GENERAL NEWS AND HEADLINES

Joint regulation issued on election supervision
The Jakarta Post, p. 3 

The National Police chief, the attorney general and the head of the Elections Supervisory Agency (Bawaslu) signed on Monday a new joint regulation on integrated law enforcement centers (Sentra Gakkumdu) to supervise the 2020 regional elections in December.

The joint regulation consists of several adjustments, including on the implementation of health protocols during the regional elections. However, no further details regarding the changes have been provided yet.

“We face new challenges for the upcoming 2020 regional elections due to the pandemic, especially in collecting evidence on election violation cases, which is due in five days,” the head of Bawaslu, Abhan, said during a meeting on Monday.

He said the pandemic might hinder investigations of suspects due to the physical distancing policy. “For example, when we receive a report [on a possible violation] and we need to summon someone [for an in-person interview] but we can’t guarantee that the Bawaslu office is COVID-19-free, that person might be worried and refuse to come,” said Abhan.  

He added that 309 regions were set to supervise the regional elections. However, only 270 of them – nine provinces, 224 regencies and 37 cities – are registered to participate in the 2020 regional elections. “Therefore, we need to pay attention to possible election violations in the 309 regions, and not just in the 270 regions,” he said.

 

Jokowi trusts state-owned enterprises minister more than health minister
Koran Tempo

Following the appointment of State-Owned Enterprises Minister Erick Thohir to lead the COVID-19 handling and national economic recovery committee by President Joko “Jokowi” Widodo, political experts have deemed that while Jokowi’s faith in Minister Erick had increased, his trust in Health Minister Terawan Agus Putranto had dwindled.

Indonesia Political Opinion executive director Dedi Kurnia Syah Putra said Jokowi appointed Coordinating Economic Affairs Minister Airlangga Hartarto as chair of the committee and Erick as the committee’s chief executive. “The appointment of Airlangga and Erick was a matter of political trust,” Dedi said on Tuesday.

Dedi suspected that trust in Minister Terawan has faded due to his considerable inability to overcome the pandemic. Meanwhile, Erick is considered the most important minister in the Cabinet as he leads the ministry with the most assets. Thus, Erick’s direct involvement in the committee is expected to restore the economy more quickly.

According to Dedi, the new position provides Erick with an opportunity to showcase his abilities and, if successful, Erick may gain political advantage in the next administration.

 

Public trust in health minister drops
Media Indonesia, p. 3 

In a survey released by pollster Indikator Politik Indonesia, it was found that the public has low trust in Health Minister Terawan Agus Putranto. Public trust in Terawan fell by 58 percent in May 2020. Now, the public’s trust in Terawan is recorded at 38.9 percent.

“Public trust in the Health Ministry in its tackling of the pandemic tends to be low but has shown to be even lower than previous findings,” Indikator Politik Indonesia executive director Burhanuddin Mahtadi said on Tuesday.

According to the survey, however, there is still a high level of trust in President Joko “Jokowi” Widodo, with public confidence reaching 60.9 percent. This, however, is a drop from the 67.7 percent recorded in May 2020.

The national survey was conducted between July 13-16, 2020. The survey was conducted by telephone using a sample of 1,200 respondents.

 

More strategic steps needed to hunt down graft fugitive Joko Tjandra
Kompas, p. 2; Republika, p. 2 

One month has passed since graft fugitive Joko Tjandra entered Indonesia and roamed the country undetected, yet no significant results have been yielded by efforts to hunt him down. A number of ministries and law enforcement agencies were asked to immediately take more strategic measures and that all parties involved in Joko’s escape must be pressed with criminal charges.

In a limited meeting with the Foreign Ministry, the Law and Human Rights Ministry, the Attorney General’s Office (AGO), the National Police and the State Intelligence Agency (BIN) on Monday night, Coordinating Political, Legal and Security Affairs Minister Mahfud MD asked the ministries to cooperate with law enforcement to hunt down Joko.

AGO spokesperson Hari Setiyono said on Tuesday that the hunt for Joko was still under way and had not been affected by Joko’s request to the Supreme Court for a review. Moreover, acting spokesperson of the Foreign Ministry said the ministry was ready to cooperate in the investigation, reassuring that it could provide help to bring Joko back to Indonesia through.

Previously, Joko Tjandra’s attorney Anita Kolopaking stated that Joko was living comfortably in Malaysia and had no intention of returning to Indonesia.

 

Majority of Indonesians no longer want PSBB
The Jakarta Post, p. 2 

Most Indonesians no longer want large-scale social restrictions (PSBB) to be in force as the country takes gradual steps to reopen the economy, a survey conducted by Jakarta-based pollster Indikator Politik Indonesia has shown.

The survey, which was conducted from July 13 to 16 and polled 1,200 respondents from the country's 34 provinces, found that 60.6 percent of respondents said PSBB should be stopped to support the economy, a significant increase from the 43 percent who responded in the same way in a survey in May.

Only 34.7 percent of the July respondents said they wanted the government to maintain the restrictions – down from 50.6 percent in the May survey.

"Compared to previous findings, there was a significant decrease in groups that supported PSBB. Likewise, there was a significant increase in groups that wanted the government to stop PSBB," the pollster's executive director, Burhanuddin Muhtadi, said in a virtual press conference on Tuesday.

The survey also found that 47.9 percent of respondents wanted the government to prioritize economic issues over health. A sharp increase from 33.9 percent in May.

Responding to the survey, pulmonologist Erlina Burhan of the Indonesian Medical Association (IDI) COVID-19 task force said that although people no longer wanted restrictions, the number of cases was continuing to surge. She noted that Indonesia had surpassed China in officially recorded COVID-19 cases.

 

BUSINESS AND ECONOMICS NEWS AND HEADLINES

Back and forth on digital taxation
Bisnis Indonesia, headline 

The plan to impose a digital income tax will not be as smooth as the digital value-added tax (VAT), which has been implemented since July 1. The United States has requested an investigation into Indonesia’s income tax scheme for foreign digital over the top (OTT) companies. They feel that the proposed digital taxing scheme is unfair and discriminatory toward American companies.

In its last official statement, the Indonesian government said it wanted to open dialogue with all stakeholders regarding the digital service tax (DST) as mentioned in regulation No. 2/2020. This response is a cautious one, as the implementation of the DST still requires other implementing provisions and awaits a global consensus from the Organization for Economic Cooperation and Development (OECD) on taxing the digital economy. The negotiation at the international level is still far from reaching a conclusion and may face further delays.

Despite this, there have been demands to implement the digital tax income from local business players. They hope that the new tax scheme could create a level playing field for local entities to compete, especially due to the increase in demand for digital services during the COVID-19 pandemic. Digital income tax is also hoped to help increase tax revenue.

 

Stimulus disbursement to be accelerated in 2^nd half
Investor Daily, headline 

National economic recovery and COVID-19 response team chairman Airlangga Hartarto said the government would accelerate the disbursement of the Rp 695.2 trillion (US$47.38 billion) stimulus in the second half. By mid-July 2020, the highly demanded stimulus disbursement has been slow, reaching only 19.25 percent or Rp 133 trillion.

The government’s Rp 695 trillion national economic recovery (PEN) and Covid-19 mitigation stimulus consists of Rp 203.9 trillion in social assistance, Rp 123.46 trillion in stimulus for micro, small, and medium enterprises (MSMEs), Rp 120.61 trillion of business incentives, Rp 106.111 trillion for stimulus to ministries/institutions and local governments, Rp 87.55 trillion for health care, and trillion Rp 53.57 for corporate financing.

“The fiscal stimulus will be boosted soon so that it is fully disbursed by the end of 2020. The disbursement acceleration is required to trigger a multiplier effect and stimulate the economy,” Airlangga said.

He also explained that the government had spent Rp 1.07 quadrillion of budget in the first half, or 39 percent of the total Rp 2.73 quadrillion. Meanwhile, the government has targeted to collect tax revenue of Rp 1.7 quadrillion for the whole year 2020, and therefore, the budget deficit would expand to Rp 1.04 quadrillion or 6.34 percent of total gross domestic product (GDP).

 

Bosowa stalls Kookmin’s effort to become majority owner of Bukopin
Kontan, headline 

The salvaging of problem-ridden Bank Bukopin is put in balance after existing controlling shareholder PT Bosowo Corporindo is likely to block the effort of the Financial Services Authority (OJK) to help another shareholder, Kookmin Bank of South Korea, to become the majority shareholder of the bank through private placement.

Bosowa Corporindo chief commissioner Erwin Aksa said Bosowa would reject the OJK’s suggestion that Kookmin increase its shares and become the majority through private placement. Bosowo has also threatened to take the OJK to court for its inconsistency in its effort to salvage Bukopin.

According to Erwin, OJK told Bosowa in its letter dated July 9 to ask state-owned Bank BRI to represent Bosowa in Bukopin shareholders meeting. Bosowa, however, rejected the OJK’s request through its July 9 letter because it contradicted its earlier letters, dated June 10, 11, and 16.

On June 10, the OJK said in its letter to Bosowa that Kookmin Bank had failed to meet its commitment to put money as a commitment to increase its shares in Bukopin. But the OJK retracted the July 10 letter with the following letters.

Erwin said, according to the Limited Liability Law, the decisionmakers of a company were its shareholders, and therefore, the OJK could not impose its decision on the shareholders.

OJK spokesman Anton Prawobo said the OJK respected Bosowa as a Bukopin shareholder. “However, the OJK has data and facts to consider with regard to its financial capability and commitment to save [Bukopin].”

 

Govt earns top audit grade amid scandals
The Jakarta Post, p. 1 

The Supreme Audit Agency (BPK) has given the 2019 central government’s financial report an unqualified opinion (WTP), the best audit grade, despite irregularities found in several issues, including the recent financial scandals involving state-owned insurance companies.

The rating is based on the audit of 88 financial reports from ministries, government institutions and the state treasury, according to the agency’s chairman, Agung Firman Sampurna.

Of the 88 financial reports, 85 received a WTP, compared to 81 in 2018. Meanwhile, the BPK gave a qualified opinion (WDP), the second-best audit grade, to two other financial reports and a disclaimer for one financial report.

The agency has raised concerns over the financial reports on two state-owned insurers, PT Asuransi Jiwasraya and Asuransi Angkatan Bersenjata Republik Indonesia (Asabri), stating that the government’s long-term obligation on the pension program had yet to comply with accounting standards.

“Irregularities in the pension program have been occurring for years,” Agung said. “Therefore, reform on pension funds management is crucial to managing the problems in Jiwasraya and Asabri.”

Both Jiwasraya and Asabri have been implicated in financial fiascos after losing trillions of rupiah through investment mismanagement.

Jiwasraya is embroiled in a corruption and money laundering case following its failure to pay out Rp 18 trillion (US$1.21 billion) in matured policies due in May to policyholders. Meanwhile, Asabri suffered a loss of about Rp 10 trillion from investing in stocks allegedly used for pump-and-dump schemes, sparking a similar corruption allegation.

 

Finance Ministry to limit official visits
Koran Tempo, economy and business 

The Finance Ministry has urges civil servants to conduct more meetings online and limit official visits. This directive was stated in a circular signed on July 19. The circular regulates the use of civil servants’ activity budget under “new normal” conditions.

“This is to support the standardization of online activities in all ministries/state institutions in conducting their duties during the COVID-19 pandemic,” said Finance Ministry budget director general Askolani.

The government hopes official visits will be done more selectively and according to the priority scale, citing that the procedures implemented during the WFH period could be the model for the new normal.

Nevertheless, this circular has also led to confusion. The Office of the Coordinating Maritime Affairs and Investment Minister previously stated that it planned to increase the number of official visits to help the aviation and accommodation industries. Seven tourist destinations will be prioritized as the destinations for these visits with total budget allocation of Rp 4.1 trillion distributed across seven state institutions.

The plan to increase the number of official visits has been met with criticism, especially as the number of COVID-19 cases in Indonesia rises. Finance Minister Sri Mulyani Indrawati warned that the plan needed to be coupled with a well-measured policy. Gaining consumers’ trust and increasing demand will be essential for revitalizing tourism.

Moreover, only full-service airlines and hotels with star ratings would benefit from the increase in official visits as the ministries needed to adhere to travel guidelines, said INDEF economist Bhima Yudhistira Adhinegara.

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