. ADVERTISE RECENT RESuLTSEmployers report that the typ-

ical résumé gets a 15-second glance. Focus on the last 10 years. State the action you performed and the accomplishments you achieved. Stress money earned, costs eliminated or time saved. Productivity enhancements get attention, so make sure you note any you’ve made. Be a skillful ed-itor; keep your résumé to no more than two pages.

2. BRIGHTEN uP

Too many mature workers show up looking weather-worn, tired, defeated, desperate, just plain old and worn out. You must have an enthusiastic attitude that radiates energy to reassure an em-ployer you are ready and able to do the job.

Look vibrant and contempo-rary. A warm smile, a firm hand-shake and great eye contact are an absolute must. Dress in a fashion-able suit in a flattering color and style. Fit is critical -- don’t wear anything dated, too tight or too loose.

To take some years off your ap-pearance, try a new hairstyle, dye your hair, switch to contempo-rary eyeglasses and get your teeth whitened. Men should be clean-shaven; women should go light on the makeup.

3. NETWORK BACKWARDYour professional reputation

is really other people’s percep-tion of you, your work strengths, image, passion and personality traits. Track down and network with old bosses, former employ-ees and colleagues. They can out-line what you are good at, build your confidence (often necessary after a firing or layoff) and be a terrific link in helping you meet potential hiring managers.

4. BE SHARP fOR THE INTERVIEWYour next boss can be young-

er -- maybe a lot younger -- than you. Know the challenges and trends in your field. Research not

T he following foods are packed with disease-fight-ing antioxidants, heart-healthy fats, and anti-aging

nutrients. Use these tools to cre-ate a rich and varied diet that will keep you looking younger and feeling great for years to come.

THE POWER OF PRODUCEEating a diet rich in colorful

fruits and vegetables can help pro-tect against wrinkles, says Cher-yl Forberg, a registered dietitian and author of “Positively Age-less.” That’s because they’re filled with vitamins and antioxidants, which have been shown in several studies to slow the natural signs of aging. Bell peppers, tomatoes and citrus fruits, she explains, de-liver vitamin C. Avocado and ki-wifruit contain vitamin E. Ber-ries bring polyphenols, another kind of antioxidant, to the table. And leafy greens and bright-or-ange vegetables contain carote-noids, which are believed to en-hance the immune system.

STAY WELL HYDRATEDOne of the more hid-

den signs of aging is a diminished sense of thirst, says Forberg. “That makes us more vulnerable to de-hydration,” she explains. And loss of skin elasticity — a major contributor to fine lines — is a side effect of dehydration. Water is the obvious remedy, but green tea and skim milk also fit the bill. Or, “look beyond the glass,” she says.

Broth-based soups, fruit smoothies made with unsweet-ened fruit juice or soy milk, and fruits and vegetables (which are naturally packed with fluid) serve to keep you well hydrated.

PuMP uP YOuR PROTEINGetting enough dietary pro-

tein can help offset the muscle loss that goes hand in hand with aging (to the tune of 3 to 8 per-cent per decade after age 30).

Protein is also key to warding off fatigue, maintaining a steady blood-sugar level, and promot-ing cellular repair and growth. Forberg recommends getting 30 percent of your daily calo-ries from healthy protein sourc-es, such as lean meats, poultry, seafood, legumes, fat-free or low-fat dairy products, and traditional soy foods (not soy supplements).

GO FOR WHOLE GRAINS

Whole grains are also filled with anti-ag-ing nutrients. As with pro-duce, eating a variety is key in order to get the full spec-

trum of antioxidants, says Forberg. Wild and brown rices, bulgur, farro, millet, quinoa and oats are all good options. Whether you’re serving a simple side dish or preparing meatloaf or meatballs, don’t automat-ically reach for white rice or plain bread crumbs.

Think whole grain, and you’ll be rewarded with bet-

ter flavor, additional fiber and more anti-aging nutrients.

Look Youngerfor YourJob Search

only the company but what its competitors are doing. Take steps to modernize your vocabulary so that you can come across as cur-rent and flexible. Offer exam-ples of recent accomplishments. Emphasize that you are a quick study and constant learner.

Write out answers to poten-tial questions.Rehearse your answers and keep them brief. Employers lose interest fast, so never talk more than 60 sec-onds when responding to a question.

5. If YOu DON’T HAVE IT, GET ITSkills and certifications

need to be up-to-date. Check job ads and see if you are lacking any skill today’s employ-ers ask for when hiring people for your type of job. Computer skills are essential! If you are over 50, expect to get some questions and even a test on your computer ability.

Many employers stated they do not accept what you tell them at face value -- they test you. So go to class, read books, use the tu-torials and practice using these skills -- nothing will make you look older than not know-ing how to attach a file to an e-mail.

© CareerBuilder.com

Your résumé, cover letter, networking

approaches and personal presentation and how you perform

in the interview all must show you have

a lot to contribute.

Fight Age with FoodThere’s a fountain of youth waiting in your kitchen. You just don’t know it — yet.

HAVE A HANDFUL OF NUTSNuts contain heart-healthy

monounsaturated fats and ome-ga-3 fatty acids that can help boost longevity, says Edward L. Schneider, M.D., dean of the Da-vis School of Gerontology at the University of Southern Califor-nia. They also contain those an-ti-aging antioxidants mentioned above. Have a 1-ounce serving daily (about 24 almonds or 14 walnut halves).

SAY YES TO SEAFOODEating fish rich in omega-3

fatty acids, such as salmon, sar-dines and mackerel, is important to your longevity and health be-cause this kind of fat (also found in olive and canola oils) is associ-ated with lower heart risks, says Schneider. (MSN)

Eating fish rich in omega-3 fatty acids, such as salmon, sardines and mackerel, is important to your longevity and health because this kind of fat (also found in olive and canola oils) is associated with lower heart risks

F ashion may only be skin deep but every depth has a surface and it is this surface that speaks. Behavioral scientists tell us that

it takes a stranger 30 seconds to size us up, creating that all-important first impression which if bad can take as much as five years to erase. In a com-petitive business environment the quotient is upped even further and your saving grace will often be the suit you wear.

Clothes reflect your attitude, achievement and personality but it is the art of styling that denotes actual meticulousness and the affinity to please. In as much as dressing sloppy equates to sloppy work, inappropriate attire is equally off-putting.

How does one avoid either scenar-io? Invest in the right suit, dress for the occasion and heed the sartorial man-tra: color, cut, fit and style.

In terms of color, the darker the suit, the higher the perceived author-ity of the person wearing the ensem-ble. The essentials remain navy, black, grey and beige but each tone carries an associated meaning.

Navy is the building block of any business wardrobe with darker shades perfect for speeches and pre-sentations. It is the universal color for negotiation and authority hence the preferred choice for multi-tasking at-torneys and bankers worldwide. Char-coal or grey conveys security – perfect

for shareholder meetings, business mergers and accountants in general. Executives however be aware: the darker the grey, the higher the associ-ated pay. Beige and black are occasion wear – the former for business casual and the latter for formal events solely.

Once you have the essentials locked down, spruce up your wardrobe with pinstripes, checks and plaids and al-ways remember your skin tone when choosing an apt shade.

For those residing in Asia, the ubiq-uity of tailors eliminates the need for buying off-the-peg. Going custom-made or bespoke solves all your cut and fit queries for a personal cutter can assist in the choosing and crafting of a garment that is specifically yours in the making.

Most professional cutters for ex-ample suggest the avoidance of light-weight fabrics for the tall and lanky and heavyweight wools that box in those that are broader. Pay attention to specificities that make or break a suit such as the length of jacket sleeves, collars, lapels and the overall fall of the jacket.

Hariom’s Tailor, a 70-year old sar-torial legacy, suggests that your suit collar should typically hug the back of your neck without buckling and only a precise half-inch of your shirt collar should be on display. Lapels similarly should lie flat to your chest. It is these finer details endow your suit, and ulti-

mately you, with connotations of neatness and sleekness.

The technical jargon ups its ante in terms of styling and a profes-sional tailor can help your iron out quirky details and finishes to cre-ate a piece of sartorial art. These styling details or bonus points of-ten include lapel style and width, button placement, patterns and other personalizations of the high-est caliber that make even the dull-est of grays pop with personality.

The importance in going profes-sional however is not the degree of specifications but finding those that work for you based on your physique and personality. Added benefits such as door-to-door delivery, pristine finishing and the ability to work around your sched-ule are available at Hariom’s Tailor.

For more tailoring tips & tricks visit Hariom’s at their Pasar Work-shop or schedule an appointment at your home or office with a Har-iom’s image consultant, Mr. Gau-tam via telephone at (021) 3844 179 or (021) 3811 947.

The writer is the business development manager at Hariom’s Tailor & Textile. He may be contacted at amrit.v@hariomstailor.com or visit the Hariom’s website at www.harioms.com.

CLOTHES DO MAKE THE MAN“

Clothes reflect your attitude, achievement and personality but it is the art of styling

that denotes actual meticulousness and the affinity to please.

The importance in going professional

however is not the degree of

specifications but finding those that

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The President Post

Property CSECTION

www.thepresidentpost.com

Display until June 12, 2010 /// N0. 12Published by President University

Indonesia Set for DramaticProperty Boom Next Year

By Alci Tamesa

Indonesia’s property in-dustry will experience an unprecedented boom when a revised property ownership law goes into effect some time next year.

This is because the incentive will come at a time the country enjoys better political stability and im-proved investment climate.

Chairman of the Investment Coordinating Board Gita Wir-jawan has said that the govern-ment is finalizing the revision which is expected to be complet-ed during the third quarter of this year.

Wirjawan, who made the an-nouncement during a visit to Sin-gapore, also says that the gov-ernment remains committed to further improving the invest-ment climate through such a pol-icy change.

“I am very optimistic that once we take the right steps we will see at least a 15 percent in-crease in foreign direct invest-ment, up from last year’s total of US$14 billion,” he says.

This announcement has been greeted with enthusiasm by inter-national corporations and inves-tors at large.

Investors are waiting for the In-

donesian government to extend to 90 years the period of licens-ing for foreign ownership of In-

donesian property which would represent a dramatic improve-ment from provisions of the 1960 Agrarian Law that gave only 25 years to use domestic property.

Property market analysts say not only will revision of the law bolster domestic property indus-try; it will be a big draw to foreign real sector investors as it takes place at a time Indonesia enjoys one of its golden periods of politi-cal and economic stability.

Market analysts say that once the law is revised this year, by next year Indonesia will have ex-perienced a full property boom as a bigger inflow of industrial re-locations and domestic real sec-tor expansion resulting from the policy incentive will drive market demand.

Finance Minister Sri Mulyani’s appointment as the World Bank’s Managing Director will surely give an additional ballast to in-vestor confidence as many mul-tinational companies realize that the World Bank’s trust in Indo-nesia’s best financial and mon-etary expert shows that she has laid the right foundation to sus-tain her country’s financial sta-bility.

Another trigger that will boost domestic property industry is the upcoming international gather-ing of property magnates, finan-ciers, and experts in the resort is-

land of Bali. The May 24-28 World Congress of International Real Estate Federation (FIABCI) will present top industry speakers from throughout the globe.

The speakers are government officials, business people, exec-utives of property, architecture, the banking industry, and tour-ism sector from the US, Europe, Australia, China and host coun-try Indonesia.

The Indonesian minister for public housing, Suharso Mano-arfa, will also address the inter-national forum. He is scheduled to discuss the Balinese concept of harmony known as Tri Hita Karana—which calls for harmo-ny between human beings and God, among human beings, and between human beings and the environment.

Market analysts had actually hoped that he would make use of the Bali forum to highlight relax-ation of the property ownership law, as the timing is right to draw international attention. But latest reports say the government needs more time to finalize the plan.

The banking sector, mean-while, is hoping to see a 45 per-cent surge in mortgage growth this year, an indication that so much of the country’s money will be channeled into property sector amidst a shortage of supply.

This also means that investing

in the property rector will con-tinue to be attractive for many years to come because in fact In-donesia’s mortgage to GDP ra-tio is only 2 percent compared to 80 percent in the United States that was to blame for its mortgage crisis last year.

As of this month, according to in-dependent an-alysts, Indone-sia is Southeast Asia’s most at-tractive proper-ty market as in big cities like Jakarta the highest price of property is Rp25 million (US$2,775) per square meter compared to about $27,000 in Singa-pore.

This is why industry analysts are saying that once the 1960 law is revised the international busi-ness community will see many multinational companies rewrit-ing their relocation strategies with an eye on Indonesia.

Compared to China, Indonesia has lower entry barriers, its prop-erty prices are cheaper, the bank-ing sector is more stable in terms of liquidity and stability, investor confidence is rising fast and po-litical stability and predictability are now much better.

Market analysts say just like Hongkongers flocking to Main-

land China’s prop-erty sector, they expect many companies from Singapore, South Korea, Japan, Australia, Europe, and the Americas to pur-chase more property in Indonesia as of later this year.

The government’s seriousness in combating corruption and streamlining arduous bureau-cracy is another draw to foreign real sector investors and proper-ty buyers.

Analysts say that in spite of the anticipated boom, property

prices will only soar by around 30 percent because there will be a prudent balance between supply and de-mand. Theoretically, this is be-cause the banking sector which handles transactions has by now learned the art of survival through repeated crises of the past.

Once the 1960 law is revised the

international business community will see many multinational

companies rewriting their relocation

strategies with an eye on Indonesia.

see full story on page C2

Photo: www.napthens.co.uk

Apart from rapid growth of apartments and condominiums, another trend worth mention-ing is expansion of retail busi-ness property such as shopping malls, which have in recent years increased markedly both in num-ber and size.

Indonesian society’s total expo-sure to globalization has brought in new lifestyles that bolster the growth of retail market, espe-cially for consumer goods, elec-tronics, jewelry, garments, foot-wear, and various kinds of beauty product.

This on-going trend has boost-ed the growth of retail market which requires faster physical ex-pansion in terms of provision of more shopping malls.

Consequently, as the Indone-sian middle class grows in size, the bigger the demand will be for retail market property. This trend will continue well into the future as the economy improves further in tandem with further increase in income per capita and people’s purchasing ability.

In conclusion, industry ana-lysts say, all these developments will elevate Indonesia to a high-er plateau of being one of Asia’s most attractive markets for prop-erty investors and buyers.

PropertyThe President Post www.thepresidentpost.comMay 12, 2010C2

Industry actors say that un-like in the United States, where property crash was triggered by a tragic imbalance between mort-gage value and the GDP (unset-tled transactions including bad debts were worth more than half of GDP), Indonesia will not have that experience because its mort-gage to GDP ratio as of early this month was only two percent. This is also the reason why prop-erty is not yet the driving force of the domestic economy.

Hiramsyah Thaib, president

director of property develop-er PT Bakrieland Development, says that even without relaxation of the land and building title rules, the property sector would still soar next year, thanks to do-mestic expansion and rising do-mestic demand.

This is apparently triggered by industrial expansions, low infla-tion rate, a steady growth in bank loans for the property sector, and a steady growth in the size of the middle and upper classes of so-ciety. These factors, plus a rap-id growth in consumption, will cause the economy to grow by 6-7 percent as of this year.

Market analysts say that relax-ation of foreign property owner-ship rules will benefit the high-end of the property market

initially. This segment accounts for less than 10 percent of the do-mestic market and because prices of property are still low, Indone-sians prefer stand-alone houses.

But after the issuance of the new incentive, which will drive prices up, people will become more interested in high-rise apartments which will be sold at more competitive prices.

Thaib says in Singapore not many people can afford to buy houses. So the Indonesian relax-ation will affect Singapore’s mid-to-high sector where some of the buyers of stand-alone houses as well as high-rise apartments will come from.

Industry analysts expect the Indonesian economy to absorb an additional $6 billion in for-eign direct investments over the next year following the relaxation incentive. This was the situation Malaysia experienced after relax-ing its foreign property owner-ship rules some years ago.

In other words, relaxation of the property sector will bring a multiplier effect across the en-tire economy because property ownership accounts for a signif-icant portion of the fixed indus-trial cost.

In a related development, bank-ing analysts say there is still room

for further reduction of the mort-gage rate. The Bakrieland execu-tive, for instance, expects the cur-rent mortgage rate of 9 percent fixed for two years to drop to 8.5 percent or 8 percent, because in 2008 when the Bank Indonesia benchmark rate was higher than it is today, mortgage rates stabi-lized at 8.8 percent.

This apparently is the reason why Bakrie is optimistically ex-panding with a new complex of integrated office space called Ra-suna Epicentrum, whose ground-breaking will commence in June 2010 to coincide with the opera-tion of prestigious Bakrie Tower, the best seller in Jakarta’s Central Business District.

Office space in this particu-lar tower is nearly sold out. A marketing official says that un-der 12th floor space is no longer available as multinational com-panies, especially from the min-ing industry, have taken over ev-ery single corner.

Ironically, as Indonesia pre-pares to welcome its golden peri-od in property market next year, the overall situation in Asia is still a source of concern. Many coun-tries in Asia are still feeling the brunt of repeated crises which has since 2008 seen a slowdown, ranging from a decrease of 24

percent for Japan to a decline of 77 percent in Australia.

In January 2009 as the mar-ket malaise continued, Real Cap-ital Analytics (RCA) tracked only US$4.1 billion of transactions based on deals priced at US$10 million and above. The total rep-resents a 36 percent decline from

December 2008 and an 81 per-cent drop off from January 2008, when an active market registered transaction volume of US$21.4 billion, news reports say.

In January 2009, the lion’s share of commercial real estate (CRE) transactions occurred in China (roughly US$2.2 billion) and Japan (US$1.1 billion). One of the larger recently completed deals was Singapore-based ARA Asset Management’s acquisition of the newly completed 51-sto-ry Nanjing International Finance Center, an office-retail property located in Nanjing, a key indus-trial base in Eastern China. The investment manager acquired the property for approximately US$234 million on behalf of its ARA Asia Dragon Fund, the re-port adds.

Therefore, next year’s prop-erty boom in Indonesia is like-ly to force investment strategists across Asia to rewrite their reloca-tion and expansion plans, indus-try analysts say.

The good news about Indone-sian property sector is that local investors have always been able to create business opportunities even in times of crisis. And today we have seen them making tre-mendous progress.

To mention but a few key play-

ers in the industry, PT Arthalo-ka Indonesia is teaming up with PT Hutama Karya to develop a Rp2.7 trillion project on Jalan Jenderal Sudirman Central Jakar-ta that will commence in July.

Bumi Serpong Damai (BSD) is expanding very fast. Of the 6,000 hectares of land under its control, it has developed 1,400 hectares, filling the area with residential, office, business, recreational and other kinds of property. This sec-ond phase of development will be completed in 2013 after which period it will develop property on a further thousand hectares of land.

Similar projects are being build by PT Cowell Development Tbk which owns the Melati Mas complex; PT Goldland Real-ty which developed Alam Sutera residence in Serpong, Tangerang; and PT Duta Graha Indah Tbk, which is building the Rp 800 bil-lion Dharmawangsa Tower II to be completed in mid-2011.

Jababeka is another key player

in Indonesia’s property industry, having developed an integrated city of its own on the eastern out-skirts of Jakarta with more than 1,500 multinational corporations in it, and is making over its inte-grated resort of Tanjung Lesung on the western tip of Java island.

Jababeka is another key player

in Indonesia’s property industry, having developed an integrated city of its own on the eastern outskirt of Jakarta with

more than 1,500 multinational

corporations in it, and is making over its integrated resort of Tanjung Lesung on the

western tip of Java island.

Photo: Jababeka

International proper-ty companies will have the opportunity to at-tend two prestigious conferences to be held in Bali and Singapore

in May and June this year. These events will highlight challenges and opportunities in the indus-try as speakers are selected from the world’s most successful insti-tutional property players in the Asia-Pacific region.

On 24-28 May 2010, proper-ty magnates, business executives, financiers, and government de-cision makers from Europe, the US, China, Australia, and Indo-nesia will gather in the Indone-sian resort island of Bali for the World Congress of International Real Estate Federation (FIABCI) to listen to some of the world’s most credible industry actors.

Lippo Group’s Chairman James Riyadi will discuss finan-cial aspect of the industry, Bakri-eland Development’s CEO Hi-ramsyah Taib will share the success stories of his group while property baron Ciputra is expect-ed to discuss survival and recov-ery strategy, news reports say.

Meanwhile, the Indonesian minister for public housing, Su-harso Manoarfa, will highlight the event with Tri Hita Kara-na—a Balinese philosophy of maintaining harmony between human beings and God, among fellow human beings, and be-tween human beings and the en-vironment.

Conventions in Bali and Singaporeto Identify Property Challenges, Opportunities

By Diana Sasmita

He was originally expected to announce a revision of proper-ty ownership law during the Bali conference, but latest reports say the government needs more time to finalize it.

Chairman of Investment Co-ordinating Board Gita Wirjawan has said that the government is racing against time to revise the 1960 law on ownership of prop-erty and that the revision is ex-pected to be completed in the third quarter of this year.

Investors are hoping that the government will extend to 90 years the period for foreigners to own property in Indonesia, in an ordinance that is being prepared by the office of the coordinating Minister for the Economy and the State Secretariat.

Speakers from abroad include John Rabie, owner of Rabie Property Group from South Af-rica; Toby Bath, managing direc-tor of Hellmuth, Obata & Kassa-baum (HOK) Asia Pacific; Brian White, the founder and chair-man of Raywhite Group, a lead-ing network of global brokers and property investment; Ken Yeang, an architect and ecology expert with 40 years of experience and is the chairman of Liewelys Da-vies Yang, a prominent architect consultancy firm headquartered in London.

A month after the Bali confer-ence, Asia-Pacific and Europe-an property players will gather in Raffles City Convention Centre, Singapore for Asia’s largest event called Real Estate Investment

World (REIW) Asia 2010. The June 21-23 summit will

showcase strategies, products, personalities and companies that comprise the Asian real estate in-vestment management market-place.

The Asian real estate sector is teeming with opportunities but is also fraught with risks, busi-ness analysts say. But probably more than any other asset classes, the dynamics in different geogra-phies are very different.

Global investors need access not only to market intelligence and due diligence capabilities but also the ability to see how real es-tate in different countries pro-vides yield and capital growth potential in wide and varying degrees. That’s why the event is considered as a golden opportu-nity for real estate developers and

strategic planners to tap.With over 600 delegates ex-

pected in attendance, the conven-tion will continue its global rele-vance as Asia’s largest and most established industry gathering for developers, property funds and institutional investors, the orga-nizers say.

They explain that REIW Asia 2010 will enable participants to:

Network with over 600 indus-•try executives including inves-tors, asset managers and deal makers; Gain a thorough understand-•ing of the latest trends, devel-opment and investment oppor-tunities; Meet and engage the most in-•novative property funds and developers in the industry; Understand the current prior-•ities and expectations of insti-tutional investors within the Asian real estate space; Contribute views and expertise •to shape the future direction of the industry; Raise the profile of partici-•pants’ property, fund or ad-visory services amongst pro-spective investors, partners and peers; and Meet professional advisors who •can help participants grow their global ambitions.

Companies wanting to send their representatives to this event should contact Lydia Goh at lyd-ia.goh@terrapinn.com or dial +65 6322 2716.

Market analysts say that the Bali conference itself will boost the prospects of Indonesia’s prop-erty market because it attests to the country’s political stabili-ty and economic growth which are prerequisites to investor con-fidence.

Meanwhile, given that Indo-nesia’s property prices are far more competitive than such pric-es in neighboring countries such as Singapore and Malaysia, ana-lysts expect to see a review of Sin-gapore’s property buyers’ orienta-

tion because many Singaporean investors are already eyeing prop-erty ownership opportunities in Indonesia.

In Jakarta, for instance, the highest price of property per square meter is Rp25 million whereas in Singapore it is about 10 times higher. Also, the Singa-pore dollar is stronger than the Indonesian rupiah, so it is easier for buyers in Singapore to buy In-donesian property than the other way round.

When the government begins to implement a new property ownership reform next year, the Indonesian market will become even more attractive as foreign-ers may then own property for 90 years, compared to 25 years as mandated by a 1960 law. This will apply to strata title proper-ty and for the time being it is not likely to expand to ownership of non-strata property.

Yopy Rusli, director of PT Lip-po Karawaci Tbk, has said that so long as there is legal certainty, the investment climate will remain attractive to foreign investors. So there is nothing wrong with the plan to widen the corridor for for-eign investors to play a role in In-donesia’s property development.

In a related development this month, real sector analysts say that given Indonesia’s current structure of foreign investment, it is much better for foreign capital to enter the country through the property sector than see it parked in the capital market in the form of hot money.

Like in any country, direct in-vestment in Indonesia’s property sector shall benefit the nation di-rectly in terms of creation of di-rect employment opportunities as well as investment guarantee. This may have also been part of the reason the government has finally bowed to private sector’s pressure for relaxing the owner-ship rules.

On 24-28 May 2010, property magnates, business executives, financiers, and government decision makers from Europe, the US, China, Australia, and Indonesia will gather in the Indonesian resort island of Bali for the World Congress of International Real Estate Federation (FIABCI) to listen to some of the world’s most credible industry actors.

Market analysts say that the Bali conference itself will boost the prospects of Indonesia’s property market because it attests to the country’s political stability and economic growth which are prerequisites to investor confidence.

A recent purchase of three units of Lippo Centennia Suites in Singapore by Hong Kong su-perstar Jackie Chan is a good sign that products of Indone-sian property companies are performing well in the regional market.

Jackie Chan and his close friend Emil Chau, who is also a famous singer and composer, bought the exclusive suites recently for a handsome price of more than US$10 million, news reports say.

The good news is not that the kungfu star has bought the apartment but that he and Chau eventually opted for the Lippo suites after spending months searching for what they considered to be the best such property all over Singa-pore.

Lippo Group’s 36-storey Centennia Suites is situated at the former site of Kim Seng Plaza, in front of Great World City, facing the Singapore River.

Construction works on the building started only two months ago and the project is expected to be completed in 2013. Jackie Chan was among the buyers to have secured their purchases in advance. As of this month 97 percent of the space has been sold.

Jackie bought two, three and four bedroom suites while his friend Emil—who played with Jackie in the film “Mr. Nice Guy” and “Gorgeous”—bought one unit with three bedrooms.

Market analysts predict that the price of the suites per square foot is around Sin$2,100.

In 2007 Jackie Chan pur-chased Sin$11 million property on the former site of Jinriksha Station on Singapore’s Neil Road.

In 2009 another kungfu star Jet Lie bought the $19.8 mil-lion bungalow in Binjai Rise, Singapore, according to The

Business Times.In Jakarta this month, prop-

erty market observers said they expected the upcoming FIABCI conference in Bali to draw more international attention given that the forum will be attended by well over 600 business practitioners from the USA, Europe, and the Asia-Pacific region.

Along with influential property magnates from various countries, Lippo Group’s chairman James Riyadi is scheduled to address the forum focusing on financial mat-ters, opportunities, and challenges confronting the industry.

As of early May it was not clear whether world-class movie stars such as Jackie Chan will be among the participants, but for sure the forum will be congested by real estate practitioners, government decision makers, and other stake-holders.

But just as Jackie Chan’s pur-chase of the Indonesian business groups’ apartment in Singapore boosted the island republic’s fame as a good destination for interna-tional property hunters, the up-coming world property congress in Bali will bolster Indonesia’s reputation as a stable destination for property investment.

The government is preparing to relax the law on property owner-ship, allowing up to 90 years for foreigners to own real estate in Indonesia, probably as of next year. That will surely increase Indo-nesia’s investment charm, market analysts say.

Jackie Chan’s Purchase of Indonesian Property a Good Boost for Industry

By Diana Sasmita

Photo: www.tvgasm.com

PropertyThe President Post www.thepresidentpost.comMay 12, 2010C4

Property industrial-ists are preparing to establish an in-ternational real es-tate certification mechanism in co-

operation with Paris-based FI-ABCI University in an effort to enable local business practitioners to play a bigger role in the glob-al market.

Initial steps have been taken to commence real estate business classes on May 26 when interna-tional property leaders convene for their 61st conference on the tourist island of Bali.

FIABCI is the International Real Estate Federation represent-

Indonesia’s Property Business Practitioners Can Obtain International Certification

ed in more than 60 countries. The FIABCI University intends to open classes in Indonesia in cooperation with such institu-tions as University Tarumanaga-ra in Jakarta and Petra University in Surabaya.

The aim of this university is to provide up-to-date information on global property—especial-ly real estate—trends including changes in customers’ need pat-tern and other relat

ed issues.Over the past three decades, the

FIABCI University has helped industry players understand the changing market and equip them with necessary skills on the entire production and marketing chain of the industry.

Apart from providing informa-tion and training, FIABCI also helps participants build industri-al network given its own exten-sive global network.

Ignesjz Kemalawarta, MBA, chairman of the future FIABCI University Indonesia, says that this institution will contribute positively to further development of Indonesia’s property industry.

The curriculum for this uni-versity will be a mixture of the one implemented in Paris and lo-cal content which will be tailored according to he need of the stu-dents or participants.

Kemalawarta is reportedly

planning to make use of the Bali congress of FIABCI on May 24-28 to announce the start of FI-ABCI University’s collaboration with Indonesian universities.

During the congress, FIABCI

University will open courses with the theme of “National and Inter-national Real Estate Skills, with International Buyers, Users, and Investors”.

Another theme with local con-tent to be discussed is “Invest-ment opportunities in Indone-sian real estate amidst challenges and changes.”

Local real estate developers and industry players can utilize this course to prepare for a new era that will begin next year when the government relaxes property ownership law to allow for 90 years of ownership by foreigners.

FIABCI University’s collab-oration with Indonesian higher learning institutions will enable Indonesians to obtain an interna-tional diploma without having to leave the country.

But, if they wish to broaden their horizon further, they may travel to Singapore, Germany, the USA, or France to attend FI-ABCI classes at prestigious uni-versities in those countries.

Graduates will receive either FIABCI International Real Es-tate Consultant Designation

PT Anugrah Argon Medica (AAM) re-cently inaugurated its National Dis-tribution Center (NDC) to increase

capacity and improve distribu-tion of medicines across Indo-nesia.

President Director of AAM, Erwin Tenggono, explained that the launching of NDC was meant to strengthen its posi-tion amidst tough competition in the context of AFTA.

AAM is a key player in Indo-nesia’s pharmaceutical indus-try and also distributes medical equipment across the country.

“We do this to meet inter-national standards of best practices, “he said.

The company was founded in 1980 as a distributor and a trader. In 1996 it repositioned itself as a national-level dis-tributor.

PT AAM has since 2009 implemented the standards of Good Distribution Practices (GDP) version of the World Health Organization (WHO) Technical Series No. 937, 2006 in an effort to create Total Drug

By Diana Sasmita

(FIREC) or FIABCI Diploma International Real Estate (Dipl. FIABCI) titles. The university also opens two study programs in real estate for property practitio-ners and outsiders.

Students who have completed 40 hours of courses will be asked to submit academic report on their respective businesses apart from the requirement to attend at least two conferences on regional and international levels.

Meanwhile, Dipl. FIABCI is a title obtained through cooper-ation with partner universities. Students are required to com-plete at least 10 study programs on property business before grad-uating.

The programs include Intro-duction to International Real Es-tate Business, Business Network-ing, Negotiations, Marketing, Financing, Foreign Currencies, Business Ethics, Technology, Building Intelligence, Interna-tional Trade Zones, and Interna-tional Steering Committee.

FIABCI, the International Real Estate Federation is a non-profit organization under the auspices of the United Nations and is a federation of 120 pro-fessional real estate associations comprising around 1.5 million professionals and 3,300 business practitioners.

FIABCI University’s collaboration with Indonesian higher learning institutions will enable Indonesians to obtain an international diploma without having to leave the country.

A New National DistributionCenter at Jababeka

Quality Management.GDP is part of the function of qual-

ity assurance measures to ensure that products are consistently stored, shipped, and handled according to the conditions stated in product speci-fications.

GDP is also needed to ensure that there is no “mix-up, contamination and cross contamination” along the routes of drug distribution.

GDP is very important to support the standards of Good Manufacturing Practices (GMP) that aims to guaran-tee the quality of each drug product produced by the pharmaceutical in-dustry.

A reliable distribution system in ac-cordance with the requirements of GDP and GMP is imperative, so that the stability and effectiveness of drugs remain secure for patients when it passes the test of Quality Assurance at the factory (according to GMP-Good Manufacturing Practices).

PT AAM obtained the WHO GDP Certification Technical Series No. 937, 2006 from PT SGS Indonesia through a feasibility certification audit con-ducted on Dec. 2-4, 2008.

The company has also obtained ISO 9001:2008 certificates as proof that it has implemented properly the quality management system.

NDC PT AAM uses Warehouse Management System – an inte-grated system complete with wire-less barcode scanner to record stock to batch level. With this sys-tem inbound storage-outbound process can be monitored well.

PT AAM is equipped with En-terprise Resource Planning (ERP) system, Integrated Supply Chain Solution, and Customer Relation Management procedures.

For products that are related to life-saving, AAM has a mecha-nism to serve customers round the clock.

The Inauguration was high-lighted by the signing of an inscrip-tion made by Lucky Slamet, who represented the Head of the Na-tional Agency of Food and Drugs Control.

PT AAM is located at Jababeka II, Cikarang, West Java. Jababeka Industrial Estate, which was es-tablished 21 years ago, is now inhabited by 1,500 multinational companies from 30 countries.

There are nine hospitals and clinics that provide treatment fa-cilities to more than one million inhabitants, 600,000 employees, 50,000 families and 10,000 stu-dents.

By Jeannifer filly Sumayku

President Director of AAM, Erwin Tenggono, explained that the launching

of NDC was meant to strengthen its position amidst tough competition in

the context of AFTA.

The President Postwww.thepresidentpost.com May 12, 2010 C5

Real Estate

I ndonesia’s real estate sec-tor is expected to expand further through 2014 with leading developers continu-

ing to introduce new concepts to attract the market.

For instance, Kota Jababeka Residential Estate, which was es-tablished in the heart of the green city of Jababeka, provides all fa-cilities and comfort that profes-sionals need in a decent living en-vironment.

To many professionals, resid-ing in Kota Jababeka means be-ing only minutes away from their work areas.

Some 30,000 medium to up-market housing units are mar-velously laid out across the 1,400 hectare stretch of the residential estate.

Comprising various types of residential clusters, the variety of housing units cater to all so-cial strata and suit the taste of ev-eryone, from the simple and prac-tical to the grand and exquisite, market analysts say.

For families looking for exclu-sively simple and modern homes perfect for nurturing their chil-dren, Tropicana Garden and Simprug Garden is a good choice, as it is surrounded by green and peaceful Botanic Gardens.

Nearby facilities include play-grounds, jogging tracks, and shopping centers.

It is located near Jababeka’s Ed-ucation Park where you can find top schools like President Univer-sity, BPK Penabur and Al Azhar.

A health care hub, Medical City, and entertainment center, the Indonesia Movieland, are also in the premises.

The Metropark Condomini-um is located in the heart of the Jababeka CBD area.

It is built with minimalist de-sign and is completed with exclu-sive facilities, including a swim-ming pool, a fitness center, and restaurants.

The contemporary residence is

perfectly suited for young profes-sionals or expatriates, market an-alysts say.

Even better than the simple lei-sure activities and safe surround-ings that Kota Jababeka residen-tial estate provides is the sense of community it offers to its resi-dents. Individuals and families are assured of quality facilities and services, which provides for a well-rounded lifestyle.

The Veranda Golf Townhouse captures the essence of a balanced and high-end life style. The Ve-randa is designed as comfort-able and classy residences which appreciate quality and a lifestyle that blends with nature.

The superbly planned and de-signed golf townhouses are locat-ed within a green belt overlook-ing the luxuriant fairways and greens of the Jababeka Golf and Country Club. The golf-view res-idence combines relaxation, com-fort, and leisure.

Jogging track, fitness facili-ties and swimming pools are also provided for those who want a healthy and balanced lifestyle. The Veranda is also equipped with a roof-deck, specifically de-signed for enjoying the beauty of the sunset or barbecues with fam-ily and business associates.

BENEFITS OF THE VERANDA GOLF TOWN HOUSE

Backyards are directly con-•nected with the Jababeka Golf field, allowing houses to have a beautiful view and a comfort-able home atmosphere.24-hour security: Access to the •entrance and exit is just one way. Thus, other than owners of the house and guests, no one can enter the premises.The “no-fence” concept allows •residents to feel the benefit of a more spacious living environ-ment.Waste management is directly •handled by Jababeka.Completely free from floods.•

DESIGN OF THE VERANDA GOLF TOWN HOUSE

The concept of a minimalist •modern design with a touch of exclusivity and high tech on finishing materials.The building façade is designed •with a modern and high-tech touch with contemporary de-sign that is eye-catching.Directory placed at the cross-•ing areas for ease of circulation; booth design directory will be integrated with the overall in-terior design corridor.Ceiling materials combine •gypsum, acoustic tiles and metal ceiling grids and perfo-rated metal shades with a mod-ern and high technology nu-ance.The finishing of corridor floor •applies a combination of gran-ite material/local marble and homogeneous tiles.Backyard areas are directly •connected to the field Jababe-ka Golf.

KOTA JABABEKA RESIDENTIAL ESTATE: A New Concept of Livingfor Professionals

JABABEKA’S PROPERTY INDEX

January - May 2010

No. SEGMENTSSIZE - M2

PRICESBuilding Land

RESIDENTIAL

The Veranda Town House

1 Veranda Deluxe 294 166 Rp. 2,008,000,000

2 Veranda Corner 306 288 Rp. 2,689,600,000

Simprug Garden

1 Green Pine 53 112 Rp. 517,000,000

2 Yellow Pine 70 139 Rp. 585,000,000

3 Golden Pine 90 136 Rp. 800,800,000

Orchid

1 Orchid Deret 53 120 Rp. 266,500,000

2 Orchid Corner 53 225 Rp. 382,600,000

3 Orchid Corner 53 206 Rp. 364,800,000

4 Orchid Corner (Limited) 53 189 Rp. 424,600,000

Tropikana Garden

1 Zelosa - Standard 114 119 Rp. 854,500,000

2 Axela Standard 159 160 Rp. 1,069,000,000

Axela Standard Plus 159 188 Rp. 1,143,200,000

3 Ortiz - Standard 188 300 Rp. 1,595,500,000

4 Axela - Corner (Land Plot) 228 Rp. 667,200,000

5 Zelosa - Corner (Land Plot) 262 Rp. 766,700,000

6 Ortiz - Corner (Land Plot) 349 Rp. 1,021,500,000

Metropark Condominium Tower A

1 Deluxe , 2nd fl 27/1 Bdr Rp. 218,950,000

2 Deluxe ,3rd fl 27/1 Bdr Rp. 218,950,000

3 Deluxe, 5th fl 27/1 Bdr Rp. 224,500,000

4 Deluxe , 7th fl 27/1 Bdr Rp. 257,500,000

5 Premium, 7th fl 54/2 Bdr Rp. 463,050,000

Metropark Condominium Tower B

5 Deluxe , 2nd fl (view Metro Blvd.) 27/1 Bdr Rp. 218,950,000

6 Deluxe, 3rd fl (view Metro Blvd) 27/1 Bdr Rp. 218,950,000

7 Deluxe , 5th fl (view JCBD) 27/1 Bdr Rp. 224,500,000

8 Premium, 6th fl (view JCBD) 54/2 Bdr Rp. 462,600,000

9 Deluxe, 6th fl (view swim. pool) 27/1 Bdr Rp. 261,900,000

10 Deluxe , 7th fl (view swim. pool) 27/1 Bdr Rp. 261,900,000

Pavilion-Exclusive Boarding Houses

1 Grande-Corner 221 216 Rp. 1,287,000,000

COMMERCIAL

Hollywood Plaza

1 Commercial B - Module SFB 552 552 Rp. 3,838,500,000

2 Commercial B - Module SFB 682 552 Rp. 4,147,000,000

3 Commercial A - Module Studio 1,229 967 Rp. 7,209,500,000

Pavilion Niaga

1 Block A3 100 50 Rp. 575,000,000

2 Block A2 100 50 Rp. 575,000,000

Ruko Sunter Niaga Mas

1 Corner 165 71.5 Rp. 1,025,000,000

2 Standard 120 52 Rp. 750,000,000

3 Standard 120 44 Rp. 700,000,000

4 Standard 120 53 Rp. 755,000,000

Ruko Sentra Niaga Square

1 Standard 1 (4 x 11), 2nd fl 80 44 Rp. 508,000,000

2 Standard 2 (5 x 10), 3rd fl 150 50 Rp.715/727 Million

3 Corner (6 x 10) , 3rd fl 180 60 Rp. 891,000,000

4 Standard 1(4 x 11) , 2nd fl 80 44 Rp. 495,000,000

5 Standard 2 (5 x 10) , 3rd fl 150 50 Rp.715/727 Million

6 Corner (6x10) , 3rd fl 180 60 Rp. 891,000,000

INDUSTRIALSIZE - M2

Land Factory Office

1 Grand Standard Factory Building 2000-3500 830 115 start from Rp.4Bn

2 New 3-IN-1 Factory Building 576-1260 304 124 start from Rp.1,8Bn

3 Comercial Office Building 500 356 Rp. 1,700,000,000

4 Standard Office Building 425 160 Rp. 1,200,000,000

5 Land Plot min 5000m2, $80

SALES and MARKETING OFFICEJababeka Center, Plaza JBJl Niaga Raya Kav 1-4 Kota Jababeka, Cikarang Baru Bekasi, West Java, IndonesiaPh. (+62 21) 893 4350Fax. (+62 21) 893 4331 / 4038

Notes: The Above Prices are not Included: Tax 10%; PPAT; BPHTB fee; KPR/Notarial Fee and can be changed without prior notice

SPECIFICATIONS OF THE VERANDA GOLF TOWN HOUSE

Foundation Straus pile and stone

Wall Plastered bricks

Finishing Mowilex Paint or equivalent with Weather-shield Exterior

Floor Roman Ceramics

Roof Concrete Clay roof tiles

Frame/Sills Exterior and Interior uses Samarinda Camphor Oven

Doors Main Door uses Solid Door Engineering Panel while others use Double Teakwood

Windows Exterior and interior use aluminum

Ceilings Gypsum for the main room and Kalsiboard for service room

Carport Reinforced Concrete Plates

Sanitation Toto or equivalent

Water PAM Jababeka

Electricity 3500 VA (Cikarang Listrindo or Jababeka)

To many professionals, residing in Kota Jababeka means being only minutes away from their work areas.

By Jeannifer filly Sumayku

Unlike what’s hap-pening around the region, Indo-nesia’s real estate market is going its own direction

with analysts expecting a boom as of next year, thanks to an in-creased inflow of foreign capital and rapid expansion of the mid-dle class segment of society that boosts property sales.

Over the past 12 months, real estate prices and rentals in the Asia-Pacific region have seen sig-nificant declines but the senti-ment in Asia has remained pos-itive because of the resilience of Chinese economy following the communist government’s intro-duction of a series of fiscal and monetary stimulus.

China has since been leading the Asian property market boom over the past few years with 2009 being the peak of its real estate success. This signal sent good sentiment across Asia with trans-action volumes rebounding and prices going up again to benefit real estate developers.

According to PriceWater-

Indonesian Real Estate Market Remains Attractiveamid Negative Regional Signals

By Alci Tamesa

houseCoopers, many large in-vestment institutions in the re-gion have been able to recapitalize via the capital markets (especially in Australia and Singapore), al-lowing them to pay down debt. This causes the region’s business sentiment to remain “generally sanguine,” it says.

PWC is of the opinion that in spite of this, conditions re-main extremely tight because “historically, real estate invest-ment in Asia has been financed overwhelmingly by bank lend-ing, and in the aftermath of the crash, banks are reluctant to pro-vide funding to all but their best (and usually largest) clients.”

Based on investment prospect ratings, the top five markets in 2010 are Shanghai, Hong Kong, Beijing, Seoul, and Singapore.

Chinese cities dominate the rankings this year—a reflection of a remarkable resurgence in Chinese commercial real estate as the government-mandated li-quidity boom lifts markets across the country.

Another city that has moved

significantly is Sydney, which has become a popular destination for foreign funds seeking shelter in Australia’s mature property mar-kets and commodity-based econ-omy, PWC says.

The climate in Indonesia is much more encouraging as indi-cated by the good performance of property stocks on the capi-tal market as well as by rising do-mestic demand that results from a steady increase in the size of the middle-class segment of society.

A PriceWaterhouseCoopers re-port obtained by The President Post says that government-spon-sored liquidity has helped keep Asian interest rates low while li-quidity is returning via the cap-ital markets. Meanwhile, even though bank credit remains scarce, reluctance to lend is grad-ually easing.

Nevertheless, the banking sec-tor in Indonesia expects to a 45 percent increase in lending, an indication that banks will now amplify their role as “true agents of development”.

Meanwhile, according to Mar-

ketBeat Economic Summary re-leased recently by Cushman & Wakefield, all general econom-ic indicators showed an improve-ment trend over the first quarter 2010. Indonesia’s GDP contin-ued to show positive growth at an estimated YoY growth of between 5.0% and 5.5%.

Rupiah was strengthening against US$, and the stock mar-ket also showed more favorable activity. At the end of March 2010, the Composite Index closed at 2,610, a significant in-crease from the 2,443 in Decem-ber 2009.

Due to these positive devel-opments, leasing inquiries and transactions have shown more fa-vorable activities during the first quarter 2010, compared to that in the previous quarters.

The MarketBeat reports saw banking and mining sectors as the two most aggressive sectors for office inquiries and transac-tions during the reviewed quar-ter.

The ‘return’ of the bank-ing sectors to the market gave a strong indication that the con-

fidence and optimism on Indo-nesia’s economic growth on and business activities have improved and will continue this year.

Another positive sign is the higher demand for office space that is expected to occur in the next quarters. The banking and financial sectors are projected to be the largest demand generator for Jakarta offices, mostly for re-location and expansion reasons.

Similar trend to the rental of-fice, inquiry and transaction ac-tivities for strata title office space within strata title buildings were also more favorable over the first quarter 2010, the report says.

The asking price for the high-er quality strata title space was quoted in the market at between US$1,900 and US$2,300 per sq.m, whilst lower quality space was offered at around Rp.13 mil-lion per sq.m.

The macroeconomic stability is also the reason for an increase during the 1st quarter of 2010 both in terms of cumulative real estate sales rate and pre-sales rate.

The cumulative sales rate of ex-

isting condominiums was record-ed at 94.1%, a slight increase of 0.1% from the previous quarter’s figure and remains the same as the last year’s figure.

The pre-sales rate was record-ed at 60.83%, also an increased by of 0.5% from the last quarter’s figure 60.35% and 3.8% from the last year’s figure, 57.46%.

The upper-middle segment condominiums continued to re-cord the highest pre-sales rate of 65.4%.

During the review quarter MarketBeat saw the increment of the pre-sales rate of Upper seg-ment projects, from 58.9% in the previous quarter to 65.1%.

The recent low interest rate has positive impact on demand as in-vestment motivated buyers start-ed to consider investing in con-dominiums, the MarketBeat report says.

Real estate practitioners say that even with the current prop-erty law, the growth has been so encouraging, how much more when the government revises the law to allow foreigners to own

property for 90 years, instead of 25 years stipulated by the 1960 Agrarian law that is still in force.

“The issue to revise regulation of foreign ownership on proper-ties has been discussed and urged for clarity this year. If the revise regulation is issued and govern-ment allows foreign nationals to buy houses and condominiums, it will potentially boost condo-minium sales,” the report says.

Knowledgeable sources say the government had actually planned to reveal a revision of the proper-ty law prior to the FIABCI con-ference in Bali this month, but the plan was postponed because of a sudden change in the posi-tion of Finance Minister Sri Mu-lyani—who will occupy her new chair in the USA as the World Bank’s Managing Director.

Nevertheless, Chairman of In-vestment Coordinating Board (BKPM), Gita Wirjawan, has said tat he expects the revision to be announced toward the end of this year. That incentive is ex-pected to be the prelude to In-donesia’s biggest property boom next year.

The climate in Indonesia is much more encouraging as indicated by the good performance of property stocks on the capital market as well as by rising domestic demand that results

from a steady increase in the size of the middle-class segment of society.

InfrastructureThe President Post www.thepresidentpost.comMay 12, 2010C6

Photo: The President Post?Nandi Nanti

Jakarta, The President Post – The government prioritizes not only infrastructure of the transportation and energy sec-tors in its public-private part-nership (PPP) program but also the technology sector.

The use of internet is now common in Indonesia and people can access it both from their computers and cell phones.

To accelerate social infra-structure development, a sem-inar on information and com-munication technology (ICT) was held last month during the Infrastructure Asia 2010 summit.

A coalition of PPP to pro-mote the use of broadband in Asia has been established.

Asian leaders believe that broadband is a key develop-ment factor that can boost the economic stability of a country, especially developing countries.

However, the invitation to invest on broadband remains low in the PPP program, al-

Jakarta, The President Post – Bandung is a densely popu-lated small city that produces a huge volume of garbage that gives the city administration a major headache.

Bandung City Administra-tion Secretary Edi Siswandi said that Bandung residents produce about 1,850 tons of garbage per day, exceeding the capacity of the city’s garbage processing facilities.

To overcome the problem, the city administration wishes to collaborate with the private sector on garbage processing.

Speaking at a press confer-ence last month on the side-lines of the Infrastructure Summitn 2010, Edi said the city administration is offer-ing investors a Rp850 billion

J akarta, The President Post – The Jakarta adminis-tration is offering seven projects worth a total of

US$4.3 billion from projects that are deemed priority under the public private partnership (PPP) scheme.

The projects include the con-struction of toll roads in various Jakarta areas.

“The National Development Planning Body (Bappenas) serves only as facilitators and we will continue to support regional gov-ernments in their efforts to boost their economies,” Chairman of the Asia Pacific Ministerial Con-ference (APMC) 2010 who is also Bappenas Government-Pri-vate Sector Cooperation Devel-opment Director Bastary Pand-ji Indra told journalists at a press conference on the sidelines of the Asia Pacific Ministerial Confer-ence (APMC) and Infrastructure Asia 2010 in Jakarta last month.

He attributed the fact that in-frastructure projects are consid-ered potential to the regional gov-ernment’s strong determination to run the projects this year.

However, Bappenas urges the regional government to complete various processes and documents to achieve the projects’ targets.

He added that the regional

No. Name of Projects Value estimation(in US$ million) Information

1. Kemayoran-Kampung Melayu Toll Road 695.36 Length 9.65 km

2. Sunter-Rawa Buaya-Batu Ceper Toll Road 976.07 Length 22.92 km

3. Ulujami-Tanah Abang Toll Road 425.53 Length 8.27 km

4. Pasar Minggu-Casablanca Toll Road 571.99 Length 9.56 km

5. Sunter-Pulo Gebang-Tambelang Toll Road 737.80 Length 25.73 km

6. Duri Pulo-Kampung Melayu Toll Road 596.01 Length 11.38 km

7. Tanjung Priok Access Toll Road 390.00 Length 16.67 km

8. Sukabumi-Ciranjang Toll Road 185.58 Length 28.00 km

9. Ciranjang-Padalarang Toll Road 324.75 Length 33.00 km

10. Pasir Koja-Soreang Toll Road 102.15 Length 15.00 km

11. Cileunyi-Sumedang-Dawuan Toll Road 510.20 Lenght 58.50 km

12. Terusan Pasteur-Ujung Berung-Cileunyi-Gedebage Toll Road 691.70 Length 11.38 km

13. DKI Jakarta-Bekasi-Karawang Water Supply 189.30 -

14. West Cikarang & Cibitung Bekasi Regency Water Supply 29.70 -

15. Bandung Regency Water Supply 17.17 -

16. Solid Waste Final Disposal & Treatment Facility-Greater Bandung Area 80.00 -

17. Solid Waste Final Disposal & Treatment Facility-Bogor & Depok Area 40.00 -

18. Solid Waste Management Improvement Bandung Municipal 100.00 -

19. Medan-Binjai Toll Road 129.30 Length 15.80 km

20. Medan-Kualanamu-Tebing Tinggi Toll Road 475.52 Length 60.00 km

21. Pandaan-Malang Toll Road 252.76 Length 37.62 km

22. Umbulan Water Supply-East Java 204.20 -

23. Tegineneng-Babatan Toll Road 272.68 Length 50.00 km

24. Bandar Lampung Municipal Water Supply 38.00 -

25. Serangan-Tanjung Benoa Toll Road 148.88 Length 7.50 km

26. Klungkung Regency (Tukad Unda) Water Supply 43.50 -

27. Palembang-Indralaya Toll Road 105.29 Length 22.00 km

Total 8,333.44

Source: PPP Book Bappenas, 2010

Bandung Offers US$95 million Projectto Overcome Garbage Problem

or US$95 million project to pro-cess the city’s garbage.

The investor that wins the proj-ect will process 1,000 tons of gar-bage per day while the remain-ing 850 tons will be managed through the 3R approach.

“For the remaining 850 tons, we will use the 3R approach, which combines Reduce, Reuse, and Recycle mechanism,” Edi ex-plained.

He added that the city admin-istration will provide investors with a garbage supply of 1,000 tons per day, permit, and a build-ing permit to set up a facility, and assurance that the state electricity company PLN will buy the ener-gy produced from the garbage.

The Bandung city administra-tion is hopeful that PLN and the Carbon Development Mecha-

Jakarta Lures Investors to US$4.3 billion Projects

government must meet necessary conditions, including feasibility studies, land clearance, permits and others, to speed up the im-plementation of the projects.

“Basically, we see that the re-gional government is very ambi-tious about running the projects, but in this case we only serve as facilitator,” Bastary stressed.

He went on to say that the con-ditions of each priority projects vary on, for examples, the docu-ments needed for tender, perfor-mance guarantee and political guarantee, and land clearance is-sue.

“Basically, if the land issue is still not clear, the project cannot be offered as a ready-to-offerproj-ect. The tender schedule can only meet the target if the land issue is settled,” he explained.

Bastary elaborated that the sev-en projects are the Kemayoran-Kampung Melayu Toll Road of 9.65 km long worth US$695.36 million, Sunter-Rawa Buaya-Batu Ceper Toll Road (22,92 km) US$976.07 million, Uluja-mi-Tanah Abang Toll Road (8.27 km) US$425.53 million, Pasar Minggu-Casablanca Toll Road (9.56 km) US$571.99 million, Sunter-Pulo Gebang-Tambelang Toll Road (25.73 km) US$737.80 million, Duri Pulo-Kampung

Melayu Toll Road (11.38 km) US$596.01 million, and Tanjung Priok Access Toll Road (16.67 km) US$390 million with total value reaching US$4,392.76 mil-lion.

The PPP Book 2010 data be-low show that West Java is of-fering five toll road projects, and three waste-base electricity proj-ects worth up to US$2,270.55 million.

Meanwhile, North Sumatra is offering two toll road projects worth US$604.82 million, East Java one toll road project and one water supply project worth a to-tal of US$456.96 million, Lam-pung one toll road project and one water supply project worth US$310.68 million, Bali one toll road project and one water supply project worth US$192.38 mil-lion, and South Sumatra one toll road project worth US$105.29 million.

The total investment val-ue for the 27 priority projects is US$8,333.44 million.

SERIOUS RESPONSEOn projects offered by the Ja-

karta administration, the chair-man of the Indonesian Chamber of Commerce and Industry Sin-gapore Committee, Iwan Der-mawan Hanafi, called on the Jakarta administration to have clear rulings that provide inves-tors with investment security.

The security, he added, is re-lated to land issues because they

27 PRIORITY INfRASTRuCTuRE PROJECTS IN PPP BOOK 2010

remain a serious problem that needs to be tackled immediately by the Jakarta administration.

Land issues not only occur in Jakarta but also in other parts of the country.

“The situation is different compared to China and other countries in Asia Pacific, which guarantee every investor land clearance,” he explained.

He added that the land issue is very sensitive to both investors and the public and that produc-tive measures and socialization of the projects among local residents must be taken, including inform-ing them the negative and posi-tive aspects of the projects for the local residents.

“This is to make the pub-lic understand the multiplier ef-fects that the projects can bring to them. If necessary, involve the residents in the land clear-ance process and project develop-ment to create a synergy between the regional government and the public to ensure the target of the projects can be achieved,” he elaborated.

The projects include the construction of toll roads in various Jakarta areas.

nism (CDM) will buy the project so that it can slash expenses it has to spend to run the project.

He further explained that with-out cooperation from CDM and PLN, the city administration has to pay a gate fee of Rp350,000 per ton daily. But with coopera-tion from the two, it only has to pay Rp100,000 – 170,000 per ton daily.

To bolster investor confidence, tight international standards must be applied, he said.

The Bandung city administra-tion is offering three types of gar-bage processing capacities, name-ly 500 tons, 700 tons, and 1,000 tons per day.

He said that if successful, the project can be applied in other major cities in Indonesia to over-come their garbage problems.

Broadband Use Set to Boostthe Economy

though it is believed that it plays a significant role in the transfor-mation of the economy.

“The broadband policy is com-ing from the director of ITB and UI together with the Habibie Center and my organization (Meaningful Broadband Work-ing Group). We are formulating together a plan that would sup-port Minister Hatta’s plan for economic reform by accelerat-ing broadband and also to make sure that broadband is meaning-ful to the majority population of Indonesia,” explained Prof. Craig Warren Smith in a press confer-ence held after the seminar.

National Telecommunications Commission (NTC) Chairman Prof. Prasit Prapinmongkolkarn agrees on the importance to have easy broadband access. “Public-Private Partnerships (PPPs) are not just for infrastructure alone. Our event produces new data that make clear that Asian na-tions urgently need to find a fi-nancial formula for entire broad-band ecosystems that move markets towards the needs of the

poor,” he explained.The promotion of broadband

use is not only important for the economy but also in creating par-ity among countries.

Easier internet access will re-duce the likelihood a country to lag behind on information of what is happening both domes-tically and overseas. It can also help to compete globally, espe-cially Indonesia.

ICT Chief for UNESCAP At-suka Okuda said many countries have not fully enjoyed broadband access.

“Though cell phones are sweeping the continent, broad-band is not,” he said during the ICT seminar.

The presence of fiber optics to support the wider use of broad-band is already a good start to boost infrastructure from the so-cial aspect. However, not every-one has felt the benefit. Hope-fully through the PPP program, everyone, especially in Indone-sia, can access information easily both on domestic and foreign is-sues to boost the economy.

ROSY ECONOMIC GROWTH FIGURE: Workers are seen busy finishing the construction of a high-rise building in Jakarta, as the IMF again revised Indonesia’s economic growth figure from 5,5% to 6%.

The President Postwww.thepresidentpost.com May 12, 2010 C7

Pictorial Events

W hen US astronaut Neil Armstrong went to the moon in 1969, he is said to have no-

ticed a very bright light on earth, which he called Light of Peace.

He traced the source of the light and it turned out to have come from Asia, Indonesia to be precise, or, to be even more pre-cise, from Central Java’s Borobu-dur, the world’s largest temple.

Later, when he visited Indone-sia, he presented moon rocks to then President Soeharto.

The Borobudur phenomenon continues to live on, according to Marselino Sumarsono, a film-maker who madea documentary on Borobudur Temple.

He revealed that the light em-anating from Borobudur, as seen by US astronaut Neil Amstrong, is extraordinary and has been written in numerous reports that have captivated many and attract-ed tourists from foreign countries to visit the site.

Many world leaders have visited

Bright Lightfrom Borobudur

the temple, among them Prince Charles in November 2008.

Among the many stories sur-rounding Borobudur is that which relates to the birth, in 1868, of a spiritual figure called Raden Gunung, who later man-aged to gain many followers and developed a teaching called Pran-Shoe.

The history of Borobudur, as told through short tales about the temple, have beckoned tourists to visit the place, which is a source of enjoyment due to its magi-cal architecture and its peaceful aura.

The warmth one feels in the area around the temple is perhaps engendered by the harmoniza-tion of Islam, Christianity, Hin-du, Buddha and Faith, as they continue to coexist and perhaps even caused Borobudur to pro-duce light that could be observed from the moon.

As told by Mr S.D. Darmono to Nandi Nanti of The President Post.

MARINE TOuRISM POTENTIAL: The commander of the Indonesian Navy’s base Lantamal III, First Admiral Iskandar Sitompul (center) together with members of Kingdom Scuba Diving and fishermen at the Beach Club in Tanjung Lesung Resort planted 1000 mangrove trees on Earth Day. The President Post/Nandi Nanti

Infrastructure Asia2010 Conference

Gita Wirjawan, BKPM Chief (Middle) as the speaker on The Potential Role of PPP Center in Indonesia Infrastructure Development Industry seminar

From left to right: Herry Bakti S. Gumay (Director General of Air Transportation Republic of Indonesia), Emirsyah Satar (President & CEO of Garuda Indonesia), and Oxana Balayan (Managing Partner and Head of Corporate Finance Moscow Lovells) as the speakers on Air Transport seminar.

Fasli Djalal (Vice Minister of Education Republic of Indonesia) as the speaker on Healthcare & Education seminar.

The Infrastructure Asia Conference & Exhibition (14-17 April 2010) was held in conjunction with the APMC PPP 2010 and enables the widest community of government leaders, private sector develop-ers, investors, bankers, technology & service suppliers and planners, to network directly with senior decision makers and procurement offi-cials from over 53 governments responsible for the future of Asia’s in-frastructure.

The CEO ReferenceTV Program

Dr. Bayu Prawira Hie, Juwono Sudarsono, S.D. Darmono

The Financial Club Jakarta organized the monthly Breakfast Dialogue series on Friday, April 9, 2010 by inviting Ivailo Izvorski as its speaker. Ivailo Izvorski presents his speech entitled “East Asia: Emerging Stronger From The Crisis”

Present at the breakfast were prominent businessmen and professionals, among others, Giuseppe Nicolosi, M.T. Rajah, Amrit Vijay Vaswani, Theodoor Bakker, Mila, Priyo Soemarno, Atmono Suryo

Breakfast Dialogue with Ivailo Izvorski, Lead Economist, East Asia Region The World Bank at The Financial Club Jakarta

KADIN - Western Europe CommitteeKADIN - Western Europe Committee organized a luncheon with MEDEF International (France) at the Financial Club Jakarta on the 8th of April 2010

Present at the luncheon, Mr. Philippe Louis-Dreyfus, Adi Tahir, Maxi Gunawan, Edwin Suryadjaya, Sandiaga Uno, Emirsyah Satar, and delegates of French businessmen

MarketsThe President Post www.thepresidentpost.comMay 12, 2010C8

SEMEN GRESIK (SMGR)

Ready to Absorb SignificantDemand Growth in the Future

ExPANDING PROJECTS TO CAPTuRE DEMAND GROWTH

At present SMGR is developing two new plants which are lo-cated in Tuban, East Java and To-nasa, South Sulawe-

si with total annual capacity of 5 million tons. The company is also developing one power plant which is located in Tonasa with capacity of 2 x 35 MW. Total in-vestment needed for constructing those projects is US$708 million. The detail is US$594 million for constructing two new plants and US$114 million for the power plant. SMGR plans to complete the new plant in Java in 2012 while the new plant in Tonasa is targeted to be completed in 2011. The investment average per ton for the new plant is US$119. On the other hand, SMGR plans to complete the power plant con-struc- tion in 2011 with invest-ment value of US$1.63 million per MW.

Until January 2010 the prog-ress of constructing new plant in Java and power plant are on track, while the progress of con-structing new plant in Tonasa is 3.55%, relatively lower than the previous plan of 4.33%. The main reason is the engineering process. We can conclude that the actual progress is not differ-ent significantly compared to the previous plan. Most of the bud-geted capital expenditure (capex) will be spent in 2010F and 2011F in the amount of US$264 mil-lion and US$230 million corre-spondingly for new power plants construction. It will be the same for power plant that the compa-ny will spend US$24 million and US$66 million in 2010F and 2011F respectively for the power plant. Totally SMGR will spend capex of US$402 million and US$383 million correspondingly in 2010F and 2011F. The capex will be also used for de-bottle-necking project, maintenance, human capital master plan, etc.

The existence of the two new plants are needed by the com-

pany, due to its optimal capaci-ty utilization. SMGR needs ad-ditional significant production capacity in order to capture do-mestic growth demand in the fu-ture. SMGR has already obtained syndicated loan commitment which is led by Bank Mandiri (Persero) in the amount of Rp3 trillion for building plants in To-nasa. Presently the company still relies on its operating cash flow to develop the projects. SMGR will withdraw the loan based on in-vestment needed due to the cash flow efficiency.

After the projects completed, SMGR will maintain its position as the market leader in national cement industry with projected total annual capacity of 24 mil-lion tons in 2012.

EffICIENCY IN 2010

Efficiency improvement is an alternative solution to increase company’s perfor- mance, oth-er than increasing revenues. One way to increase efficiency is us-ing alternative energy such as rice husk and bagasse. The usage of alternative fuel will improve non-renewable energy efficiency as well as consume friendly envi-ronmental energy. For 2010F Se-men Gresik as the holding com-pany plans to use alternative fuel by 5%, while Semen Padang (SP) and Semen Tonasa (ST) plan to use the fuel by 1% for each plant.

Beside the alternative fuel, SMGR also plans to use waste heat recovery. The implementa-tion will be on SP. In 2010 SP plans to conduct stages of design/ engineering, procurement, and

construction.The trial and commissioning is

targeted in 2012F. SP cooperates with Nedo from Japan to imple-ment the technology. The biggest part of the capex will be charged on Nedo. SP will spend capex of approximately Rp76 billion, while Nedo Rp150 billion. The benefit for Nedo is, the Japanese company will get carbon credit from the process.

In our view, SMGR will have much benefit if using alternative fuel and imple- menting waste heat recovery. The cost of alterna-tive fuel is much lower than coal as well as waste heat recovery. SP will use the heat from processing as a new energy for another pro-cessing. On the other hand, SP will spend much less capex than its counterpart, Nedo.

POTENTIAL fuTuRE DEMAND fROM INfRASTRuCTuRE PROJECTS

Indonesia has a plan to im-prove its infrastructure, mainly in tollroads. The plan is strong-ly needed to accelerate the coun-try’s economic growth. Based on National Development Plan-ning Agency (Bappenas), total value of infrastructure projects from 2010 - 2014 is estimated to be amounted of US$34.1 billion, with value for toll road projects of US$15.2 billion. The projects consist of available projects offer with length of 135 km, priority projects of 342 km and potential projects of 857 km.

The potential demand from infrastructure projects, main-ly are tollroads, which will give

much room for the company to grow. SMGR is also benefited by its wide location of cement plants throughout Indonesia, since the country will need much cement for constructing infrastructure. Other than tollroads, SMGR will also have potential growth from developing power plants, water resources, railways and transpor-tation.

VALUATION AND RECOMMENDATION

The outlook of SMGR’s per-formance is positive. Since the company’s capacity utilization is almost at full level, SMGR is con-structing two new plants in Tu-ban and Tonasa. When domestic cement demand grows signifi-cantly, SMGR will be ready to supply its products. The compa-ny has strong market penetration in almost all areas in Indonesia.

Profitability is the company’s main objective for its stakehold-ers. SMGR always finds ways to increase the margin by improving its efficiency. In order to increase its production due to its optimal capacity utilization, the company is constructing two new plants. In the mean time while the con-struction is progressing, SMGR conducts de-bottlenecking proj-ect to increase its produc- tions. This is conducted through tech-nical engineering.

As a state owned company, SMGR always pays dividend with a high dividend payout ra-tio with an average around 40% - 50%. It is very attractive in re-

Current Price : Rp 7700/shr

52 Wk high (01/20/10) : Rp 8200/shr

52 Wk low (03/25/09) : Rp 3625shr

YTD %-change : 1.99%

Share Outstanding : 5931.520mio shrs

Market capitalization : Rp 45672.70bio

Floating rate : 0.24%

1 year total return : 109.81%

2006A 2007A 2008A 2009F 2010F

Sales (Rp bn) 8.728 9.601 12.210 15.965 18.913

Gross profit (Rp bn) 3.328 4.001 5.355 7.184 8.511

Operating profit (Rp bn) 1.779 2.397 3.387 4.863 5.771

Net income (Rp bn) 1.296 1.775 2.524 3.686 4.175

EPS (Rp) 2.184 299 426 621 704

Equity (Rp bn) 5.500 6.627 8.070 10.375 12.562

Net debt (Rp bn) -1.576 -2.712 -3.626 -4.913 -6.552

Total asset (Rp bn) 7.496 8.515 10.603 13.030 15.459

EV/EBITDA 19,5 14,9 10,7 7,4 7,1

Dividend/share (Rp) 1.092,1 149,7 215,2 310,7 351,9

Dividend yield (%) 1,4 2,0 2,8 4,1 4,6

Book value/share (Rp) 927,4 1.117,6 1.360,8 1.749,5 2.118,4

PER (x) 3,5 25,4 17,8 12,2 10,8

PBV (x) 8,2 6,8 5,6 4,3 3,6

PEG (x) 0,1 0,7 0,4 0,1 0,3

Gross margin (%) 38,1 41,7 43,9 45,0 45,0

Operating margin (%) 20,4 25,0 27,7 30,5 30,5

Net margin (%) 14,8 18,5 20,7 23,1 22,1

ROE (%) 23,6 26,8 31,3 35,5 33,2

ROA (%) 17,3 20,8 23,8 28,3 27,0

Net debt to equity (x) net cash net cash net cash net cash net cash

INVESTMENT HIGHLIGHTSStrong cash position to support major expansions

Extending the implementation of debottlenecking project

Loan commitment from national banking syndication

On-track new cement plants and power plant construction

Alternative fuel usage to increase effi- ciency

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JCI Index

SMGR Equity

JCI - SMGR

SEMEN GRESIK

Rp billion 9M09 9M08 chg

Sales 10.404 8.798 18,3%

Gross profit 4.757 3.784 25,7%

Operating profit 3.059 2.396 27,7%

Net profit 2.408 1.791 34,5%

Gross margin 45,7% 43,0%

Operating margin 29,4% 27,2%

Net margin 23,1% 20,4%

9M09 9M08 Chg

Semen Gresik 6.034.987 6.192.795 -2,5%

Semen Padang 3.728.016 3.842.768 -3,0%

Semen Tonasa 2.634.580 2.334.250 12,9%

Total 12.397.583 12.369.813 0,2%

Source: Indonesia Cement Association

SEMEN GRESIK GROuP: DOMESTIC SALES VOLuME 2005 - 2009 (TON)

2009 2008 2007 2006 2005 CAGR

Semen Gresik 8.520.548 8.351.054 7.399.554 7.894.480 7.903.635 1,9%

Semen Padang 5.007.975 5.124.201 4.836.439 4.357.435 3.876.732 6,6%

Semen Tonasa 3.617.358 3.179.986 2.938.240 2.684.599 2.496.165 9,7%

Total 17.145.881 16.655.241 15.174.233 14.936.514 14.276.532 4,7%

Source: Indonesia Cement Association

PER PBV

2009 2010 2009 2010

SMGR 12,4 10,9 4,4 3,6

INTP 19,4 16,5 5,0 4,0

SMCB 17,5 17,0 4,7 3,7

Average 16,4 14,8 4,7 3,8

Source: BNIS estimate

ExCELLENT 9M09 PERfORMANCE

SEMEN GRESIK GROuP: DOMESTIC SALES VOLuME 9M09 (TON)

In 9M09 SMGR record-ed significant growth in sales by 18.3% yoy to Rp10.4 tril-lion. The increasing sales vol-ume was mainly contributed by subsidiary, ST. Gross prof-it rose by 25.7% yoy to Rp4.8 trillion, accompanied by in-creasing gross margin. The operating expenses increased by 22.4% yoy to Rp1.7 tril-lion, mainly because the in-crease of selling expenses. Part of the selling expenses which is delivery and loading ex-penses rose by 27.6% yoy to Rp630.9 billion. Although the operating expenses rose significantly, the company’ operating profit jumped by 27.7% yoy to Rp3.1 trillion. Other income also surged sig-nifi- cantly by 63.8% yoy to Rp256.6 billion. The main contributor was a significant increase in interest income by 75.2% yoy to Rp256.8 billion, although the foreign exchange loss increased to Rp9.4 billion in 9M09 compared to Rp0.3 billion in 9M08. On the bot-tom line, the net profit rose by 34.5% yoy to Rp2.4 trillion in 9M09.

lation with its increasing perfor-mance from one year to another.

SMGR is traded at the cheap-est valuation, compared to its peers, which are Indocement (INTP) and Holcim Indonesia (SMCB). We have a target price for SMGR of Rp9,000 per share by using DCF method, WACC of 16,1% with market risk premi-um of 20%.

SEMEN GRESIK

Income Statement Projection 2006A - 2010F

Rp billion 2006A 2007A 2008A 2009F 2010F

Revenue 8.728 9.601 12.210 15.965 18.913

Cost of revenue (5.400) (5.600) (6.855) (8.781) (10.402)

Gross profit 3.328 4.001 5.355 7.184 8.511

Operating expenses (1.548) (1.604) (1.967) (2.322) (2.739)

Operating profit 1.779 2.397 3.387 4.863 5.771

Other income (expenses) 78 163 202 421 216

Net profit 1.296 1.775 2.524 3.686 4.175

Balance Sheet Projection 2006A - 2010F

Rp billion 2006A 2007A 2008A 2009F 2010F

Cash 1.744 2.822 3.747 5.053 6.717

Current asset 4.153 5.268 7.083 9.290 11.477

Fixed asset 3.163 3.102 3.309 3.500 3.700

Total Asset 7.496 8.515 10.603 13.030 15.459

Liabilities 1.915 1.796 2.429 2.576 2.817

Current liabilities 1.460 1.446 2.092 2.036 2.117

Non-current liabilities 455 350 337 540 700

Equity 5.500 6.627 8.070 10.375 12.562

Minority interests 82 92 104 80 80

Total Liablities and Equity 7.496 8.515 10.603 13.030 15.459

Cash Flow Statement Projection 2006A - 2010F

Rp billion 2006A 2007A 2008A 2009F 2010F

Cash flows from operating activities

Receipts from customers 8.821 9.602 11.851 15.167 18.157

Payment to suppliers (5.548) (5.634) (7.133) (8.781) (10.402)

Payment to employees (917) (1.217) (1.392) (2.089) (2.055)

Cash from operating activites 2.356 2.751 3.325 4.297 5.700

Interest income received 124 138 224 450 250

Payment of corporate income tax (661) (786) (873) (1.268) (1.437)

Net cash flows provided by operating activities 1.594 2.075 2.628 3.404 4.433

Cash flows from investing activities

Acquisition of fixed assets (190) (323) (562) (850) (1.000)

Net cash flows used in investing activities (306) (285) (528) (753) (955)

Cash flows from financing activities

Repayment of bank loans (197) (104) (53) (50) (75)

Payment of dividends (263) (648) (888) (1.262) (1.709)

Net cahs flows used in financing activities (893) (711) (1.176) (1.344) (1.815)

Net increase in cash and cash equivalents 395 1.079 924 1.306 1.664

Cash and cash equivalents at the beginning of the year 1.349 1.744 2.822 3.747 5.053

Cash and cash equivalents at the end of the year 1.744 2.822 3.747 5.053 6.717

Source: Company data and BNI Securities Estimate