Indonesia

Lorenzo published in Global Lens, Indonesia

Indonesia and India lead the Global South

Jakarta and New Delhi chair ASEAN and G20 in 2023. By strengthening cooperation they can promote the vision of a steadily rising part of the world

Among the many ambitious goals of Indonesia's rotating chairmanship of ASEAN is to strengthen the role of Jakarta and the Southeast Asian bloc in the Global South. And, moreover, support the role of the Global South in world affairs. The intention was made explicit by Sri Mulyani Indrawati, Indonesia's Finance Minister, in a relevant interview with Nikkei Asia. "We will work very closely with India," Indrawati said. "India and Indonesia are among the few big emerging countries that are performing very well on the economy, so this relationship provides us with more influence and more respect globally." Then again, Jakarta and New Delhi share a common perspective on international affairs and crucial diplomatic engagements in recent years. In 2023, India inherited the rotating presidency of the G20 from Indonesia itself, which in turn precisely holds that of ASEAN. Countries in the Global South tend toward political neutrality and avoid taking sides during conflicts. Despite the tensions, many consider the G20 summit in Bali in November a success, with leaders issuing a statement condemning Russia's aggression in Ukraine. While proposing a peaceful solution that protects not only security but also the resilience of trade and globalization. A perspective that will also be supported by India. "The G7 is admitting that it needs a counterpart that can provide a balanced view ... providing greater inclusiveness and diversity within the global community, which is healthy, I think," said Indrawati, who argues that countries in the global South are "contributing constructively to the global agenda," she said. "They have also become a source of solution for many global problems in terms of climate change, financial crisis, pandemic or even now global economy." This is precisely why the 10 ASEAN countries can play a "very important role," not only economically, but also politically and in terms of regional security "because of the tensions between the United States and China." And in Jakarta’s view, deepening cooperation with another regional player like India can strengthen the role of a rising part of the world in all aspects.

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Agnese Ranaldi published in Culture and society, Indonesia

A film encourages the debate of gender justice in Indonesia

Sri Asih is the cinematic adaptation of Indonesia's first comic book superhero. It celebrates a female character, the reincarnation of the goddess of justice. But the message of empowerment contrasts with restrictions on the rights of women and the LGBTQ+ community

A volcanic eruption gives birth to Alana, a true force of nature, reincarnation of the warrior goddess who is the main character of the Indonesian movie Sri Asih. Released in cinemas in November, it is directed by Upi Avianto and tells the story of the first superhero in comic book history in Indonesia: a young fighter who grows up without parents, is passionate about kickboxing and soon discovers that she has been chosen to exert the will of Dewi Asih, the goddess of justice, on Earth and restore balance to the world. The timing of this cinematic success, which adapts the famous 1950s comic book, reintroduces a much-loved character from Indonesian pop culture, precisely at one of the most difficult historical junctures for women and the LGBTQ+ community in Indonesia.

The movie is part of the Bumilangit Cinematic Universe superhero blockbuster and it has been included in the lineup of the International Film Festival Rotterdam, that runs from 25 January to 5 February 2023. It is a product that mixes the typical action of the Marvel and DC universes with cultural references from South-East Asia - from martial arts to all the imagery related to local mysticism, with demons and benign spirits clashing in challenges to the death. A superhero-themed action film that has nothing to envy from the most celebrated US sagas.

"I was surprised and amazed to learn that the first ever superhero in a country with such a strongly patriarchal culture at the time was a woman," director and screenwriter Upi Avianto told Nikkei Asia. The story had already been the subject of a film released in 1954, the reels of which have been lost. But Sri Asih's celebration of women's emancipation clashes with the current, progressive exacerbation of religious conservatism in the country.

The tight control of women's role in Indonesian society has resulted in the laws increase for compulsory use of the hijiab in several provinces, and some parts of the revised penal code. The latter law, unanimously approved by parliament, will come into force within three years. The new document 'contains provisions that violate the rights of women and girls to comprehensive and inclusive education and information on sexual and reproductive health,' said Andreas Harsono of Human Rights Watch. By punishing extramarital relationships, the new code risks disproportionately affecting same-sex couples who are barred from marriage.

"More than anything else, this is a clash between tradition and modernism - and about whether one's family accepts one's sexual choices," said one protester interviewed by the Guardian, "there is the clause that [extramarital sex] is only considered a criminal act if reported by a close relative - parents, spouse, children - and not by any random offending party." Indonesia's transgender community could suffer the most from the new law, as LGBTQ+ people 'are more likely to be sued by families for relationships they disapprove of,' Human Rights Watch recently stated.

The new regulations have provoked public demonstrations and protests against the imposition of conservative moral values on sexuality. The fate of gender justice in Indonesia seems very uncertain and the situation is still far from matching the liberating message portrayed in the superhero adaptation Sri Asih.

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Redazione published in Indonesia, Politics and strategy

Omnibus Law and the financial sector in Indonesia

The long-awaited financial sector reform Jakarta has been working towards has been approved. Here is what will change

Article by Aniello Iannone

After nearly three years of negotiations, the Indonesian House of Representatives approved the Financial Sector Development and Strengthening Reform (UU PPSK) on 15 December 2022. The reform, which will change the rules of financial law, especially for the investment sector, will be managed through an omnibus law, the type used for labour reforms in 2020 and 2021 for reforms related to the harmonization of tax regulations. The financial sector development and strengthening law (PPSK), which consists of 27 chapters and 341 articles, underwent essential changes in 17 articles.

The new reform will be the gold standard for the regularisation of businesses such as venture capital, carbon markets, and cryptocurrency markets. However, it will also regularise financial institutions such as banks, insurance centres, and gold banks. In addition, the new law reforms the competencies and powers of the Central Indonesia Bank (Bank Indonesia or BI), the Financial Services Authority (Otoritas Jasa Keuangan or OJK), and the Deposit Insurance Corporation (Lembaga Penjamin Simpanan or LPS).

Under the new law, Bank Indonesia can purchase long-dated government bonds in the primary market. In practice, the central bank can print money to finance government spending in a financial crisis that could threaten the national economy. Previously, BI bought government bonds in the primary market at an interest rate, became a reserve buyer if investors failed to reabsorb government bonds, and bought domestic bonds even at a 0% interest rate. This measure, called 'burden sharing,' was practised during the Covid-19 health crisis as the pandemic hit state revenues. Burden-sharing measures should only be used when necessary. Nevertheless, the new reform has become a non-stop policy in case of an economic crisis. However, it needs to be better explained in the reform what constitutes a state of crisis, meaning that the reform could be a tool if the government needs cheap tax revenue.

Instead, a prominent role was given to OJK, which was structurally reformed. OJK Board of Commissioners increased from 9 to 11 members. Chief Supervisor of Financial Institutions, Venture Capital Firms, Microfinance Institutions, and Chief Supervisor of Financial Sector Technological Innovation for Digital Financial Activities and Crypto Activities were created. The new law allows OJK to supervise and manage fintech and digital finance activities, including cryptocurrency markets. It is precisely cryptocurrency-related activities (previously managed by BAPPEBTI, the Commodity trading regulatory body) that fall under ITSK, as new forms of technology in the financial sector must be regulated and supervised. From now on, it is OJK that must manage them. In addition to OJK and BI, LPS has also changed its role. Initially, one of the main tasks of LPS was to guarantee public deposits in banks. In contrast, the Omnibus Finance Law mandates LPS to guarantee insurance policies.

Conclusion 

Financial sector reform is long overdue in Indonesia. It aims to improve, secure, and accelerate a sector that in Indonesia, as Finance Minister Sri Mulyani Indrawati has said, relies on outdated regulations. Like other reforms, it also has some shortcomings. For example, it is still being determined who will be selected as directors of the three primary financial authorities, BI, OJK, and LPS. The law clearly states that they cannot be active leaders of political parties, but there is no actual mechanism to protect this principle. 

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Anna Affranio published in Economy and trade, Indonesia

"Food Estates": Jokowi's plan for food self-sufficiency

To combat the food crisis, the Indonesian president has launched a new program to increase farmland. While also garnering some criticism.

Indonesia is facing a possible food crisis, with a growing population and limited arable land putting pressure on the country's ability to feed its people. To address this crisis, the Indonesian government has decided to turn to a new project of agribusiness estates (so-called "food estates," a name also used in Indonesia in reference to the program), large-scale agricultural projects that aim to increase food production.

Specifically, the project consists of developing crops of grains and other staples, such as rice, cassava, and maize with the aim of reducing imports of these foodstuffs and making the country increasingly self-sufficient.

The provinces of Central Kalimantan, on the island of Borneo, and North Sumatra will be the first to pilot the program and, if it is successful, it may be extended to the rest of the archipelago, including the island of Papua.

President Joko Widodo, known as "Jokowi," has announced that in this first phase paddy fields will be planted on 148,000 hectares of land, while another 622,000 hectares will be devoted to cassava, corn, and other crops, as well as farms. By the end of 2025, however, the cultivable area will be expanded to cover a total of 1.4 million hectares in Central Kalimantan, according to Defense Minister Prabowo Subianto, i.e., the one who has been charged with spearheading the program.

The project is very reminiscent of the ambitious attempt of the `90s, when former President Suharto decided to restore Indonesia`s food self-sufficiency by launching a mega-project to intensify rice crops production in Central Kalimantan. Hopefully, this new project will be more successful, given the disastrous outcome of Suharto`s project caused by the then unsuitability of peat soils for rice cultivation.

This initiative also drew some criticism since its start from environmentalists because farmland will be developed on land that had previously been classified as, precisely, peatlands. Peatlands are very important because they retain water and CO2, making them an important ally against flooding and in the fight against climate change. Their preservation is an issue that Indonesians value highly, and they have even established a full-fledged organization for their conservation and restoration. 

To make matters worse, activists and indigenous tribes are strongly resisting the project, convinced that the harms of this initiative will outweigh the benefits. A major criticism of agribusiness estates is that they often uproot local communities and destroy natural habitats. For example, new land for agricultural use in Central Kalimantan has caused the uprooting of thousands of people, as well as the destruction of forests and areas vital to the local ecosystem. Similarly, an estate developed under this program in East Nusa Tenggara has caused the dispossession of indigenous communities, who were thus forced to relocate elsewhere. In addition to causing harm to local communities and the environment, these agricultural estates have also been criticized for not being sustainable at all. Many of these projects are based on monoculture, growing a single crop year after year, resulting in soil degradation and reduced yields over time. This is in contrast to traditional farming practices, which often involve a multitude of different crops and the use of natural fertilizers, which may be more sustainable in the long run. In general, it appears that "food estates" are not the solution to Indonesia's food crisis, to solve which they were initially proposed. Although they may provide a short-term increase in food production, they also have a high cost to local communities and the environment and are not sustainable in the long term. Instead of relying on these large-scale projects, the Indonesian government could consider more equitable investments to increase food production, such as supporting small-scale farmers and promoting traditional agricultural practices.

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Pierfrancesco Mattiolo published in Indonesia, Politics and strategy

Indonesia to the test of ASEAN presidency

In the course of 2022, Indonesia switched from the chairmanship of the G20 to that of ASEAN. Jakarta has proven to be a leader for the region and an indispensable interlocutor for all players involved in the Indo-Pacific

Jakarta has never been more central to the international scene. In 2022, diplomats from all over the world worked with the Indonesian government to prepare for the G20 Summit in Bali. The city is also the seat of the ASEAN Secretariat and, from the end of 2022 and for much of 2023, will Indonesia will hold the ASEAN chairmanship. The 2022-2023 period is perhaps an annus mirabilis for Jakarta, a city that will lose its capital status in the future, as work has already begun to move the country's government to the new city of Nusantara in East Borneo. However, work on the construction of the new capital is proceeding slowly and will still take years. The project is almost a symbol of Indonesia's ambitions in the region - and of some of its contradictions. The desire to move the centre of the country from Java to one of the most peripheral areas of the archipelago. The administrative difficulties of a gigantic project. The rising sea level that threatens the old capital and the rest of the region. A name evocative of a centuries-old leadership ambition.

Nusantara indeed comes from old Javanese and means 'outer islands'. Outer from the perspective of Java, the heart of the Majapahit Empire, whose influence extended, between the 13th and 15th centuries, over the entire Malay archipelago - and in fact the concept embraces not only the territories that today correspond to Indonesia. The term has been part of Indonesian nation-building since the famous Palapa oath taken by Gajah Mada, prime minister of Majapahit, in the 14th century. The prime minister swore to refrain from eating spicy food (palapa) until he had unified all of Nusantara under Javanese authority. The idea of unifying the archipelago and the Malay-speaking peoples under one leadership was essential to the birth of the Indonesian state during the 20th century. During the Sukarno regime, the young country had come to clash first with the Netherlands and then Malaysia in order to complete the unification process of the region – without fully succeeding. Already under Suharto, these ambitions changed in nature: Indonesia was to lead Nusantara through political influence and diplomacy, not by force. The country has followed this doctrine ever since. The Palapa oath also remains part of the national rhetoric: the first satellite launched by the Indonesians in 1976 was named Palapa to symbolise the whole country's commitment to the project.

This leadership role is in some ways natural given the size of the country. By population and economy, Indonesia is the largest member of the ASEAN bloc and the only state in the region that is also part of the G20. In 2022 Jakarta held the presidency of the summit, opening a three-year period in which the summit will always take place in the Global South: after Italy and Indonesia, the presidency will pass to India and then to Brazil. The government led by Joko Widodo did not have an easy task, given the growing tensions in international politics. Russia is a member of the G20 and the membership is divided between countries that boycott Moscow and those with a less confrontational line. Despite this disagreement, Widodo invited Ukrainian President Volodymyr Zelensky to address the Bali Summit. After the conclusion of the summit, Chinese President Xi Jinping stayed for a bilateral meeting with Widodo to strengthen cooperation in various areas - particularly in infrastructure development. On the political level, Jakarta expressed its adherence to the principle of non-interference in internal affairs which Beijing champions - a significant stance given that Indonesia is the largest Muslim-majority country in the world and that China receives criticism from abroad especially for its treatment of the Muslim minority in Xinjiang. At the same time, the Widodo administration does not intend to flatten itself on Chinese positions, nor on American ones, rejecting the logic of the 'new cold war'. This is a position shared by the vast majority of governments in ASEAN and emerging G20 economies. Again, the Indonesian strategy comes from afar - though not from a concept as old as palapa or Nusantara. One of the leaders of the independence movement and future prime minister Mohammad Hatta outlined the course of the new nation's foreign policy in a speech of 1948: mendayung antara dua karang, 'rowing between two rocks' - at the time, the US and USSR, to which we could perhaps add China today.

The annual chairmanship of ASEAN, assumed by Jakarta in November 2022, also brings with it no easy challenges. The Indonesian government believes that the organisation must address two essential issues: navigating the growing rivalry between the great powers and distributing the fruits of economic growth to the bloc's nearly 700 million citizens. The strategy outlined by the Widodo administration to solve these challenges consists of three points: implementing the ASEAN Charter - in other words, sharing certain essential political choices, such as the resolution of the ongoing crisis in Myanmar -, strengthening ASEAN as an institution and equipping it with more tools to achieve energy and food security, 'medical independence' and financial stability in the region. This strategy was summed up in the slogan: 'ASEAN matters: epicentrum for growth'. The Indonesian presidency indeed seems determined to strengthen the organisation and resolving within it the aforementioned political issues shaking the region, namely the Myanmar issue and the difficult balancing between the US and China. On the economic front, Indonesia will seek to implement the ASEAN Vision 2025, thus strengthening intra-regional trade and accelerating the technological transition. Another important dossier is the accession of Timor-Lester into the organisation. Expectations for the Indonesian presidency are high, given the country's leadership ambition and some historical precedents: two key processes for regional integration - the creation of an ASEAN Community on the EU model (2007) and the RCEP trade agreement (2020) - were launched during two rounds of Indonesian presidency, in 2003 and 2011 respectively. In the months to come, we may see whether Indonesia will again be able to hold the countries of Nusantara and the rest of Southeast Asia together - through politics, cooperation and leadership.

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Anna Affranio published in Culture and society, Philippines, Indonesia

Water privatization: the different experiences of Jakarta and Manila

To remedy the problems with the water systems in the two capitals, municipalities chose to grant management to private companies in the 1990s. Despite similar premises, however, the two cities' experiment did not play out in the same way.

The privatization of public water service in the two Southeast Asian megacities dates back to the 1990s. At that time, heavyweight institutions such as the World Bank and many economists had pinned high hopes on the role that the free market could play in developing countries, and in strategic sectors such as water there was a prevailing view that privatization was the way to go. And so it was that many utilities were fully or partially privatized, often with the support of the United States or multilateral development institutions. 

Until that time, the water systems in Jakarta and Manila were entrusted to their respective municipalities and were in a very poor condition, with a very low user rate among the population. Jakarta's aqueduct system had originally been built by the Dutch at the time of their rule in the country, and obviously has not kept pace with the rapid growth of the metropolitan area, which now has a population of 11 million. Manila's water and sewage system is even older than Jakarta's, which was created in 1878 by the Spanish colonialists and designed for a city of 300,000 inhabitants, but now has more than 14 million.

The two cities' water system privatization schemes were initially very similar. In fact, in both cities, the metropolitan area had been divided into two sectors assigned to different companies, and in both cases the concession had an initial term of 25 years. The largest international water companies were brought in to provide technical assistance and financing schemes to Indonesian and Philippine government agencies in support of privatization programs, while service provision was assigned to large international conglomerates along with prominent and politically well-connected local groups, an essential element in obtaining privatization contracts. 

Water privatization in Manila began when then-President of the Philippines Fidel Ramos, in order to combat the water crisis that was affecting the capital city, issued a tender that was won by two companies-Maynilad Water Services in West Manila and Manila Water in East Manila. Despite some initial difficulties, exacerbated by the financial crisis that had hit Asia in those years, the two companies have to date achieved more than 94 percent service coverage in the city compared to 58 percent before privatization, and water leakages have been brought down to 27 percent compared to about 67 percent pre-privatization. For these reasons, water privatization in the Philippines is considered by many to be one of the most successful public-private partnerships in the world.

Differently was it, alas, for the Indonesian capital. Here, then-President Suharto, seeking to remedy the inefficiency of the public water delivery system in Jakarta, which did not allow equitable access to water for all citizens, granted the management of the water network to two foreign companies without any competitive bidding. These were the French Suez Environment, which together with the Salim Group (owned by a tycoon loyal to the president), had formed PT PAM Lyonnaise Jaya (Palyja). The other company, however, PT Aetra Air Jakarta, was formed by Britain's Thames Water together with Suharto's son. In the 25 years of the concession, the two companies have undergone numerous corporate changes and share divestments, and have made little progress in expanding service coverage, as well as in increasing efficiency but especially equity in terms of access to water among different strata of the population. According to the Jakarta Post, after nearly two decades, coverage has only reached 59 percent of the city's residents, despite average water rates being quite similar to those in Manila. In 2017 then, the two water companies were sued for failing to meet their contractual obligations, and the court ruled against them, threatening the end of the water privatization experiment in Jakarta, although the system will likely persist but in different ways. 

It remains to be seen, however, whether the Indonesian capital will be able, albeit with some delay, to replicate the successful example of its Philippine counterpart.

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Carola Frattini published in Economy and trade, Indonesia

Indonesia and palm biodiesel

Indonesia is the world's largest producer of palm oil. The question for Jakarta is: can the blend of diesel combined with 40 per cent 'cooking oil' help meet the government's targets?

Indonesia is testing a biodiesel blend to be used as fuel for cars, of which palm oil makes up 40 per cent. In particular, Jakarta is testing whether this combination of diesel and palm oil (also called 'cooking oil') can work at high altitudes. In fact, in general, palm oil tends to harden in colder climates. Blending biodiesel with palm oil is nothing new in Indonesia. The South-East Asian country currently requires cars to use a 30% blend (or 'B30' - 'B30 requirement'), and is trying to increase this to 40% ('B40' - 'B40 requirement'). To find out whether the tropical oil can adapt to higher altitudes, a few weeks ago the experimenters left Dieng, an active volcanic region in central Java, for a test tour. Therefore, in the coming weeks, six Toyota Innova minivans, fuelled with 40 per cent palm oil biodiesel, will be on a trial run on the island of Java. 

Should the tests yield the desired result, the government's target would be to increase the requirement from B30 to B40, and thus mandate the 40% 'cooking oil' blend of diesel. The consequence would be a redistribution of palm oil: palm oil exports would be reduced and there would be more local consumption instead. Indonesia's goal is precisely this: on the one hand to increase domestic consumption of palm oil and on the other hand to reduce imports of fossil fuels. In addition, a greater use of palm biodiesel would also lead to a reduction in emissions. Thus, the impetus for increased use of palm oil is the hope to reduce emissions, reduce fossil fuel imports and consume surplus palm oil stocks..

As already mentioned, a positive test result would also lead to less palm oil being exported and this would certainly have an impact on exports of the product. The Indonesian government's plan could cause prices to rise globally, resulting in higher oil prices. In fact, following the basic rules of economics, if there is less supply against more demand, the price of the product is bound to rise. This is not the first time Indonesia has tried to decrease palm oil exports. Already earlier this year, the country tried to ban exports in an attempt to reduce local inflation. As a result of this policy, palm oil prices had reached record levels. The country only changed its strategy when it found itself with far more palm oil stocks than its citizens could realistically consume. Exports then resumed and prices started to fall.

To understand whether there will be another decrease in exports from Indonesia, however, we have to wait for the end of the tests and the possible announcement of the Jakarta government on the implementation of the 'B40' requirement. The final results will come in around December when the trial is over. According to Dadan Kusdiana, Director General of New and Renewable Energy at the Ministry of Energy and Mineral Resources, the results of road tests so far indicate that the efficiency of this blend is generally comparable to the 'B30' blend. The ministry hopes for positive results so that the technical specifications for the 'B40 requirement' can then be formulated. As stated by Director General Kusidiana, with the B30 requirement, the Jakarta government's goal was to achieve an annual consumption of 11 million kilolitres. By October 2022, already 8 kilolitres had been used. If the B40 requirement is implemented, domestic use of palm biodiesel will increase by about 3.4 million to 3.5 million kilolitres. When B40 is in place, the government expects palm oil-based fuel use to rise to 15 million kilolitres per year.

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Redazione published in Indonesia, Politics and strategy

The impact of inflation on Indonesian politics

The freeze on fuel subsidies decided by Widodo's government has led to a price increase disputed by citizens. The economic situation can play a fundamental role in parties' choices for the 2024 elections.

Article by Aniello Iannone

On 10 September, the Indonesian government blocked fuel subsidies, causing prices to rise automatically. This decision led to turmoil and protests in Jakarta, where the population took to the streets for the choices of the government led by President Joko Widodo. Rising fuel prices, however, are not the only problem in Indonesia. From an economic point of view, the food sector has also suffered from a significant increase in prices without an adequate minimum wage increase. In this situation of economic instability, Indonesia is already beginning the long approach toward the next elections of 2024, between new and old players who will compete for the presidency.

The Indonesian economy is going through a phase of continuous and rapid price increases. Since last year, Indonesia has seen a 5% -10% increase in prices of essential goods called pokok (such as rice, oil, and eggs). This increase was recorded before the suspension of subsidies: oil prices soared in February, reaching almost $ 4 per liter. Increase that took place even before the war in Ukraine.

To understand how much the negative effect of rising prices is a problem for most Indonesian population. However, it is necessary to analyze the economic and social structure of the country. Indonesia has a population approaching 300 million, of which nearly 10% live in poverty, and 4% in extreme poverty, especially in areas such as Kupang in NNT or Papua. In addition, the average minimum wages in Indonesia are around $ 270 a month in Jakarta, the area with the highest minimum wage. In Yogyakarta, the minimum wage is around $ 100 a month, the lowest in the country. Prolonged price increases without adequate wage increases will weigh heavily on citizens.

The political situation: what does the post-Jokowi forecast? 

The complicated economic situation that Indonesia is facing must also deal with the first signs of a future election campaign and an unclear political situation. During Jokowi's second term, there were numerous protests against the government, especially against the law on labor reform, which among other things, modifies the regulations for minimum wages, or against the reform of the penal code. On 9 September, protests arose against the increase in fuel and the suspension of government subsidies.

The protests are the consequence of fragmented politics in Indonesia. At the moment, the PDI-P, Jokowi's party, seems to want to continue to bet on Puan Maharani for future elections, even if his popularity among Indonesians remains weak, especially among the lower middle class. Nevertheless, Puan is the daughter of Megawati Sukarnoputri, the leader of the PDI-P. The possible candidacy of Prabowo Subianto remains unknown. The former Indonesian general lost twice to Jokowi in the 2014 and 2019 elections. After the latter, he was incorporated into the government as Defense Minister. However, his future victory could mean a change in a conservative-Islamic key, given Gerindra's tendency to join forces with pan-Islamic parties. 

Two other protagonists could be Anies Bsweden and Ganjar Pranowo. Ganjar Pranowo, governor of Jawa Tengah, is second in the polls only to Prabowo. Ganjar is part of the PDI-P, but his popularity is high, unlike Puan, who is considered an elite figure. Anies Baswedan is instead the current governor of Jakarta: after declaring his willingness to run, he was contacted by the national democratic party NasDem of which he will be the candidate for the presidency. Anies, along with Prabowo and Ganjar, runs high in the opinion polls among the population.

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Annalisa Manzo published in Economy and trade, Indonesia

Indonesia: the alternative source of European imports

The war in Ukraine is deeply changing the directions of European imports, redefining the role of Jakarta in terms of energy and natural resources 

Indonesia's exports - particularly steel, coal and palm oil - hit a new all-time high in March, when the invasion of Ukraine triggered a rise in global commodity prices. It is estimated an increase in exports of 44.36% on an annual basis, for a total value of $ 26.5 billion last March. The largest economy in Southeast Asia recorded a trade surplus of $ 4.53 billion, beating all economists' estimates.

Indonesia - the world's largest exporter of thermal coal - typically does not ship to Europe, but due to the new geopolitical issue, the demand for Indonesian coal is increasing significantly, as stated by Pandu Sjahrir, president of the Indonesian Coal Mining. Association. Germany is already positioning itself among the top European buyers. By 2023 it could become the second or third largest importer of Indonesian coal, after China and India.

The number of Indonesia's thermal coal shipments overseas is increasing following the European ban on the purchase of coal from Russia, which went into effect in August. Russia - the world's third largest supplier of coal - dominates sales in Europe, but the ban has also caused the interruption of some Russian gas supplies to the continent.

Now, with the European winter around the corner and the imminent need to meet home heating needs, Indonesian mines are aiming to increase their production. PT Bukit Asam - also known as PTBA - was among the first local players to ship coal to Europe. The company said it exported 147,000 tons of fuel to Italy from March to July, while negotiations continue with Germany and Poland to penetrate these markets at competitive prices. Bukit Asam produced 15.9 million tons of coal between January and June, 20% more than the same period in 2021. Bukit Asam produced 15.9 million tons of coal between January and June, 20% more than the same period in 2021. Also Bumi Resources - the largest Indonesian coal producer by volume - aims to increase production this year, following the start of negotiations with Germany, Poland and Italy. PT Adaro Energy Indonesia also has the same goals: to increase coal production from 58 million tons to 60 million in 2022, declaring that it has already shipped around 300,000 tons of coal to the Netherlands and Spain. Due to the spike in coal prices, these companies are also making huge profits. PTBA reported a net profit of $ 415 million in the first half of the year, up 246% compared to the same period in 2021, that of Adaro jumped seven times to $ 1.2 billion and that of Bayan Resources it nearly tripled to $ 970 million. Share prices have also risen sharply since the start of the year, reaching + 60%.

In addition to coal mines, Indonesia also holds the largest nickel reserves in the world. It is expected to supply most of the nickel needed by the thriving global electric vehicle industry over the next few years. The Indonesian government is pursuing an ambitious program to encourage the production of batteries and vehicles by foreign companies and position the country as a key player in the sector. Nickel processing projects are mostly led by Chinese actors, including the stainless steel giant Tsingshan and the battery maker, Contemporary Amperex Technology.

Recently, the Indonesian unit of Brazilian mining giant Vale embarked on three nickel processing projects worth a total of $ 8.6 billion with major partners, including the Chinese battery materials manufacturer, Zhejiang Huayou Cobalt, and the US automaker Ford Motor.

The protracted war in Ukraine will continue to open up new scenarios for Indonesia, which in the meantime confirms its privileged role for its wealth of mineral and natural resources. A new challenge for mining companies and for internal demand.

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Redazione published in Indonesia, Politics and strategy

Labor Reform and Criminal Code in Indonesia

The new Indonesian penal code is currently in its final draft in parliament, presumably coming into force before the end of Jokowi's term

Article by Aniello Iannone

During the Covid-19 pandemic, particularly during the massive first wave of the pandemic in Indonesia in 2020, the government enacted one of the most controversial labor reform laws, the Undang-Undang Cipta Kerja, known to most as the Omnibus Law. The Indonesian academic community and NGOs harshly criticized the new law.

The main reason for such criticism, which later turned into protests, was the corpus of the new law which discriminated against and damaged workers' rights. Passing the law unleashed demonstrations, particularly in Jakarta. For days the demonstrators took to the streets to condemn the Indonesian government's choice, so much so that the police had to intervene to stop the protests.

The protests against the labor reform were not the only ones nor the most violent. A year earlier, in 2019, violent protests broke out in the capital during the first draft revision of the penal code (Rancangan Kitab Undang-Undang Hukum Pidana or RKUHP). Protests erupted when a first draft of the law declared extra-marital or non-marital relationships a criminal offense. Furthermore, the draft considerably weakened corruption offenses, a sensitive issue in the country, given the high level of corruption. The protests delayed the reform, leading to a rethink by the government. During the massive 2019 violence, they were followed by the shout TolakRKUHP (reject the reform of the penal code). Without a clear revision of the reform, the possibility of new riots remains high.

The law of Indonesia through history 

Indonesian jurisprudence takes a lot from the Dutch colonial period. The Criminal Code is no exception. Although decades of the country's independence have passed, the penal system dates back to the Dutch period. Historically, the Indonesian legal structure can be divided into 4 main pre-independence and 4 post-independence phases (Sylvana et al., 2021): 

  • The pre-colonization period was characterized by the unwritten customary laws of a religious nature (Harahap, 2018)
  • In the VOC (Dutch East India Company) period, Western law first entered the archipelago with the establishment of the Statute of Batavia in 1642 and the Mucharaer Book of Law in 1750, which contained a collection of Islamic criminal laws, also maintained during the English period until 1810

Between 1814 and 1855, known as Besluiten Regering, Indonesian law was influenced by the Dutch monarchical constitutional system without fundamental changes to the penal code. The years ranging from 1855-1926, known as Regarding Reglement, coinciding with the transition from constitutional monarchy in Holland to parliamentary monarchy, show a reduction of the king's power over the colonies. At this stage, the penal code, like the entire judicial structure, begins to take shape with the creation of a penal code that will be extended to the entire Indonesian population of the time.

  • The period of the Japanese occupation (1942-45). During this period, there was a dualism in the penal code, on the one hand, the Dutch system, on the other, and the Japanese system (Saleh & Pelengkap, 1981)
  • The Indonesian period. The problem of the dualism penal code was resolved after the replacement of the 1945 Constitution with the enactment of Law 73 of 1958, which took up Law No. 1 from 1946, declaring the Dutch penal system Indonesian, currently applied in the country (Bahiej, 2006) 

The reform of the penal code: rights, religion, and politics 

Analyzing the proposed reform of the penal code, the points that have seen the most criticism are mainly 14. In this analysis, we will consider only a few, especially those that most affect personal freedoms.

The proposal of the new penal code provides for an amendment to art: 218 to 220, 240 to 241, and article 273. The amendment introduces different penalties—for instance,3 to 4 months of detention in case of criticism against the President and Vice-President. In addition, in cases, criticisms against the authorities will be transmitted through social media (Article 240), a penalty of up to 4 years for defamation of the authorities.

In the Indonesian context, without an appropriate explanation in the law for "criticism and defamation," this regulation can be used to silence any criticism/opposition against the authorities. During the introduction of the Electronic Information and Transactions (ITE) law and the Omnibus Law, many academics were convicted of defamation of the authorities, even if they were only criticizing the ITE law and the more recent Omnibus Law.

Moreover, the Art. 273 places restrictions on student and social demonstrations, risking undermining a fundamental right transcribed in the constitution: the right to social demonstrations. 

Furthermore, the revision of the criminal law introduces stringent rules on religious issues. Starting from this point of view is necessary to analyze this part of the reform transversal. Indonesia has the highest percentage of Muslim faithful in the world. 87% of the population professes Sunni Islam mainly according to the thought of the two schools of thought present in the country, the Nahdlatul Ulama (the most widespread and most conservative current) and the Muhammadiyah (the most moderate current). 

Religion plays a pivotal role in Indonesian politics. In this sense, Indonesia is constitutionally not an Islamic but a semi-secular state. Professing a religion is mandatory, but no religion imposes itself on the other, constitutionally. The revision of the penal code emphasizes the role of religion. Art. 302 proposes detention for five years in case of blasphemy. Convictions for blasphemy are not new in the country; the best-known case is former Jakarta governor Basuki Tjahaja Purnama, Ahok.

Another criticism of a religious theme concerns art—304 of the reform. The article states that anyone who forces another person to change their religion risks a sentence of up to 4 years. A flaw in this law can be found not in the obligation to force a person to believe or not. The law's flaw is in how should be reported to the authorities, becoming a threat to freedom of expression. 

Furthermore, articles 415 and 416 condemn a penalty of up to one year for adultery and evading the marriage contracts. In particular, Article 416 condemns all who live "as" husband and wife but have not contracted marriage with imprisonment of up to 6 months.

Conclusion 

The new Indonesian penal code is currently in its draft defined in parliament, presumably entering into force before the end of Jokowi's term. However, the various criticisms and gaps within the new code could push Mahkamah Agung (the supreme court of Indonesia) to declare the revision of the penal code unconstitutional, which has already happened with the Omnibus Law. In cases where the Indonesian Supreme Court declared the law unconstitutional, but the law will pass by the parliament unleashed, violent protest riots in Indonesia are particular. 

 

Reference 

Bahiej A. (2006) Sejarah dan Problematika Hukum Pidana Material di Indonesia. SOSIO-RELIGIA, 5(2)

Harahap A. (2018) Pembaharuan Hukum Pidana Berbasis Hukum Adat. EduTech Jurnal Ilmu Pendidikan dan Ilmu Sosial, 4(2)

Sylvana Y., Firmansyah Y., Wijaya H., Angelika M,S. (2021). History of criminal law in Indonesia. Jurnal Indonesia Sosial Sains, 2(4) : 645-655

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Sabrina Moles published in Economy and trade, Indonesia

Thailand: opportunities for green energy made in Italy

Bangkok opens to energy cooperation with Rome. Southeast Asia's second-largest economy aims to break free from dependence on fossil fuels and increase renewables: what is the scenario opening up for Italian companies?

La Thailandia ha fame di energia. Ma non può continuare sulla strada dei combustibili fossili. Negli ultimi trent’anni Bangkok è stato uno dei principali motori dello sviluppo asiatico, trasformando il blocco ASEAN in una delle regioni più promettenti per l’economia di domani. Oggi la seconda economia del Sud-est asiatico ha bisogno di sostenere la propria crescita su basi solide, che dovranno partire da politiche energetiche lungimiranti e coerenti con gli obiettivi di riduzione dei gas serra previsti dall’Accordo di Parigi.

Una nazione in crescita

With a growing GDP per capita ($21.05) and a population of about 66 million, Thailand quickly transformed into an upper-middle-income economy during the 1990s. Today, the export-driven growth model is threatened by a decline in private investment (16.9 percent of GDP in 2019 vs. 40 percent in 1997) and the climate emergency that threatens Thailand's ecosystems. Dependence on fossil fuels is another problem the country must address to secure the energy sector and create opportunities on the ground.

Today, Thailand's energy mix consists mainly of oil (40 percent), natural gas (31.2 percent), and coal (12.5 percent). During 2021, imports of these resources reached 75 percent of the total used, while the Ukraine crisis is exacerbating prices on fuels. Renewables are almost limited to hydropower plants, but government programs to raise the percentage of clean sources are growing. The 2018 Alternative Energy Development Plan promises to achieve 30 percent coverage of the energy mix by 2030 through the construction of new power plants. At the center of the energy transition will be mainly wind and photovoltaics, not excluding the potential of biomass and small-scale hydropower plants. Among the strategies listed, the Thai Ministry of Energy plans to increase access to the raw materials needed to implement a smart grid from green sources and the development of technologies and know-how essential to the construction of efficient, clean and safe plants.

Opportunities for Italy

Thailand plans to achieve carbon neutrality by 2065. Bangkok is aware of the challenges imposed by the energy transition, and is opening up to partnerships with external actors to succeed in developing a resilient energy sector. Thailand participates in ASEAN programs such as the Southeast Asian Energy Transition Partnership (ETP) and the ASEAN Centre for Energy (ACE). The country is now open to new opportunities for investment and cooperation under the strategic partnership with the European Union, which devotes considerable space to the topic of sustainable development and green technologies.

In this context there is also room for Italian companies interested in developing new projects with Thai partners. As speeches at the last Italy-ASEAN High-Level Dialogue organized by The European House-Ambrosetti pointed out, the energy sector represents fertile ground for birthing new collaborations and contributing to Thailand's energy transition. In recent years, the bilateral dialogue between Rome and Bangkok has intensified through a shared agenda of mutual economic cooperation and opportunity sharing in the context of climate challenges and sustainable development. Both sides aspire, as Ambassador Lorenzo Galanti pointed out, to the resumption of negotiations to facilitate technology transfer and exchange of knowledge and expertise in the energy sector.

The second meeting of the Italy-ASEAN Development Partnership was also held on June 10 with the aim of defining areas of practical cooperation from 2022 to 2026. These included the topic of clean energy, with Rome promising to support the energy development of ASEAN countries by providing know-how and safe technologies with low environmental impact. Today, trade exchange between Italy and Thailand has returned to growth after the pandemic pause. Italian exports in the first half of 2020 grew by 18 percent, while imports from Thailand reached +26 percent year-on-year. New plans for the development of technological cooperation, therefore, offer further prospects for growth in the relationship between the two countries.

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Redazione published in Economy and trade, Indonesia

Indonesia's digital race

From the beginning of the pandemic until the first half of 2021, 21 million new digital consumers have been added in Indonesia. Hence the boom in startups and unicorns

By Chiara Suprani

Indonesia, along with Vietnam and Singapore, is considered a tip of the golden triangle of startups in Southeast Asia. It is the birthplace of 13 unicorn startups, including a decacorn, 10 billion startup created when super-app Gojek merged with e-commerce giant Tokopedia. Gojek's multiservice platform became unicorn faster than Bukalapak or Tokopedia, and now operates in five ASEAN countries. Indonesia, the most populous country with the largest economy in the region, seems to have a special attractiveness and fertile ground for digital and tech growth. From the beginning of the pandemic until the first half of 2021, 21 million new digital consumers have been added in Indonesia, most of them from the hinterland. In fact, before the first wave of Covid-19 only 4 percent of Indonesia's population had access to stable internet lines. Now even outlying regions, thanks in part to the push from Jakarta, are more covered and the country has 350 million digital users. Last year, the gross merchandise value of the country's digital economy stood at US$70 billion, while the total value of the region was US$170 billion. Indonesia's interest in the growth of the digital and tech sector is given by reforms that fit well into the national context. This is evidenced, for example, by the rush of Bukalapak, a tech company backed by Microsoft and Ant Group, which has been propelled by the inclusion of 3.5 million warungs, family-run stalls, among its as yet untapped pool of businesses to go online. But the country sees a chance to expand its domestic market by opening up to foreigners: international digital nomad workers will be able to work in the country without paying taxes. The five-year visa granted by Joko Widodo's government aims to attract 3.6 million foreigners with digital work permits to the archipelago.

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