Billionaires almost Doubles in 1 Year

More than 12 years ago, Indonesia was struck by one of the worst global economic crisis that toppled the 32-years of authoritarian rule of former President Soeharto.

Since then, Indonesia became one of the largest democratic country in the world, and a very liberal economic system was adopted. Politics became top priority and the economy became less important..
 
This sudden change has caused mismanagement of the country, so many bad things occurred i.e. abuse of power and corruption by government officials, members of parliament and the legislative bodies.    

Due to the said mismanagement, the country's very rich natural resources have only been enjoyed by few people. While the majority of the people are poor.

In this regards, Bloomberg reported (below) that the number of rich people in Indonesia has almost doubles in just 1 year.

I hope that in the future there will be another report which shows that the number of middle class people, i.e. those whose economic conditions are somewhere between the poor and the rich, also increased significantly.

Number of Indonesian billionaires nearly doubles

JAKARTA, Indonesia
 
The number of billionaires in Indonesia has nearly doubled from a dozen last year to a record 21 today -- thanks largely to booms in coal, palm oil and other commodities.

Forbes Asia also said in its December issue that the collective net of the country's 40 richest people jumped from $42 billion to an all-time high of $71 billion.

Indonesia, home to 237 million people, has one of the fastest growing economies in the region. That's thanks to a strong stock market -- boosted by the wealth of many on the list -- abundant natural resources, and consumers who are eager to spend.

The richest Indonesians were once again brothers Budi and Michael Hartono. Money generated by the Bank Central Asia, clove cigarette giant Djarum and palm oil interests gave them a combined net worth of $11 billion.

That's up from $7 billion last year.

Photo: Courtesy of Fotokita/M.Iqbal

The State of the Nation Speech

Every year on 16 August, a President of Indonesia delivers a state of the nation speech before a joint meeting of the parliament i.e. the House of Representatives and the Regional Representative Council.

Today, President Susilo Bambang Yudoyono (SBY) delivered a speech that covers various aspects in the country, such as Politics, Economy, Corruption, Terrorist, Inter-Faith relationship, etc.

There are two aspects that I would like to write here, first about Inter-Faith relationship, whereby SBY calls the Indonesian people to exercise the "true philosophy of harmonious living in a pluralistic society", and calls for religious tolerance.

SBY's statement is related to the frequent attacks by certain Moslem radical/fanatics on the activities of Christian minorities, the latest one being the attack on Christian Church in Bekasi, West Java.

Very disapointed with the way the government and law enforcement agencies handle these attacks, whereby attackers were seldom punnished, last Sunday around 1,400 Christians have protested by holding their prayer in front of the SBY official residence at the Merdeka Palace.

On the economic side, SBY said that he is optimistic that Indonesia's annual Gross Domestic Product would grow 7.7% by 2014 (currently 5-6%), this he said would create new jobs for 10.7 million people and slash poverty by 8 to 10%.

The figures mentioned are very good compared to complaints I have heard from my friends, and other people that have been reported by TVs, newspapers, radios, about the crazy price hikes of Pepper, Eggs, Chicken, Meat and so many other commodities, that have been going on for some time. Whereas the cheap things sold in the markets are mostly imported items starting from vegetables, fruits, toys, garments, etc. etc.
And then there were labour unrests, high unemployment rates, so many beggars/tramp that can be clearly seen on many corners of Jakarta and vicinity, very high crime rates, etc. etc. etc.

One thing that I am very disapointed was that SBY seems to forget about the frequent explosion of LPG Canisters that have killed and injured so many innocent people, and solution for the never ending Lapindo Mud Flow tragedy in Sidoarjo, East Java.

Nevertheless, I hope that SBY would be more firm, decisive and confident in leading his government so that all the things that he has promised during the presidential election campaigns can be fulfilled.

For details, please read the following articles :
-  SBY Calls for Religious Tolerance
-  SBY's Target to Slash Unemployment
-  Religious Minorities in Indonesia Push back 

Photo :  Courtesy of Kompas.

Survey results on Indonesia

RI ‘the most confident country’ in facing crisis!
That was the title of an article in the 24th April edition of The Jakarta Post quoting the result of survey conducted by an international survey company Nielsen which show that the Republic of Indonesia topped its Global Consumer Confidence Index with 104 points, followed by Denmark (102) & India (99).

The Jakarta Globe has quoted another survey report by Nielsen which stated that during first quarter of the year 2009, advertising spending in Indonesia has increased by 19 % compared to same period in 2008.

These results of survey bring mix feelings for me. On the one hand I am very happy that our country is not badly affected by the current global economic crisis, thus we are luckier than other countries.
On the other hand, the survey results are confusing. Because from the situations in big cities like Jakarta, Bandung, Surabaya, Medan, with their traffic jam & shopping malls packed with visitors, it can be assumed that Indonesia has not been badly affected by the current global financial crisis.
But, if we see and/or read & listened to news media reports about the decrease of export quantity, frequent lay off of workers, closing down of companies and “jumping” prices of Eggs, Rice, Vegetable, etc. then we can assume the survey results are not only confusing but perhaps misleading too.

As a conclusion I think that the above results of survey should not soften our serious efforts to overcome the impacts of the current global financial crisis which has devastated the economies of many countries of the world. They should in stead make us optimistic and more passionate to work as hard as we can to do everything we can to survive the crisis.

Abolish the IP Laws to save the Economy

Between 1960 and 1990, four Asian countries Taiwan, South Korea, Hongkong and Singapore, have developed their industries a lot much faster compared to any other countries in the world.

Many factors have been mentioned as the basis for their industrial progress, but according to Wikipedia the most determining factor is the Traditional Philosophies of the hard working people of those countries.
Meanwhile, Scripted wrote that such progress was achieved because during those years those countries have not been serious in protecting Intellectual Property (IP) right.

In this regards, I read a blog post in Legal Blog Watch about two Economists at Washington University i.e. Michele Boldrin and David Levine, who claimed to know how to revive the current economy crisis without any stimulus policy. Their proposal is to abolish the Patent, Trademark & Copyright laws which they said have discouraged innovation and prevent inventions from entering the marketplace.
In their book "Against Intellectual Property Monopoly" they said:
"So-called intellectual property is in fact an 'intellectual monopoly' that hinders rather than helps the competitive free market regime that has delivered wealth and innovation to our doorsteps,"
They said that there's plenty of protection and opportunities to make money for inventors and creators. And there are lots of ways to make money without IP.
However, the economists realized that it is impossible to eliminate the IP laws drastically, so they will propose an incremental approach to gradually reduce the scope of those laws.

Although the IP Laws may discouraged innovations and prevent inventions of certain people, especially those who have bad faith, however as any laws, the IP Laws are needed to ensure legal certainty and justice for the whole society in general.

The Jakarta Commitment

Last Monday, 12 January, 22 international financial institutions and donor countries signed The Jakarta Commitment which allows Indonesia to regulate and take the lead on all projects funded by foreign creditors.

According to Kompas, the signing of this commitment will prevent duplication of projects and will optimize debts provided by the 22 Creditors: Asian Development Bank (ADB), French Development Agency (AFD), Japan International Cooperation Agency(JICA), Korea International Cooperation Agency (KOICA), New Zealand Agency for International Development(NZAID), United States Agency for International Development (USAID), Great Britain's Department of International Development (DfID), the World Bank, the United Nations Organization, the governments of the Australia, Australia, Canada, European Union, Finland, France, Germany, Italy, Netherland, Norway, Poland and Sweden.
Indonesian owes the creditors US$ 55.77 billion in debt, consisting of US$ 33.42 billion Bilateral Debt and US$ 18.35 Multilateral Debt. This year, our government plan to get US$ 5.5 billion of Stand by Loan to be used if the government failed to sell half of the State Bonds it plans to issue totaling Rp 99.7 billion.
The most important aspect of the Jakarta Commitment is that it provide possibility for our government to use credits according to our national interest and priority, thereby the Creditors should make its credit plan based on our domestic budget and procurement of goods & services.

Now that we have to opportunity to fully decide what to so with the foreign debt, let us hope that we will be more careful and its usage would wholly be for the benefit of the Indonesian people.

Financial System Security Net

Since the last few weeks, the mass media has constantly reported about the worsening economic condition of countries like USA, Japan, European Union, although their governments have taken emergency actions to cope with the crisis. In this connection on Wednesday 15 October our President issued another emergency law to anticipate the current global economic crisis i.e Perpu 4/2008 regarding the Financial System Security Net. This law is effective on 16 October and will give power to the Central Bank (Bank Indonesia/BI) and the Department of Finance to take over Shareholder Meeting of a national bank or financial institution that failed to to function properly. Kompas reported that the Minister of Finance as ad interim Coordinating Minister for Economy Sri Mulyani made this announcement on Thursday 16 October, explaining that The main purpose is to prevent and handle crisis by Providing Financial or Funding Facility, Temporary Equity participation, Insentive and Facility to expedite solving of problems faced by the Private Sector. It would be possible for the government to issue a special financial instrument for BI, afterwards the fund will be channelled to financial institution that is facing a sistemic crisis. Such instruments consists of Providing Emergency Financial Facility and Providing Additional Share through temporary Equity Participation. If a bank received the Emergency Financial Facility, BI will be authorized to change the bank's board of directors, and place a bank under special surveilance.

With all the extra authorities given by the 3 new Perpu, the government now has all the power it needs to minimize the impact of the current global economic crisis on our economy. Let us hope that those powers will be used properly according to the laws, regulations and common sense so that our country's economy will recover soon.

Image: FreeFoto.com

Guaranteed Bank Deposit

Economic Crisis has always bring bad impact on our life, that is a well known fact! However, past experience shows that Crisis can also bring positive impact for us, in the sense that it would force us to think and make best efforts for improvements so that we can lead our lives more efficiently and effectively. With regards to the current crisis, our mass media reported this morning that on Monday 13 October, the government has issued two Decrees/emergency laws (PERPU), that would enhance people to increase their savings in the bank, enhance banks to give credits, as follows :
The First Decree amended Law No.25 Year 2004 regarding Saving Guarantee Institution, that increased the amount of Guaranteed Saving Deposits from One Hundred Million Rupiah to Two Billion Rupiah. According to the Minister of Finance Sri Mulyani, this means an increase in guaranteed bank deposits from 10% to 97% of bank deposits owned by 81 Million Depositors.
The Second Decree amended Law No. 3 Year 2004 regarding Bank Indonesia, that eased the condition for banks to obtain Bridging Loans from the Central Bank (Bank Indonesia). Currently, only High Quality and Liquid Assets, among others Certificate of Bank Indonesia and State Bonds, can be used as collateral for Bridging Loans. Now, banks may use their smooth collectible credit assets (Performing Loan) as Collateral.
Actually there is an additional Decree which amend the Law Bill regarding Financial System Security Net which has just been brought to the parliament (DPR).
The above decrees became effective and came into force immediately after their signing by the President on Monday, 13 October 2008.

The 20 fold increase in the amount of Saving Deposits guaranteed by the government will surely bring peace of mind to everyone who has Bank Deposits, but there is no guarantee that it would totally prevent people from buying USDollars. Whilst the ease in condition for Bridging Loans will provide better opportunity for the banks to get broader financial source, thereby making it possible for the banks to provide more loans.

Suspension of the JSX

Headlines of today's newspapers are dominated by the decision of the Jakarta Stock Exchange to suspend all transactions on Wednesday, 8 October at 11 am, after the Stock Index plummeted more than 10%. According to the President Director of JSX Erry Firmansyah, the suspension has been made because transaction has developed irrationally, although the value of transaction is not very big i.e. only below Rp 1 Trillion, but the Stock Index dropped very sharply. Actually the Stock Index has shown indication to drop since Monday 6 October, and it even droped to more than 10% on Tuesday 7 October at 15.29, but considering that it was almost closing time, no
suspension was made. He further said that the cause of the problem is the U.S economic crisis. Considering this fact, President SBY has instructed 14 State Owned Enterprises listed in JSX to buy back its shares from the public. Meanwhile, on Tuesday 7 October, the Central Bank has increased the interest rate to 0.25%, which is contrary to what has been done by other countries' Central Banks that have cut their interest rates.

In view of the above, I felt that the devastation caused by the panick selling of stocks could have been prevented or at least minimised if the suspension of JSX has been done on Monday or Tuesday when the Index has fallen rapidly. The late suspension has enabled spectulators to take advantage by selling huge quantity of stocks causing great panick among other traders. Now that the 'water is under the bridge' let us hope & pray that the government will carry out a better coordinated bail out plan for this problem.