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

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The Prospects ofSpecial Economic Zones (SEZs) SEZs are a means to attract domestic as well as foreign direct investments (FDIs). The main issue, however, is that our existing industrial policy should be in line with domestic as well as regional changes in consumer behaviour

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INTERVIEW THE ECONOMY

Uncovering Secrets to a Longer LifeThe secret to longevity, as I see it, has less to do with diet, or even exercise, and more to do with the environment in which a person lives: social and physical.

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LIVING

Five State-Owned Companies to Go Public This YearThe four companies to conduct an IPO this year are housing construction company PT Pembangunan Perumahan (PP), plantation company PT Perkebunan Nusantara III (PTPN) and steel company PT Krakatau Steel.

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BUSINESS

IDR 10,000

Harris Thajeb: “We have no authority to impose sanctions.”150 out of the thousands of ads that were run in the media (television, radio, newspapers, and the internet) last year, considered to have violated the PPPI’s code of ethics.

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Caption Photo: www.presidenri.go.id

JAKARTA (TPP) – President Susilo Bambang Yudhoyono last week reaffirmed his belief in free-dom of expression, telling a large gathering of the nation’s journal-ists that “I am strongly commit-ted to Press freedom.”

He also called on the Press to join him in building what he called “a people-based democra-cy, not a democracy based on the state or one that is centered on the media.”

He also underscored the Press as “a force” that should make use of its position “constructively.”

”It is the discretion of the me-dia to choose, to decide, and to define how that power is utilized for the greater good of our soci-ety,” said the President.

The President, Indonesia’s first directly-elected head of state (he was re-elected in 2009 for a sec-ond and last five-year term), made the statement during a speech addressed to commemo-rate the 64th National Press Day (HPN) last week in Palembang, South Sumatra.

”In many countries we see me-dia-centered democracy, which communications experts say can be an impediment. We in Indo-nesia are heading towards people-centered democracy,” he said.

As power tends to veer (from its noble course), “we need to make sure that checks and balances are always applied, and this is also valid to the Press.”

As part of the HPN celebration, the President gave a “maiden lec-ture” entitled “Failure is Not an Option” to students of the School of Journalism in Palembang.

He said Indonesia has passed at least two big tests so far, name-ly the multi-dimensional crisis in

President ‘Strongly Committed’ to Press Freedom

1998 and the world economic cri-sis in 2008.

“The two achievements were attained by the nation s best sons and daughters, and for that we must show our sense of appreci-ation to them,” he said.

The President added that af-ter the country had passed the second test, the next challenge would be to prepare a new gen-eration of national leadership and to continue development efforts to create welfare for the people.

“To that end, at least three pil-lars are needed, namely economic progress, development of democ-racy and realization of justice,” he said.

President Yudhoyono said In-donesia must be able to overcome various challenges after it had successfully overcome a number of crises in the past decade.

“We have passed past tests and therefore we must also be able to overcome future tests to make Indonesia more advanced in the 21st century.”

The President further said cri-ses in the past had undermined the country s economy and trig-gered conflicts.

“Some had even predicted that Indonesia would break up and disappear,” he said.

“However Indonesia had been able to pass those difficult times,” he said.

“We have survived as a nation and have made positive chang-es. There has been a reawak-ening and Indonesia s role in the international fo-rum is rising,” he said.

“Indonesia is where it is today because we have huge capital, much expe-rience and a new momen-tum,” he said.

He called on the Press to join him in building what he called “a people-based democracy, not

a democracy based on the state or one that is centered on the media.”

to espouse values and norms that will make • democracy growto use its power in the interests of the people.• to use its power wisely and to help the nation • become successfulto safeguard corruption eradication efforts• to exercise self-censorship, cover •

both sides and be selective on stories (proper/improper)

to support the • government and make its development programs successfu

From SBY to the Press

P T Garuda Indonesia has concluded a cor-porate sales agree-ment with PT Shell

Indonesia as part of its pro-gram to cooperate with 750 companies in its bid to secure potential income of Rp2 tril-lion.

“This conforms to the in-crease in our capacity after we acquired 24 new planes and opened 10 new domestic and international routes,” Garu-da Indonesia President Direc-tor and CEO Emirsyah Satar said after the signing of the ac-cord with Shell Indonesia last week.

He said last year the airline signed a MoU with 580 big companies in Indonesia with total income expected at over Rp600 billion.

In connection with the co-operation Emirsyah said the company had prepared special packages for Shell employees in Indonesia for domestic as

Garuda Indonesia, Shell in Corporate Sales Deal

well as international flights.The president director of Shell

Indonesia, Darwin Silalahi, said the contract was not only based upon a discount facility as it also shows Garuda s capability to serve large numbers of customers.

To develop a corporate mar-ket, in the future Garuda will facilitate access for its corporate partners through “Garuda On-line Booking Corporate” facili-ty, Garuda s head of communica-tions, Pujobroto, said.

Garuda recently earned a four-star class recognition from SkyTrax, an international rating agency for airline service. It ex-pects to earn the five-star title in 2013, he said.

Shell is a global energy and petrochemical business group with around 102,000 employees in more than 100 countries and regions, based in The Hague, the Netherlands.

In Indonesia it operates in var-ious locations in Java and Kalim-antan.

“This conforms to the increase in our capacity after we acquired 24 new planes and opened 10 new domestic and international routes.”Emirsyah SatarGaruda Indonesia President Director and CEO

In the cabin: Garuda recently earned a four-star class recognition from SkyTrax, an international rating agency for airline service.

Photo: Kristupa Saragih

Vice President Boediono and Coordinating Economic Minis-ter Hatta Rajasa may have differ-ent opinions, but they are united on solving problems with inde-pendent power producers (IPP)s, says an official.

Boediono’s spokesman Yopie Hidayat denied a story carried by The Jakarta Post last week, which reported a rift between the Vice President and Hatta.

Yopie said that both state offi-cials were concerned about find-ing a solution to the IPP prob-lems.

He explained that Boediono and Hatta met on Jan. 18 to dis-cuss IPP problems with other public officials.

During the meeting, he said, differing opinions emerged be-fore a consensus was reached.

“In the meeting, Pak Boe-diono and Pak Hatta were of one

VP, Hatta in the Same Boaton IPP: Official

voice. Both wanted to help PLN [state power firm] to deal with the 50 IPPs. They all wanted to secure PLN from possible law-suits,” Yopie said.

“All participants are commit-ted to helping PLN and not to giving certain privileges to people who are close to the President,” he added.

The 50 IPPs, having gained

operating licenses between 2004 and 2009, are largely owned by prominent businessmen.

Despite the small capacity of combined IPPs, totaling 500 megawatts, the Cabinet included the resolution of IPP disputes in its 100-day program.

According to State-Owned Enterprises Minister Mustafa Abubakar, all problems related to IPPs would be resolved based on business-to-business princi-

ples, demanding the companies renegotiate their contracts direct-ly with PLN management under the government’s supervision.

J. Purwono, the director gener-al for electricity and energy utili-ty at the Energy and Mineral Re-sources Ministry, explained that PLN had categorized IPPs into three categories.

The first category compris-es IPPs that had secured financ-ing and started construction. Ac-cording to Yopie, there are five IPPs in the first category.

The second category covers IPPs that had secured financ-ing, but had not started construc-tion—there were 12 in that cat-egory.

The third lists IPPs that had signed power purchase agree-ments with PLN, but had not yet secured any financial commit-

ments.“PLN said it can only renegoti-

ate with first and second catego-ries of IPPs,” Purwono said, add-ing the government would wait for the results from the (B2B) ne-gotiations.

“IPPs basically want higher prices. We ask PLN to discuss this matter,” Purwono said.

He added the final results of the negotiation must be audit-ed by the Development Finance Comptroller Agency (BPKP).

“Whatever PLN’s decision is, as long as it has been approved by the state auditor [BPKP] the gov-ernment can approve it as well,” Purwono said.

He added the government was waiting for PLN’s decision and the BPKP audit.

PLN’s business and risk man-agement director Murtaqi Syam-suddin, said the company expect-ed to finish negotiations within a year.

“We are working on it,” he said.

Murtaqi denied a report saying that PLN had dropped the nego-tiation with some IPPs.

“That information is inaccu-rate,” he said.

ViewpointThe President Post www.thepresidentpost.comFebruary 11, 20102

G unung Kidul is the name of one of the districts in the Spe-cial Province of Yog-

yakarta, at the south-eastern part of the province in Central Java. In the old days, the land was barren as the district was covered by bar-ren rocks. Finding and transport-ing water for their daily needs, such as cooking, took up a signif-icant amount of time of their dai-ly life. Sometimes, it took them hours just to bring in a few gal-lons of water. Not surprisingly, in those years the district became the epicenter of Indonesian hun-ger and poverty. Aside from the difficulties, that kind of life un-dermined the sense of pride of the people.

In 2004 I had a chance to visit the district. It was a heartwarm-ing experience to see that things have changed very significantly. The road to Djati Village, around an hour’s drive from the District Capital of Wonosari, was very well paved and maintained. To be honest, the road was even better than most of the roads in Jakar-ta. After driving through asphalt-paved road, we passed through a hardened dirt road. The con-struction of the small road to the

ARISING FROM POVERTY:

The Gunung Kidul Success Story

By Cyrillus Harinowo Hadiwerdoyo

village was made possible by the collective effort of the local peo-ple; the village is now more than accessible to cars. In that village, I attended a Catholic church’s service led by a priest from Yog-yakarta. The small church was clean and equipped with a simple sound system and an electron-ic keyboard. The congregation, around 200 people, wore simple but clean dresses that made the sight interesting.

I took time after mass to go to the washroom at the side of the church. The house was made of teakwood, with ceramic floor-ing and a very clean bathroom with a toilet inside. When I turned on the faucet, I was sur-prised to see the water was very clean. The house had been con-nected to electricity and I noticed that there were dried paddies on the floor and a motorcycle. Lat-er on I joined the priest and a small group of congregation for tea and simple snacks in anoth-er house. The second house was made of bricks and had not been completely finished. A motor-cycle was also parked inside the house. The furniture was made of teakwood and rattan and was very well kept.

What was more interesting was the substance of the discus-sion. No one was talking about lack of food. In fact, the congre-gation felt sorry for not being al-lowed by the priest to serve din-ner after mass. They said that this kind of gathering was only done every week. They felt sorry that they had to miss the opportunity to serve the guests. I am sure the request was made with good in-tentions, and not to cause unnec-essary burden to the people.

In that village there was only one elementary school. Appar-ently many of the children went to that school before moving to another village or to the dis-trict capital to attend second-ary school. As such, basic educa-tion was not a problem for most of the people; their concern was sending their children to univer-sity Can you imagine that the district, formerly the epicenter of hunger and poverty, now had a completely different set of issues in the discussion?

In fact, the problem of send-ing our children to universities is not a monopoly of that village; it is the concern of many families in this republic. To me, the dis-cussion showed how significant-

ly the people of that district have progressed.

Taking that sample to the big-ger population, we can clearly see how well the district has pro-gressed. The Djati Village that I used as an example was not a por-trait of the most prosperous village in that district. In fact, it is clos-er to the truth to classify that vil-lage as less fortunate ones. How-ever, the village enjoyed streams of clean water from a project done by a German NGO, which had been assisted in the field by students of Karlsruhe Univer-sity of Germany. The project’s aim was to bring up water from a river around 100 meters deep down the Earth, store it inside a big tank in the village of Bribin, and have it distributed to houses through a network of pipelines. The water is drinkable and can be used for people to take baths and other daily needs.

Such an effort was recently re-prised in the same area for the second stage. A similar effort was also made in the Baron Coast-line with the assistance of the Japanese Development Agency (JICA). Other efforts were also done by the Indonesian Gov-ernment and by district itself. As

such, most of the people can now enjoy water without having too make too many sacrifices. The quality of life in that district has significantly increased by that ef-fort.

Looking at the statistics of that district, we can now clearly see the difference between what had been experienced in the past and what they have been able to achieve. I am sure the people of Gunung Kidul can take pride with what they have done so far. The district has been turned in to a very green area thanks to very successful reforestation. In fact, the Gunung Kidul District Gov-ernment has maintained serious efforts in reforesting some areas so that the ideal forest-to-land ra-tio can be achieved within a rea-sonable time. The increase in forest area helped significantly ef-forts to conserve water in that re-gion. When I visited that district last year, it was really heartwarm-ing to see green paddy fields in several areas. This was partly the result of the efforts of the people in conserving water through the greening of the land.

Another interesting statistic was the rate of undernourished people. From being the center of

hunger and poverty several de-cades ago, the district now boasts a rate of 0.8 percent of their peo-ple classified as undernourished. This level was significantly below 2 percent, the national average figure. This statistic once again showed how significantly things have changed in that district over the past several decades.

Similarly, the percentage of the people classified as poor has de-clined significantly as prosperi-ty has improved in that district. A private bank in that area could easily tell you that the number of people with the capacity to save and has increased.

It is indeed interesting to share a success story on the eradication of hunger and poverty in the most poverty-stricken district of Gu-nung Kidul. There are certainly many lessons that can be learned by other districts. If the District of Gunung Kidul has succeed-ed in making the difference, oth-er more fortunate districts should also be able to do so. The key is a strong determination that has to be kept alive day after day.

The writer is an economist and a regular columnist in major national news media.

If the District of Gunung Kidul has succeeded in making the difference, other more fortunate districts should also be able to do so. The key is a strong

determination that has to be kept alive day after day.

If the District of Gunung Kidul has

succeeded in making the difference, other

more fortunate districts should also

be able to do so. The key is a strong determination that has to be kept alive

day after day.

The President Postwww.thepresidentpost.com February 11, 2010 3

Interview

T he association also co-operates with the In-donesian Broadcasting Commission (KPI) to

maximize its supervision on ad-vertisements in the media.

To find out more on the defi-nition of troubled ads, and those who violate the industry’s code of ethics and how the cases will be treated, The President Post’s Eka Putri met with the associa-tion’s executive chairman, Harris Thajeb, who is also the chairman of Dentsu advertising company, one of the largest in Indonesia.

The following are excerpts of the interview.

What is the trend in 2010, and what is your estimation of our national ad spending?

Now that digital media is be-ing developed, we see a combina-tion of conventional and digital media. Digital media is comple-mentary and does not undermine conventional media.

The combination will contin-ue to develop in 2010. Ad spend-ing is expected to grow 15% com-pared to 2009.

What do you think about the advertising industry in In-donesia now?

It is showing good progress. The quality of the advertisements is also improving as seen by the number of awards received in in-ternational competitions. This has never happened before.

This industry is quite huge, how much did it earn in 2009?

Approximately Rp53 trillion (about US$600 million), as the value that was recorded up until September-October had already reached Rp47-48 trillion.

The percentage for television is about 53%-54%, print media 30% with the remaining going to radio and digital media.

In 2009 telecommunication companies and political parties were the biggest contributors. Previously it was toiletries and telecommunications.

Does this mean the figures would not be this high if it were not for the general elections?

Not necessarily, the figures would still be high because when political parties started their cam-paigns, producers cut down their ad placements due to problems in getting slots. They then shifted to other promo media.

After the general elections, they started placing ads once again.

The advertising industry would never become dormant because producers are fully aware that promotion is an investment rath-er than an expense. They they will enjoy the fruits of what they plant now in the future.

They are not wrong about in-curring costs because this is part of an investment. Most impor-tant is that they must have the

insight to see the opportunity by producing high-quality advertise-ments that don’t violate ethics.

Speaking of ethics, PPPI found 150 troubled ads with most of them violating the in-dustry’s code of ethics.

We obtained the data from PP-PI’s Supervisory Board.

Frankly. there are still many who violate the ethics of the in-dustry.

We have already published a book on Indonesian Advertising Ethics (EPI) that have been dis-tributed to all agencies and adver-tising community. We also often hold discussions in the associa-tion. It’s true that it needs time to regulate it.

The problem is, we are an in-dustry that adopts self-regulato-ry measures and therefore there are no sanctions. We can only make calls to agencies, so who-ever committed violations could never be punished.

The most we can do is make announcements on the ads that violate the EPI during a congress. This would embarrass the agency or agencies that produced them.

Can you cite an example of an ad considered to be violat-ing the EPI?

Most of the violations found in advertisements are indecent ap-pearances and superlative claims or exaggerated statements.

We have reprimanded through KPI an ad of a coffee with milk product because it displayed an indecent shot of someone tak-ing out the coffee product from a woman’s private part, which is logically wrong. The ad is now no longer being aired.

There was also a superlative ad, for example, showing a detergent that claims it can make clothes cleanest without supporting it with facts and data.

There was also an ad on a milk product for children which sug-gested that the child can become much taller after drinking the milk—this is also a violation.

An ad can claim that the prod-uct is the cheapest, the best or whatever only if they are support-ed by data based on research by a third party and not from the pro-ducer itself.

Ads are not allowed to claim anything if they are not support-ed by facts.

Sometimes we see an ad that show a child lifting a heavy object after taking in a certain brand of vitamins. That is illogical and it is obvious it had violated the EPI and can be categorized as fraud.

Lately, we see disguised ad-vertisements in many infotain-ment and news programs. Isn’t that a violation?

That’s not a violation. A viola-tion is when the actor is not really using the product. Ads like that emerge because the Indonesian public likes to know what their idols are up to. If their idol uses product A, they would follow by using it too.

Now we can also find adver-tisements in movies. But don’t be mistaken, that is top sell. Is it a vi-olation? No.

So movies are now also a target for advertisements and we have seen many examples of that.

PPPI is collaborating with KPI to supervise advertise-ments in televisions and radi-os. When did the collaboration start?

Only recently. If we find an advertisement violating ethics, we would tell the agency, “Please, don’t air it.” So, we can only make calls, we can’t stop them from air-ing ads. But if the KPI considers an ad improper and violates eth-ics, they can ask TV or radio sta-tions to pull it off the air.

Actually, that happened re-cently happened, when the KPI stopped what it considered to be an indecent, negative and vulgar ad.

The KPI holds political pow-er and have broader authori-ty. PPPI’s cooperation with the KPI was made because the pub-lic often lodges complaints on certain advertisements to us. In the meantime, we can only rep-rimand members of our associa-tion, but we do not have the au-thority to ban ads.

What are PPPI’s other efforts to minimize ethics violation?

PPPI has an Advertising Super-visory Body that runs a monthly check on all ads placed in televi-sions, radios, newspapers, maga-zines and others. So, we are quite thorough about this, especially when we receive reports from the public, to which we will respond immediately.

The Advertising Supervisory Body always evaluates advertise-ments that are considered prob-lematic. We reprimand agen-cies if we see something that is not right, but we cannot punish them.

Has the EPI been socialized?All the time. We provide all

agencies with the EPI book. Whether or not they read it, we don’t know. To be frank, giving

HARRIS THAJEB

“The problem is,we have no authorityto impose sanctions.”

The size of the country’s advertising industry is quite large and this is reflected in billings. In 2009, for instance, the creative industry recorded up to Rp53 trillion in terms of spending

value, with the biggest contribution coming from telecommunication and political ads.

Out of the thousands of ads that were run in the media (television, radio, newspapers, and the internet) last year, the Indonesian Advertising Companies Association (PPPI) Supervisory Body found about 150 ‘problematic’ ads, or those considered to have violated the PPPI’s code of ethics.

However, since the policy is self-regulatory in nature, PPPI has no authority to impose sanctions on ad agencies that produced the troubled ads. It could only recommend them to put a halt on airing the ads.

out the EPI book is not enough, that’s why we also hold trainings periodically to improve the quali-ty of creative workers.

Is the number of violation in-creasing or declining?

I don’t have the data in full de-tail, but if you look at how the quality of advertisements in the country has continued to im-prove, the violation rate seems to decline.

Now, whenever a member re-ceives a letter of reprimand, they soon realize they have made a mistake.

What happens if an ad obvi-ously contained a violation and has been reprimanded by PPPI but continues to be aired?

We have rules of engagement. First we make call them up,

then issue a reprimand letter and later issue a strong warning.

We are stronger now because we can use the KPI’s authori-ty to remind television stations and other related media regard-ing problematic ads. So far, our relationship with KPI is running well. Let the KPI make the deci-sion.

Does the harshest sanction include ousting the member from the association?

Not really, but the agency will at least be embarrassed about the mistake it made. However, there are of course many that have no shame at all. But they generally change after getting reprimand-ed once or twice.

We want to be like in other countries whereas there are not too many ethics violations be-cause they are used to discipline and feel embarrassed if they make any violation.

Our problem is that we can only make calls but we have no authority to impose sanctions. That’s the problem.

We have rules of engagement.

First we make call them up, then issue a reprimand letter and later issue a strong warning.

We are stronger now because we can use the KPI’s authority to remind television stations and other related media regarding problematic ads.

“

The EconomyThe President Post www.thepresidentpost.comFebruary 11, 20104

Govt earns Rp5.45 trillion from bonds issuance

The government earned Rp5.45 trillion from the sales of four series of state bonds in an auction late last month, the ministry`s director general of debt management, Rahmat Waluyanto, said in a statement.

The state bonds up for the auction were series SPN20110113 due on January 13, 2011, FR0031 November 15, 2020, FR0040 September 15, 2025, and FR0050 July 15, 2038, the Finance Ministry official said.

The government received Rp2.30 trillion bids for the bonds series SPN20110113 with the highest yield of 7.25 percent and the lowest yield of 6.78%, and Rp4.16 trillion bids for the bonds series FR0031 with the highest yield of 10.16% and the lowest yield of 9.63%.

Govt promises to solve power outagesproblem in 2010

The government has pledged to solve the electricity shortage problem in the country this year so that people would no longer have to endure power outages.

“We are resolved to make all possible efforts, so that the problem will be solved this year,” President Susilo Bambang Yudhoyono said in Banten, West Java recently.

The government, he added, would accelerate improvement of distribution and transmission channels and speed

up the first and second phase of the 10,000 MW development project. On the same occasion President Yudhoyono also dedicated the Labuhan Angin

coal-fired power project in North Sumatra which has a capacity of producing 2x115 MW electricity but is not part of the 10,000 MW project.

West Sulawesi produces 150,000 tonsof cocoa per year Cacao estates in West Sulawesi province are

now producing more than 150 thousand tons of cocoa per year said West Sulawesi Governor Anwar Adnan Saleh here Sunday.

“With a total of 180,835 ha in five regencies in West Sulawesi, the cacao growers will produce more than 150,000 tons of cocoa per year,” he said.

He said the biggest cocoa producer among the five regencies is Mamuju regency covering 65,448 ha producing 53,457.9 tons per year.

World Bank loans for channelnormalization project

The World Bank will facilitate funding for a normalization project involving a number of river channels in Jakarta, said the World Bank East Asia and Pacific Development Director, John A. Roome, at Jakarta City Hall recently.

According to Roome, the river channel normalization and the flood canal projects are an important step that must be taken by the Jakarta municipality.

Jakarta governor Fauzi Bowo added that the channel normalization project is currently in the

dredging phase. “The canals that have not been dredged for 30 years,” he added.

Russians interested in RI’s mining sector

Indonesian Ambassador to Russia Awaluddin Hamid said several Russian investors were interested in investing in Indonesia`s mining sector.

“Some Russian businessmen are interested in investing in gold and coal mining,” Awaluddin said at the Foreign Affairs Ministry here last week.

A number of Russian entrepreneurs had joined the Russian Business Academy to offer cooperation to Indonesian entrepreneurs to run mining ventures, Awaluddin said.

He said the Russian businessmen appreciated Indonesia`s natural wealth and rapid government response to foreign cooperation opportunities.

The ambassador also urged regional government heads in Indonesia to be more pro-active in promoting their regions potentials.

In 2009, Indonesia-Russia trade experienced an increase of 48% to US$1.6 million, Hamid said.

“Palm oil is the most popular commodity in Russia; the market is still asking for additional supplies,” he said.

Anwar Adnan Saleh

ECONOMIC UPDATES

Susilo Bambang Yudhoyono

GLOBAL

T he World Bank’s latest economic re-port “Global Eco-nomic Prospects

– crisis, finance, and growth 2010” clearly confirms that recovery is underway. But, it will be a subdued recovery given the severe financial crisis that rocked the world in the fall of 2008. The outlook will remain clouded with many challenges and uncertainties.

As the Bank points out, the depth of the recession has left the global economy seriously wounded. The impact of the recession is mostly felt by de-veloped countries, which suf-fered severe contractions. Im-mense sums were needed to bail out important banks, while unemployment rates reached high levels and mil-lions of consumers were hit hard.

It is expected that countries will continue to feel the pain of the crisis for years to come, as the World Bank emphasized. Therefore, the Bank appealed that countries should not re-spond passively. To that end, the G7 (industrialized coun-tries) just announced that they will continue with their stim-ulus programs.

It looks that in 2010 indus-trial production and trade lev-els have yet to regain pre-cri-sis levels. Unemployment has reached double digits in many countries and continues to rise. Developing countries will still be operating about 3% below their level of poten-tial output.

It is not quite reassuring to note that the world has been warned that there are no silver bullets to mitigate the worst symptoms of the crisis that will take a longer time to sub-due.

SUBDUED RECOVERYThe World Bank reaffirms,

however, that the acute phase of the crisis is over. Stock mar-kets have recovered – bond flows have returned – develop-ing countries currencies have regained – the freezing up of credit markets and the reversal of capital flows have stopped. This trend is being shown in clear terms in East Asian countries. Indonesia is often considered to be one of the countries with solid growth, after China and India.

Overall recovery, however, will be subdued and uncer-tainties will remain to cloud the outlook (Table 1):

High-income countries will

grow from -3.3% (minus growth) to 1.8% in 2010 and 2.3% in 2011. World growth will reach 2.7% in 2010 and 3.2% in 2011 (compared to 3.9% in 2007).

Developing countries will grow to reach 5.2% in 2010 and 5.8% in 2011; compared to 8.1% in 2007. As can be seen from the above data, the highest world growth will be in East Asia and in Pacific led by China, India and transition countries. Indonesia’s growth forecast will be between 5-5,5%

EAST ASIA

Compared to the situation in advanced countries such as the United States and Europe, and compared also with other devel-oping regions, East Asian econo-mies, including Indonesia, were less affected by the crisis.

It cannot be denied, however, that East Asian economies were hard hit by the collapse of glob-al business during the last part of 2008 and the beginning of 2009.

It will be recalled that many countries in East Asia depend-ing on exports of manufactured goods (durable and investment goods) experienced dramatic de-clines in trade and production between September 2008 and March 2009.

In the area of finance, local eq-uity markets fell by 60% or even more and currencies tumbled to a large degree. There was an im-mense outflow of funds from the region and the credit squeeze was substantial. A very critical sit-uation developed at that time. That was also the case in Indo-nesia. The impact in our coun-try was mostly felt in the finan-cial area and less severe in the area of trade.

YEARS AHEAD Growth

East Asia’s recovery from the global downturn is quicker and more robust than in other parts of the world. It is led by Chi-na: China’s upturn, among oth-ers through its stimulus program (amounting to $575 billion) and increases in industrial production serves as the stimulants of growth (Table 2).

For East Asia, the trend for the years 2010-2011 will be up espe-cially in the areas of GDP growth and private consumption. In oth-er areas the trend will be down namely in the area of public con-sumption and current account balance.

Exports will grow from minus 13.5% in 2009, to 6.6% in 2010 and 8.8% in 2011. The trend in imports will also increase. Early indications suggest that Indone-sia may follow the general trend

of East Asia.

FinanceAs to the years ahead, it must

be realized that tighter regulation will have to be taken by the ad-vanced countries. But this will have its impact on developing countries including Asia. There will be less capital available for countries in need to spur growth such as Indonesia.

In addition, there will be high-er capital costs in the coming years which will also have their impact on the flow of capital. All this may impede and restrain the developments and growth of the developing countries.

In the case of Indonesia, the sta-bilization of international finan-

cial markets, renewed capital in-flows especially from new sources of supply, such as the Middle East and also China, are expected to stabilize the economy and main-tain growth in 2010-2011.

An important trend to note for countries such as Indonesia is that capital which fled away in 2008-09 to safe-haven countries, especially the United States, is re-turning. In addition, the positive developments of financial mar-kets in Asia is underpinning rap-id rebound of equity markets in individual countries. It is report-ed that bourses in Indonesia and Thailand have more than dou-bled. The markets, however, con-tinue to reflect the day-to-day fluctuations of world markets.

Global Economic Prospectsand a Subdued Recovery

By Atmono Suryo

TRANSITION The two years ahead (2010-

2011) could be considered as the transition years to achieve in par-ticular pre-crisis levels of produc-tion, trade and investment. The most difficult area would be in the area of international finance, which needs a great deal of im-provements.

In these transition years Asia is in a more favorable position than the developed countries and oth-er developing regions. East Asia can play a positive role in the in-ternational efforts to achieve full recovery and sustainable growth. It will also be in a position to take advantage of the opportunities which are opening up.

(real GDP growth, percentage change from previous year)

Region 2007 2008 2009e 2010f 2011f

World 3.9 1.7 -2.2 2.7 3.2

High-income countries 2.6 0.4 -3.3 1.8 2.3

Euro Area 2.7 0.5 -3.9 1.0 1.7

Japan 2.3 -1.2 -5.4 1.3 1.8

United States 2.1 0.4 -2.5 2.5 2.7

Developing countries 8.1 5.6 1.2 5.2 5.8

East Asia and Pacific 11.4 8.0 6.8 8.1 8.2

Europe and Central Asia 7.1 4.2 -6.2 2.7 3.6

Latin America and the Caribbean 5.5 3.9 -2.6 3.1 3.6

Middle Asia and North Africa 5.9 4.3 2.9 3.7 4.4

South Asia 8.5 5.7 5.7 6.9 7.4

Sub-Saharan Africa 6.5 5.1 1.1 3.8 4.6

Memorandum Items

Developing countries

excluding transition countries 8.1 5.6 2.5 5.7 6.1

excluding China and India 6.2 4.3 -2.2 3.3 4.0

Source: World BankNote: e=estimate; f=forecast; growth rates aggregated using real GDP in 2005 constant dollars.

TABLE 1: MODEST RECOVERY

(annual percent change unless indicated otherwise)

1995-2005a 2006 2007 2008 2009e 2010f 2011f

GDP at market prices (2005 US$)b 7.4 10.1 11.4 8.0 6.8 8.1 8.2

GDP per capita (units in US$) 6.3 9.2 10.5 7.2 6.0 7.2 7.3

PPP GDP c 7.3 10.1 11.3 8.0 6.8 8.0 8.2

Private consumption 5.7 8.1 8.7 6.7 5.9 7.3 7.5

Public consumption 8.1 8.2 9.8 7.8 11.1 8.4 7.3

Fixed investment 8.1 12.4 8.7 5.3 14.3 9.3 9.3

Exports, GNFS d 12.5 18.8 15.4 7.4 -13.5 6.6 8.8

Imports, GNFS d 9.7 12.7 11.0 4.9 -12.1 6.2 8.5

Net exports, contribution to growth 0.7 3.4 3.0 1.7 -2.0 0.7 0.8

Current account balance/GDP (%) 2.2 8.4 9.9 8.8 7.1 6.5 6.4

GDP deflator (median, LCU) 5.9 4.4 3.5 4.3 3.2 3.3 3.4

Fiscal balance/GDP (%) -1.8 -0.7 0.0 -0.6 -3.3 -3.7 -3.1

Memo items: GDP

East Asia excluding China 3.5 5.7 6.2 4.8 1.3 4.7 5.1

China 9.1 11.6 13.0 9.0 8.4 9.0 9.0

Indonesia 2.7 5.5 6.3 6.1 4.5 5.6 5.8

Thailand 2.7 5.3 4.9 2.6 -2.7 3.5 4.0

Source: World Bank

TABLE 2: EAST ASIA AND PACIFIC FORECAST SUMMARY

In these transition years Asia is in a more favorable position than the developed countries and other developing regions. East Asia can play a positive role in the international efforts to achieve full recovery and sustainable growth.

Indonesia will have a strong political modernization. Mod-ernization is not only change the way of thinking but the way of behavior.

This is the hot topic of discus-sion at the Innovative Leaders Fo-rum which was held by the Mod-ernisator on January 29, 2010.

The speakers were Anas Ur-baningrum from Democrat-ic Party faction, Arif Budimanta from Indonesia Democratic Party - Struggle, Mustafa Akmal from Prosperous Justice Party faction, and Basuki Tjahaja Putra.

The forum was moderated by Dr. Bima Arya Sugiarto, a polit-ical observer of the Charta Poli-tika. He is also a noted lecturer from Paramadina University.

Innovative Leaders Forum

The discussion was opened by the co-founder of Modernisator, Dr. Dino Patti Djalal.

He said that Indonesian peo-ple already had a way of thinking towards modernization through various political activities.

This trend persist a big trigger in May 1998 when the reform movement began to increased awareness of political rights of ev-ery citizen.

People are now free to express themselves in a more open and democratic society that is Indo-nesia.

Many people in the audience raised critical questions. They in-cluded ambassadors and private sectors leaders.

Innovative Leaders Forum was held by the Modernisator on January 29, 2010.

The Economy

The President Postwww.thepresidentpost.com February 11, 2010 5

A s we enter the second decade of the 21st cen-tury, one of the de-velopment strategies

of Indonesia’s economic policy-makers and players should be the creation of a plan to develop SEZs (Special Economic Zones) in selected provincial regions.

The required characteristics of the provincial regions are namely, infrastructure, quality and quan-tity of labour, knowledge spill-over, and the ability for existing supporting and related compa-nies to attract new companies to move into the areas.

In SEZs, agglomerations and clusters of industries are the main players. Agglomerations and clus-ters should be treated equally, meaning that industrial factories and distribution facilities come together in a common location and form a concentrated busi-ness area outside regional capitals in order to avoid large-scale ur-banization. Industrial clustering is indeed of great importance in terms of economic growth.

SEZs are a means to attract do-mestic as well as foreign direct in-vestments (FDIs). The main is-sue, however, is that our existing industrial policy should be in line with domestic as well as regional changes in consumer behaviour on the following products:

electric appliances•wood and wood products•garments•household appliances•pulp and paper•leather products and footwear•fish and shrimps•agriculture •

Our macroeconomists claim that Indonesia’s success in indus-trialization is due to macro-eco-nomic stability, export-oriented policies, trade reforms, invest-ment licensing deregulation, in-vestment in infrastructure and education. The speed of industri-alization has however led to a rel-atively “shallow” structure. In the early 1990s ‘broad-based’ indus-trial policies resulted in shallow export-driven industrialization.

When the Asian crisis (1997-1998) occurred, not many mem-bers of our elite were fully aware of a number of factors in our manufacturing sector, stemming from long-standing weaknesses such as narrow export base and limited capacity to cater to in re-gional as well as international

The Prospects ofSpecial Economic Zones (SEZs)

By Bob Widyahartono

markets. Several weaknesses can still be

obeserved in the concentration of industries in Java, particular-ly in Jabotabek (Jakarta-Bogor-Tangerang-Bekasi), Bandung, Semarang and Surabaya-Gresik-Mojokerto (the East Java trian-gle). There exists a low level of local component content in in-dustries and limited capability in adopting as well as absorption of appropriate technology in indus-tries. There is no significant ‘clus-tering’ of industries’ to enable ef-fective use of resources, and the list of resources includes oil and gas, tin, nickel, and other mineral resources, hydropower, lumber, special marine products and ag-riculture products.

In new SEZs, clustering would be more realistic since they en-courage product specialization in certain locations and enhanc-es competitiveness. In short, this means grouping intensively inter-linked industries. In the outer re-gions, and especially in Sumatra, Sulawesi, Kalimantan, Malu-ku and Nusa Tenggara islands, there has not been much indus-trial clusters involving SMEs, since a small number of large for-eign affiliated or even wholly In-donesian non-oil industries on the sites usually have their prof-it transferred to Jakarta or outside the country, leaving little in the regions in question. This makes it more difficult to foster the es-tablishment or growth of small local businesses.

In reality, interaction be-tween local government and ex-isting industry associations has been mostly confined to taxa-tion and regulations, and limit-ed to public-private networking in the form of formal irregular dialogues. Because of time con-straints, what took place in the 1990s and 2000s are short-term

industrial and export diversifica-tion, productivity enhancement and skill development in prod-uct and process technology, and assessing international competi-tiveness.

Dialogues are constrained not only by time, but also by weak analytical capacity of most in-dustry associations as well as low-quality professionalism on the part of local authorities involved in facilitating industrial develop-ment.

Therefore, regular upgrading is a bigger requirement in the re-gion so as to enable associations to absorb information on how to effectively pursue industrial de-velopment for members. Mean-while, the function of local au-thorities must be confined to provision of services and execut-ing ‘good governance’, since too many regulations and interven-tions will hamper the productivi-ty and efficiency of the related in-dustries.

Clustering will still be benefi-cial to society as the stakeholders of economic development. Well-planned industrial clusters in SEZs could effectively function in places where locally special-ised items are produced or where a large core firm has a handful of subcontracting or parts mak-ers surrounding it. It should be in the vicinity of large cities – in or-der to create a multiplier effect to society – and government-led or

semi government-led export pro-cessing zones.

These forms of industrial clus-ters have several shared features despite differences according to category. There are strong ex-ternalities derived from verti-cal as well as horizontal linkag-es through sub-contracting and what is referred to as ‘inter-firm alliances that produce ‘collective efficiency’. With the advance-ment of information technology (internet, facsimile, hand phones)

accumulated knowledge is also shared. On the other hand, trans-portation and communication costs are unavoidable factors in the sense that when they are high, firms prefer to concentrate or rely on one and another.

Knowledge is crucial in any cluster. R&D (Research and De-velopment) activities, new devic-es and skills are inevitably shared in the community through regu-lar interactive meetings and dia-

logues. Lastly, the role of govern-ment and local authorities is also significant since clusters could mainly consist of small-and me-dium scale enterprises (SMEs).

Clustering, in our case, is of importance in terms of economic growth. The creation of industri-al parks in alliance with Japanese industries has proven beneficial since the 1990s. But this kind of alliance must be further encour-aged by other qualified inves-tors. It must be borne in mind that creating industrial clusters is

not always and instantly success-ful. It depends on several factors: Firstly, infrastructure (highways, ports, electricity supply, banking services, health and local trans-portation facilities etc.); Second-ly, institutional framework, e.g. legal system, and networking based on trust.

Thirdly, good public gover-nance and to a certain extent government support in terms of laws, taxation and financing, and

Fourthly, the required human re-sources in terms of basic knowl-edge in business as well as profes-sional and skill development.

The private sector particularly in the regions should be encour-aged to develop and operate de-mand-driven technical training centres, in alliance with training institutions with financial and other incentives (e.g. tax), and under a very carefully designed quality control and accredited system.

Take the case of Japan with their industrial policy, which from time to time is reviewed since 1970s until now. Their METI (Ministry of Economy and Industry) orchestrates the de-velopment of their ‘picking win-ners’ strategy in their home mar-ket as well as the international market. Since the 1980s a num-ber of Japanese firms have been allocating a substantial amount of their budget for R&D: one-third on new products and two-thirds on new processes resulting in faster entry and penetration into domestic as well as region-al (East Asian) markets. Japan’s industries have never been con-fined to large-scale industries, the majority are more medium-scale in size.

Why do certain locations at-tract firms to take part in cluster-

ing? Several factors that should be understood by the stakeholders in charge of promoting prospective SEZs are, Firstly, essential raw materials must be easily accessi-ble by industries in the zones, as well as well-organized infrastruc-ture such as sea transportation fa-cilities e.g. port facilities, efficient shipping, and highways. Second-ly, stable supplies of electricity, gas and water are indispensable. Thirdly, a large pool of quality labour to attract firms must be in place. Fourthly, city govern-ment facilities are essential, pro-viding tax incentive as outlined by the Central Government with no ‘additional local tax”. Fifthly, our representatives and embassies abroad should actively and con-tinuously promote SEZs to inter-ested business circles, domestic as well as international.

The success or failure of SEZs in selected provincial regions will also depend on institutional framework i.e. legal system, com-petent and credible participatory actors, coordination/networking with actors having continuously ethical sensitivity and behaviour in ‘ better, faster and cheaper’ in the provision of services.

The writer is a senior economist and lecturer in International Business at Jakarta-based Tarumanagara University.

SEZs are a means to attract domestic as well as foreign direct investments (FDIs). The main issue, however, is that our existing industrial policy should be

in line with domestic as well as regional changes in consumer behaviour

Batam:as one of the areas

in Indonesia that will be prepared

to become the special economic zones as attached

in the 100-day program drawn by the second United Indonesia Cabinet.

The success or failure of SEZs in selected provincial regions will also depend on institutional framework i.e. legal system, competent and

credible participatory actors, coordination/networking with actors having continuously ethical sensitivity and behaviour in ‘ better, faster and

cheaper’ in the provision of services.

The RegionThe President Post www.thepresidentpost.comFebruary 11, 20106

RISING ASIA

S purred by its high trade and economic growth pace, Asia is heading to-wards a new era, one that

is filled with new developments, fresh challenges but also new op-portunities, particularly in the area of trade, finance and servic-es.

Asia is also facing a new eco-nomic environment. Rising Asia has become an important eco-nomic powerhouse in the global economy. Aside from Europe and North America, Asia is moving from the periphery to the center of world economic gravity.

POLICY INSTRUMENTSAccess to science and technol-

ogy, its development and spread, has become an important tool for countries in Asia to leap forward towards becoming new modern Asia. This is already shown by China, India and South Korea.

As noted by the Asian Devel-opment Bank (ADB), Asia’s rising economies are also underpinned by its growing integration, which continues to gain momentum. The emerging Asian regionalism will offer a new platform for eco-nomic development.

ADB emphasized that Asia’s process of integration is beneficial not only to all countries in Asia but also the global economy.

This is an important policy statement which should be well understood by all concerned, in-

Asia and the Global Economy

By Atmono Suryo

cluding the Indonesian political and business societies, as Idonesia often considers Asian countries only as competitors rather than as potential economic partners.

ECONOMIC SIZEIn terms of population Asia

is much bigger than Europe or North America. Such an enor-mous size of human resources poses many challenges and many opportunities as well. Asia’ hu-man resources with its expanding middle class will be an impor-tant policy tool to transform Asia to become a modern Asia. This is already happening in China and India.

Asia is not only on a par but is even larger than Europe or the USA. In the present econom-ic thinking the economic size of countries or group of countries is considered to be of strategic im-portance on account of the con-sumption factor.

It is predicted that at one time in the future (2025) three of the world’s largest economies will be Asian, namely China, Japan and India. This will further strength-en Asia’s economic position in the global economic setting (Fig-ure 1).

THE CHALLENGE TO ASIAOne immediate challenge con-

cerns the present international expectations and even pressure on Asia along the following lines:

Asia is expected to take the •lead to achieve global recovery and global sustained growth With Asia’s experience in cop-•ing with the Asian financial crisis of 1997/98, Asia is ex-pected to be also ahead in re-shaping the post-crisis global economy These are two most difficult

challenges facing Asians. The question is, would Asia be in a position to take up these chal-lenges and take the lead within the international community to achieve global recovery and to re-shape the post-crisis global econ-omy?

As to the problem of reshaping the post-crisis global economy our immediate response would perhaps be that this should be left to the G-20. After all, Asia is well-represented in that presti-gious grouping

MULTILATERAL ORDERASEAN’s role has been of key

importance, and one can clear-ly see that ASEAN continues to be on the “driver’s seat” in many Asian forums. This role has been accepted by ASEAN partners such as China, Japan, South Ko-rea, India and other economies in the region, as well as outside the region such as the Europe-an Union, Russia and the Unit-ed States.

Asia recognizes that its econo-mies have benefitted greatly from the open multilateral order, par-ticularly in the area of trade. The expansion of global trade has been of considerable importance to Asia.

REGIONALISMIn the ADB report on “Emerg-

ing Asian Regionalism”, Asian countries are increasingly con-nected through various channels: trade, financial transactions, di-rect investment, technology and tourist flows. More than half of Asia’s trade is now conducted within Asia.

ASEAN countries have been at the forefront of Asian regional-ism. ASEAN has established the ASEAN+3 (PRC, Japan and the Republic of Korea). It has also set up the East Asian Vision Group to look into the possibility for the creation of an Easy Economic Community. The East Asia Sum-mit is already on its way, which includes Australia and New Zea-land.

Asian regionalism will affect the lives of almost 4 billion peo-ple who inhabit the region, and will impact the world as a whole. Asia’s contribution to the global economy is growing faster than that of any other region

The integration process in Asia is different than that of the Eu-ropean Union. EU integration is a top-down process, while Asian

regionalism is basically a bottom-up process and driven by market forces. Until recently formal eco-nomic cooperation lagged behind market-driven integration.

This trend, however, has changed considerably during the last ten years. Numerous trade agreements have been signed, in-cluding the ASEAN-China Free Trade Area (Figure 2).

ASIA AS A “POWER HOUSE”In the global economy a rising

and integrated Asia is expected to become another powerhouse in the global economy.

INDONESIA: It must be re-alized that it is of strategic impor-tance for Indonesia to continue to be part of ASEAN’s economic growth and to be fully prepared for the upcoming Asian integra-tion.

As things now stand, Indone-•sia is not yet tuned in with this process as evident with the im-plementation of the ASEAN-China Free Trade agreement It is, therefore, very urgent •that the still weak private sec-tor build and strengthen their competitive position and forge closer cooperation with other Asian businesses As can be seen from Figure 3, •Indonesia is still on the lower end not only on such matters as “doing business”, but also in industrial and technology de-velopment, services and some sectors of tradeAlthough Indonesia is consid-•ered as a highly potential coun-try, it is lagging behind China, India, South Korea, Singapore, Malaysia and Thailand. Viet-nam is fast coming up. Inter-national business confidence in Indonesia is also on the low endIt is urgent that the govern-•

ment take effective and con-crete steps to improve the busi-ness and investment climate through such means as provid-ing the required infrastructure (electricity, roads and harbors, credits and incentives, good regulations, law and order etc.)Indonesia cannot afford to fall

behind in the development to-

wards greater regional integration in Asia. The upcoming integrat-ed Asia is expected to become an-other powerhouse in the global economy alongside the European Union and North America.

The writer is a retired career diplomat and former ambassador to the EU.

Rising Asia has become an important economic powerhouse in the global economy. Aside from Europe and North America, Asia is moving from the periphery to the center of world economic gravity.

EU27 ASIA* USA

15,247 19,662 14,265

ASIA – EU27 – USA($ million)

*) Asia represented by ASEAN: 2,762; China: 7,916; Japan: 4,354; India: 3,288; South Korea: 1,342

Source: ASEAN Secretariat

EU27 18,142

USA 14,265

Japan 4,924

China 4,402

ASEAN 1,507

India 1,210

ANZ 1,139

ROK 947

1955 1965 1975 1985 1995 2005

Integrating Asia North America Europian Union

10

30

50

70

SingaporeHong Kong, China

JapanThailandMalaysia

Republic of KoreaTaipei, China

Brunei DarussalamPeople’s Republic of China

VietnamIndia

IndonesiaPhilippinesCambodia

Lao People’s Dem. Rep.

0 20 40 60 80 100 120 140 160 180

14

1215

2430

5078

8391

120123

133145

164

FIGURE 1: REAL GDP GROWTH IN PER CENT

FIGURE 2: IncREASInG IntRAREGIOnAl tRAdE SHARES (lOnG tERm tREnd: 1955 - 2005

FIGURE 3: EASE OF dOInG bUSInESS vARIES AcROSS ASIA (RAnkInGS OF 178 EcOnOmIES by tHE WORld bAnk, 2007)

The President Postwww.thepresidentpost.com February 11, 2010 7

Property

T he Indonesian proper-ty industry has expe-rienced rapid chang-es in its orientation,

shifting its focus from develop-ment of residential compounds to office blocks, integrated com-plexes, and is now set to realize the concept of “green property” development.

The concept of “green proper-ty”, also known as “eco-proper-ty”, is basically about developing property projects that are friend-ly to the environment in order to create and preserve a good eco-logical balance.

This property development philosophy will be amplified on a global scale when property mag-nates, practitioners and govern-ment policymakers gather in Bali to attend the 61st International Real Estate Conference which is organized by FIABCI, the feder-ation of international real estate developers.

According to Pingki Elka Pangestu, chief organizer of the conference and Asia-Pacific pres-ident of FIABCI, Indonesian

property industry leaders who will address the conference in-clude James Riady from the Lip-po Group and Ciputra from the Ciputra Group. They will share their views on the future of prop-erty industry development in the Asia-Pacific region.

The theme of the conference is “Green Shoot for Sustainable Real Estate”, in reference to ef-forts to explore the resurgence and the empowerment of the property sector that has in recent years declined on a global scale.

Participants will take this op-portunity to conduct some kind of introspection, in the sense that while there is a need to continue developing the industry, great-er attention must now be given to environmental and ecological considerations.

They will even talk about the need to strike a good balance be-tween property development and preservation of local cultures. This apparently is the reason why the government will be represent-ed by Minister of Tourism and Culture Jero Wacik and Gover-

nor of Bali I Gde Mangku Pas-tika, both of whom will address the conference.

Pangestu says that green prop-erty is now the direction of the Indonesian property industry. In some areas, including Bali, he added, developers have begun to readjust their business strategies to this new trend as they consid-er ecological balance a high pri-ority.

Industry specialist Teguh Sa-tria, who is also involved in the FIABCI conference, says that In-donesia should have hosted the conference in 1998 but a political crisis that led to a change in na-tional leadership derveloped and prevented it from doing so.

Indonesia was then compet-ing against Norway and Italy to be the host of the 61st conference but not until the crisis was over did it regain international recog-nition to host the prestigious in-ternational meeting which will be held at the Grand Hyatt, Nusa Dua, Bali, on May 24-28, 2010.

PROPERty tREndS 2010 And kEy PLAYERS

In a related development, in-dustry leaders say that the Indo-nesian property development has taken a new route, namely devel-opment of integrated complexes comprising residential space such as apartments and office blocks. This is expected to be the trend as of 2010 because of rising demand for such kind of property.

Jabebeka City is an example of such property development concept, combining residences, shopping and office areas with educational facilities, including President University.

Under this grand strategy, Ja-babeka Group—led by Setyono Djuandi Darmono—has devel-oped 5,600 hectares of integrat-ed compounds for almost a mil-lion people occupying 30,000 houses.

The tiny city in the eastern out-skirts of Jakarta also houses 1,400 companies, including Unilever, Samsung Electronics, ICI, Mat-tel, United Tractor, KAO, Nissin, and Akzo Nobel, representing international investors from 27 countries. This integrated con-

cept employs around 3,000 expa-triates and a huge number of lo-cal workers.

Jababeka’s integrated proper-ty development concept also in-cludes eight hotels and condo-miniums, 24 shopping malls, 55 hospitals and clinics, two driv-ing ranges, 16 sport clubs and 18 public transportation lanes.

The annual production value of this integrated area is US$31.5 billion, with export worth esti-mated at $10.3 billion. At least US$21 billion worth of invest-ments have poured in to turn

“We realize that such is the preferred trend today,” says Ros-ihaan Saad from PT Perdana Gapuraprima Tb, another key player in the industry.

He was quoted by vivanews.com as saying the sales of such property are on the rise because buyers prefer to live near their of-fices and in areas where they can easily obtain everything they need.

As an example, he said, ev-ery single space in the GP Plaza, which is owned by Gapuraprima, is already sold out even before work on the building is complet-ed. People buy them up because they like the integrated concept of the compound, he added.

Tirta Setiawan, another prop-erty industry analyst, says that nowadays buyers prefer residenc-es that are close to their offices or business fields.

In other developing countries, Setyawan adds, buyers prefer to live not at the city center but out-side of it because they don’t like noise.

In Indonesia, it is the other way around—people actually prefer to live at the city center because that is where they can easily get whatever they want.

Given this situation, develop-ers must build residences that are integrated with shopping malls, business centers or offices, educa-tion and sport facilities. So, Indo-nesia’s concept must be an all-in-one concept, he theorizes.

“In the past, price was the pri-mary consideration; today that is no longer the case. The primary consideration is completeness of a location and its comfort,” he was quoted by Kompas.com as say-ing.

In recent years, many Indone-

sian developers have shifted at-tention to developing integrated complexes. Lippo Karawaci is an-other example of integrated prop-erty development.

Established in 1990 under the name of PT Tunggal Reksaken-cana, Lippo Karawaci Township, which came to being in 1996, was its maiden success.

It is now listed among Indone-sia’s well-developed townships, housing Universitas Pelita Hara-

RI Industry Players Set to Take Center Stage at Bali Meeting

By Jeannifer Filly Sumayku

Indonesia is well-positioned to share its experience with property developers and realtors who will gather in Bali next May. At the same time, it can also learn from the experiences of overseas property industry players.

Jabebeka into one of Indonesia’s most popular new cities.

This is apparently the reason why industry analysts are saying that developers cannot survive the tough competition unless they implement a strategy similar to Jababeka’s.

pan (UPH), Sekolah Pelita Hara-pan (SPH), thousands of offices and residences, sports facilities, and such popular shopping malls as Matahari, Hypermart and De-benhams.

It also features Times Book-store, a joint project of Matahari Department Store and Times Bookstore Singapore, thereby providing local and expatriate communities with access to qual-ity and globally-oriented reading materials.

Lippo Karawaci is also where Siloam Hospital is situated. It is one of Asia’s best centers for neu-rosurgical treatments, attracting patients from Singapore and oth-er neighboring countries.

Meanwhile, the property phi-losophy of Dr. (HC) Ciputra is another towering example one must learn from.

He has developed many in-tegrated townships in Indone-sia, Vietnam and India, and has in recent years developed educa-tional facilities as an integral part of its property development phi-losophy.

The Ciputra University and

Ciputra schools in Surabaya are good examples of how one-stop property compounds should be developed. And they don’t stop there, as Ciputra is in fact the pio-neer of Indonesia’s entrepreneur-ial education.

At all of his schools, entrepre-neurship is the main stream of education, while the Ciputra En-trepreneurship Center provides training to lecturers from private and state-owned universities, en-abling them to work not just as teachers but business trainers as well.

This way Ciputra is building a new generation of entrepreneurs who will are expected to give added ballast to the development of Indonesia’s economy, includ-ing the property sector, which is his main line of business.

With all these developments going on, Indonesia is well-po-sitioned to share its experience with property developers and realtors who will gather in Bali next May. At the same time, it can also learn from the experi-ences of overseas property indus-try players.

Jababeka’s integrated property

development concept also includes

eight hotels and condominiums, 24 shopping malls, 55

hospitals and clinics, two driving ranges,

16 sport clubs and 18 public transportation

lanes.

“

Foreign property owner-ship will be extended from 25 years to 70 years, in a ruling that now awaits the approval of the Housing Minister, said Lucy Rumantir, Jones Lang La-Salle Indonesia Chairman, in a press conference in Jakarta, last week.

Lucy, who is also the Perma-nent Commitee Head of Prop-erty Services for the Indonesian Chamber of Commerce and In-dustry (Kadin), is a member of the team who formulated Gov-ernment Regulation (PP) No. 41/1996.

Under this regulation, for-eigners could only own a house for 25 years.

According to Lucy, Indone-sian properties occupancy rates are not optimal yet because of government-imposed limita-tions.

Under this PP, foreigners can only own a home or flat built on land with a right to use (hak pakai) certificate .

Foreigners complained that while Indonesians could easily own houses abroad, it is diffi-cult for expatriates to buy hous-es in Indonesia.

Foreign PropertyOwnership Set at70 Years

Lucy said that in Australia, foreigners could own a house just by having a passport.

“But they may only buy new houses,” she added.

“Later, step by step, we will formulate a regulation to al-low right to use land to be-come right to build land (hak guna bangunan),” said Lucy.

“For example, foreigners could only own properties priced above Rp1.5 billion,” she added.

Lucy added that if more for-eigners buy properties in In-donesia, state revenues will in-crease.

According to her, the num-ber of foreigners in Indonesia is 83,000 people.

“If just one percent of them buy properties, this translates to 800 people. And 800 times Rp1.5 billion is quite a big rev-enue for Indonesia,” she said.

“And if demand rises, prop-erty development will also rise. From there, demand for curtains and furniture will in-crease, and this means that other industries, such as tex-tile and furniture, will also grow.”

JABABEKA’S PROPERTY INDEX

October-December 2009

No. SEGMENTSSIZE - M2

PRICESBuilding Land

RESIDENTIAL

The Veranda Town House

1 Veranda Deluxe 294 166 Rp. 2,008,000,000

2 Veranda Premium 294 153 Rp. 2,073,600,000

3 Veranda Corner 345 210 Rp. 2,305,600,000

Simprug Garden

1 Green Pine 53 112 Rp. 470,000,000

2 Yellow Pine 70 120 Rp. 532,000,000

3 Golden Pine 90 136 Rp. 728,000,000

Orchid

1 Orchid Deret 53 120 Rp. 266,500,000

2 Orchid Corner 53 225 Rp. 382,600,000

3 Orchid Corner (Limited) 53 189 Rp. 424,600,000

Tropikana Garden

1 Zelosa - Standard 113 119 Rp. 817,665,000

2 Axela Standard 155 160 Rp. 1,017,678,000

3 Ortiz - Standard 188 300 Rp. 1,525,560,000

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

Metropark Condominium Tower B

5 Deluxe , 2nd fl 27/1 Bdr Rp. 218,950,000

6 Deluxe, 3rd fl 27/1 Bdr Rp. 218,950,000

7 Deluxe , 5th fl 27/1 Bdr Rp. 224,500,000

8 Premium, 6th fl 54/2 Bdr Rp. 416,300,000

9 Deluxe, 6th fl 27/1 Bdr Rp. 261,900,000

10 Deluxe , 7th fl 27/1 Bdr Rp. 261,900,000

Pavilion-Exclusive Boarding Houses

1 Grande-Corner 221 216 Rp. 1,287,000,000

COMMERCIAL

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

Ruko Sentra Niaga Square

1Block 8B Standard 1 (4 x 11), 2nd fl 80 44 Rp. 495,000,000

2 Standard 2 (5 x 10), 3rd fl 150 50 Rp. 715,000,000

3 Corner (6 x 10) , 3rd fl 180 60 Rp. 891,000,000

4Block 8C Standard 1(4 x 11) , 2nd fl 80 44 Rp. 495,000,000

5 Standard 2 (5 x 10) , 3rd fl 150 50 Rp. 715,000,000

6 Corner (6x10) , 3rd fl 180 60 Rp. 891,000,000

INDUSTRIALSIZE - M2

Land Factory Office

1 Standard Factory Building 1380 831 128 Call

2 Grand Standard Factory Building 3931 830 115 Call

3 3-IN-1 Factory Building 576 310 146 Call

4 New 3-IN-1 Factory Building 1214 304 124 Call

5 Supporting Industrial Building 360 80 80 Call

6 R & B 360 360 80 80 Call

7 Land Plot Call

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

8EducationThe President Post www.thepresidentpost.comFebruary 11, 20108

I ndonesia has for decades been recognized as a na-tion that reads very little, meaning that reading is

not a habit in society. This is an anathema that must be eliminat-ed if Indonesia is to become an advanced nation.

Against this backdrop and the belief that reading is the key to knowledge and expertise, a trag-ic lack of society’s interest in read-ing means that this nation will continue to stand at the receiving end. The reason is the inability to absorb and develop new technol-ogies and competitive business practices that propels a nation’s economy.

With such a philosophy in mind, Sultan Hamengkubu-wono X, the ruler of Yogyakarta, recently launched a new initiative to spur reading habit in society.

This was done when he inau-gurated a mobile library called “Guru Bangsa Gus Dur” (Teach-er of the Nation Gus Dur) to perpetuate the memory of In-donesia’s former president and champion of pluralism and de-mocracy, Abdurrahman Wahid, who passed away on December 30, 2009.

The mobile library actual-ly belongs to Galangpress pub-lishing company in Yogyakarta, which fills the car with 720 titles of book for its tour of the city ev-ery day.

In spite of the fact that Gus Dur was partly blind in the lat-ter half of his life, he was wide-ly recognized as a broad-minded statesman with an internation-

Yogyakarta Sultan Takes Leadin Stimulating Society’s Reading Habit

By Alci Tamesa

al horizon and long-range vision. Strangely, though, he was also an intellectual who used to read a lot of books in his own way.

So the inclusion of his name in the mobile library is apparent-ly meant as a stimulus to encour-age everybody with normal eye-sight to read more books than Gus Dur did, especially those on science and technology, because

even a near-blind person such as Gus Dur was fond of reading.

Sultan Hamengkubuwono X is himself a staunch advocate of holistic education as proven in his continuous attention to the entire process of education, from ele-mentary to university levels.

But as the Sultan champions the campaign to stimulate read-ing habit in society, other parts of Indonesia are waiting for similar champions to emerge. In the cap-ital city of Jakarta, for instance, no significant breakthrough has come to sight in terms of arous-ing society’s reading habit.

According to Bose Devi, chief of the Jakarta public libraries net-work, only a maximum of 200 people show up at 30 public li-braries in this metropolitan city

every day. In Beijing, the offi-cial says, some 10,000 people vis-it public libraries every day.

In a way this indicates that Ja-karta residents do not like to read books; they prefer to watch tele-vision, or read newspapers and magazines that contain hot or controversial issues.

Such a tendency is not very helpful in the nation’s drive to

compete in the global market be-cause mastery of science and tech-nology that can be done through reading books is the primary en-gine of modernization. And yet, this is where Indonesia lags far behind other countries in Asia.

FACTORS CAUSING POOR READING HABIT

The question is, why don’t In-donesians like to read? Accord-ing to Jakarta educators, there are many reasons behind this situa-tion.

Firstly, even though the focus of education since independence in 1945 was to combat illiteracy, it has not been easy to do so due to cultural reasons. Even today Indonesia is not yet totally free from illiteracy.

North Sulawesi has the low-

est illiteracy rate: only 0.94% of the population. Iti is followed by Jakarta (1.04%), Riau (2.25%), Central Kalimantan (2.73%), West Sumatra (2.86%), South Sumatra (3.16%), and North Su-matra (3.1%).

On the contrary, provinces with high rates of illiteracy are those inhabited mainly by eth-nic tribes of Java, Madura, Bugis, and Papua, according to a state-ment from the Ministry of Edu-cation and Culture.

One of the reasons is that in those high illiterate provinces, people use their mother tongues instead of the national language in daily life. Given that most

books are written in the nation-al language as well as English, such people have difficulty read-ing them.

For instance in Bone regen-cy, South Sulawesi, which is the home village of former Vice Pres-ident Jusuf Kalla, the rate of illit-eracy is still 12.87%. Even East Java, which has produced three presidents—Soekarno, Abdur-rahman Wahid and Susilo Bam-bang Yudhoyono—still has a high rate of illiteracy, says Prof. Bambang Soedibyo, the former minister of education.

Nationally, the highest rate of illiteracy remains in Papua (16.50%), followed by West Nusa Tenggara (13.05%), East Nusa Tenggara (10.47%), West Pap-ua (10.22%) and Central Java

(9.42%) even though Central Java is the biggest “producer” of Indonesia’s ministers of educa-tion.

The second factor that causes a lack of reading habit in society is a change in the orientation of family spending. Books are not on the priority lists of every fami-ly except compulsory books as re-quired by school teachers.

The parents themselves are not fond of reading; they prefer to watch television, so it is difficult for them to persuade their chil-dren to read books. This is un-like in Japan, for instance, where mothers are required to read for

at least 20 minutes before send-ing children to bed.

Even in presenting birthday gifts, very few—if any at all—would buy books as most In-donesian parents prefer to pro-vide mobile phones and luxuries. Thereby, children get the message that reading is not important.

The third factor causing a lack of reading habit is society’s sud-den shift from oral transmission and absorption of information as done through folk tales to elec-tronic and digital methods.

With the electronic media now dominating family life across the

T he Government of President Susilo Bam-bang Yudhoyono has in recent years in-

creased the amount of assistance for the development of public li-braries—a move that has been greeted with guarded optimism by holistic educators.

The assistance has soared sig-nificantly from a mere Rp14.9 billion allocated annually since 2007. For this year there is a fur-ther increase in the total alloca-tion for libraries because of the 20 percent allocation in the total portion of educational spending in the national budget.

Library spending for this year is focused on development and restoration of facilities in remote areas, especially in provinces with high rates of illiteracy, according to Sularsih, an official from the Ministry of National Education.

She explains that Indonesia currently has 440 public libraries but only half of them are reason-ably furnished.

Nevertheless, according to in-dependent observers, many of the furnished libraries, includ-ing those in the capital city of Jakarta, do not have reasonable and up-to-date titles or reading materials. In fact, many librar-ies are still poorly equipped with

old books that fail to attract the younger generation or arouse so-ciety’s reading habit.

The government of President SBY has, as of 2007, begun to up-grade public libraries, giving pri-ority to development of 100 big

libraries across the Indonesian ar-chipelago. Each library will re-ceive at least Rp75,000,000 in as-sistance annually.

In order to encourage reading habit in society, the Government

has also provided around 100 mobile libraries, 50 of them were released in 2007 in remote regen-cies. Each car is worth around Rp200 million.

This strategy has been adopt-ed by the private sector, especial-ly publishing companies, which provides mobile libraries to pro-vincial capital cities.

The latest instance occurred recently in Yogyakarta, where Galangpress publishing com-pany launched a mobile library called “Teacher of the Nation: Gus Dur”, inaugurated by Sultan Hamengkubuwono X.

The dire need for good librar-ies is felt most obviously by Is-lamic boarding schools, educa-tors say, adding that most books provided at such schools are out of date and that students are not interested in reading them.

These calls for concrete action come from the Ministry of Reli-gious Affairs, which is responsible for developing religious schools.

On another front, however, the Government is working to pro-mote society’s reading habit by building small libraries at public health centers.

This year, the Special Region of Yogyakarta has taken the lead, having equipped at least 10 pub-

SBY Government Increases Assistance for Developing Public Libraries

As the Sultan champions the campaign to stimulate reading habit in society, other parts of Indonesia are waiting for similar champions to emerge.

Nationally, the highest rate of illiteracy remains in Papua (16.50%), followed by West Nusa Tenggara (13.05%), East Nusa Tenggara (10.47%), West

Papua (10.22%) and Central Java (9.42%) even though Central Java is the biggest “producer” of Indonesia’s ministers of education.

country, only parents who under-stand proper child upbringing require children to read books. Most parents do not take action even when their children hate reading.

A lack of regular school as-signments, which require a lot of reading, is to blame as the fourth factor causing students’ rejection of reading as a necessity. And to make things worse, public librar-ies are not being promoted as a good place for the younger gener-ation to visit. These are challeng-es Indonesia needs to overcome to elevate itself as a reading-minded nation.

Sultan Hamengkubuwono X is himself a staunch advocate of holistic education as proven in his continuous attention to the entire process of education, from elementary to university levels.

The government of President SBY has, as of 2007, begun to upgrade public libraries, giving priority to development of 100 big libraries across the Indonesian archipelago. Each library will receive at least Rp75,000,000 in assistance annually.

By Alci Tamesa

lic health facilities with a library. The aim is to provide good read-ing materials for patients and their relatives visiting health cen-ters.

But here is the good news from Kompas-Gramedia Group (KGG). As of this year, they will increase assistance for up to 200 libraries across Indonesia, with special focus on facilitating li-

Photo: www.newsmerdeka.wordpress.com

braries in Jakarta, Bogor, Depok, Tangerang, and Bekasi.

Under a project called “Books for All”, KGG will help renovate library buildings apart from pro-viding books. Funds for this come from the stakeholders of Kompas and independent donors.

But what is more impor-tant, according to Ria Purwiati,

In order to encourage reading habit in society, the Government has also provided around 100 mobile libraries, 50 of them were released in 2007 in remote regencies. Each car is worth around Rp200 million.

Given the fact that the private sector is now

working hand in hand with the Government in arousing society’s

awareness for reading, it is perhaps fair to say that there is still hope for Indonesia to see a reading generation

emerge in the not-too-distant future chairperson of KGG’s Informa-

tion Center, is the need to build a small library in every house; thereby children will be encour-aged to read books instead of wasting time on unproductive activities.

She says that a family library will have educational, informa-tional, recreational, and research functions so every family must

start building it now.Given the fact that the pri-

vate sector is now working hand in hand with the Government in arousing society’s awareness for reading, it is perhaps fair to say that there is still hope for Indo-nesia to see a reading generation emerge in the not-too-distant fu-ture, despite the onslaught of a digital lifestyle in society.

Photo: www.presidenri.go.id

8 The President Postwww.thepresidentpost.com

Display until February 24, 2010 /// N0. 09 9Businesschinese investors put Rp405 billionin West Sulawesi

China has been constantly developing cooperation with Indonesia, including making investments in the country, the latest foray being in West Sulawesi, for which it had set aside Rp405 billion.

“This year, China has prepared grants for investment in Indonesia totalling Rp 1,000 trillion, including in West Sulawesi,” Governor Anwar Adnan Saleh said here last week, according to Antara.

Anwar also said that the investors have prepared Rp405 billion for various development projects.

Chinese investors have been eying three development areas planned by the West Sulawesi provincial administration.

He said the three development projects include hydro-power plant PLTA Karama, Mamuju, an international seaport in Belang-Belang, Mamuju, a 104km coastal road of a width of 8 meters from West Tappalang subdistrict to Belang-Belang port, which will become a trade center in the area.

With regard to PLTA Sungai Karama, Mamuju, Chinese investors are said to be interested in building it.

“A positive responsive to the project is still awaiting from the central government and the National Planning Development Board (Bappenas) in Jakarta,” the governor said.

tourist arrivals in bali up 14%

More than 2.38 million foreign tourists visited Bali last year, up 14.48% from a year earlier, the local statistics office said.

“In December 2009 alone, the number of foreign tourists visiting the resort island was 222,546, a 26.47% increase compared to the same period a year earlier or a 20.42% increase compared to November 2009,” head of the Bali

statistics office Ida Komang Wisnu last week told Antara.He said Australia was Bali s biggest source of foreign tourists, contributing

446,570, an increase of 42.62% from the year before.China came in second place with 205,151 tourists, up 56.98% compared to

2008, he added.Meanwhile, the number of Japanese, South Korean and Taiwanese tourists

visiting Bali last year fell, respectively, 7.20%, 7.43% and 7.67% respectively from 2008.

Petrochemical firms to invest US$1.12bthis year

Five Indonesian petrochemical companies plan to invest a total of US$1.12 billion this year, the association of olefin and plastic industries said.

The projects involve Chandra Asri, Dow Chemicals, Pertamina, Polytama and Try Polyta, and are expected to improve the short supply of petrochemical products in the country, the association said.

Chandra Asri, the country’s largest producers of petrochemicals, is set to build two factories in Banten, the association said.

The company plans to build the country’s first butadiene factory with an investment of US$100 million and a BTX extraction plant to cost around US$70 million, Antara reported.

Meanwhile, US company Dow Chemicals plans to spend US$500 million on a petrochemical factory project, and state oil and gas company PT Pertamina is to spend US$200 million on a polyethylene factory project in Balongan, West Java.

Thailand`s PTT expands RI coal mininginvestment

In a bid to diversify investment risk in the energy industry, Thailand’s PTT Group has taken a syndicated loan of US$380 million or some Bt12.5 billion from four domestic commercial banks to invest in Indonesia’s coal mining business through Straits Asia Resources Limited (SAR).

The four banks are Siam Commercial Bank and Krung Thai

Bank, as joint lead arrangers, with Bangkok Bank and Standard Chartered Bank acting as co-lenders.

Chitrapong Kwangsuksathit, acting managing director of PTT International, a PTT subsidiary, said the loan amount would be used to increase SAR’s coal production capacity to 11-12 million tons this year from 9 million tons in 2009.

It is expected the capacity would rise to 20 million tons in the next five years. He said the coal output would be exported to Japan, Hong Kong, and China. It is estimated the group would earn revenue of around US$500-600 million

from the business.

BUSINESS BRIEFS

“The next state-owned company ready to go public would be PT Garuda Indonesia”Mustafa AbubakarState Enterprises Minister

S tate Enterprises Min-ister Mustafa Abuba-kar said five state-owned companies

would be ready to go public this year.

“If all goes well, five state-owned companies will go pub-lic this year, four through ini-tial public offerings and one, namely Pertamina (oil compa-ny), will go public but not be listed at the stock exchange,” the minister said at his office here on Friday.

The four companies to con-duct an IPO this year are hous-ing construction company PT Pembangunan Peruma-han (PP), plantation compa-ny PT Perkebunan Nusantara III (PTPN) and steel compa-ny PT Krakatau Steel.

PT PP will likely be the first to go to the trading floor as the process is just awaiting share price fixing.

“PP s shares have been con-firmed. However, based on a regulation a company is only allowed to announce the price of its shares after receiving an effective statement from the Capital Market and Financial Institution Supervisory Board

Five State-Owned Companies to Go Public This Year

(Bapepam-LK),” he said.Mustafa said the next state-

owned company ready to go pub-lic would be PT Garuda Indo-nesia, which plans to sell 25% to maximally 40% shares to raise up to US$300 million to repay its debts and improve its service.

Mustafa said Garuda s man-agement has been effective in pre-paring various aspects to smooth-en its initial public offering.

“Garuda right now is still se-lecting financial advisors,” he said.

He added that Garuda s finan-cial performance continues to im-prove from year to year as shown by the company s profits.

According to records, Garu-da is expected to earn a profit of up to Rp2.1 trillion this year, up 20% from 2009 s profit of Rp1 trillion.

Regarding PTPN III s IPO, Mustafa said PTPN III, IV and VII had already received the ap-proval to conduct an IPO from the privatization team but that PTPN III is considered the most ready because of its good perfor-mance.

“It is impossible for two com-panies of the same sector to go public at the same time,” he said.

Mustafa said his office was now also preparing PT Pertami-na to become a public non-listed company.

“The audit of Pertamina s fi-nancial statement is expect-ed to finish in April so that the company s plan to go public is ex-pected to be realized in the first semester of 2010,” he said.

STATE COMPANIES ASSETS REVALUED TO RP2,505 TRILLION

The State Enterprises (BUMN) Ministry has revised upward the value of state-owned firms as-sets, from Rp2,400 trillion to Rp2,505 trillion, an official said.

“The increase in the value of the state companies assets was reported at the sharehold-ers meetings of 141 state compa-nies,” Said Didu, secretary of the ministry of state enterprises, said here last week.

Didu said that a number of BUMNs announced increases in their asset values after they re-evaluated them on current mar-ket prices.

He said the big ten state firms in terms of assets were state-owned electricity firm PLN with Rp423 trillion, Bank Mandi-ri with Rp400 trillion and Bank BRI with Rp367 trillion.

They are followed by Bank BNI with Rp257 trillion, telecommu-nication company Telkom with Rp107 trillion, Jamsostek work-ers insurance firm with Rp92 trillion, housing ownership cred-it bank BTN with Rp66 trillion, Taspen with 41 trillion and fer-tilizer firm Pusri with Rp37 tril-lion.

He said the ten state firms had

assets totaling Rp2,100 trillion or 83.8% of the overall value of state-owned companies assets.

Didu said the assets of state-owned oil and gas company Per-tamina had not yet been reeval-uated

GOVERNMENT RAISES STATE FIRMS NET PROFIT TARGET FOR 2010

The government has mean-while revised upward the net profit target of 141 state compa-nies for this year to Rp92.7 tril-lion from Rp90 trillion previous-ly.

“Based on the results of their general shareholders meeting the net profit target of state firms for 2010 has been set at Rp92.7 tril-lion, a 25.27 percent growth com-pared to their net profit of Rp74 trillion last year,” Didu said.

The government also raised the income target of state companies for 2010 to Rp1,050 trillion from Rp1,100 trillion, he said.

In line with the rise in the profit target the operating expen-diture of the state firms was ex-pected to increase to Rp890 tril-lion from Rp785 trillion as earlier projected, he said.

Didu said the net profit tar-get of state plantation companies for this year was raised to Rp2.95 trillion from Rp2.14 trillion pre-viously.

The net profit target of state firms in the agricultural sector was raised to Rp2.6 trillion from Rp1.52 trillion, he said.

State companies in the strate-gic industrial sector also had re-vised upward their net profit tar-get to Rp1.8 trillion from Rp1.1 trillion, he said.

He said the net profit target of state construction companies for 2010 was raised by Rp170 billion to Rp1.2 trillion from Rp1.05 trillion.

The significant increase in the net profit target of state planta-tion companies was based among others on an increase in sugar prices and production, he said.

In addition, state plantation companies were also expected to see a significant increase in their net profit this year because of im-proving commodity prices in the global market, he said.

S tate oil company PT Pertamina has set its net profit-mak-ing target for this

year at Rp25.011 trillion, the company s finance director, Ferederick Siahaan, said here last week.

Speaking at a meeting with the House of Representatives Commission VII, Siahaan said the net profit figure was calcu-lated assuming the Indonesian Crude Price (ICP) was US$65 per barrel and the rupiah s ex-change rate at 10,000 per US dollar.

“The net profit target for this year is Rp25.011 trillion or up by about Rp10 trillion compared with only Rp15.07

trillion last year,” Siahaan said.He said the profit figure was in

accordance with the company s work and budget plan (RKAP) for 2010 and had been approved by the government.

Siahaan said Pertamina s in-come this year was projected to reach Rp386.817 trillion and its business expenditures Rp350.586 trillion.

So its business profit would be Rp36.241 trillion,” he said.

But in the company s 2009 prognosis, business income reached Rp356,378 trillion and business profit Rp26.119 trillion.

Siahaan added that in 2009, subsidized fuel oil distribution caused a loss of Rp6.496 trillion because the figure set for distri-

bution cost proved to be lower than the amount actually spent.

He said business income from subsidized fuel oil distri-bution activity in 2009 reached Rp184.139 trillion and business cost Rp190.635 trillion.

PERTAMINA, PGN TO FORM LNG TERMINAL SERVICES JV

Pertamina and fellow state enterprise State Gas Company (PGN) have reached a deal to form a joint venture engaged in LNG Terminal services in West Java.

The cooperation agreement was signed by PGN Director Hendi Prio Santoto and Per-tamina President Director Karen Agustiawan last week.

The joint venture will become fully operational by the end of 2011 with a 1 million to 1.5 mil-lion tons per year storage capac-ity.

Pertamina s stake in the joint venture company will be 60% and it will have the right to ap-

point the company s chief ex-ecutive officer, technical direc-tor, operations director and chief commissioner.

PERTAMINA STARTS ExPLORATIONS ON TWO GAS WELLS

Pertamina has meanwhile started conducting exploration of two gas wells in Ulu Lais village, Lebong Utara subdistrict, Leb-ong district, Bengkulu province for the construction of Gas Pow-er Plant (PLTG).

The PLTG is estimated to gen-erate power for 55 Mega Watt (MW), head of the Energy and Mineral Resources provincial office, Winarkus, said here Fri-day at the corner stone laying function of the PLTG construc-tion, marking that Pertamina has started doing the exploration.

“They have started carrying out the construction work and at the first phase from June to July this year, the two gas wells will be able to produce 55 MW of

The four companies to conduct an IPO this year are housing construction company PT Pembangunan Perumahan (PP), plantation company PT Perkebunan Nusantara III (PTPN) and steel company PT Krakatau Steel.

By Eka Putri

Pertamina Projects Rp25.011t Net Profit in 2010power, which will be distributed through the South Sumatra and Jambi interconnection network,” he said.

The electric power which was produced from the two wells will be distributed through the in-terconnection channel with the South Bengkulu in a bid to meet the electric power demand of the region, he said.

In addition, the electric pow-er for North Bengkulu and Mu-komuko districts will be supplied through the interconncetion channel from Padang, West Su-matra.

“The installation of inter-conection network will be able to meet Bengkulu s demand of elec-tric power. We will even supply the needs of Southern part of Su-matra of the electrict power,” Wi-narkus said.

According to him, the state-owned electricity company PT PLN will buy the power from Pertamina.

The net profit figure was calculated assuming the Indonesian Crude Price (ICP) was US$65 per barrel and the rupiah`s exchange rate at 10,000 per US dollar.

B atik as Indonesia’s her-itage finally gained international recog-nition. Internation-

al body UNESCO awarded ba-tik along with Javanese dagger kris and puppet wayang with the certificates of intangible cultural heritage and a certificate recog-nizing the best practice of cultur-al preservation.

Known for its beauty and ar-tistic designs, batik has captured the hearts of not only Indonesians but also people of other countries and thus inspired them to pro-duce their own batiks.

With the certificate recog-nizing the best practice of cul-tural preservation, UNES-CO will grant Indonesia with elaboration projects to prepare books, movies and exhibitions.

Until a few years back, batik had lost its appeal among young Indonesians. Many considered

Batik has Own Mall in Jakarta

batik as outdated and clothes worn only by older people or dur-ing wedding ceremonies.

Batik regained its populari-ty after the country’s top design-ers started producing fashionable and trendy batik clothes. Now, to maintain batik’s popularity, es-pecially after securing the inter-national recognition certificate and going through the fuss about a neighboring country promot-ing batik as its own cultural her-itage, a mall of batik was finally opened.

The mall, officially called Pusat Batik Nusantara, and located at Thamrin City, Grand Indonesia complex, Jakarta, was inaugurat-ed by Trade Minister Mari Elka Pangestu last week.

The place will gradually turn into a shopping mall selling hand-icrafts and products from around the country, including batik.

“Our dream to see small and medium entrepreneurs sell-

ing their batik products direct-ly to consumers at a market with wider coverage has finally come true,” Pngestu said during the handicraft center launch.

Mari said Thamrin City, which focuses on selling batik and handicraft products, will open a wider market access for SMEs and at the same time will serve as an alternative place for consumers to buy batik products.

Thamrin City Chief Executive Officer Hadi Satyagraha said the mall will not only be focused on selling batiks but also other prod-ucts from around the archipela-go.

The mall has been introduced as a batik center since November 2009 although in a smaller scale. Thamrin City’s turnover has now reached Rp3.5 billion.

“I think it would be too arro-gant if we call it the mall of ba-tik although we have to admit

that in terms of space, we provide the biggest space for batik traders. I would say, it is most appropri-ate if we call it the mall of hand-icraft that sells batik, souvenirs and etc,” he elaborated.

Hadi explained that batik trad-ers cover two floors of the Tham-rin City building or around 500-700 traders from the total of 7,000 outlets provided at Tham-rin City and generating turnover of Rp70-75 million per day each.

Various batik types from Java and Jambi, both print-ed and hand-made, are avail-able at Thamrin City with pric-es ranging from Rp30,000 to Rp500,000 a piece.

“Our target is to sell batik from across the archipelago here,” said Hadi.

He added that the building management leases each kiosk for Rp2 million per 3 months or traders can own it by paying around Rp40 million per unit.

Korean Air Lines Co., South Korea s largest airline, said Fri-day it would increase joint op-erations with Garuda Indo-nesia on the Incheon-Jakarta route starting next week.

Korean Air, which has been offering seven trips a week be-tween South Korea s main gateway and the Indonesian capital on a code-sharing ba-sis with the Indonesian carri-er, will expand the service to 10 trips a week.

The two airliners current-ly operate code-shared flights 10 times a week between In-cheon and the resort island of Bali.

Code sharing allows one carrier to sell its tickets on the other s flights in order to boost revenue by increasing passenger numbers and desti-nations.

Garuda Indonesia, Korean Air to Increase Joint Operations

Pusat Batik Nusantara was inaugurated by Trade Minister Mari Elka Pangestu last week at Thamrin City

The mall has been introduced as a batik center since November 2009 although in a smaller scale.

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H.E. Susilo Bambang Yudhoyono* President, Republic of Indonesia

H. E. Boediono*Vice President, Republic of Indonesia

H. E. Armida S. AlisjahbanaState Minister, National Development Planning / Chairperson of Bappenas, Republic of Indonesia

H. E. Hatta Rajasa*Minister, Coordinating Minister for Economic Affairs,

Republic of Indonesia

H. E. Sri Mulyani Indrawati*Minister, Ministry of Finance,

Republic of Indonesia

* To Be Confirmed

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Technology, Republic of Indonesia

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H. E. Darwin Saleh*Minister of Energy and Mineral Resources,

Republic of Indonesia

H. E. Freddy Numberi*Minister of Transportation,

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Mr. John Krenicki*President and CEO

General Electric Energy

THE COORDINATING MINISTRY FOR ECONOMIC AFFAIRSREPUBLIC OF INDONESIA

BusinessThe President Post www.thepresidentpost.comFebruary 11, 201010

Japanese electrical compa-ny Chubu Electric Power will buy Tangguh liquefied natu-ral gas this year.

The shipping for Chubu will begin this year and lasts until 2018.

“The Minister of Energy and Natural Resources Dar-win Zahedy Saleh has ap-proved it,” said the Head of upstream oil and gas regula-tor BPMigas R. Priyono in a meeting with the House of Representatives Energy Com-mission yesterday.

Chubu has an allocation of 700,000 metric tons per year after Korea Gas Corp (gas company from South Korea) delayed its order because of the economic crisis.

Korea Gas signed an agree-ment to buy 1 million tons of Tangguh LNG in 2010-2012.

“The buy-sell gas price is the highest among other gas contracts,” Priyo said.

The remaining 300,000 metric tons of LNG for which shipments have been delayed has not been decided upon yet.

On the Tangguh LNG al-location for domestic market, Priyono said there was a deci-sion to supply 1.5 million met-ric tons to a power plant in Be-lawan, Bali.

The Indonesia Stock Exchange (IDX) has asked Matahari Pu-tra Prima (MPPA) to provide de-tailed information on the com-pany’s move to sell its Matahari Department Store (LPPF) unit.

IDX has previously asked MPPA to provide explanation on the corporate move but the an-swers provided by the manage-ment were considered insuffi-cient.

“We still have a few questions for Matahari,” said IDX Director Eddy Sugito.

“In general, they have been quite informative but we want to know their reason for selling it plus there are a few other questions that we need them to explain,” Eddy said.

Matahari Putra Prima sold 90.76% of its shares in Matahari Department Store (MDS) to CVC Capital Partners for Rp7.16 trillion.

Before the transaction, LPPF shareholder composition was as follows: MPPA controlled LPPF with 2,648,220,000 shares (90.76%), Pacific Asia Holding Ltd with 211,203,500 (7.24%) shares and the public owned the remaining 58,494,580 (2%) shares.

MPPA is forming a joint venture with CVC Capital Partners called Meadows Asia Company (MAC). MAC’s shares are 80% owned by CVC and 20% by MPPA. According to the plan, MAC will

Intiwitz International, a subsidiary of Intiland Devel-opment, is set to build 60 new hotels using the brand Witz Hotel in the next five years.

The company is planning to build 12 hotels per year with around 120-150 rooms and investment value estimat-ed at Rp50 billion per hotel.

“The long term growth is the target to build 60 Witz hotels in five years,” said Intiwitz In-ternational President Director and CEO Moedjianto S Tjah-jono after signing strategic co-operation agreement with Re-alta Chakradharma at Intiland Tower in Jakarta last week.

The cooperation with software company Realta Chakradharma will cover the installation of Hotelite, an in-tegrated information technol-ogy system in all Witz Hotels chain.

“Good hotel management demands punctual adminis-trative and financial works to help the hotel management

to make decisions and to analyze performances based on the re-ports effective,” he explained.

The hotel is expected to save 20% of the total administration costs by implementing the Ho-telite IT system which has three integrated and complete main modules, namely front office, general ledger, and logistics.

The company plans to finance the project through bank loans and cooperation with the land owners.

For the first stage, Intiwitz plans to operate its first Witz Ho-tel in Yogyakarta at Malioboro area in June 2011, which will be built on 850m2 land.

The hotel will have 103 rooms. The second hotel will be built in Semarang on 1,000 m2 land with 150 rooms. The rates of hotels will range between Rp300,000-Rp400,000 per room per night.

Moedjianto added that Inti-witz International is also plan-ning an initial public offering in the next 3-4 years but declined to say how much shares it is plan-ning to release to the public.

IDX Asks Matahari to Explain Unit Sale

Intiwitz International Readies Rp3t to Build 60 Hotels

Chubu Electric to Buy 700Metric Tons of Tangguh Gas

acquire 90.76% of MPPA’s shares in LPPF and purchase 7.24% of Pacific Asia shares for Rp2,705.33 per share, bringing the total ac-quisition value of 98% MAC’s shares to Rp7.735 trillion.

Meanwhile, MPPA is targeting 150 new Matahari Department Store outlets in the next 15 years and eyes Rp15.5 trillion revenue this year.

MPPA President Director Ben-jamin J. Mailool said that by forming an alliance with CVC, an additional of 10-12 stores a year or 150 new stores in 15 years is very possible.

The company is also upbeat on 15-20% revenue growth to Rp15.5 trillion this year from

Rp14 trillion last year.“If nothing extraordinary

happens, we will see an aver-age growth of 15% or 20% at the most. Our expectation is that we can book more than Rp14 trillion,” MPPA Vice Pres-ident Corporate Communi-cations Roy N. Mandey said. Meanwhile, MPPA is allocat-ing Rp1.2 trillion in capital ex-penditure for the whole group, which will be funded from inter-nal funds.

Roy said that in the past 2-3 years, the group’s total capex had been steady at Rp1-1.2 trillion, adding that the company’s cash was at Rp3 trillion as per Sep-tember 2009.

A Singaporean investor will soon invest Rp400 billion (about US$40 million) in the construc-tion of a dump site at Cipeu-cang, Serpong subdistrict, South Tangerang municipality, Banten province, an official said.

Head of the South Tangerang Municipal Cleanliness, Park and Funeral Services Didi S. Wijaya said the local authorities had pre-pared 2.4 hectares of land for the construction of the dump site.

The Singaporean investor and the local authorities are expected to sign a Memorandum of Un-derstanding this month, he said.

He added the Singaporean in-vestor would build the dump site using zero waste modern tech-nology capable of processing 700 tons of garbage per day.

It would take four months to build the dump site, he said.

One of the benefits the Singa-

Singapore Investor to Build US$40m Dump Site

porean investor would gain from the dump site would be electrical power resulting from garbage processing, he said.

Hitachi Asia Ltd. Intends to expand its investment in Indo-nesia, Chief Executive & Chief Innovation Officer for Asia, Hi-tachi Ltd, Yasunori Taga, said here recently.

“We want to realize the plan as soon as possible,” Yasunori Taga said in a Media Briefing Hitachi Young Leaders Initiative Alumni Forum.

He said Indonesia was a poten-tial country with abundance of energy namely gas, liquefied nat-ural gas (LNG), coal and others.

But Yasunori added that he was currently focusing on social in-frastructure development sector such as railway system, transpor-tation facility, or other business which has a direct contribution to the Indonesian economy.

He also noted that the global financial crisis did not have any negative impact on Indonesia, which he says is one of the coun-tries with a positive gross domes-tic product (GDP) growth.

Hitachi Set to Up Investment in RI“I have confidence in Indone-

sia,” he says.“We build high-voltage equip-

ment here for export purposes to thye Middle East,” Yasunori add-ed.

He also said he would remain using local content in an optimal manner.

Yasunory further said Hitachi would focus on long-term social infrastructure business.

“It is a long term business that will directly effect the people at large, and therefore we have to make sure that the country where we invest has political and eco-nomic stability,” he said.

Established in 1995, Hitachi Asia has been marketing various products and services for the in-dustrial sector such as power gen-erators, transmission networks and distribution systems, indus-trial components and equipment, air conditioners, elevators, and es-calators.

The President Post

The President Postwww.thepresidentpost.com February 11, 2010 11

Human Capital

An in-depth survey of the HR practices within Indonesian organizations found that fully 93% of organizations link compensation with performance

“

Naresh Makhijani krishnan Rajendran James Creelman

“W hat gets mea su red gets done,” is a well-

known adage in management circles. Less well known is that it is actually the first part of a lon-ger saying: “what gets measured gets done, but what gets reward-ed gets done quicker.”

The fact is that the promise of rewards - most powerfully when they are financial- tends to moti-vate. As a simple illustration, give an employee two tasks, of equal complexity and challenge. Tell them that a bonus will be paid on the successful delivery of task one, but not on completing task two. Which task do you think that the employee with prioritize?

In the previous edition of Pres-ident Post we described how to better link the performance ap-praisal process with the strate-gic goals of the enterprise by the creation of dedicated “personal scorecards.” A personal scorecard enables every individual to clear-ly understand their roles and re-sponsibilities, as well as the ca-pabilities needed to perform. As much as anything it is a job de-scription and development plan rolled into one. A personal score-card, we explained, should be-come the individual’s perfor-mance appraisal system.

Performance appraisal, wheth-er captured in a personal score-card or not, is typically linked to incentive compensation. Our re-search finds that incentive com-pensation (or bonuses) provides one of the most complex chal-lenges to HR organizations. Al-though the promise of a bonus can certainly motivate it is also true that employees are rarely sat-isfied with the bonuses they re-ceive, or for that matter their basic level of compensation. Em-ployees typically believe that they are worth more that they get paid (even if their managers and co-workers know otherwise). Re-search finds that most people think that their performance is above average - about 60% be-lieve they are in the top 10% of their company’s performers. Al-though this is clearly untrue, it poses significant challenges to HR organizations in the success-ful management of performance.

Of course money is not the only motivator of performance. Work related aspects such as meaning-fulness of work, variety, attitude of others, culture, etc., all play a part. Young people entering the workplace today are increasing-ly drawn to companies that share the same values and aspirations as

PAYING FOR PERFORMANCE:

Using Incentive Compensation to DriveSuperior Performance

they do. When the financial re-wards are equal, or at least close to being so, then other powerful factors come into play as part of the recruitment process.

But once within the organiza-tion, pay for performance is the best way to continually motivate employees to do excellent work. This is why nearly every organiza-tion in the private sector uses pay for performance plans in some form or the other. For instance, 90 percent of the Fortune 1000 companies report that they use incentive compensation plans. Moreover, an in-depth survey of the HR practices within Indone-sian organizations to support our book: Managing Human Cap-ital in Indonesia: Best Practices in Aligning People with Strategic Goals, found that fully 93% of organizations link compensation with performance (figure 1).

In the book, we explained that for pay for performance to work organizations should adhere to these key principles.

Communicate the plan’s de-•sign so that all participants know how it works and what it takes to be successful. Per-ceived fairness is as important as the reward itself.Are rewards based on individ-•ual or group efforts? Most suc-cessful plans will include a mix of both (see below).If using a Balanced Scorecard •(about which we have spoken at length within previous is-sues of The President Post, but which is essentially a strate-gic performance management framework that comprises a fi-nancial and three non-financial perspectives of customer, inter-nal process and learning and growth and that identified ob-jectives, measures and targets) then which perspectives are in-

cluded in the Plan? Incentives should be spread across all four perspectives. But perspectives could be given weights to fo-cus employee attention on crit-ical drivers of performance (see below).Should you use lagging or lead-•ing indicators in the plan? A good mix of both ensures fo-cus both on results today and the determinants of sustain-ing that success. As an exam-ple of the difference, profit is a lagging performance indicator (in that it describes past perfor-mance) whereas new products in development is a leading in-dicator (in that it describes the processes that are in place to drive future financial perfor-mance).

It is normal that only a part of the incentive compensation pay-out is based on performance to individual targets. More com-mon is that the payout will be also partly based on performance to business unit Balanced Score-card (or other dashboard in the absence of a scorecard). And over the years there been some neat mechanisms put in place to make this work.

Early scorecard adopter the US-headquartered Cigna Prop-erty & Casualty (P&C) is one of the best-known examples of an organization that implemented a

successful, incentive-compensa-tion system.

Cigna P&C devised a perfor-mance share plan comprising “phantom” shares that were as-signed a standard valuation of $10. At the start of each financial year, each employee was allocated a number of these shares depend-ing on their personal responsibil-ities. The performance of P&C during that year determined the final value of the shares.

Simultaneously, each individ-ual could earn additional shares during the year based on their own performance. For exam-ple, consider an individual who was awarded 50 $10 shares at the start of the financial year. If the business unit of the P&C that s/he worked for performed poor-ly against scorecard objectives, then at the end of the year the unit’s share value may have been $5. However, if at the same time the individual performed well, he may have earned 100 additional shares. His bonus would be the final share price ($5) multiplied by the total number of individu-

al shares (150). This would have equaled a bonus of $750. Con-versely, if the unit performed well and received a share rating of $14, but that same individual gained only 10 extra shares, his bonus would have been $840. Howev-er, if the individual had accumu-lated 150 shares and the business unit’s share was $14, then the bo-nus would be $2100.

Oftentimes, incentive com-pensation is paid according to the unit scorecard in isolation. Fig-ure 2 shows such an example. As we can see the perspectives are weighted depending on the im-portance of the perspective. So, in this example, the financial per-spective is weighted at 40%, with customer, internal process and learning & growth all receiving a 20% weighting.

Typically, the financial per-spective will receive the great-er weighting, simply because in the final analysis success or oth-erwise is based on financial re-sults. That said, weighting can be a powerful mechanism for re-

directing the attention of employ-ees onto other performance areas where the organization wish-es to make rapid improvements. A good example was provided in a case study on The Gold Coin Group, which appeared within the best-selling book: Mastering Business in Asia: succeeding with the Balanced Scorecard - written by Naresh Makhijani and James Creelman. In one of the coun-tries within which the compa-ny operated customer retention was proving a significant prob-lem. Therefore, a much higher compensation weighting was as-signed to the customer perspec-tive with the largest component of the metric being based on cus-tomer retention. As a result, cus-tomer retention rose sharply and in a remarkably short time.

As a public sector example, con-sider the City of Christchurch, New Zealand. Fully 450 people have their bonuses tied to score-card (covering all the manage-ment layers – from the CEO, through department heads to team leaders. - and forming

PERSPECTIVE MEASURE TARGET WEIGHT ACTUAL PAYOUT

Financial ROE 15% 30% 16% 3.0%

Revenue Growth 25% 10% 20% 0

Customer Customer Satisfaction 75% 15% 77% 1.5%

Repeat PurchasePercentage

80% 5% 75% 0

Internal Processs On-time Delivery 90% 10% 85% 0

Manufacturing Efficiency 85% 10% 85% 1.0%

Employee Learning & Growth

Competency attainment-% ofEmployees gaining 3 new competencies

70% 12% 75% 1.2%

Employee Turnover 5% 8% 4% 0.8%

Total Payout 7.5%

FIGURE 2: ExAmPlE OF USInG A bAlAncEd ScOREcARd tO lInk bOnUSES tO PERFORmAncE At tHE bUSInESS UnIt lEvEl.

��������

������

FIGURE 1. PERcEntAGE OF IndOnESIAn ORGAnIzAtIOn tHAt lInk bOnUSES WItH PERFORmAncE.

Money is not the only motivator of performance. Work related aspects such as meaningfulness of work, variety, attitude of others, culture, etc., all play a part.

about 1/8 of the workforce) have the major portion of their incen-tive remuneration tied to score-card results.

The compensation link works this way. The performance as-sessment is weighted to highlight the council’s scorecard priorities. Therefore in 2007 35% of the bonus was dependent on perfor-mance to the customer perspec-tive, 20% was allocated to the fi-nancial perspective, people 15% and process 10%. The remain-ing 20% of the bonus is linked to individual development targets.

Aligning incentive-compensa-tion is one of the most complex challenges facing HR organiza-tions. Few get this right. Those that do provide their parent en-terprise with a powerful tool for driving superior performance that can be sustained over the longer term.

This article is extracted from the book: Managing Human Cap-ital in Indonesia: Best Practices in Aligning People with Strategic Goals (Azkia, Indonesia, 2009)

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ManagementThe President Post www.thepresidentpost.comFebruary 11, 201012

GROWING M&A HUNGER

D uring the glob-al downturn, the M&A deal activi-ty has shifted from

hard hit developed regions to comparatively stable emerging economies. The share of devel-oped economies (Western Eu-rope and North America) in the overall deal activity has fallen consistently since 2007 as these regions were hit relatively hard-er by the global economic crisis. On the other hand, the share of the emerging markets in Asia has increased over this period, pri-marily due to better financial and economic condition of the com-panies in these regions as a result of comparatively stricter govern-ment policies and regulations.

The economic data is turning the right way in 2010 and M&A activity will follow strong GDP growth very closely. When the economy is picking up there is likely to be an increase in risk ap-petite in equity markets and in the boardroom. According to Merger Market Intralink the sentiment towards M&A’s in Asia Pacific region is strong. In their M&A survey three quarters of corpo-rate respondents expect that in the Asia Pacific region the M&A activity will increase greatly (8%) or increase (68%) this year , with not a single respondent expecting deal making to fall.

Indonesian market develop-ments and government policies will support this upward trend in M&A deal making. Foreign investment in Indonesia is again picking up and domestic in-vestments doubled. The ASE-AN-China Free Trade Agree-ment (ACFTA) will put pressure on the competiveness of the do-mestic markets and will uncov-er weaknesses in protected indus-tries and companies. Currently there are too many telecommu-nication operators for the Indo-nesian market compared to other countries and operators also need to strengthen their data business for future competitiveness. These developments will push the tele-communication industry for ac-quiring the right capabilities and consolidation. In banking, Bank Indonesia will keep pressing for-ward with the consolidation pro-gramme for a sound, strong and competitive banking system. All in all Indonesia seems to be the ideal arena for the M&A game.

LOW M&A SUCCESS RATEAs always, investors are con-

cerned – now more than ever – about how to realize maximum value and mitigate risk from M&A activities. How can they ensure that their investment de-livers on the promises of cost re-duction and growth? And what can be done to create new share-holder value as quickly as possi-ble? Beyond seizing the perceived immediate opportunities, organi-zations should also keep in mind the longer-term sustainability of the merged organization.

However recent Hay Group re-search shows that in reality deals often fail to reach anywhere near the potential expected of them. Much of this failure can be at-tributed to an underestimation of the importance of intangible cap-ital by merging organizations.

Analysts say that the value of a business linked to organization-al, relational or human capital – the intangibles, should be in the region of 75% of market capital-ization. Yet the executives we sur-veyed suggest that no more than a third of value is attributable to such intangible capital.

And although there is an im-provement in recognition of the importance of intangible capital to longer-term integration suc-cess, they spend only a quarter of deal time identifying and manag-ing such risk.

There is often a heavy focus on the financials – leading to an in-complete view of the value of the

company being acquired. Conse-quently the handling of ‘intangi-ble capital’ - the silver bullet that is critical for success - does not al-ways get the attention it merits. Most 90-day deal implementa-tion plans aim to achieve quick wins by integrating ‘hardwiring’ - the tangible assets such as IT, financial systems and property portfolios. But aligning intangi-ble capital or ‘soft wiring’ is more difficult. Executives must take time to evaluate intangibles right from the start of M&A activi-ty. However, because it is easy to identify and manage risks to tan-gible assets and difficult to audit intangible capital, priorities can remain focused on the former. The consequences can be severe. If intangible capital is disregard-ed, integration languishes and the synergies fail to materialize.

By undervaluing intangibles, buyers risk destroying value. Re-wards come to those who mea-sure, evaluate and value intangi-bles. Yet in our survey:

nearly a third of buyers (31%) •did not carry out a formal in-tangibles review.

and seek other ways to penetrate the market.

Also after the deal has been made, organizations must avoid stepping into the pitfall of focus-ing mainly on the tangible assets, and need to balance it with fo-cus on the intangibles. A leading global geophysical services and equipment company that part-nered with Hay Group in pre-paring the merger and executing the post merger integration, expe-rienced this first hand. The un-divided attention to the intangi-ble assets proved to be one of the main factors for the successful cross cultural merger.

THE SILVER BULLET OF M&A SUCCESS: INTANGIBLE CAPITAL

So what is intangible capital. The Hay Group model of ‘Intan-gible capital’ consists of three el-ements: ‘organizational’, rela-tional’ and ‘human’ capital, as detailed in figure one. Measur-ing these elements during due diligence will ensure that you will make a balanced decision on a M&A deal. Taking these ele-ments into account during the

LeadershipM&A activity necessarily re-

sults in leadership changes as in-tegration takes place. How such changes are handled is the next major hurdle.

A common mistake is to send contradictory messages through the selection of individuals for key positions. CEOs can too eas-ily promote those they favor, not those that are most suited to im-plement a successful integration. Mergers are about the relation-ships, both formal and informal, that are forged as two distinct en-terprises come together. Collab-orative, empathetic skills are re-quired. Problems with internal relationships, resistance to change and unwillingness to collaborate across organizational lines feature regularly in dysfunctional merg-ers. Frequently it takes too long to determine which roles and peo-ple should stay, or decisions can be made on inappropriate crite-ria, such as judging leadership ca-pacity on an individual’s personal presence, rather than their capa-bilities in managing M&A inte-gration.

obscure fact. As employees com-municate with customers all the time, there is much scope for mis-information and mishandling.

Accordingly, during due dili-gence it is vital to consider how client relationships will be main-tained. Both the acquiring com-pany and that being acquired will handle client relationship man-agement, account management and procedures such as sales pro-cesses differently. Throughout integration, customers must be at the heart of operation.

Corporate governanceUncertainty around corporate

governance, particularly where accountabilities are unclear or the operating model is in flux can cripple organizations. It is the fourth biggest barrier to integra-tion success.

Driven by legislation, the need for tax efficiency as well as the need to bring together two dif-ferent sets of processes, the new-ly merged entity will require new governance procedures. For key senior individuals, changes in governance can result in a loss of autonomy and decision-mak-ing power. So retention strate-gies may be required if key people are not to leave for new opportu-nities.

A THREAT OR OPPORTUNITY?In these challenging and high-

ly competitive times in the In-donesian market place, does the possibility of a merger or take over pose a threat or an opportu-nity? It depends on which end of the game your are and how you want to look at it.

Executives can see the ASE-AN-China Free Trade Agree-ment as a threat or as an incentive to shape up the organization. If an industry is always protected, it will never become a competitive, strong and resilient industry with the capability to expand beyond it’s geographical borders. Indone-sian companies should not waste energy on focusing strongly on their weaknesses and the threat of “unfair” competition, being tak-en over or even diminishing.

Instead Indonesian compa-nies should focus on opportuni-ties and strive for committed and talented leaders, a strong culture

with engaged employees, a loy-al customer base, a sound operat-ing model and transparent gover-nance structure. This will create a solid foundation for a healthy competitive business with strong capabilities to grow and a strong bargaining position in a merger or acquisition process.

In case of an M&A, more and more organizations will be-lief in the power of doing a due diligence on intangible capital. When you are acquiring a com-pany make sure that you balance the tangibles with the intangibles before making a decision.

If your company is on the verge to be taken over and it proves to be a good catch in as well the tan-gible and intangible areas, then your bargaining power is en-hanced. Your company will come out strong as also one of our In-donesian clients in the FMCG sector noticed. Having a strong and responsive management, a loyal customer base, cohesive cul-ture and proven operating mod-el, our client was a good catch for the acquiring partner. At first the acquiring partner wanted to re-place most of our client’s man-agement in the merged organi-zation and impose it’s operating model. Because of their many strengths, our client was able to put a stronger mark on the new to be formed organization and in the end it actually went the other way around.

Whichever way you look at it, Indonesian companies need to build and develop their strengths to survive in the competitive and challenging arena.

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.

Merger & Acquisition GamesThe Silver Bullet of Success

Sylvano DamanikManaging DirectorHay Group Jakarta

Ed krancherManaging ConsultantHay Group Jakarta

Mergers and acquisitions are a challenging game when striving for strategic growth

and increasing shareholder

value. They are one of the most

difficult corporate undertakings. The

rewards can be high, but so are the risks.

A poor due diligence or badly executed

merger can diminish the potential

integration synergies and significantly

destroy shareholder value. How can

senior executives uncover the true

potential synergies and ensure that

their M&A initiative delivers the

promised value?

ORGANIZATIONAL CAPITAL RELATIONSHIP CAPITAL HUMAN CAPITAL

Culture and market convergenceShared values, attitudes, beliefs and customs

GovernanceAligned business processesClear and effective governance

AgilityCapacity to manage internal business transformationReact quickly to new market demands

Communication and teamingWilling to share informationSimple channels/information flow

Energy and clarityCommunicated and understood business strategyClear direction for people to mobilize their energy

Organizational StructureEffectiveness of the organization to deliver the strategy

Tacit ‘know-how’ and informationWillingness to innovateUnpatented intellectual property

BrandExternal and inetrnal image and reputationAll that touches the customer experience

Climate intimacyKnowledge of the clientMarket coverage

Client loyaltyClient satisfactionLow turnover and high rate of referrals

External networksStrong relationships with suppliers distributors and other partners or centers of influence

Internal networksEffective internal communicationHigh impact cross functional teamsEnabling relationships across organizational and geographic Boundaries

LeadershipClear vision established and communicatedConflicts of interests coordinated and balanced for all stakeholdersTeam commitment and employee recognition

EmployeesHigh potentials identified, developed and rewardedStrong commitment, loyalty and value by the organization

Development and managementNew skills, knowledge, leadership style acquired with training and coaching

EngagementEmployee empowerment and degree of attachment to the company

ProductivityEfficient management of costs, resources and time

FIGURE 1: HAY GROUP MODEL OF INTANGIBLE CAPITAL

About the researchHay Group’s global research program was conducted in conjunction

with ‘mergermarket’ (part of the FT group), and questioned more than 560 senior management level executives with experience of M&A transactions worth at least $500m over the past three years.

Respondents were drawn from disciplines including corporate finance, strategy, M&A, finance, risk, operations, IT and HR and included board-level executives in sectors such as financial services, industrials, energy, mining and utilities, consumer and retail, technology, media and telecommunications, pharmaceutical, medical and biotech and business services.

of those who did, 70% consid-•ered their merger to be a suc-cess. Indonesian companies that carried out a formal intan-gibles review responded a 90% success rate. While quite the opposite, Indonesian compa-nies that neglected a formal in-tangibles review reported only a 10% success rate .two-thirds (66%) of business •leaders believe an increased and earlier focus on intangi-bles throughout the deal lifecy-cle would improve deal success. 100% of the Indonesian busi-ness leaders believe that an ear-lier focus on intangibles would have given them more deal suc-cess. almost two-thirds (61%) plan •to increase the focus on intan-gible capital in their next trans-action. For Indonesian busi-ness leaders this is 79%.

These are figures that are not to be taken lightly.

In Hay Group’s M&A expe-rience organizations that do not execute a proper due diligence on intangible capital and take the post merger integration pro-cess too lightly in terms of in-tangibles, will fail to make the merger work. Or at the best will succeed but at significant unex-pected financial and human cap-ital costs that could otherwise have been avoided. If intangi-ble capital risks and costs would have been known to the compa-ny upfront, they would be part of the deal making, balanced with the financials and tangibles. Al-though the financials and tangi-bles might show a good deal, the outcome of an intangible capital due diligence might proof this wrong, as also a Hay Group cli-ent in the FMCG sector experi-enced. When Hay Group per-formed an intangible capital due diligence for our client on the tar-get organization in China it be-came clear that the merger would come with considerable risks due to a completely different business culture, almost opposite manage-ment philosophy and a poor tal-ent pool. Although the financials seemed right in the beginning, in the end our client thought it wise to blow of the intended merger

post merger integration process will enhance the success of the integration (Figure 1).

FOUR CLEAR ISSUES IN INTEGRATION

CultureDealing with cultural issues

of the target company is the big-gest challenge to successful post merger integration, according to Hay Group research. This is a complex issue and during M&A, three elements of culture – na-tional, organizational and man-agement culture – must be con-sidered.

The difficulty is that during due diligence, buyers might not have sufficient access to the target organization to assess cultural fit. Even if they do, culture is often regarded as a ‘soft’ issue, not wor-thy of serious analytic thought. This is a mistake that many com-panies make. When two separate cultures keep on existing after a merger, in essence two hidden companies co-exist next to each other under one roof, and possi-ble synergies will be lost.

About half of the respondents in our research (52%) reviewed leadership capabilities during due diligence. It is by far not enough. If leadership is fundamental to a successful integration, keeping your talent aboard and engaged and maintaining your client re-lationships, this figure should be nearer to 100%. Instead we see the focus of many executives shift after due diligence towards the running of the daily business rather than positioning the levers right for successful integration.

Integrating the customer baseFollowing issues around cul-

ture and leadership, getting the most from the target company’s customer base is ranked as the next major obstacle for execu-tives.

After integration, executives can focus on internal matters to the detriment of customers. At a time when customers wor-ry about continued service lev-els, this is concerning and, as both customers and employees read press coverage, rumor can

“ Indonesian companies should focus on opportunities and strive for committed and talented leaders, a strong

culture with engaged employees, a loyal customer base, a sound operating model and transparent governance

structure. This will create a solid foundation for a healthy competitive business with strong capabilities

to grow and a strong bargaining position in a merger or acquisition process.

The President Postwww.thepresidentpost.com February 11, 2010 13

Investment

B ank Indonesia (BI or central bank) said Monday Indonesia was only one notch away

from an investment grade after global rating agency Fitch had upgraded the country s credit rat-ing to BB+ earlier in the day.

“Given the upgraded rating, we only need to go up one more notch to reach an investment grade,” Bank Indonesia (BI) Deputy Governor Hartadi A. Sarwono said in a short text mes-sage to journalists.

Among the positive factors pushing up Indonesia s rating was the Indonesian economy s resilience amid external upheav-als, he said.

RI Only One Notch From Investment Grade

The other factor was Indonesia s balance of payments, which had tended to continuously record a surplus in terms of current ac-count and capital account, he said.

Hartadi said Indonesia s for-eign exchange reserves had con-tinued to increase and now to-taled nearly US$70 billion, up from US$69 billion at the end of last year.

Indonesia s state budget def-icit was still sound compared to those of other countries belong-ing to the same group and this was another factor considered to upgrade its credit rating, he said.

If Indonesia continued to man-age its macro economy consis-

State power company PT PLN will build a special coal terminal in Labuan subdis-trict, Pandeglang regency, for the supply of coal to PLTU Labuan, unit 2.

“PT PLN has already sub-mitted a plan for the special coal terminal, which is cur-rently still under discussion,” head of the Pandeglang clean-ing and zoning agency, D. Ha-sahatan, said here last week.

The discussion covers mat-ters related to development in close harmony with govern-ment policies of central and regional level, port develop-ment and optimizing the uti-lization of zoning and inte-grating local, regional and national transformation.

He also said that the mas-ter plan in the making needs to cover territorial waters and land zoning on the basis of the aspects and parameters of nature, operations, facilities, equipment, and type of cargo.

“The master plan also needs to be flexible to support devel-opment and environmental aspects,” he said.

According to the Nation-al Zoning Plan, part of Ban-ten province is covered by a certain area which gets prior-ity in development, namely the Cilegon industrial estate and Tangerang within Jabo-

detabek (Jakarta, Bogor, Debok, Tangerang and Bekasi), which are classified as a fast develop-ment enclave.

The Soekarno-Hatta interna-tional airport is the national gate-way and the port of Bojonegara as an international port are in-tegrated with Jakarta s Tanjung Priok of Jakarta.

The same is also true with Sunda Bay, an international lane linked to the Indian Ocean and the South Chinese Sea.

PLTU Labuan, unit 2, in Labuan subdistrict, Pandeglang regency, Banten province, inau-gurated by President Susilo Bam-bang Yudhoyono on January 28, 2010, needs coal to move its two turbines.

The power plant has a capaci-ty of 300 x 2 megawatts (MW) and was built to meet the power supply shortage in Java and Bali power grid.

Member of Commission VII of the House of Representatives Irna Narulita Dimyati has asked to prioritize Banten province in getting power supply from PLTU Labuan.

“The PLTU is a national proj-ect, but as it is located in Pandeg-lang, it is only reasonable that Banten has the last say on pow-er supply from the power plant,” Irna said here last week.

Of the total number of peo-ple of Banten, only 250 thousand families are enjoying electricity.

T rade Minister Mari Elka Pangestu said there seems to be a tendency for shoe

manufacturers in China to relo-cate to Indonesia.

The strengthening Chinese yuan can be one reason for this, along with the increasing cost of manpower and its regulations in China.

“This is a permanent trend,” Mari said last week in Tangerang, Banten.

Major shoe producers like Nike, Adidas, and New Balance, have relocated their shoe pur-chases from China to Vietnam and Indonesia.

Such a trend, Mari said, has been going on since 2005.

For the last four years, the val-ue of these moves to Indonesia have netted US$1,8 billion.

“Buyers are coming in large numbers,” she said.

The relocation, Mari contin-ued, will improve production and investment in the country, espe-cially when Indonesian shoes are now capable of competing with Chinese and Vietnamese prod-ucts.

Meanwhile, the Indonesian Shoe Association board chair-man, Harijanto, said with top shoe brands coming to Indone-sia, the national shoe industry is set to restructure the production system to become more efficient.

“But the government must en-sure that electricity supply is reli-

PLN to Build Special Coal Terminal

Footwear Factories in ChinaMove to Indonesia

Seven United States-based companies will invest and expand in Indonesia.

They are Caterpillar, Ford Motor Company, The Dow Chemical Company, Cargill, General Electric Company, Monsanto and News Corporation.

Industry Minister M.S. Hidayat announced this after receiving the US-ASEAN Business Council delegation in his office yesterday.

Caterpillar, he said, will expand in the heavy machinery sector, while Ford in automotive components, News Corporation in the creative industry by entering the film industry, and Cargill in the health sector.

The one thing that they asked, Hidayat said, was long-term

contract insurance, especially in the oil and gas field.

The businessmen also asked Indonesia to abide by long-term contracts that had been signed.

“They often encounter disputes during implementation of contracts,” Hidayat added.

The US-ASEAN Council President, Alexander C. Feldman, said his delegation came to assist Indonesia in the infrastructure sector. According to Feldman, the US companies are committed to stay in Indonesia.

“This can be seen with Obama coming very soon,” he said.

US President Barack Husein Obama plans to visit Indonesia in June or July this year, according to reports.

US Companies to Expand Operations in RI

tently and carefully, its econom-ic prospects would become even better, he said.

Fitch upgraded Indonesia s credit rating to BB+ on Monday, one notch below the investment grade. The rating s outlook is sta-ble.

The upgraded rating is for Indonesia s long-term debts.

Fitch also upgraded the rat-ing of Indonesia s country ceil-ing from BB+ to BBB and main-tained the rating of its short-term debt at B.

Ai Ling, a director in Fitch s Sovereign Ratings team, said in a statement the rating reflected Indonesia s relative resilience to the 2008-2009 severe global fi-nancial stress test, underpinned by continued improvements in the country s public finances, a fundamental sovereign rating strength, and a material easing of external financing constraints.

Fitch also noted that Indonesia s

public debt ratio continued to fall to only 30% of gross domestic product (GDP) in 2009.

Foreign exchange reserves, in-cluding gold also rose by 28% to US$66 billion and econom-ic growth increased to 4.6% last year.

But Fitch added the priority risk of long-term development would overshadow the perfor-mance if inefficient fiscal spend-ing remained unsolved in line with deferred increase in electric-ity tariffs and fuel oil prices.

Finance ministry expects up-graded rating to attract invest-ment

The Finance Ministry also ex-pects Indonesia s upgraded cred-it rating from BB to BB+ will en-courage more foreign investment inflows to the country.

“It is expected the upgraded credit rating will not only make the cost of borrowing more ef-

ficient but also encourage more foreign investment inflows to In-donesia because of the declining country risk,” the ministry s di-rector general of debt manage-ment, Rahmat Waluyanto, said last week.

Given the upgraded rating, the country would only need one more notch to reach an invest-ment grade, he added.

Rahmat said there were sever-al factors underlying Fitch s de-cision to raise Indonesia s cred-it rating.

The factors included Indonesia s success in weathering the 2008 global crisis as reflect-ed by its economic growth mo-mentum and manageable finan-cial system.

The upgraded rating also sug-gested international recognition of fiscal and monetary authori-ties performance in managing the state budget including state debts, he said.

The global rating agency Fitch had upgraded the country`s credit rating to BB+ earlier in the day.

Major shoe producers like Nike, Adidas, and New Balance, have relocated their shoe purchases from China to Vietnam and Indonesia.

able and that infrastructure, like roads are repaired,” Mari said.

She cited the example of the Panarub factory in Pabuaran, Tangerang, which can only reach Tanjung Priok Port through the congested Tomang toll road.

Harijanto also asked for more efficiency in arranging invest-ment permits, especially in the provinces.

Mari promised to cut the bu-reaucracy, including the time to process the licenses.

She said New Balance inves-tors admitted that the cost and production of Indonesian man-power is competitive and the staff turnover is stable, as is the nation-al political situation.

“There is also infrastructure that needs to be repaired,” she said.

PT Panarub Dwikarya CEO Hendrik Sasmito said the local shoe industry will remain com-petitive against China and Viet-nam, as long as it can keep down the cost of production.

Panarub currently produces four shoe brands, namely Adi-das, New Balance, Mizuno, and Specs.

A pair of New Balance shoes is sold at US$12 to 16.

Panarub has two factories and will open a new one in Cikupa, Tangerang.

Panarub has exported 1 mil-lion pairs of shoes.

Until the end of 2010, an ad-ditional 500.000 pairs per month will be produced.

South Africa’s Sasol Limited, the world’s largest producer of synthetic fuel, has begun talks on developing a US$10 billion coal-liquefaction plant with two Indo-nesian state companies.

Negotiations were in prog-ress with oil and gas company PT Pertamina and coal miner PT Tambang Batubara Bukit Asam, Gita Wirjawan, the chairman of the Investment Co-ordinating Board (BKPM) said.

State fertilizer companies like PT Pupuk Sriwijaya might also be in-volved in the proj-ect, Wirjawan said.

Last month, Sasol and the Indonesian government signed an initial agreement to study the feasibil-ity of the project.

Investment pre-dicted to increase at least Rp. 13 trillion

Wirjawan is op-timistic that Indo-nesian investment value increase from 10 to 15 percent this year.

The reason cited was the enact-ment of the one-door integrated service, which will simplify the pro-cess of capital investment through the internet in every region.

The impact of this new system has started to show with an in-crease of investments in Jakarta.

In Batam, the investment process is being carried out through the internet.

The use of electronics is ex-pected to be carried out in all of Indonesia this year.

Last year, investment in Indone-sia amounted to Rp 135 trillion, in which Rp.100 trillion came from foreign investors and Rp. 35 tril-

lion from domestic investors.

“This is different from the previous blueprint, targeted for 2012. We are accelerating it to 2010. With this sim-plification, invest-ment will definitely increase,” said Wiry-awan after a visit to the Tirta Investama company in Klaten, Central Java, last week.

To publicize this integrated service, Wiryawan plans to visit Central Java ar-eas like the ones he made to Semarang, Solo and Klaten.

“I met governors and regents to brainstorm about the potential targets that can be achieved by Central Java in order to improve coordination between the central and regional govern-ments,” he said.

Samiaji, Klaten Deputy Regent, proposed several investment schemes such as dairy cattle breeding, steel foundry and crafts.

Sasol in Talks with RI Firms on Coal Liquefaction Project

“Negotiations were in progress with oil and gas company PT Pertamina and coal miner PT Tambang Batubara Bukit Asam.”

Gita WirjawanBKPM Chairman

To create something from noth-ing is not easy; it requires perse-verance, honesty and sincerity. It is also quiet an achievement to start a business. Soegeng (61) has suc-ceeded in doing just that by having 3 workshops in Jababeka’s Indus-

trial Estate.Humble, low profile and simple.

That best describes Soegeng, who started his Electro Motor Workshop 30 years ago in Pulo Gadung Indus-trial Estate. Soegeng decided to buy a Standard Factory Building (“SFB”)

in Jababeka’s Industrial Estate in 1993 for Rp. 250 Million. He found the in-formation in an advertisement in the newspaper at that time. Soegeng saw a large potential market in Jababeka and believed that investing was the best decision to make. “Kota Jababe-ka is a promising place to everyone who wants to make money and live in harmony,” he said. Now the price reached Rp. 4.5 billion. Imagine that 99% of the tenants in Jababeka have used his workshop services, which in-clude both big and small motor repair and maintenance.

His diligence in running the busi-ness of Electro Motor Workshop is supported by the international Elec-trical Apparatus Service Association (“EASA”). In 1990, Soegeng became a member of EASA, an association that covers a company or individual that runs a business in the electro motor field, including manufacturers, sales

outlets, repair shops, etc. For the first 10 years, Soegeng was the only EASA member from Indonesia, however, he is now followed by 3 other members.

The R&B factory building, which is usually located on the edge of Ja-babeka’s Industrial Estate, is available with 2 or 3 floors and is particularly suitable for commercial, retail or res-taurant businesses. Soegeng chose such R&B building in order to expand his motor workshop, which is used by many customers daily and to diversify to the textile industry as well. With the success of his workshop business, Soegeng tried to diversify to the textile industry, especially catering to provid-ing employee uniforms for companies within Jababeka’s Industrial Estate. This decision was taken with the con-sideration that many companies re-quire a uniform for their employees, which is a fixed cost every year.

Soegeng’s second daughter runs this textile industry until now.

In 2008, Soegeng bought a Three-in-One Building because a partner of-fered him to co-operate in a new busi-ness. However this co-operation failed and the factory was then rented out to a third party. However, the tenant offered him a share of the company and today Soegeng’s share is 32% of the sync plating industry, which is still operating, that operates in the Three-in-One Building.

Soegeng emphasizes The Manage-ment of Religion not only to his family but also to his employees. Because by believing in God, Soegeng, father of 3 children, has succeeded.

This Management of Religion had finally moved Soegeng’s heart and he decided to make his employees more prosperous. Soegeng bought 50 units of houses in Kota Jababeka to be giv-en to each of his employees. Soegeng drew the attention of S.D. Darmono, President Director of PT Jababeka Tbk,

and soon an agreement was success-fully made between PT Graha Buana Cikarang (subsidiary company of PT Jababeka Tbk that takes care of the Housing and Commercial sector) and Soegeng on the transaction of these houses. Besides, Soegeng also provid-ed the Umroh (pilgrimage to Mecca) to his employees, whom had worked at least five years with him. “Looking

for an honest person is not easy. It is easier to look for a clever per-son” he explained.

Now, his warehouse in Pulo Gadung is handed over to his first daughter and another warehouse in Jababeka Industrial Estate is handed over to Budi Tulus Pra-koso, his youngest son.

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Budi Tulus Prakoso, Soegeng’s youngest son.

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Few people may realize that the man behind the scene in the pres-ervation of Borobudur and Pram-banan temples is also a key figure in the Jababeka Group.

Purnomo Siswoprasetjo, di-rector of PT TWC Borobudur, Prambanan & Ratu Boko — the company is involved in the UNES-CO-associated cultural heritage project — has since 1990 joined forces with Setyono Djuandi Dar-mono, the CEO of Jababeka, to run what is now one of Indonesia’s leading property developers.

They started off with only a four-member staff; looking back, they now say the much progress they have made entitles them to call their property business a suc-cess.

Purnomo is believed to be the executive who prepared Oktagon to become the marketing division of the famous Tanjung Lesung re-sort project.

He got his bachelor and post-graduate degrees on industrial management from Trisakti Univer-sity and was involved in the South Banten Development Foundation

T en ASEAN coun-tries last month launched a new tourism cam-

paign built around the slo-gan “ Southeast Asia: feel the warmth”.

A dynamic, new, interactive website, SoutheastAsia.org has been created as the primary marketing tool.

The new campaign, official-ly supported by the 10 ASEAN tourism ministers at the ASE-AN Tourism Forum in Brunei, will immediately target tourists in medium and long haul mar-kets such as the UK, Austra-lia, India, North America and Hong Kong.

“Southeast Asia: feel the warmth” and SoutheastAsia.org will emphasize the warmth of Southeast Asia’s hospitality and climate and the diversity of the region’s cultural attrac-tions and tourism activities.

The ten participating coun-tries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singa-pore, Thailand, and Vietnam.

In announcing the cam-paign, Pehin Dato Yahya, Bru-nei’s Minister of Industry and Primary Resources, told ASE-AN Tourism Forum delegates and media that the new cam-paign had been built on four principles.

“First, the fact that ‘South-east Asia’ has greater recog-nition in international source markets than ‘ASEAN’. Sec-ond, the trust that online con-sumers now put in meta-search tools and user-generated con-tent. Third, the importance of authenticity and ‘warmth’ in travelers’ decision making processes. And fourth, the tre-mendous opportunities that Southeast Asia offers to visitors who are interested in explor-ing niche themes such as cul-ture, adventure, shopping, ec-otourism, island holidays, train travel, spa, culinary experienc-es, river and sea cruises, and much more.”

Felix J. Cruz, Chairman of the ASEAN Tourism Associ-ation (ASEANTA) and Vice President for Marketing at Philippine Airlines, said that the campaign had the support-ing objectives of promoting multi-destination travel with-in ASEAN countries, boost-ing tourism as a tool to fight poverty in the poorer areas of

ASEAN, and helping small and medium-sized tourism enterpris-es showcase their tourism services to a wider audience.

“Southeast Asia: feel the warmth” was jointly created by ASEANTA and the ASEAN Competitiveness Enhancement (ACE) office in collaboration with the ten ASEAN member countries of Southeast Asia.

The region’s national tourism organizations played a key role at each stage of the brand and cam-paign development.

The ACE project was designed and funded by the United States Agency for International Devel-opment.

ACE Project Director R. J. Gurley said: “We are particular-ly excited about the boost in de-mand our theme-based approach to content will bring to niche-fo-cused small and medium-sized tourism enterprises throughout ASEAN.”

In January 2009, ACE and ASEANTA signed an agreement to work together on a new brand-ing and marketing campaign that would encourage travelers to vis-it multiple Southeast Asian des-tinations, stay longer, and spend more money in the region.

Since then, ACE has created al-liances and agreements across the public and private sectors to build the campaign. For example, for SoutheastAsia.org, Lonely Planet is supplying insights and practical information on more than 8,000 travel attractions and things to do in Southeast Asia.

Singapore-based travel search engine, Wego, created the inte-grated map, trip planner, and meta-search engine which will be the key application integral to the new website.

Another Singapore firm, Qais, developed the site and will build traveler awareness of Southeas-tAsia.org through a sustained e-marketing campaign, which also starts with the 25 January launch.

The initial phase of the South-eastAsia.org launch is centered on a contest to populate South-eastAsia.org with user-generated text, images, videos, and articles.

The user-generated content will supplement professional-ly-sourced content from Lonely Planet, ASEAN’s national tour-ism organizations, professional travel writers and other contribu-tors. Contestants submitting con-tent can win prizes.

The website and broader on-line marketing campaign will be

fully launched at ITB Berlin in March.

As part of the roll-out, the ASE-AN Tourism Association, with support from ASEAN NTOs, has agreed to establish an ASE-AN Tourism Marketing Center, initially within the ACE project in Bangkok.

The center’s ACE-funded staff will coordinate with Wego and Qais to build awareness of South-eastAsia.org and handle consum-er queries.

ACE has financed the develop-ment of “Southeast Asia: feel the warmth”, SoutheastAsia.org, the e-marketing campaign and the staffing of the ASEAN Tourism Marketing Center.

While SoutheastAsia.org has been created with a flight and accommodation search interface (meta-search engine), bookings and payments will take place on the website of the travel supplier.

Gurley said that ACE’s objec-tive was to “create a fully func-tioning and integrated global development alliance based on public and private sector partner-ship that would serve Southeast Asian tourism”.

The ASEAN Tourism Associa-tion (ASEANTA) was formed on 27th March 1971.

ASEANTA is a non-profit tourism association comprising both public and private tourism sector organizations from ASE-AN.

ASEANTA has grown to be-come a tourism association of influence within the ASEAN tourism landscape, playing an in-tegral role in shaping tourism de-velopment growth and policies in the ASEAN region.

ASEAN Competitiveness En-hancement (ACE)

was designed and funded by USAID’s Regional Development Mission in Asia (RDMA), which is based in Bangkok.

ACE’s objective is to enhance the integration and competitive-ness imperatives of two of ASE-AN’s priority sectors: travel & tourism and textiles & apparel.

The ACE Project is part of the broader ASEAN-US Enhanced Partnership which was launched in 2006, under which the Unit-ed States pledged its support to ASEAN in pursuing its objective of becoming an ASEAN Com-munity by 2015.

The ACE Project is managed by Nathan Associates Inc. E-mail: rjgurley@ace-advance.com. Website: www.ace-advance.com.

ASEAN Launches New Tourism Campaign

which peacefully relocated around 5,000 houses to make way for indus-trial development.

According to Agus Canny, VP for Corporate Marketing of Ja-babeka Group, Purnomo is a wise and hum-ble-hearted per-son with a calm per-sonality who always advocates harmony. He sometimes fasts and practices meditation “the way ancient kings use to do.”

He is also a good listener who prefers to listen thoroughly before expressing ideas, Agus says. And more importantly, Purno-mo always pays atten-tion to the aspirations of his employees.

The LeaderBehind the ScenePurnomo is believed to be the executive who prepared Oktagon to become the marketing division of the famous Tanjung Lesung resort project.

In an effort to preserve Indo-nesia’s cultural heritage, the Uni-versity of Indonesia (UI) recently signed a cooperation agreement with PT. TWC Borobudur, Prambanan & Ratu Boko.

The purpose apparently, is to utilize the expertise of UI’s ar-cheologists in managing the his-torical objects based on scientif-ic principles.

Dr. Nining I. Soesilo, from the UI’s Faculty of Economic says that this cooperation will create a synergy which is inconformi-ty with UNESCO’s program to preserve cultural heritage around the world.

Purnomo Siswoprasetjo, the Director of PT.TWC Borobu-dur, Prambanan & Ratu Boko, says that this cooperation will lead to provision of better services

By Jeannifer Filly Sumayku for tourists, students, researchers, and the public in general.

Under this cooperation with the Department of Archeology, they will organize ASEAN Ar-cheological Congress near the Borobudur temple on December 13th 2011 to call inside the cele-bration of 20 years of UNESCO’s recognition of Borobudur temple as a world cultural heritage.

Meanwhile, PT TWC has also setup cooperation with PT BAB publishing Indonesia to publish a book entitled Borobudur: Majes-tic, Mysterious, Magnificent.

The book is expected to inspire the public especially Budhists to learn more about the architec-ture, archeology, ancientistry, and story of Borobudur temple.

The issuance of this book was sponsored by Joop Ave, former Minister of Tourism.

Observer say that more efforts

UI - PT. TWC Borobudur, Prambanan & Ratu Boko Signed a Cooperation Agreement

must be made to promote Indo-nesia’s other cultural heritage and preserve them for scientific, so-cial, economic, and recreational purposes.

The purpose of the coopertaio agreement, is to utilize the

expertise of UI’s archeologists in managing the historical objects

based on scientific principles.

The President Postwww.thepresidentpost.com February 11, 2010 15

Health

C ommon colds -- also known as human rhi-novirus -- affect bil-lions of people world-

wide every year and have more than 100 different, but related, strains. Each of these strains can cause a variety of symptoms in sufferers.

Doctors say that variety is what makes the common cold so hard to understand and so hard to treat.

Last year, researchers from the University of Maryland and the University of Wisconsin-Mad-ison announced that they had taken the first step in finding a cure for rhinovirus by mapping each strain’s entire genome.

Now, those same scientists have found some interesting things about all those different strains.

“We continue to see a new vi-rus that appears to come from two viruses,” said Dr. Stephen B. Liggett, co-leader of the proj-ect and a professor of medicine and physiology at the University of Maryland School of Medicine. “So a person can become infect-

Gene Mappers UntanglingCommon Cold Mysteries

ed with two viruses, and a third unique virus is formed.”

Why those mutations develop is still a major question, but Lig-gett says most of them don’t cause any harm.

“It’s really more about why they develop ... because many are not very strong, but in some cas-es, they are,” he said.

“So we need to better under-

stand them.”

When the different strains of the common cold were mapped early last year, researchers were looking for ways to develop diag-nostic tests and eventually possi-ble treatments.

Since the completion of the mapping, researchers have been working on a diagnostic test for

the virus.Originally, the test was expect-

ed to cost about $2,000, but they have perfected the technique and found they can develop a much cheaper test for about $20. That means a test for the cold may one day be common in doctors’ offic-es.

A fast and inexpensive test is good news for asthmatics and people who have chronic obstruc-tive pulmonary disease, for whom colds can be life-threatening.

“Fifty percent of the exacerba-tions that occur in patients who have these two diseases are due to a rhinovirus infection,” Lig-gett notes.

THE SYMPTOM: SNEEZING

What it means: Your body is expelling bacteria and other par-ticles with a sudden, involun-tary burst of air. Don’t suppress a sneeze, as your body is trying to evict the irritants.

When to worry: Almost nev-er, but if sneezing interferes with your life or persists after other symptoms are gone, talk to your doctor to find out if an allergy might be the cause.

Home remedies: Using Kleen-ex Anti-Viral tissues helps prevent the spread of viruses. No tissue? Sneeze into your upper sleeve, not your hands. You’ll be less likely to pass germs along.

Over-the-counter remedies: Some antihistamines (the sedat-ing varieties) can help cut down on the sneeze reflex. But most ex-perts advise you to leave this fair-ly innocuous symptom untreat-ed.

THE SYMPTOM: CHILLS AND FEVER

What it means: Chills are the way the body generates heat when it feels cold. They usually precede a fever, the body’s method for de-fending itself by raising its tem-perature to fight a virus.

When to worry: Call your doctor if your temperature rises above 102 degrees, if a fever per-sists for 72 hours without break-ing, or if you also have shortness of breath or dizziness.

Home remedies: To stay hy-drated, sip your favorite liquids. Sponging off with warm water may also give you relief.

Over-the-counter remedies: Acetaminophen (Tylenol), ibu-profen (Advil, Motrin), or naprox-en (Aleve) can lower a fever that’s making you uncomfortable.

THE SYMPTOM: SORE THROATWhat it means: Mucus is

dripping into the back of your throat,

causing irritation and inflamma-tion.

When to worry: If you have severe difficulty swallowing or breathing, call your doctor to rule out a more serious illness, such as a bacterial infection.

Home remedies: Gargle

Your Cold and Flu Symptoms, Explained

with warm salt water. Soothe a scratchy throat with liquids, such as caffeine-free tea and broth, or cool down a fiery one with an ice pop.

Over-the-counter remedies: Acetaminophen or ibuprofen will help decrease inflammation.

THE SYMPTOM: RUNNY NOSE

What it means: Your body has stepped up mucus production to remove the cold or flu viruses from your nasal passages.

When to worry: If your health doesn’t improve after one week, you could have a bacterial sinus infection, which may require treatment with an antibiotic.

Home remedies: Drink flu-ids to thin mucus. Chicken soup may help reduce inflammation. Sniff gently into a tissue, as blow-ing hard can lead to sinus prob-lems.

Over-the-counter remedies: Use a saline spray to help irrigate your nasal passages, or use an oral decongestant or an antihistamine Drixoral or Benadryl for exam-ple).

THE SYMPTOM: SINUS PRESSURE

What it means: Mucus has congested the nasal passages and may be trapped in the sinuses be-cause they are not draining prop-erly.

When to worry: If you have a fever of more than 102 degrees, you may have a bacterial infec-tion, which can be treated with antibiotics.

Home remedies: Keep your si-nuses moist by using a humidifi-er, or stand over a sink filled with hot water.

Over-the-counter remedies: A decongestant spray (such as Dristan or Afrin) can help ease congestion and swelling.

THE SYMPTOM: COUGH

What it means: A reflex that keeps the throat clear, a cough is triggered when excessive mucus (or some other irritant) has irri-tated the nerve endings in the re-spiratory tract.

When to worry: If you’re short of breath and coughing up blood or discolored mucus, you may

have bronchitis, sinusitis, or pneumonia.

Home remedies: Skip the medicated cough drops; they have been proven ineffective. Instead, soothe an irritated throat with your favorite hard candy, or drink warm fluids.

Over-the-counter rem-edies: Products with pseu-doephedrine work but can make you sleepy. Nondrowsy versions with phenylephrine aren’t as effective. Naproxen may reduce throat inflamma-tion.

THE SYMPTOM: SWOLLEN GLANDS

What it means: Your lymph nodes are producing an army of infection-fighting cells to battle the invading vi-rus.

When to worry: If your glands remain enlarged for several weeks after a cold or the flu is gone, that could be, in rare cases, a sign of a more serious illness, such as lym-phoma.

Home remedies: There’s not much you can do to re-duce swollen glands. They should return to normal with-in a few weeks.

Over-the-counter reme-dies: Other cold or flu symp-toms will probably bother you more, but acetaminophen or ibuprofen can ease any dis-comfort caused by the en-gorged glands.

THE SYMPTOM: BODY ACHES

What it means: More com-mon with the flu, allover aches are a sign your body is releas-ing chemicals that help your white blood cells fight off in-fection.

When to worry: Only if the aches are incapacitating, which is rarely the case with a cold or the flu.

Home remedies: Get plen-ty of rest, and take warm baths to soothe your muscles --or try using a heating pad or a heat-ed water bottle.

Over-the-counter reme-dies: Acetaminophen or ibu-profen will relieve the pain.

A cure for the common cold has eluded scientists since the dawn of mankind.

“So it’s that group of people we are targeting. Those would be the first group we’d like to help.”

Respiratory infections includ-ing colds and the flu are some of the most common causes of asth-ma flare-ups, especially in young children, according to the Ameri-can Asthma Foundation.

Although the genetic mapping of the different strains is a posi-tive step, many in the medical community say the virus itself is just too complex to tackle.

Dr. Andrew Shorr, a pul-monologist with Washington Hospital Center, says that map-

ping the genome of the different strains of the common cold is “no big deal” because the complexity of the virus makes the likelihood of finding a specific cure highly unlikely.

But Liggett ignores the naysay-ers; he says that by mapping the genome of the different strains and assembling the results into a “family tree,” scientists can bet-ter understand how virus strains are related, as well as their differ-ences.

Last year, researchers found that human rhinovirus strains are organized into about 15 sub-groups, so a “one-drug-fits-all”

approach to treat the cold prob-ably won’t work.

But Liggett says he and his fel-low researchers hope to stream-line those 15 subgroups into five, which would make it easier to treat the virus.

“Better to have five treatments than 15,” Liggett said.

“Right now, vaccines and oth-er treatments aren’t our main goal,” Liggett added. “Hopeful-ly, we will be able to design treat-ments some day. Taking our re-search little by little will help us understand a virus we’ve nev-er been able to figure out before. And for now, that’s what’s most important.” (CNN)

By mapping the genome of the different strains and assembling the results into

a “family tree,” scientists can better understand how virus strains are related,

as well as their differences.

There’s a reason for each and every sniffle, sneeze, ache, and pain. Learn why your body behaves the way it does, and discover the quickest ways to feel better.

When we enter the golden age of retirement, what will happen to us? What are our activities? What are our priorities? How about self-actualization at that time?

Talking about life accomplish-ment, the golden age of retirement may be the highest point in your life when the goals you had when you were young can be achieved.

Housing options are becoming an important aspect when we want enjoy life at an old age, both physically and spir-itually. It is undeniable that our body’s natural process will experience decline with age. The fast-paced and busy life of the city makes it difficult for our children to give us all the help we need or ac-company us on a regular basis.

The “Senior Community” is an emerging trend in big cities today. The seniors spend time and their activities together and share their experiences.

Senior Housing Jababeka Medi-cal City will present a new concept and paradigm; seniors are living near their children’s hearts, but are not always accompanied or assisted by their children and are free to do activities on their own and be cre-ative.

Senior Housing will be part of a

regional integrated one stop world class health service. The location is just a few meters from International Hospital facilities, so that all medical emergencies can be handled with-out facing traffic problems of a large city.

Access and residential facilities are user friendly and especially catered to the capabilities and needs of its seniors. Toilets and its accessibil-ity are designed to prevent injuries and facilitate mobility, especially for those who use a walker.

The Senior Community will be built and become the heart of the activity center, where seniors can spend quality time together and maintain a healthy body and soul. Exercise programs, such as garden-

ing and flower planting, keep the seniors fit and games for the mind keep the brain and memory active. Senior sport facilities designed for seniors are also available. Library, skills room and karaoke are other facilities and activities for seniors in

Jababeka Medical City.We don’t have to

feel that we are far from our family, be-cause every time our children and grand-children visit, we can do activities together. “Family Day” events will be held to enliven the atmosphere and get to know each oth-ers family.

Remove the old par-adigm and find out that living inde-pendently in the golden age means time to enjoy in Senior Housing- Jabebeka Medical City. For those of you who still work part time at your golden age or for those of you who have fully retired, to all your needs can be catered.

Happy LivingIn Your Golden Age

the “Senior community” is an emerging trend in big cities today

(021) 893 4580 ext. 414 & Rossy 0811 851 769

LivingThe President Post www.thepresidentpost.comFebruary 11, 201016

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 HadiwerdoyoNaresh MakhijaniTaufik DarusmanThomas W. ShreveWuryastuti SunarioEka Putri

EDITORIAL & ADVERTISING/CIRCULATION DEPARTMENTSMonica Siregar

LAYOUT & DESIGNMohamad Akmal

In the same way organ-isms select for characteris-tics that favor the survival and well-being of its spe-cies over successive genera-tions, so too do cultures.

With organisms, we call this process evolution and it repre-sents a sort of accumulated wis-dom. There is no word for this process in cultures, but there is one for the result. And that word is tradition.

For that past eight years, my team of scientists and National Geographic researchers have ex-plored five parts of the world -- “Blue Zones” -- where people live measurably longer lives.

Compared to American aver-ages, we found a bronze-age cul-ture in Sardinia’s interior that pro-duces about 10 times more male centenarians; a remote peninsula in Costa Rica where 50 year-olds have a three-fold better chance or reaching age 90; a Greek island completely free of Alzheimer’s (about 50 percent of Americans over age 90 suffer from demen-tia); and islands in southern Ja-pan where people suffer one-sixth the rate of heart disease.

HOW DO THEY DO IT?The Danish Twin Studies es-

tablished that only about 20 per-cent of average lifespan (within certain biological limits) is dic-tated by genes. Lifestyle explains most of the rest of the longevity formula.

We found that all five Blue

Secrets to aLonger Life

By Dan Buettner

Zones possessed the same nine lifestyle characteristics. Among them: a low-meat, plant-based diet (all of them ate a lot of beans) and a ritual of “down-shifting” each day. They expe-rience the same stresses we do -- kids, health, finances -- but they managed it through daily prayer, meditation, ancestor veneration or city-wide happy hours (like the Sardinians).

The secret to longevity, as I see it, has less to do with diet, or even exercise, and more to do with the environment in which a person lives: social and physical. What do I mean by this? They live re-wardingly inconvenient lives. They walk to the store and to their friends’ homes and they live in houses set up with opportuni-ties to move mindlessly. They do their own yard work, hand-knead their own bread dough, and, in the case of Okinawa, get up and down off the floor several dozen times a day.

They live in strong families that keep them motivated to sup-port loved ones. Centenarians are still living near their children and feel loved and the expectation to love. Instead of being mere recipi-ents of care, they are contributors to the lives of their families.

They grow gardens to contrib-ute vegetables, they continue to cook and clean. This has a pow-erful two-fold effect: Children and grandchildren in these fam-ilies benefit from their grandpar-

ents’ wisdom and care while the centenarians feel the motivation to stay active, to get out of bed in the morning, and live for a pur-pose.

They live in cities where it is easy to walk to their friends’ houses, to the store or to church. So, we figured they get about 105 minutes of physical activi-ty everyday -- and no health club membership!

We know from the Framing-ham studies that happiness, smoking and obesity are all “con-tagious.” If your three best friends are obese, there’s a 70 percent bet-ter chance that you’ll be over-weight. People in the Blue Zones either proactively surround them-selves with people who practice the right behaviors or are born into communities of people who do -- or people whose idea of fun is gardening, or bocce ball or swimming; people who eat meat sparingly, who have faith, who are trusting and trust-worthy. Why is this so important?

No supplement, hormone, an-tioxidant or pill of any sort has been shown to reverse, stop or even slow aging. The problem is two-fold: to do the study prop-erly, you’d need to follow two groups of people for life: one who takes the pill, the other that doesn’t. Then you’d have to con-trol for all other factors and com-pare the average age of death for each group. No such study has ever been done on a “longevity”

Men who cheat do it because they are unhappy with their life, not their wife’s appearance, col-umnist says.

Men who cheat do it because they are unhappy with their life, not their wife’s appearance, col-umnist says.

When my high school boy-friend cheated on me, I found out the other girl’s Instant Messenger screen name and “confronted” her online. (Not the most ma-ture move, I know. But give me a break! I had just turned 17.)

You know what this girl had the audacity to say to me? “I’ve seen a picture of you! No wonder he cheated.”

Sadly, that dopey logic is not confined to teenage soccer play-ers who give hickeys to other girls’ boyfriends; it has cycled over and over and over in my mind as this alleged Tiger Woods affair has played out.

Surely you, like me, have heard numerous friends or significant others say something to the effect of, “How could he have cheated on his wife? She’s so gorgeous!”

Men Don’t Cheat Because Their Wives are Ugly

By Jessica Wakeman

Yes, Elin Nordegren is a blonde-haired Swedish former model and her turd husband allegedly still cheated on her.

What I want to know is why we insist a woman’s beauty -- which is highly subjective! -- is some kind of barometer -- which is highly shallow! -- of whether or not her hubby will cheat.

Let’s get this clear: People cheat because they are unhappy in their relationships. That’s it. I’m not naive: I know plenty of people cheat because their paramours have gained weight/lost too much weight and said paramours are no longer an object of physi-cal attraction. But it’s an underly-ing and relatively shallow factor, not cause-and-effect at all.

Most relationships have these little things called “love,” “trust” and “respect”; relationships that have all those things don’t have cheating. If you really, really love someone, you will deal with the inevitable aging process.

The implication is that Nor-degren is too pretty to cheat on

and that Tiger’s infidelity would make more sense if she were ugly -- but since she’s beautiful, there must be something else she did that drove him to do something so insane.

Let’s stop insinuating that when a man cheats, it is always because of something the wife did (or didn’t do). And that’s es-pecially true when we’re talk-ing about somebody like Tiger Woods, who appears to have al-legedly cheated with a bunch of random cocktail waitresses all over the country. None of them appear to be love matches.

Furthermore, Tiger Woods has plenty of coin to hire a divorce lawyer. If he was/is really unhap-py in his marriage to Elin Norde-gren, I’m sure plenty of attorneys would jump at the chance to han-dle his breakup for him. Cheat-ing, as they say, is the coward’s way out.

At the end of the day, it is Ti-ger who allegedly cheated. It is Tiger who allegedly tried to cover up the mobile phone trail. It’s Ti-ger who is at fault, not his beauti-ful wife. (TM)

The secret to longevity, as I see it, has less to do with diet, or even exercise, and more to do with the environment in which a person lives: social and physical.

UNCOVERING

supplement.

The second problem is adher-ence. People in general just don’t stick to doing anything for very long. Are you taking supple-ments? How long have you been taking them? I’ll bet not more than a few years.

Science (and hucksters) have offered us countless diets but re-search done by the University of Minnesota’s Dr. Robert W. Jef-frey has shown that fewer than 2 percent of people adhere to di-ets for more than two years. For anything to really impact your life expectancy positively, you need to do it for most of your

life. Friends, unlike pills or diets, are much more likely to be much longer-term undertakings.

The secret to solving much of America’s health care crisis and battle with chronic diseases lies in emulating the environment in Blue Zones. Is it possible?

Last year, my partners and I made Blue Zones-inspired chang-es to the environment of an en-tire American town -- Albert Lea, Minnesota, (see AARP Maga-zine article). We made the town more walkable and bikeable, dug public gardens, made it easier for kids to walk to school and people to expand their face-to-face social

networks to include more people motivated to change their health habits. The results were astound-ing.

If the trends continue, life ex-pectancy for the average partici-pant would rise about three years and health care costs for city workers would decrease by 48 percent.

The wisdom of the world’s Blue Zones represents centuries or even millennia of observed hu-man experience. As many argue over how to solve the health care crisis, perhaps they should take a moment to consider the wisdom of their grandmothers. CNN

Photo: philip.greenspun.com

They live in cities where it is easy to walk to their friends’ houses, to the store or to church. So, we figured they get about 105 minutes of physical activity everyday - and no health club membership!