Little red bud | COVID-19 on the rise | Coal exports ban: what now? (Jan. 21-28)
Hello Coconauts,
Welcome to the first free edition of the Indonesia Intelligencer in 2022! If you’re new to the game, we open up this newsletter for everybody on the last Friday of every month. If you want full access, do hit the red button below.
This week, we have a smorgasbord of news to get through, including an update to Indonesia’s soon-to-expire coal exports ban, strengthening ties with Singapore, and, unfortunately, renewed worries over COVID-19.
As always, stay safe, stay informed, and we’ll see you next week!
Business and the economy
Dour-cast
The International Monetary Fund (IMF) has lowered its GDP growth forecast for Indonesia to 5.6 percent in 2022 and 6 percent in 2023. The projections were revised down by 0.3 percent and 0.4 percent, respectively.
Indonesia’s growth will likely be hampered by renewed mobility restrictions and intense pressure on the healthcare sector as the Omicron variant takes hold, IMF said.
Working in Indonesia’s favor is the global commodities inflation, which is expected to resume in the foreseeable future and be beneficial for Indonesia’s exports.
Helter smelter
Indonesia is going all out on mineral processing as it is set to launch seven new smelters this year — the highest one-year increase in new smelter units since at least 2015.
The seven units comprise two for nickel, one lead, one zinc, one alumina and two iron smelters, some of which were carried over from 2021. Upon their launch, Indonesia would have 28 operational smelters by the end of the year.
Enticing mode
Indonesia is aiming to boost total investment this year by a third and attract IDR1,200 trillion rupiah (US$83.43 billion) after foreign direct investments (FDI) rose 10 percent in 2021.
Indonesia is using its promising resource processing sector to lure outside investment. The biggest beneficiary of FDI last year was the base metal sector followed by mining and transport, warehousing and telecommunication.
Foxconn: beyond iPhones
A big contributor to Indonesia’s FDI this year could be Foxconn, which is renowned as a major assembler of Apple’s devices. The Taiwan-based company said it has sealed a partnership with the Indonesian government involving a wide scope of investment on electric vehicles (EVs), including battery manufacturing.
Under the partnership, an open "MIH platform" that provides both hardware and software services will be available to companies in Indonesia. Details on the size of the investment or production plans have not been disclosed.
The ban is up
Indonesia’s unpopular coal exports ban is expiring on Jan. 31, but there likely won’t be wholesale resumption of shipments after the date. The government says only coal miners compliant with Indonesia's new Domestic Market Obligation (DMO) will be cleared to restart shipments, with 171 miners approved so far.
The DMO stipulates miners must sell a quarter of their output locally, at a price no higher than US$70 per tonne for power generators. There are about 600 coal mining companies in Indonesia.
Indonesian state electricity firm Perusahaan Listrik Negara's (PLN) coal supply for February is safe and it will ensure there is no repeat of a crisis that led to a halt on international coal exports.
Little red bud
Indonesian President Joko Widodo welcomed Singaporean Prime Minister Lee Hsien Loong in Bintan, Riau Islands this week, during which the pair signed agreements on economy, travel bubbles, and the extradition of fugitives.
Singapore has pledged US$9.2 billion in new investments, including in the renewable energy sector and a construction of a logistics hub in Jakarta’s Tanjung Priok. Indonesia has also opened a vaccinated travel lane for Singaporeans to visit Batam and Bintan in the Riau Islands, with an extension of the lane to Bali being mulled.
Indonesia also reclaimed control of the airspace above the Natuna and Riau Islands, putting an end to a long-standing bilateral issue with Singapore. In addition, the two countries signed a treaty on the extradition of fugitives.
OJK says no crypto
Indonesia's Financial Services Authority (OJK) warned that financial firms are not allowed to offer and facilitate sales of crypto assets amid a boom in crypto trading in Southeast Asia's largest economy. It warned that the value of crypto assets often fluctuates and that people buying into the digital assets should fully understand the risks.
Trade in crypto assets is surging in Indonesia, with total 2021 transactions reaching IDR859 trillion ($59.83 billion), up from just IDR60 trillion in 2020. Indonesia allows sales of crypto assets in the commodities exchange and trading is supervised by the trade ministry and the Commodity Futures Trading Regulatory Agency.
Recommended reads
The longer-term impact is that the key planks of being cheap and reliable, promoted by the coal industry in its battle for survival against cleaner energy alternatives, are seriously undermined.
It is a policy that cannot escape being labeled, in the eyes of many, as protectionist or as resource nationalism. But it is also a policy that Indonesia considers to be crucial as it strives to accelerate its industrialization, and lift the so-called resource curse, where an abundance of natural resources can be a factor leading to underdevelopment.
Across the archipelago
Up and up
Indonesia recorded 8,077 new COVID-19 cases on Thursday — the highest daily infections rate so far this year. The day’s positive rate for PCR tests was 16.62 percent, which portends even higher spikes in the near future as Omicron takes hold.
Of the reported infections on Thursday, 4,149 were recorded in Jakarta. The capital’s COVID-19 hospital bed occupancy rate has surged to 45 percent, while 14 percent of available ICUs are filled.
The government said the majority of COVID-19 patients in hospital care have mild symptoms or are asymptomatic. It’s calling on health facilities to limit hospital admissions for people actually at risk from the disease.
Indonesia has recorded 1,998 Omicron cases thus far. Of those, the majority have recovered or are expected to recover, but three people with underlying health conditions have died.
Absolute villainy
The Corruption Eradication Commission (KPK) this week arrested the regent of Langkat, Terbit Rencana Perangin-Angin, over suspicion of receiving bribes. The spotlight on the case quickly turned to the discovery of prison cells in his residence, which housed at least 40 people.
Police initially said that the regent ran an unregistered rehabilitation facility for drug addicts. But labor groups said they had received reports that the inhabitants of the cells had been forced into slavery at the regent’s palm oil plantation.
Authorities also found endangered wildlife being kept in the regent’s residence, including an orangutan and several rare birds.
Terbit is facing up to 20 years in prison for graft, but may be slapped with additional charges for human trafficking and the endangerment of protected wildlife.
Sick doctor
In another high profile criminal case, a doctor in Semarang, Central Java was sentenced to six months in prison after he was found guilty of ejaculating onto his roommates’ food.
The victims used a hidden camera to catch the doctor doing the nasty deed in 2020. They are appealing against the sentence as indecency is punishable by up to two years and eight months in prison under the Criminal Code (KUHP).
Deadly rage
In Jakarta, five men aged 18-23 were arrested for assaulting and killing an 89-year-old man. Video footage had circulated showing the suspects with at least a dozen other motorcyclists chasing after the octogenarian’s car, accusing him of theft.
Police said the victim was not a thief because he was driving his own car. Instead, he had scraped his car against a motorcycle, triggering the motorcyclists’ angry mob mentality. Police say more suspects could be announced soon.
Road tragedy
Four people were killed and at least 30 were wounded when a truck, which was said to have experienced brake failure, rammed into several vehicles that stopped for a red light at an intersection in Balikpapan, East Kalimantan.
The driver, who was carrying a fake driver’s license, may face up to six years for fatal negligent driving, and an additional six years for falsifying an official document.
Recommended read
Soe Hok Gie’s diary: The life of celebrated Chinese-Indonesian intellectual, anarchist, and activist (Coconuts Jakarta)
Gie may have been viewed as a headstrong radical by the powers that be. But he was shaped by the grim reality of his surroundings, constantly bearing witness to suffering among the working class. The post-National revolution era where Soekarno, Indonesia’s founding father, and his cronies seized power was to blame.
Top Coconuts Jakarta stories this week
At least 5 dead as truck crashes into multiple vehicles in Balikpapan
Indonesian child actor Matthew White passes away at 12 years old
Indonesian doctor gets 6 months for ejaculating on friends’ food
Top Coconuts Bali stories this week
