City budget signed by governor': Jokowi responds to Sylviana

President Joko Jokowi Widodo has responded briefly to Jakarta deputy gubernatorial candidate
Sylviana Murni, who mentioned his name in relation to an alleged graft case, by saying that all
city budgets are signed by the governor.

Yes, the State budget is signed by the President. The city budget [off course] is signed by the
governor. Thats all, Jokowi told reporters after joining the 2017 Bogor Open Archery
Championship in Bogor, West Java, on Sunday.

Sylviana, who is running alongside gubernatorial candidate Agus Harimurti Yudhoyono, was
questioned on Friday in relation to alleged corruption in a grant of Rp 6.8 billion (US$505,952)
to the Jakarta Scout Movement she chaired from 2014 to 2015.

She told the police that the grant was part of the city budget that was signed by Jokowi, the
governor of Jakarta at that time.

The police earlier said they would not question Jokowi in regards to Sylvianas statement.

We will not question him. As the governor, he acted according to procedure. The problem is
about the use of the grant, National Police spokesman Brig. Gen. Rikwanto said on Saturday as
reported by kompas.com.

Sylviana admitted that some programs in the scout movement had not been executed. However,
she claimed that the grant had been audited and the remaining funds, worth about Rp 800
million, had been returned to the citys treasury office. (jun)
 Food & Beverage Industry Indonesia Urges Revision Halal Guarantee

21 January 2017 |

Players in Indonesia's food and beverage industry request the government to revise Law No.
33/2014 on the Halal Product Guarantee because this law is highly difficult to be implemented
and makes the nation's business environment less attractive. The law, drafted in 2014, requires
all food, pharmaceutical, and cosmetic products that are consumed in Indonesia to have halal
certification (which indicates the product was prepared according to Islamic law) by October
2019.

Adhi Lukman, General Chairman of the Indonesian Food and Beverage Association (Gapmmi),
said Indonesia's food and beverage industry is not ready for the "halal guarantee" and he feels
that it is basically impossible for the law to be implemented in full force by 2019 as it would
mean millions of products have to be halal certified in the next two and a half years. Moreover,
the law does not make much sense at it would imply products like mineral water also needs halal
certification.

Lukman suggests a revision to Law No. 33/2014, namely that it will only be mandatory to have
halal certification to those who label their product as halal.

Over the past 20 years the Indonesian Ulema Council' s Assessment Institute for Foods,
Drugs and Cosmetics (LPPOM MUI) has been the institution that grants halal certification in
Indonesia. However, on average, LPPOM MUI only issues around 7,000 halal certificates per
year. To issue several million over the next 2.5 years seems a highly unrealistic target. Most of
the big Indonesian companies already have halal certification, so new certification would mostly
involve Indonesia's micro, small and medium companies.

Based on data from Indonesia's Statistics Agency (BPS), the number of food and beverage
producers in Indonesia numbered 1.25 million in 2014. About 99 percent of this total are micro
and small companies (for example local street vendors) that usually lack a strict or standardized
production process and therefore it would be difficult for them to obtain halal certification.

Moreover, it costs money to obtain halal certification. For the small and micro food and beverage
entrepreneurs this is a major obstacle. And, considering LPPOM MUI is not a government
institution these funds will not flow to the government. If it will indeed become prohibited to sell
food and beverages that lack halal certification by October 2019, then it could seriously
undermine attractiveness and earnings in Indonesia's lucrative food and beverage industry, a key
engine of the nation's manufacturing industry.

Danang Girindrawardana, Head of the Public Policy Department within the Indonesian
Employers Association (Apindo), is also skeptical about Law No. 33/2014 and urges the
government to review the law as it is not in line with other existing laws and contradicts the
government's ambition to cut red tape in Indonesia.
 Holding Company for Indonesia's State-Owned Miners Ready in Q1-2017

20 January 2017 |

The government of Indonesia is nearing completion of the forming of holding companies for
state-owned enterprises that are active in the oil & gas and mining sectors. It now only requires
signing by Indonesian President Joko Widodo. Last year Widodo approved plans to create five
state holding companies in energy, mining, construction, housing, and financial services. Fully
state-owned aluminium producer Inalum and energy company Pertamina will be the holding
companies for activities in the mining and oil & gas sectors, respectively.

The development of these five state holding companies in separate sectors are the first phase of a
recently unveiled government program. In the second phase, expected by 2019, the government
of Indonesia plans to set up a "super holding company" that is to control all Indonesian state-
owned enterprises (including those that are listed on the Indonesia Stock Exchange but are
majority-owned by the government). It is estimated that there currently are 199 large state-
controlled companies active in Indonesia, together controlling about USD $320 billion in assets.
After the restructuring the number of state-owned companies in Indonesia could fall to 118.

Last year Widodo said "we want to strengthen our state-owned companies through the
establishment of holding companies so they can expand outside the country and become world-
class companies". Moreover, these holding entities will create greater synergies and are more
cost-efficient. At the same time these companies' equity will be expanded, increasing access to
credit hence facilitating larger investments (when working individually, the state-owned
companies have difficulty to obtain bank loans). Another advantage is that the holding company
structure will allow state-owned miners to team up together to finance the purchase of mineral
reserves. Currently, it are mostly private parties that have the financial resources to acquire large
mineral reserves.

Gatot Trihargo, official at Indonesia's Ministry of State-Owned Enterprises, said the forming of
the holding company for mining should be completed in the first quarter of 2017. Aluminium
manufacturer Inalum, which is fully owned by the Indonesian government, will be appointed as
the parent holding company for the mining sector. Trihargo said Freeport Indonesia will also
become part of this holding. This would imply that the government's stake in Freeport Indonesia
needs to be transferred to Inalum.