The fall of state-owned giants | BRI rights issue | The great disconnect (Sept 17-24)
Welcome to a free edition of Indonesia Intelligencer!
Hello Coconauts!
It’s the last edition of Indonesia Intelligencer of the month, which means that this one is going out as a free to read for all. Do hit subscribe if you want to keep abreast of the most important weekly updates on economy, politics, business, and more in Indonesia.
This week, we talk about a high-profile internet outage, a smear campaign in prison involving human excrement, economic growth projections for Indonesia, and more. Strap in, and let’s embark on a quest for knowledge.
Stay safe, stay informed, and we’ll see you next week!
Business and the economy
Just how fast are we growing?
Bank Indonesia (BI) this week maintained its benchmark interest rate at the record low 3.5 percent — where it has been since February — amid an expectation of a robust economic recovery following the mid-year devastating COVID-19 wave.
Mobility in Indonesia has risen to the highest level in ASEAN amid declining COVID-19 infections, and the decision to hold the rate was seen as key to maintain rupiah stability and efforts to boost private consumption.
On the other hand, the Asian Development Bank (ADB) cautioned against over-optimism in Indonesia, downgrading its projection for the country’s annual GDP growth by one whole point to 3.5 percent.
The ADB said it lowered its forecast for Indonesia due to existing mobility restrictions, which have put pressure on the country's economy and people's purchasing power.
G20 recovery focus
Indonesia says it’s keen to push the world’s biggest nations towards better coordination on global policies to recover the economy when it assumes presidency in the G20 intergovernmental forum in late 2021.
Other priorities put on the table by Indonesia include focus on cross-border payments, digitalization, and financial inclusion.
SOE gone
Indonesia plans to shut down seven dormant state-owned enterprises (SOE) by the end of the year, putting an end to years of uncertainty for employees in limbo at the non-functioning companies.
The SOEs in the termination list are Merpati Airlines (which had been rumored for a relaunch in recent years), glass bottle makers PT Iglas, construction firm PT Istaka Karya, paper company PT Kertas Kraft Aceh, textile firm PT Industri Sandang Nusantara, ship lessors PANN, and paper producers PT Kertas Leces.
Bracing for Evergrande fallout
Finance Minister Sri Mulyani says the government is wary of Chinese property giant Evergrande’s default risk, which could have knock-on effects on the global economy, including Indonesia’s.
BI Governor Perry Warjiyo said the risk surrounding Evergrande, which is on the brink of collapse under its US$300 billion debt, could contribute to further global economic uncertainty and undo the positive domestic economy sentiment that has been achieved in Indonesia lately.
Palm oil moratorium ends
A 2018 moratorium on new palm oil plantation permits expired this week, leaving the issue to be regulated by a job creation law that activists have roundly criticized for disregarding environmental considerations in favor of capital gains.
Enforcement of the moratorium was not exactly without flaws, either, with one major issue being that permit-less plantations that existed before the restrictions continued to operate.
‘Historic’ rights issue
State-owned lender Bank Rakyat Indonesia (BBRI) raised IDR93 trillion (US$6.5 billion) through a rights issue invitation to current shareholders, making it the most successful rights issue ever in Southeast Asia and the seventh most successful ever in the world.
The bank previously said that it will direct funds raised from the rights issue towards financial inclusivity, namely with the development of an ultra-micro business ecosystem and by expanding its loans coverage to micro and small businesses.
The great disconnect
Customers of state-owned internet service provider Indihome suffered the cruelty of slow or no connection over the past week after service was hugely disrupted due to a technical issue in a major undersea fiber optic cable.
IndiHome has promised customers a bill deadline extension and no penalty for late fees as compensation, while assuring the public that connection has been fully restored.
Recommended reads
Even as Indonesia wins cautious praise from some green groups for ambitious plans to cut carbon emissions, the world's biggest exporter of thermal coal shows no sign of weaning itself off the polluting fuel any time soon.
Fed tapering: Indonesia's economy deemed fairly resilient (The Jakarta Post)
A much stronger current account should, in principle, help Indonesia deal with the effects of a United States Federal Reserve (Fed) taper better than it did in 2013, after the last financial crisis. This time around, however, the COVID-19 pandemic has created new vulnerabilities.
Gig workers are uncertain, scared, and barely scraping by (Rest of World)
Gig work is stressful and fragile; it pays relatively well, but it also costs workers a lot in fuel, data, and insurance. Workers, whether driving a taxi in Ethiopia or a truck in Indonesia, don’t feel they can turn down gigs, meaning that it’s rarely as flexible as the companies make out.
Across the archipelago
Back 2 school 2 soon?
Over 1,000 schools have self-reported COVID-19 cases since schools commenced limited face-to-face learning in July, according to a survey of 46,500 schools by the Education Ministry.
Almost half of the schools with COVID-19 clusters were elementary schools, where 6,908 students have tested positive. In Indonesia, children under the age of 12 are not yet eligible for COVID-19 vaccination.
The real extent or potential for an outbreak from the education sector has yet to be accurately measured, as it’s only now that regional governments are calling for widespread testing and tracing in schools. The Education Ministry previously insisted on reopening schools for the sake of children’s mental health, despite concerns from health experts.
Bi-weekly PPKM
The government will no longer announce weekly extensions to the Enforcement of Restrictions on Public Activities (PPKM) and instead will make it a bi-weekly occurrence, particularly as no region in Java and Bali are now under Level 4 of restrictions.
The latest PPKM extension also came with further easing of restrictions, most notably that malls in major cities in Java, including Jakarta, are now allowed to let children under the age of 12 (therefore unvaccinated) in with parental supervision.
Only Jakarta’s Soekarno-Hatta Airport and Manado’s Sam Ratulangi Airport have been designated as entry points for international travelers by air, leaving Bali to wonder about its exclusion despite reports picking up steam that it’s ready to reopen to foreign tourists soon.
Luhut’s Papua ties
Senior Minister Luhut Pandjaitan is suing two high-profile activists to the tune of IDR100 billion (US$7 million) for defamation, after they cited a study by environmental groups that the politician, along with other former military generals, has business ties to gold mines in Papua.
The ties have led to increased Indonesian military presence in the area in recent years, which, in turn, have caused a surge in clashes with insurgency groups, the study said. The activists are not backing down amid the lawsuit, and say they intend to uncover the truth.
Smear campaign
Graft convict/police general Napoleon Bonaparte smeared his own feces onto the face of an alleged blasphemer of Islam, Muhammad Kace, at a Jakarta detention facility this week.
Napoleon, who is serving four years in prison for receiving a bribe, said he was offended by Kace’s insulting claims about Islam’s Holy Prophet Muhammad. Kace is facing up to six years in prison for blasphemy.
Lack of collective spirit
Indonesia’s 2022 public holidays calendar released this week notably lacked a single collective leave day, as the government has yet to decide which to discard and which to keep to avoid giving Indonesians extended holidays and risking further COVID-19 outbreaks.
In 2021, the government scrapped most collective leave days along the way, with the long Eid holiday in May, along with the emergence of the Delta variant, were believed to be the main drivers of the most devastating wave of COVID-19 the country had ever seen between June and August.
Recommended reads
Indonesia wants to ban backpackers from Bali, but will a focus on ‘quality’ tourists pay off? (South China Morning Post)
While reports of badly behaved overseas guests mean some back the decision, others say it’s a move away from Bali’s history that may further hit business.
Cut off: Indonesian men struggle to access vasectomies (The Jakarta Post)
From 2016 to 2020, 34-year-old tax specialist Rahan Galileo asked nine doctors for a vasectomy. They all refused. Vasectomies remain unpopular and difficult to access in Indonesia. “‘What if something happens to one of your kids? If that’s the case, you could still have more children,’” 34-year-old tax specialist Rahan Galileo recalled his doctor as saying before declining to perform a vasectomy on him.
Top Coconuts Jakarta stories this week
Cafes, restaurants with late operating hours in Java and Bali are now allowed to open until midnight
Have we learned anything?: Indonesia reports COVID-19 clusters from over 1,000 schools
Manager of Holywings Tavern in Kemang charged for violating COVID-19 protocol
Gov’t eyes further easing of restrictions as PPKM extended in Java and Bali
Top Coconuts Bali stories this week
Singapore Airlines quashes reports of November return to Bali
Indonesian influencer arrested in Bali for masturbating live on social media
Odd-even traffic rule coming to Kuta, Sanur to prevent crowds
Bali vice governor wants Ngurah Rai airport to open for international flights
Ikea in Bali? Sightings of renovation project in Kuta hint at possible debut