GENERAL NEWS AND HEADLINES

Gibran, exception to PDI-P’s own rules
The Jakarta Post, p.1

The Indonesian Democratic Party of Struggle (PDI-P) has long prided itself on being a modern political party where meritocracy is the guiding principle.

Those who have reached top positions in the party are mostly party veterans who have climbed their way up the career ladder within the decades-old political party. Even the party’s current chairperson Megawati Soekarnoputri started her career in the PDI-P in the early 1990s when the party was still under tight control by the New Order regime.

The same rule is also supposed to apply in the recruitment of party candidates to run in the 270 local elections scheduled to take place in December. On paper, the party central board requires at least three consecutive years of active membership for members to win a ticket to join a race.

PDI-P member Teguh Prakosa, 62, who has been with the party for the past 20 years and whose last position was treasurer of the party’s branch in Surakarta, Central Java, meets all the criteria and last week he finally got the central board’s nod to run for deputy mayor of the city.

But there is always an exception to any rule.

At the top of the ticket, running alongside Teguh, is the eldest son of President Joko “Jokowi” Widodo, Gibran Rakabuming Raka, a 32-year old businessman, who once swore off politics, claiming he would stick to running his catering business.

Despite this seeming aberration, PDI-P secretary general Hasto Kristiyanto said that the nomination of Gibran, along with the 269 other candidates that the party has endorsed in this year’s regional elections, should be seen as a sign of the success of its political recruitment process, one of the key functions of a political party in a democracy.

 

Political dynasties scramble for Makassar mayoral seat
Koran Tempo, Nasional

Despite having different professional backgrounds, the majority of four contending Makassar mayoral pairs are related to either central or local government officials. Their fight over the Makassar mayoral post hints that there is an ongoing squabble between local political dynasties.

Syarif Hidayatullah State Islamic University (UIN) political expert Adi Prayitno said one of the strongest political dynasties in Makassar was that of the Yasin Limpos, members of which are currently posted in a number of strategic executive and legislative posts in South Sulawesi.

Similarly, political expert Firdaus Muhammad of Alauddin UIN in Makassar said the rivalry between local dynasties in the regional election was evident in the Irman Yasin Limpo-Andi Zunnun Armin mayoral ticket. Irman is Agriculture Minister Syahrul Yasin Limpo’s younger brother, while Andi Zunnun is Golkar politician Nurdin Halid’s son.

 

Police general reportedly accompanied fugitive Djoko Tjandra to Pontianak
Koran Tempo, Nasional; Republika, p.2

The National Police’s investigation reported that the head of the Civil Servant Investigator Supervisory and Coordination Bureau at the Criminal Investigation Department (Bareskrim), Brig. Gen. Prasetyo Utomo, played a significant role in graft fugitive Djoko Tjandra’s escape to Pontianak.

Prasetyo, for one, signed a travel letter on June 18 that allowed Djoko to fly from Jakarta to Pontianak, West Kalimantan, the next day, in which Prasetyo was reportedly on the same flight as Djoko as affirmed by National Police spokesman Brig. Gen. Awi Setiyono. Prasetyo’s letter also enabled Djoko to return to Jakarta on June 22 on his capacity as a consultant.

Furthermore, Prasetyo had also reportedly assisted Djoko in acquiring a COVID-19-free letter, which is a requisite for someone who wants to travel amid the ongoing outbreak.

For his alleged role, Presetyo was removed from his post and detained for 14 days.

 

Social aid politicization reduces regional elections spirit
Media Indonesia, p.3

Elections organizers have to be able to reduce the misuse of social assistance funds (Bansos), which reportedly continue to be an illegal source of funds for political candidates nearing this year’s regional elections. The politicization of the social aid, according to political expert Nazir Salim Manik, can reduce the public’s enthusiasm for participating in the elections.

On the same occasion, Elections Supervisory Agency (Bawaslu) member M. Afifuddin said the agency did not mind the distribution of social aid during the COVID-19 epidemic as long as it was not being misused for political purposes.

 

Indonesia offers to buy Austria’s Typhoon jet fighters
The Jakarta Post, p.1; Kompas, p.3

Surprises in Indonesian defense procurement seem to have become a constant feature lately. After initial clearance from the United States State Department to buy MV-22 Osprey tilt-rotor aircraft, news has broken that Defense Minister Prabowo Subianto intends to buy jet fighters from Austria.

Austrian newspaper Die Presse reported on Sunday that Prabowo had sent a letter to his Austrian counterpart Klaudia Tanner offering to buy the country’s 15 Eurofighter Typhoon jet fighters. The letter was dated July 10 and arrived at the Austrian Defense Ministry late last week, Die Presse reported.

“As I have always been impressed by European technology and know-how, I would kindly ask your support for the following proposal, which hopefully leads to mutual benefit for our two countries,” Prabowo said in a letter circulated among various media WhatsApp groups on Monday morning. 

There has been no official confirmation from the Defense Ministry on the authenticity of the letter, though it is consistent with Die Presse’s report. Prabowo was referring to information he received from someone named WD Grosse that Austria had acquired 15 Eurofighter Typhoon jet fighters in 2002.

Prabowo said he was fully aware of the sensitivity of Typhoons in Austria, which has been in a legal fight with European defense and aerospace giant Airbus over alleged overpricing.

 

BUSINESS AND ECONOMICS NEWS AND HEADLINES

Govt sets up new joint COVID-19 response team
The Jakarta Post, headline; Koran Tempo, headline; Kontan, headline; Kompas, headline 

The government introduced on Monday a new team to tackle the public health and economic aspects of the COVID-19 pandemic as the country’s economy restarts amid a surge in cases.

The team will be led by Coordinating Economic Minister Airlangga Hartato as chairperson and State-Owned Enterprises (SOEs) Minister Erick Thohir as executive chairperson.

Head of the economic recovery task force Budi Gunadi Sadikin and head of the COVID-19 response task force Doni Monardo will join the team to coordinate and integrate the country’s policies on handling the pandemic from the public health and economic aspects.

Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira said the new team indicated that old institutions were not fully functional.

Erick Thohir leads COVID-19 policy committee
Investor Daily, headline 

State-Owned Enterprise (SOE) Minister Erick Thohir has been appointed the executive chairperson of the policy committee, a part of the national economic recovery and COVID-19 response team. Although Coordinating Economic Minister Airlangga Hartato is the leader of the team, Erick will directly report to President Joko “Jokowi” Widodo.

The team was stipulated in Presidential Regulation (Perpres) No. 82/2020 to accelerate COVID-19 mitigation and national economic recovery. Erick was appointed executive chairperson because SOEs control one-third of the country’s economy.

The economic recovery from the COVID-19 impact has been taking too long. Therefore, President Jokowi has assigned the response team to design economic recovery policies and execute the programs so people’s health and the economy can recover hand-in-hand.

On the team, Erick is responsible for integrating and coordinating strategic policy implementation to revive the economy.

Working capital loans fall as manufacturing slows down
Bisnis Indonesia, headline 

Loan disbursement has reached the lowest point in the last two decades as the COVID-19 pandemic disrupts production. Since the pandemic, business activities and expansion plans that require new capitals have been put on hold, leading to a slowdown in working capital loan disbursement. This might be a warning sign as the government hopes to accelerate economic recovery in the second half of this year.

Based on Financial Services Authority (OJK) data, working capital loans account for 46 percent of the total loans distributed by commercial banks. This is much higher than investment loans and consumer loans, which account for 27 to 28 percent. Despite steadily growing at more than 3 percent and even reaching 6.44 percent in March, the growth of working capital loans has fallen to 1.43 percent in May 2020.

Nevertheless, as businesses have started to reboot in the second half of 2020, companies are slowly getting back on track with their business plans. Business players in the tire and footwear industry have stated their intention to tap into working capital loans to maintaining production and avoid laying off employees. The government’s policy to place sovereign debts on commercial banks is meant to boost loan growth and become the catalyst for national economic recovery.

Aside from the projected recovery of working capital loans in the second half, banks need to remain cautious and selective in distributing loans. Distributing loans to less-affected sectors will be the optimal choice to ensure distribution while safeguarding credit quality.

 

Masela moves on without Shell
Koran Tempo, economic headline 

Dutch oil and gas giant Shell plans to exit the gas-rich Masela block in the Arafura Sea by divesting its 35 percent participating interest. However, Japan’s Inpex Masela Ltd remains confident about proceeding with developing the liquefied natural gas (LNG) project.

Inpex Masela acting corporate communication manager Mochamad Kurniawan said his side was preparing the front-end engineering design (FEED) for the project. The final decision for investment in the gas site would rely on the design. If approved, stakeholders can move on to construction and start producing.

According to a source in the company, the senior management of head office Royal Dutch Shell has planned to exit the block since early 2019. Shell is changing its core business at the global level, therefore it has been letting go a number of its assets such as the Oil Sands project in Canada and Baltics LNG project in partnership with Russia’s Gazprom.

Digital tax discussion at a stalemate
Koran Tempo, headline 

Finance Minister Sri Mulyani Indrawati said that the digital tax discussion at the international level had yet to reach an agreement despite calls from countries to establish a new basis for taxation in the digital sector.

The Organization for Economic Co-operation and Development (OECD) has introduced a two-pillar approach to help reach an agreement on this issue. The first pillar is a unified approach with a focus on dividing the rights to tax corporations that operate digitally across borders. The second pillar is Global Anti-Base Erosion Tax, which will give additional rights to a jurisdiction over income lower than the effective tax rate, or not limited by other jurisdictions.

Sri Mulyani expects agreements to be reached in July, but since the United States shows reluctance, she hopes at least these two pillars can be agreed. Due to the COVID-19 pandemic, many countries have seen the need to accelerate to a digital transformation era. “Therefore, an agreement between G20 members or global agreement on international tax regime, especially in regard to the digital economy, will be crucial,” said Sri Mulyani.

The Finance Ministry previously issued a regulation as the legal basis for charging 10 percent value-added tax (VAT) on consumers of digital services from their transaction value. Six digital companies, including Amazon, Google, Netflix, and Spotify, have been ordered to start charging the VAT from Aug. 1. These companies have been registered and have a tax ID for collecting VAT charges.

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