Jokowi's VP tease | Sharia fintech | Lux cell scandal redux | Indonesia Intelligencer (July 21-27)
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Business
Chinese steel, local workers: The topic (and baseless rumors) of foreign workers invading Indonesia has been a hot one leading up to next year’s election, so investors seem to be treading carefully when coming into the country. China’s Hebei Bishi Steel Group, for example, is investing US$2.54 billion into building a steel factory in Kendal, Central Java, and it says it’s going to prioritize locals for its 6,000 to 10,000-strong workforce.
Palm oil jet: The Trade Ministry is seeking to collaborate with Boeing as part of its strategy to enhance strategic partnerships with the US. Among the many points of potential collaboration, the ministry says Indonesia can help Boeing develop palm oil-based jet biofuel that is more environmentally friendly.
Major Sharia player: Economic Affairs Coordinating Minister Darmin Nasution said Indonesia is not a major player in the development of the world’s Sharia economy despite making up 12.7% of the world’s Muslim population. However, it’s expected that spending among the country’s Muslim majority will continue to rise, with expenditures predicted to rise to US$3 trillion in 2022.
Brakes on car sales: Indonesia’s car sales drastically dropped 41.5% in June compared to May, making it the lowest number of monthly car sales so far this year. In June, 58,837 cars were sold, with Toyota contributing the most sales with 18,767 units sold.
Astra seeing green: In more good news for PT Astra International, which has a joint venture with Toyota for its vehicle-distribution in the country, the Indonesian conglomerate recorded 11% growth in first-half net income, supported mainly by its coal-mining business. Astra’s net income stood at US$718.8 million from January to June.
Trade friendly-er: Indonesia ranked 46th out of 160 countries in the World Bank’s biannual Logistic Performance Index (LPI) report, jumping 17 places from two years ago. LPI measures ease of trade within a country. Indonesia scored poorly in the customs and border management clearance indicator, but did well in the timeliness indicator.
Popping up at the Little Red Dot: Over a dozen Indonesian fashion startups, including Purana, Saul, and Nataoka are showcasing their products at a temporary pop-up store in Singapore in a bid by the Indonesian Creative Economy Agency (Bekraf) to promote local fashion brands abroad as part of a larger push towards increasing exports from local creative industry enterprises.
Recommended reads
How the World Cup Made Eggs More Expensive in Indonesia (Bloomberg)
The World Cup helped boost consumption as fans ate instant noodles with eggs while watching football matches at home, Leopold Halim, secretary general of the Indonesian Poultry Farmers Association and Information Center, said in an interview in Jakarta on Thursday. Prices also gained due to lower supply, as many farmers sold their old laying-hens because of rising demand for meat, he said.
Shariah Fintech – A Case Study of Indonesia (Asia Regulation)
However, in April 2018, Muslim scholar Muhammad Abu-Bakar, the internal Shariah adviser for Indonesian Islamic micro-financing firm Blossom Finance, released a study exploring the functionalities of Bitcoin, concluding that it did indeed meet the requirements of accepted payments and mediums of exchange in financial transactions allowed under Islamic principles. Following the release of the report, the price of Bitcoin rose by more than USD1,000 in 30 minutes, a jump that media outlets attributed to the increase in Muslim traders in cryptocurrency following the release of the report.
EU policy discriminatory, but criticism of Indonesia’s palm industry justified (Asia Sentinel)
The European Union’s policy on imports of crude palm oil (CPO) amounts to discrimination against Indonesia, denigrating oil-palm cultivation while shrugging off the environmental damage done by other biofuel crops.
That said, there is no doubt that the Indonesian palm-oil industry is far from trouble-free, suffering from corporate malpractice and lax enforcement, while creating significant – and costly – damage to the environment.
The rise of Indonesia’s tech startup scene (The Asean Post)
The growing middle class in Indonesia is young and in touch with the latest trends and technologies. As such, the number of internet users in Indonesia is growing every year. A study from Hootsuite shows that Indonesia has 88 million people online, with 79 million of them active social media users. In a report by McKinsey & Company titled “Unlocking Indonesia’s digital opportunity,” it was revealed that if Indonesia fully embraces digitalization, it can gain an estimated US$250 billion in economic growth by 2025.
Can Indonesia be a powerhouse in the digital economy? (The Business Times) A look into factors supporting the idea that Indonesia can follow in the footsteps of China to become a force to be reckoned with in the digital economy, including a burgeoning startup scene and positive government support.
Politics
Clock’s ticking for Prabowo
Despite the deadline for presidential candidates to register for the 2019 election coming up in just two weeks (Aug. 10), Gerindra Chairman Prabowo Subianto still seems deeply embroiled in negotiations with the major parties that have yet to join President Jokowi’s coalition. He needs to form a coalition with at least one of those parties just to fulfill the mandated minimum political support threshold required to register his candidacy.
On Monday night, Prabowo met with members of the 212 Alumni Brotherhood (PA 212), the Islamist political group, and high-ranking officials from four other political parties: PAN, PBB, PKS and Berkarya. PA 212 said it is pushing all five parties to form an opposition coalition on the advice of their leader, fugitive Islamic Defenders Front (FPI) founder Rizieq Shihab, but a sticking point seems to be that PAN and PKS are both still jockeying for one of their cadres to be picked as Prabowo’s running mate before making any commitments. PBB has also said it was still considering whether to join Prabowo or Jokowi’s coalition.
Prabowo also met with Democratic Party Chairman and former president Susilo Bambang Yudhoyono on Wednesday after a meeting last week was delayed. The meeting was said to be productive, but no deal between Gerindra and the Democrats has been announced yet. Any coalition with the Democrats would almost certainly require Prabowo to pick SBY’s son Agus Harimurti Yudhoyono (AHY) as his running mate, and Prabowo indicated such an alliance could include PAN and PKS as well.
Jokowi’s VP tease
While Prabowo was meeting with PA 212 and Rizieq’s chosen coalition partners on Monday, President Joko Widodo had a meeting with top officials from the six parties that have already committed to his coalition, and they supposedly agreed on a running mate for the incumbent. However, Jokowi representatives are still indicating that his VP announcement won’t come until just before the Aug. 10 registration deadline, leaving him room to maneuver and change his pick after it becomes clear who Prabowo’s running mate will be.
One person who definitely won’t be Jokowi’s running mate is AHY, as SBY said this week that despite being approached by PDI-P to join Jokowi’s coalition multiple times, intractable problems between himself and PDI-P chairwoman Megawati Soekarnoputri made a coalition unfeasible. However, a senior PDI-P official said the real reason the Democrats would not join is because of their requirement that AHY be made Jokowi’s running mate.
Jakarta Gov. Anies’ curtain controversy: Jakarta Governor Anies Baswedan has been talked up by many as a potential VP pick for Prabowo, but recent developments likely have the Gerindra chairman wondering if Anies would be a political advantage or liability. The Jakarta administration has been heavily criticized in the national media over the past week for its preparations (or lack thereof) for next month’s Asian Games, particularly the curtaining over of the fetid Sentiong Canal located next to the dormitory for visiting athletes competing at the massive sporting event. Uproar over the curtain scandal has led to the central government stepping in to take over canal’s cleanup.
Luxury cell scandal redux
On Saturday, a raid of Sukamiskin Prison in Bogor by the Corruption Eradication Commission (KPK) revealed that prisoners at the penitentiary were bribing the warden and other prison officials for luxury cell suites with hotel-like accommodations including AC, flat-screen TVs, computers, refrigerators and even private keys to come and go as they pleased.
The raid led to the immediate arrest of Sukamiskin’s warden and five others, as well as calls for Minister of Law and Human Rights Yasonna Laoly to step down.
In the wake of this most recent scandal (which follows on the back of similar corrupt practices being found at Sukamiskin and other prisons many times in the past), the government announced that it was planning a major overhaul of the correctional system including an end to corruption convicts being sent to special prisons.
From lap of luxury in prison and back into politics: Despite the General Elections Commission (KPU) officially banning those who have been convicted of corruption from running for public office earlier this month, it looks like plenty of corruption ex-cons are banking on the regulation being successfully challenged in court. According to the Elections Supervisory Agency (Bawaslu), 199 politicians convicted of corruption have gone through the first steps in registering as candidates for DPRD seats next year. Thirty of them have registered at the provincial level, along with 148 at the regency level and 21 at the city level.
Indonesia and Malaysia iron out border issues: Indonesian Foreign Minister Retno Marsudi and her Malaysian counterpart, Saifuddin Abdullah, announced that their two countries have agreed to resolve issues pertaining to the delineation of their borders, a sign of increasing closeness between Indonesia and Malaysia’s new administration. Retno and Datuk said they would work to strengthen bilateral cooperation on issues facing both countries such as regulations on the palm oil industry.
Recommended reads
Pre-election jockeying rides wild in Indonesia (Asian Times): Joko Widodo is streets ahead of rivals in a race that could yet be co-opted by radicals keen to portray the front-running president as “un-Islamic.”
'I felt disgusted': Inside Indonesia's fake Twitter account factories (The Guardian)
For several months in 2017, Alex, whose name has been changed, alleges he was one of more than 20 people inside a secretive cyber army that pumped out messages from fake social media accounts to support then-Jakarta governor Basuki Tjahaja Purnama, known as “Ahok,” as he fought for re-election.
“They told us you should have five Facebook accounts, five Twitter accounts and one Instagram,” he told the Guardian. “And they told us to keep it secret. They said it was ‘war time’ and we had to guard the battleground and not tell anyone about where we worked.”
Rats in the ranks: Here’s how the KPU should deal with corrupt candidates (Indonesia at Melbourne)
The controversy over the regulations recalls the long debate over the best regulatory strategy to break the cycle of corruption in democratic Indonesia. Regulations that not only have a strong legal basis but also provide room for public participation in the fight against corruption offer the highest chance of success.
As a regulator, the KPU could learn from the approach used by the business sector. The relationship between the KPU, political parties, candidates and the public is much like the relationship between the government, business, goods and services, and the public as consumers. In this analogy, political parties offer candidates, just as companies offer goods or services.
Declassified Files Provide Insight into Indonesia's Democratic Transition (Voice of America)
The major takeaways from this batch of files, which corroborate and fill out the existing historical record, are that the U.S. supported the Suharto military government until it collapsed in 1998 and that Washington "played a fairly decisive role in convincing Suharto to sign off on the [International Monetary Fund]'s structural adjustment program, which many scholars believe was responsible for the ouster of Suharto," said Dr. Bradley Simpson, a University of Connecticut professor and specialist on U.S. foreign relations who leads the declassification effort.
Other News and Notable Features
Labeling terror: Using recently passed anti-terrorism legislation, government lawyers have for the first time attempted to prosecute an organization as a terrorist entity. That organization is Jamaah Ansharut Daulah (JAD), the loosely-knit pro-ISIS terror group behind May’s horrific suicide bombings in Surabaya as well as other terrorist attacks. Using the new laws, prosecutors are attempting to have JAD disbanded and declared forbidden.
Shameful sentence: A nine-month sentence given to a 15-year-old girl in Jambi who had an abortion after being raped and impregnated by her 17-year-old brother was heavily criticized by the international media, shedding a spotlight on Indonesia’s draconian abortion laws. Although abortions are legal in Indonesia under certain conditions, including rape, it is only allowed within the first 40 days of the pregnancy, which activists say is an unrealistically short window of time for rape victims in a country lacking adequate access to reproductive health education and services.
Clean air for the Asian Games?
One of the most severe challenges potentially facing competitors at next month’s Asian Games is the air quality. Jakarta’s air quality index scores have reached unhealthily high levels this week and even landed it on the top of a ranking of the world’s most-polluted cities multiple times. The Jakarta government has taken several measures to limit the number of cars on the roads for the duration of the games in order to ease congestion and decrease pollution.
To protect the air quality in fellow host city Palembang, the military said it was deploying more troops to fight forest fires in the surrounding area of South Sumatra, as well as tasking provincial police and volunteers with surveillance. About 240 hectares of land in the area around the South Sumatran capital were shown to be affected by forest fires in the last few days. Forest fires in Sumatra, especially from areas around palm oil plantations, are a major component of the annual regional haze crisis.
Recommended reads
Indonesia Seeks to Democratize its Schools (Asia Sentinel)
In an effort to minimize what amounts to “school shopping” and assure that no student has to travel too far to attend lessons, Indonesia is implementing a zoning policy that classifies schools in each regency and city into separate zones and mandates that schools enroll students living in their vicinity
The policy, called in Indonesian Penerimaan Peserta Didik Baru Zonasi, is part of the administration’s ongoing effort to fix the country’s education system, which has been criticized for poor teacher quality and teacher distribution, discrimination against marginalized groups, and schools that are considered child-unfriendly. The country has been making some progress, with an OECD study in 2016 showing that between 2012 and 2015 science performance among 15-year-old students rose by 21 points nationwide, making Indonesia the fifth-fastest improving education system among the 72 that took part in the comparison.
Top Coconuts Jakarta Stories
Ahok writes letter to volunteers asking them to keep fighting for Jokowi to be re-elected
Tommy Suharto says corruption has become worse in Indonesia since it became a democracy
Prisoners need entertainment too: Deputy house speaker criticizes KPK raid on corrupt prison
Jakarta Gov. Anies says smelly canal problem inherited due to neglect of ‘previous administration’
Viral: Indonesian cops stop 3 people on motorcycle, turns out one of them just died
Public transportation users up 11.4% in Jakarta since expansion of odd-even rule