Category: Business

Indonesia aims to emulate Norway in managing its mineral wealth

After three years leading Indonesia’s largest state-owned bank by assets, former Bank Mandiri chief executive officer Budi Gunadi Sadikin has a new role as special staff to Rini Soewandi, the Minister of State-Owned Enterprises (SOE).

In this role, which he started in late June 2016, Budi is charged with establishing a holding company made out of state-owned mining enterprises to re-do the way the government handles its future stakes in the industry.

Continue reading “Indonesia aims to emulate Norway in managing its mineral wealth”

New Pertamina chief faces one-price fuel policy challenge in a vast archipelago

The newly appointed president director of state-owned energy firm Pertamina, Elia Massa Manik, has a huge task ahead to carry out President Joko Widodo’s one-price fuel policy, in the face of inadequate infrastructure to distribute fuel to the country’s remote areas and far-flung islands in the Indonesian archipelago.

Maryati Abdullah, the national coordinator for PWYP Indonesia, a civil society coalition for energy and extractive industry governance reform, considers the policy is viable if Pertamina could import crude oil at a much more affordable price and refine it in its own refineries.

“They could start by revitalizing its existing, old refineries so they could increase its production output, while also remain committed to developing new ones,” she said.

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Pertamina refinery in Cilacap, Central Java. Photo: Pertamina.com

Widodo announced the policy in October 2016 during a visit to Yahukimo, a district near the Indonesia-Papua New Guinea border in the easternmost province of Papua. Due to the location and lack of infrastructure in Papua and the eastern part of Indonesian archipelago, fuel prices can cost up to a dozen time more from the normal price of 6,450 rupiah per liter for petrol and 5,150 rupiah per liter for solar. The policy is expected to cost Pertamina about 800 billion rupiah annually.

Fahmy Radhi, an economic energy analyst from Universitas Gadjah Mada in Yogyakarta agrees that having its own production infrastructure could give Pertamina wider fuel distribution coverage.

“If it has its own refineries, Pertamina won’t have to import up to 650,000 barrel per day. This is a huge amount that the oil and gas rent seekers have been cavorting around,” Fahmy said.

Kurtubi, a lawmaker from the House of Representatives Commission VII which oversees energy and mineral resources said as a company drawn to constitutional obligation about exploitation of the country’s natural resources should benefit the people, there is more that Pertamina has to consider in its operation than merely making a profit.

Article 33 in Indonesia’s 1945 Constitution states that “sectors of production which are important for the country and affect the life of the people shall be controlled by the state and the land, the waters and the natural riches contained therein shall be controlled by the State and exploited to the greatest prosperity of the people.”

“One-price fuel policy is a constitutional mandate. Pertamina could do it as long as the cost is efficient,” Kurtubi, who goes by one name, said.

“The new president director has to be able to operate the company without contradicting the constitution,” he added.

Kurtubi also said that cutting fuel import should be high in Pertamina’s agenda under Manik’s leadership.

“It should develop its own refineries so that Pertamina could produce its own fuel to meet the domestic demands,” Kurtubi said, adding that the existence of a refinery in a certain area could also create multiplier effects that would boost the local economy and open new jobs.

Manik was appointed to head the company during Pertamina’s general shareholders meeting at the State-Owned Enterprises Ministry in Jakarta on March 16, more than a month after then-chief executive Dwi Soetjipto and deputy director Ahmad Bambang were ousted on Feb 3 because of what the government – its majority shareholder – was a leadership problem and a lack of teamwork.

Manik, who was the president director of PT Perkebunan Nusantara (PTPN) III, the holding company of 14 state plantations firms since April 2016, is an alumnus of Bandung Institute of Technology and Asean Institute Of Management.

In his first address to Pertamina’s employees, Manik said he would focus on strengthening the company’s human resources and maintaining Pertamina’s improved performance for the past years.

Sudirman Said, the then-energy and mineral resources minister, said in 2015 that Pertamina was able to save 250 billion rupiah per day after ousted CEO Dwi in 2015 disbanded Pertamina Energy Trading Limited (Petral), a Singapore-based Pertamina subsidiary handled crude and fuel oil imports for the state energy company and was notorious for being the oil and gas rent seekers’ den.

“There are many important projects we need to execute to achieve the national energy security goal, therefore it is important to gain trust so that we can adeptly carry out the projects,” Manik said.

PWYP Indonesia had urged the government to select the new president director in a transparent, credible and independent manner, following the Feb 3 ouster of Dwi.

Maryati said the government didn’t say much about the reason they appointed Manik, but given his public track record on improving corporate efficiency, she holds a favorable view that Manik would be efficient in his human resources planning and be able to restructure various executive positions to a more effective appointments.

“We also hope he would not be swayed by certain political interests,” Maryati said.

 

Alvin Tjitrowirjo: Product Designer with a Mission

A lack of appreciation for locally-made products in Indonesia motivated designer Alvin Tjitrowirjo to create a contemporary design language steeped in the country’s traditions and culture for his furniture brand. Continue reading “Alvin Tjitrowirjo: Product Designer with a Mission”

Indonesian pilots see the sky is limited

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Students train to fly an aircraft at the state-owned Indonesian Aviation Institute (STPI) in Curug, Banten. Photo courtesy of STPI

The Indonesian transportation ministry plans to kick off development of new airports in 13 locations from 2017 to 2019 to meet Indonesia’s growing appetite for infrastructure and to increase the number of people using air transport for domestic and international travel. Continue reading “Indonesian pilots see the sky is limited”

It’s all about precision in Germany’s optical valley

Jena – High-precision laser light technology for industrial mass production and manufacturing is just one of the technologies that is coming out of Jena, the optical valley in east German state of Thuringia.

Located in the deep valley of the Saale River, Jena is the cradle of innovative, light-based technologies that began more than 150 years ago. It is also a European center for research in the field of optics and photonics, where ultrashort pulse laser for a more precise, subsurface cutting is being produced around the clock, thus earning its other nickname, “city of light”.

“The precise cutting allows smartphones and tablets to have more scratch resistance and robust display and camera. The laser pulses are also used for precise cutting of holes, such as for speakers, on hardened glass of smartphones and tablet displays,” said Stefan Nolte, a professor at the Institute of Applied Physics, Abbe Center of Photonics, Friedrich Schiller University Jena, told a group of international journalists earlier this year.

“Drilling of fuel injection nozzles also uses ultrashort pulse laser as it allows adapted holes for an optimized gas distribution, which leads to lower emissions and reduces consumption by up to 20 percent,” Nolte added.

Dr. Christian Helgert, chief executive officer of the Abbe Center of Photonics and Abbe School of Photonics said photonic technology is ubiquitous in everyday life, encompassing communication, health, environment, mobility, data management and security with a major impact on the world economy, creating 300 billion euro in the global market.

“Growth in the photonics industry is more than doubled of the worldwide GDP between 2005 and 2011,” Helgert said.

Thanks to its three most famous residents Otto Schott, Ernst Karl Abbe and Carl Zeiss, Jena developed into an industrial city producing binocular, glasses and microscope during the second half of the 19th century. Zeiss set up an optics workshop in 1846 and centuries later it has become a household name for manufacturing optical systems, industrial measurements and medical devices, which added weight to Jena’s reputation as a research, scientific and economic hub in east German that the trio established.

Out of Zeiss’ approximately 25,000 employees worldwide, 10 percent of them are in research and technology, said Ulrich Simon, senior vice president of corporate research and technology of Zeiss.

“Our DNA is innovation. 80 percent of smartphones would not exist today if Zeiss didn’t exist,” he added.

Jena’s optical and optoelectronic industry has 175 enterprises with a turnover of 2.85 billion euro and 10 percent rate of research and development. The industry employs 15,200 people, including 4,500 scientists in 1,300 research institutes.

“The universities and research institutes provide the optical environment and big level of competency in terms of optical technology and development,” Simon said.

As Germany is bracing for a demographic change when the country will have less young people and more of those over 60, research institutes have also been focusing their works on technology that would suit the needs of an aging society.

The ultrashort laser for subsurface cutting, for example, would be useful for a more precise eye surgery while at Zeiss, one of the examples of medical technology used in its vision care is adaptive introduction lens to regain full vision after cataract surgery.

Hans-Joachim Hennings, the director general of research and innovation at the Saxony-Anhalt state ministry for science and economy, said the state is channeling 20 million euro from 2016 to 2020 to fund research on aging society topics.

“It will be used among other for research on early diagnosis of neurodegenerative diseases and development of phytopharmaceutical products and other effective substances against dementia,” Hennings said.

A research campus in Magdeburg, the capital city of Saxony-Anhalt also places quality of life for an aging society as the highest relevance on its biomedical engineering project.

The campus, which is established on a public-private partnership between the Otto-von-Guericke-University Magdeburg, Siemens Healthcare GmbH and the Stimulate Association, aims to develop new imaging devices, intraoperative imaging methods, navigation devices, treatment planning and procedures for minimally invasive, image-guided interventions to treat cancer, cardiovascular and neurological diseases.

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Urte Kägebein, a doctoral student at the Stimulate research campus showed how a magnetic resonance imaging machine has a very high magnetic field. Photo: The Parrot/Ismira Lutfia Tisnadibrata

Urte Kägebein, an electrical engineering doctoral student and researcher for interventional magnetic resonance imaging (MRI) at the Stimulate research campus is working on a research to improve the current available MRI system to treat cancer.

She said that her research project aims to track the precise location of a tumor. If the tumor is located, the treatment would be minimally invasive and patients would not need to go through chemotherapy since the treatment would only need to puncture a needle to reach the tumor and heat the needle with 90 degrees heat to destroy the tumor.

“It would be a through-and-through puncture. The needle is inserted where the skin is marked and it cuts through the fat tissue to reach the target,” she said.

“We could only do this if we know exactly where the tumor is and if the tumor is on a precise location,” Kägebein added.

Precise visualization of tumors is also a focal point in research at Helmholtz-Zentrum Dresden-Rossendorf (HZDR), a research centre in Dresden and a member of one of Germany’s top four research organisations, Helmholtz Association, which focus its research on six fields including matter and health.

HZDR emphasises its health research on cancer and the center’s interdisciplinary environment allows matter and health scientists to collaborate, such as on laser acceleration of ion beams for research in a therapy known as radiation oncology or the therapeutic use of ionising radiation to treat cancer.

Professor Thomas Cowan, the director of HZDR’s Institute of Radiation Physics said the research is a reflection of a major question that drives HZDR’s work on health research; “how can malignant tumors be more precisely visualised, characterised and more effectively treated?”

 

After IKEA, French designer Pierre Cardin loses trademark lawsuit in Indonesia

French fashion house Pierre Cardin has lost a lawsuit against an Indonesian businessman who has been using the name “Pierre Cardin” for his fashion products.

The Supreme Court ruled that the local version of Pierre Cardin was registered in 1977 and that it “does not piggyback on another brand’s fame.”

The French designer had registered the brand “Pierre Cardin” in Indonesia in 2009 and extended the patent registration in 2014.

Earlier this year, an Indonesian furniture company won the right to use the Swedish IKEA brand name after the Supreme Court ruled in favour of its lawsuit against the home furnishing giant.

IKEA opened its first store in Indonesia, located at Alam Sutera just southwest of Jakarta, in 2014 and has been able to continue to use the brand despite the court ruling.

The case involving Pierre Cardin, named after the designer who started his business empire in 1950, lodged a lawsuit  with the Central Jakarta commercial court against Alexander Satryo Wibowo for producing goods with the same brand.

Pierre Cardin is registered in countries around the world such as Australia, Brazil, Hong Kong, Japan, Denmark, Korea, Italy, Malaysia, Singapore, the United States, Britain, and Indonesia.

But the court court threw out the lawsuit on June 9, 2015. Pierre Cardin appealed the ruling.

The Supreme Court “rejects the plaintiff’s appeal of cessation.”

“The defendant always makes sure to include the words ‘product by PT Gudang Rejeki'” to make them different from genuine Pierre Cardin products,” according to the judges.

Swedish furniture giant IKEA recently lost a lawsuit  filed by a company from Surabaya that insists it has the right to the IKEA brand in Indonesia. The Supreme Court rejected the Scandinavian company’s appeal.

The Surabaya company, PT Ratania Equator had registered the IKEA trademark as an acronym for “Intan Khatulistiwa Esa Abadi”.

IKEA trademarked its name in Indonesia on October 9, 2006, and then again on October 27, 2010.

Electrifying Asean with interconnected energy grid

Vientiane – Four Asean member states are working on a power grid interconnection project between Laos, Thailand, Malaysia and Singapore as part of regional efforts to ensure energy security.

Laos deputy minister of energy and mines, Viraponh Viravong said working groups on the first 100 Mw that uses existing facilities are meeting regularly to make this interconnection a reality.

A 2013 report from Jakarta-based Economic Research Institute on Asean and East Asia (ERIA) showed that the estimated possible cumulative benefit range from this project would be approximately US$ 20 billion.

“A memorandum of understanding amongst the four countries is planned to be signed in September in Myanmar during the Asean Energy Ministers meeting,” said Viraponh during a discussion on Asean energy challenge at the 5th ERIA Editors’ Roundtable held earlier this month in Vientiane, jointly organized by ERIA, Lao Journalists’ Association and Vientiane Times.

The deputy minister said Laos produces almost 100% its domestic electricity supply from hydropower. In 2015, its household electrification was 89% and would rise to 95% by 2020.

“Combining electricty production from large hydropower projects for domestic use and export and interconnection with neighboring countries has proven to be cost-effective for Laos,” he said, adding that the country also projects to export up tp 10,000 megawatt to Thailand, Vietnam, Cambodia and Myanmar by 2020 or about 50,000 GWh annually, which would also contribute to energy security in the region.

“Energy security tops the energy policy [in Laos], aimed at improving energy diversification, energy conservation programs and intensifying efforts to identify and develop energy resources,” Viraponh added.

However, another challenge is ensuring affordable supplies to support continued economic growth and development in the country, which aims to gain eligibility to graduate from least developing countries status by 2020 and to achieve the ranking as an upper-middle-income country by 2030.

Landlocked Laos has a population of 6.49 million people and from 2011 to 2015, its gross domestic product has grown on average of 7.4% while its electricity demand has increased by more than 14%, thus making energy security fundamental for its national development because energy supports and sustains economic and industrial activities.

ERIA president Professor Hidetoshi Nishimura said ERIA has completed a long-term development vision for Laos industrial development strategies 2016 – 2030.

“In cooperation with Lao PDR government and research institute, Lao PDR will shift from landlocked country to land-linked country,” Professor Nishimura said.

With all Asean member states, except for Brunei, being net importers of energy, the regional bloc faced a serious challenge in energy security, which is essential to boost its integrated economy and regional development.

The bloc’s current primary demand for energy is about 550 Mtoe or million ton of oil equivalent, which supplies its 600 million population across the 10 member states and generates 1,166 Mt of energy-related Co2 emmission. According to various data from Asian Development Bank, International Energy Agency and ERIA, the primary energy demand in the region by 2035 would increase to 1,004 Mtoe, generate 2,300 C02 emmission used by 736 million population.

The Asean 2016 chair Laos also noted that common energy challenge in the region include improving energy security and sustainability of energy use as well as reducing economic costs, though energy policies in the ten member states vary as they reflect the differences in political direction, economic development and natural resources assets.

Energy is rated as the number one out of the top 10 problems that Asia would face over the next 50 years, followed by water, food, environment and poverty, said Venkatachalam Anbumozhi, a senior energy economist at ERIA.

He noted that the success of development in the region would also rely on the rate of electricity consumption.

“Human development index and energy consumption are linked. Countries with high human development index have higher energy consumption compared to those who don’t,” Anbumozhi said, adding that Singapore and Brunei, whose energy consumption are almost 8,000 kWh per capita, were the two Asean countries that belong in the same group of countries that have high energy consumption and human development index, such as Japan, Australia and the United States.

“Energy security concerns grow in Asean under growing demand circumstances,” he said.

The concerns grow as Asean’s energy supplies from Middle Eastern countries are experiencing setbacks and with the changing dynamics of emerging Asia as China, Japan, Korea slow down while India, Asean and Central Asia take over as the engines of global energy demand growth.

To ensure its energy supplies, Asean energy development would be propelled by geopolitical and market uncertainties, while energy efficiency and renewable energy could play a role in the region’s energy security and setting the low-carbon green growth agenda.

Anbumozhi said the region needed to look to an energy transition in the future when its pyramid of energy use, which currently places fossil fuel for the most part at the base and less use of renewable and energy efficiency at the apex, would be reversed to a much-wider use of renewable and energy efficiency and eventually, an end to the use of fossil fuel.

“Far-sighted government policies, innovative financing and regional cooperation are essential to steer the Asean’s development on to a safer course,” Anbumozhi said.

Asean’s continued development and integration however is somewhat overshadowed by the aftermath of Britain’s exit from the European Union (EU), raising concerns whether the same thing could happen in Asean.

But economics and international affairs pundits dismissed the notion, saying that Asean has a different model of regional integration compared to the EU. Most notably, EU member states have to relinquish some sovereignty such as writing their own laws, which would be written in Brussels and accommodate regional concerns.

Dr. Victor Sumsky, the director of Asean Centre at the Russian Foreign Ministry’s Moscow State Institute of International Relations said that EU was overly bureaucratized. It provides many lessons for Asean of what not do in terms of bureaucratization and institutionalization.

“It is not foreseeable right now of a Brexit replica in Asean,” he added.

ERIA senior economist Dr. Ponciano Intal said compared to the EU, Asean is in a different stage of development and the region would have a greater potential by integrating.

Asean secretary-general Le Luong Minh said the impact might be on the negotiations for free trade agreement between the two blocs, which started in 2007 but was halted in 2009 to make way for EU to forge trade agreements bilaterally with individual Asean member states first.

Moreover, Asean doesn’t have the migration issue and free movement of people that EU face. Non-Asean citizens are not that free to travel within the region because Asean doesn’t have a single visa policy like the EU’s Schengen visa.

“For us, it is a wake up call. We have to promote efforts to narrow development gap and for member states to strike the balance between short-term national interests with long-term regional interests,” the secretary-general said.