Indonesia considers scrapping e-commerce

from negative investment list

JAKARTA (TheInsiderStories) – The Indonesia government plans to scrap e-commerce business
from the negative investment list and will allow foreign investors to enter the business to help
start-up companies to grow in the country, a government official said.

The government expects the new rule will provide wider funding opportunities for start-ups
willing to expand their businesses. Several foreign investors showed their eager to invest in e-
commerce business in the country to grab Indonesia’s large market.

Indonesia has what is called Negative Investment List, which contains industries that are
prohibited or limited for foreign investors to invest. Under Presidential Decree No. 39/2014 on
latest Negative Investment List, e-commerce business is among the industries that is closed or
limited for foreign investment. The rule imposes ownership limits with caps ranging from zero
percent to 95 percent ownership.

Usually, Indonesia reviews the negative list every two years. A number of observers and start-up
companies have called on the government to scrap the e-commerce from the list.

The Communication and Information Technology Minister Rudiantara, the discussion on the
plan to lift e-commerce from negative list will start later this year and is expected to be ready for
implementation in 2016.

Chairman of the National Investment Coordinating Board Franky Sibarani also echoes
Rudiantara’s view, stating that the government considers opening the e-commerce business for
foreign investors.

The initiative is still under discussion, whether to scrap e-commerce from the list or to open it up
to foreign investment under certain conditions

There are a number of variables that we need to assess,” Rudiantara told The Insider Stories.

He added that government considers allowing foreign investors to invest in e-commerce business
that has been established by holding shares. The government will also set up a detailed
requirement and conditions before allowing foreign investors to invest in the e-commerce
business.

Blocking foreign investment in the local e-commerce marketplace, Rudiantara said, has
hampered local players’ efforts to expand their business and benefit optimally from the market.

Currently, foreign venture capitals enter into local e-commerce by providing loans, instead of
equity. He cited the case of e-commerce giant Tokopedia which has received capital injection –
considered as loan, not as equity — worth $100 million from foreign investor SoftBank Corp of
Japan and US-based venture capital firm Sequoia Capital to maintain its place in the market.

The negative list regulation is motivated by acquisitions of key Indonesian e-commerce players
over the last few years, such as that of Dealkeren.com by US-based LivingSocial Inc. and Disdus
by US-based Groupon.

“What the government can do is allowing foreign investment in the business, while, maintaining
local ownership, let’s say at between 70 and 89 percent,” he stated.

Indonesian E-Commerce Association (idEA) data showed, Indonesia’s e-commerce market is

projected to have a total value of Rp 295 trillion ($20.07 billion) in 2016.

The growth of e-commerce is driven by the growing number of smartphone users in the country,
which is predicted to skyrocket to 103.6 million users in 2017 from around 61.2 million users
last year, market research company eMarketer reported.

Rudiantara said that he also aimed to collect $1 billion from local business tycoons to help start-
ups develop their businesses.

“I think the funds could be managed by a professional institutions such as a venture capital firm.
We aim to establish the venture capital by the end of this year,” he said. (*)

Soap operas, gossip shows

drive RI television industry
Hans Nicholas Jong, The Jakarta Post, Jakarta | National | Sat, October 10 2015, 5:14 PM

A study conducted by the Indonesian Broadcasting Commission (KPI) has concluded that the
quality of local television programming has been held back by the endless supply of cheap
sinetron (soap operas) and gossip shows.

The study, conducted between July and August this year, asked 810 respondents from 90 cities to
rank programs aired by 15 television stations. When respondents were asked to give television
programs a score between 1 and 5, the majority of them put sinetron and gossip shows at the
bottom of the list.

“[The findings from the survey] ask the country’s broadcasting stations to think about the future
of our young generation. The greater public appear to want quality content at the moment,” KPI
commissioner Bekti Nugroho said during the launch of the survey in Jakarta on Friday.

Gossip shows, locally known as infotainment, ranked lowest out of nine types of shows
subjected to the study, scoring 3.0, one full point lower than the minimum threshold of 4.0 set by
the KPI for a show to be deemed of a good quality.

Infotainment scored especially low in the aspect of respecting private life, only getting 2.57.

Soap operas did not fare much better, scoring 3.02, with the educational aspect receiving the
lowest score of 2.65.

Bekti also said that some of the respondents who have to watch soap operas on a daily basis were
aware of its bad quality and the toll that it took on the character of the country’s youth.

He claimed that sinetrons were responsible for a decline in youth morality.

“I just came back from Aceh, and many cases of sexual violence could be attributed to youth
exposure to crummy television,” he said. “Then in Jakarta, there are elementary school students
who got into brawls and got kicked in the head and died. Where did this behavior come from?
Most likely it was from imitating others. But from where? Did it come from their surroundings?”

Sinetron has been considered a cash cow for local television since the early part of the last
decade with simple and melodramatic storylines designed for the middle and lower classes.

Rajawali Televisi’s program creative development department head Fred Suban said that low-
quality content continued to dominate the television industry due to the outsize role played by
the ratings system.

“[The TV industry is] still driven by ratings,” he said on Friday.

Fred claimed that low-quality content was what people demanded.

“To improve things, the viewers’ mindset has to be shaped. In order to do that, we have to design
quality programs. But the trend hasn’t shifted in that direction because [the content] is
programmed to follow what is liked [by audiences],” he said.

In order to change the paradigm of the TV industry, the KPI is lobbying the Association of
Indonesian Advertising Agencies (P3I) to start putting ads on quality programs.

“We are slowly trying to shift the paradigm so that when advertisers are looking to advertise
their products, the paradigm is to look for quality shows,” he said on Friday.

Fred said that it would not be easy to break the habit.

“The key [to improving the quality of TV content] is [to persuade advertisers]. But [the
lobbying] is still in the early stages and it will be difficult for advertisers to want to change their
behavior. But there’s no harm in trying,” he said.

- See more at: http://www.thejakartapost.com/news/2015/10/10/soap-operas-gossip-shows-drive-ri-

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NGO calls on Indonesia
to reject upcoming WTO
meeting
Marguerite Afra, thejakartapost.com, Jakarta | National | Thu, October 15 2015, 8:02 PM

Indonesian government should reject the upcoming World Trade Organization ministerial
meeting as it is irrelevant for the global economy, an organization on global trade and investment
has said.

Indonesia for Global Justice (IGJ) research and monitoring manager Rachmi Hertanti said on
Thursday that the WTO “is prone to accommodating the interests of giant powers. Lobbying
often takes place with only several developed countries and their allies. Trade-offs of interests
are done under the table.”

The WTO’s 10th meeting, scheduled on Dec 15-18 in Nairobi, Kenya, would follow up the
unsolved market access for the least developing countries (LDCs) and facilitation issues, and
also achieving a permanent solution for a public stockholding proposal.

If the meeting were to take place, Rachmi said Indonesia should push its agenda on food security
and defend its agricultural interest from developed countries.

“The issue at stake since the formation of the WTO has always been agriculture. It’s the
disagreement between developing countries with their ideals of food sovereignty and developed
countries with their ambitious market expansions,” she said during a press conference.

Initiated at the ninth WTO ministerial meeting by 33 developing countries (G33) in Bali in 2013,
this proposal called for new rules on public stockholding for food security purposes and domestic
food aid.

G33 asked for more flexible rules for farm subsidies in order to support poor farmers, “but they
failed to negotiate with developed countries who held their interests on trade facilitation,”
Rachmi said.

“President Joko Widodo should better use this opportunity to fight for the public stockholding
proposal. A permanent solution on food security should be achieved because it is related to the
well-being of our people,” she added.

- See more at: http://www.thejakartapost.com/news/2015/10/15/ngo-calls-indonesia-reject-upcoming-

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High speed train project
to have effect on nearby
cities
The Jakarta Post, Jakarta | Business | Sat, October 17 2015, 5:25 PM
Business News

 Government fails to stop development disparity, says INDEF

 Pertagas looks beyond Java for new reserves
 Maybank Indonesia vying with corporate heavyweights ahead of AEC

The Indonesian state enterprise consortium and its Chinese counterpart have promised
accelerated economic growth in the areas between Jakarta and Bandung, West Java, as both
countries signed a joint venture agreement on the controversial Jakarta-Bandung high-speed rail
project on Friday.

During the signing, state enterprises consortium PT Pilar Sinergi BUMN Indonesia, comprised of
state construction firm PT Wijaya Karya, state railway operator PT Kereta Api Indonesia (KAI),
toll-road operator PT Jasa Marga and state plantation firm PT Perkebunan Nusantara VIII, also
formed a joint venture with China Railway International called PT Kereta Cepat Indonesia
China.

“With the signing, we have started a new episode of railways and transportation in the country,
along with the development of a corridor where business and economic growth centers will be
developed,” said PT Pilar Sinergi BUMN Indonesia chairman Sahala Lumban Gaol.

The high-speed train, which will run at over 250 kilometers per hour on a 140-kilometer-long
track, will pass eight stations, including Gambir, Manggarai and Halim Perdanakusuma in
Jakarta and Karawang, Walini and Gedebage in West Java. However, Sahala said the train would
service four stations in its first phase of operation.

It is expected to reduce congestion as well as ease movement between the two cities.

The railway project, with an estimated cost of US$5.5 billion, is slated to begin construction by
2016 and be finished by 2018, according to PT Wijaya Karya president director Bintang
Perbowo.

Bintang added that the development of the high-speed railway could create new residences
around the transit areas, with its transit-oriented development (TOD) planning that is integrated
with the railway.

“With these new areas being opened, people will choose to live there. There will also be
development of a new city, such as in Walini,” he said, adding that the places would be more
attractive as they could be reached in a more time-efficient manner after the railway
development.

Walini, a hillside area near Bandung, used to be a tea-producing area but has become
unproductive. The area is expected to be utilized as a business center and residential area in the
future. Some parts of Walini implicated in the project belong to PT Perkebunan Nusantara VIII.

The state enterprises also pinned their hopes on accelerated development in Karawang, which is
already known as an industrial area. The Indonesian consortium will have 60 percent of the
venture, while its Chinese counterpart will own 40 percent.

Meanwhile, three quarters of the funding will come from the China Development Bank(CDB),
which is expected to sign the loan agreement by the end of November.

The high-speed train project sparked controversy following Indonesia’s decision to reject a
proposal from Japan in favor of China, as the world’s second-largest economy agreed to a
business-to-business (B2B) scheme instead of a government-to-government(G2G) scheme.

The Indonesian government insisted that the project would only run if it did not require any state
funds, guarantee, or state capital injection (PMN), which could not be fulfilled by the competing
country.

Infrastructure development has been one of the main focuses of President Joko “Jokowi”
Widodo to boost economic growth, which hit a six-year low of 4.67 percent in the second quarter
of the year.

Meanwhile, Chinese Ambassador to Indonesia Xie Feng said that going forward, the
development would be a landmark project for the countries’ strategic partnership.

“This will be our single biggest project and the most important early harvest in the alignment of
our development strategies,” he said. (fsu)

- See more at: http://www.thejakartapost.com/news/2015/10/17/high-speed-train-project-have-

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