Concerns Over COVID-19 Second Wave Surface Anies Struggles In

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th Thursday , June 11 , 2020

GENERAL NEWS AND HEADLINES

Concerns over COVID-19 second wave surface Kompas, headline; Media Indonesia, headline; Republika, p. 1

President Joko “Jokowi” Widodo, during a visit to the national COVID-19 task force’s office on Wednesday, emphasized that COVID-19 still posed a threat. Three months after the first case was discovered in the country, the spread of the coronavirus is still volatile as positive cases across the archipelago are fluctuating, with some regions reporting increased, decreased or even zero cases.

“I remind you, our heavy task is not yet over. The threat of COVID-19 still exists and the conditions are still dynamic. I remind you, there must be no second wave. There must be no surge in cases,” Jokowi asserted during a virtually broadcast speech.

In the presence of task force head Doni Monardo and his staff, Jokowi said these uncertain conditions would continue until a vaccine was found. However, that process may take a relatively long time since the vaccine must undergo clinical trials, field trials and mass production before being widely distributed.

As of Tuesday, the government reported the highest daily increase of 1,241 new cases in the country, bringing the total number of confirmed cases up to 34,316. Indonesia now has the second-highest number of COVID-19 cases in Southeast Asia after Singapore.

Anies struggles in new poll despite tough COVID-19 leadership The Jakarta Post, p. 1

Jakarta-based pollster Indikator Politik Indonesia found that Anies' electability rating was down from 12.1 percent in February to 10.4 percent in May. Anies' slump in the polls took place against the backdrop of the trending upward of Central Java Governor Ganjar Pranowo and West Java Governor Ridwan Kamil as potential candidates for the 2024 presidential race.

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The electability ratings of Ganjar and Ridwan increased 2.7 percent and 3.9 percent in the May survey. Of the 1,200 people Indikator Politik Indonesia interviewed for the latest opinion poll, 11.8 percent said they would vote for Ganjar if the election were held today, and another 7.7 percent said they would vote for Ridwan.

Also struggling is defense minister and chairman of the Gerindra Party Prabowo Subianto, who is also expected to run in the 2024 presidential election. President Joko "Jokowi" Widodo's term will expire in 2024 and he will be barred from seeking reelection.

Prabowo's electability rating has dropped more than eight points in the past months. The Gerindra chairman gets the approval of just 14.1 percent of the respondents, a steep drop from 22.2 percent in February.

In the February survey, both Anies and Prabowo came out as the two strongest contenders for the 2024 presidential election.

New normal’ was not discussed with COVID-19 Task Force Koran Tempo, Main Report

The government’s plan to relax large-scale social restrictions (PSBB) and transition into the “new normal” was reportedly not discussed with the national COVID-19 task force or the National Disaster and Mitigation Agency (BNPB). Former BNPB expert staff Corona Rintawan explained that the new normal transition plan was only made known to them after the government introduced the narrative to the public.

According to Corona, before introducing the new normal phase to the public, the government had only involved the task force in discussions on making peace with the virus. At that time, he continued, matters that were discussed included economic stagnation, food security and the cessation of the food supply chain. “It [the new normal] was not discussed with the task force. Perhaps it was discussed with Pak Doni [BNPB head],” he said.

Corona claimed that he was unaware of why the government would implement such a policy as, according to him, COVID-19 cases in the country are increasing daily.

Considering that the spread of the virus is dynamic, Corona explained that although certain areas had become “green zones”, where no new COVID-19 cases

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had been reported, widespread transmissions can still potentially occur if isolation is not strictly carried out.

Green light for pesantren Republika, headline

The government has allowed the reopening of pesantren (Islamic boarding schools) located in areas considered as “green zones”. However, school activities must be cautiously carried out in accordance with COVID-19 health protocols.

This was discussed in a joint meeting chaired by Vice President Ma’ruf Amin and a number of ministers on Wednesday, as a follow-up to the discourse of reopening Islamic boarding schools amid the transition into the “new normal”.

Spokesperson for the Vice President, Masduki Baidlowi, said Ma’ruf had emphasized that the reopening of pesantren must be done based on the principle of prudence, so that it would not trigger a new cluster of COVID-19 infections.

Ma’ruf, Masduki said, also allowed pesantren in “red” and “orange” zones to reopen under special conditions. Boarding schools located in these areas must coordinate with the task force handling COVID-19 in their respective regions.

House may axe thorny revisions to Press Law The Jakarta Post, p. 3

The House of Representatives Legislation Body (Baleg) is considering dropping proposed revisions to the Press Law from the omnibus bill on job creation. The proposed changes have been criticized by media groups as a threat to press freedom.

Some groups questioned the government’s revisions during a hearing with representatives of journalist groups and media companies on Tuesday. They said the revision had nothing to do with the bill’s main objective of job creation. Subagyo of the Golkar Party – the main supporter of the bill – suggested that they be revoked entirely, saying the local media industry needed rules that supported their freedom.

"The Press Law should not be revised through the omnibus bill. In order to prevent further misinterpretations, the Golkar faction proposes that the provisions be dropped from the bill,” Subagyo said.

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BUSINESS AND ECONOMICS NEWS AND HEADLINES

Govt prepares Batang to accommodate factories relocated from China Investor Daily, headline

Indonesia is preparing an industrial estate in Batang – instead of Brebes – both in Central Java, to accommodate the potential relocation of factories from China. Batang, according to the government, has adequate land and supporting infrastructure, so that the relocation could be realized quickly.

State-Owned Enterprises (SOE) Minister Erick Thohir said the government had changed its plans, so that the industrial estate would now be developed in Batang rather than Brebes, because more land would need to be acquired in Brebes. Both Brebes and Batang are located on the northern coast of Central Java.

Erick added that companies headquartered in the US and Japan were the potential investors and were ready to relocate in the next six month. Therefore, Indonesia had to play aggressively to take advantage of the opportunity for relocation.

The industrial area in Batang is to be developed on 4,000 hectares of land belonging to state-owned PT Perkebunan Nusantara (PTPN) IX. It also has 300 meters of railway network and a Dutch heritage port that are ready to be redeveloped for an industrial area. “All would be converted into an industrial area to anticipate the speedy relocation of the US and Japanese companies.”

According to Erick, Investment Coordinating Board (BKPM) chairman Bahlil Lahadalia had inspected the location to ensure the readiness of the area to be developed into an industrial estate. Bahlil made the visit in early June and met with Batang Regent Wihaji to get his support for the development of the industrial estate. Bahlil also visited the 2,000-megawatt Batang power plant, which is currently under development.

Indonesian Chamber of Commerce and Industry (Kadin) vice chairwoman Shinta Kamdani explained that the planned relocation of the US companies from China was driven by the US-China trade war. She added that Kadin was mapping the potential companies that really wanted to invest in Indonesia. She noted that Indonesia was competing with Bangladesh, Vietnam and India. To win the competition, she suggested that the government ease investment regulations.

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Bank risk still high in the ‘new normal’ Bisnis Indonesia, headlines

The risk of worsening credit quality at banks still looms even as the economy braces itself for reopening, and debt restructuring could increase the nonperforming loan (NPL) ratio.

PT Bank Central Asia (BCA) president director Jahja Setiaatmadja explained that NPLs could be hidden in accounting because of debt restructuring, but BCA would take a conservative approach despite the Financial Services Authority’s (OJK) recent relaxation of debt restructuring rules. BCA, Jahja said, would continue implementing the usual reserve measures. BCA has so far restructured Rp 609.07 trillion in loans belonging to 5.94 million debtors.

Meanwhile, PT Bank Rakyat Indonesia (BRI) finance director Haru Koesmahargyo said the state-owned bank would implement additional reserve provisions as a preventive measure against credit quality changes. Meanwhile, PT Bank Ina Perdana president director Daniel Budirahayu said his company would increase the bank’s loan loss provision (CKPN) to anticipate the risk of an NPL ratio increase in 2021.

Deposit Insurance Corporation (LPS) chairman Halim Alamsyah stated that public bank savings had slowed down during the pandemic, but there was still a high degree of trust in the banking system. However, he added that liquidity risk was unavoidable with the slowdown in new loan extensions and the pressure of debt restructuring.

Trioksa Siahaan of the Indonesian Banking Development Institute (LPPI) said the banks had to continue to be aware of their credit quality, as the new normal protocol had seen a rise in COVID-19 cases. He suggested that reserve measures be increased and highlighted the liquidity problems experienced by some banks because of their customers’ panic.

BNI to save Bank Bukopin Kontan, headline

Bank Bukopin (BBKP) is now running after fresh capital as its financial indicators are worsening. State-owned Bank BNI (BBNI) is currently giving technical assistance to BBKP to maintain the latter’s liquidity.

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BBKP’s financial indicators in the first semester are worsening, with the capital adequacy ratio (CAR) standing at 12.59 percent – barely above the required 12 percent – and nonperforming loans of 5.33 percent, up from 4.45 percent in the last quarter of 2019.

A source told Kontan that the cooperation between BBKP and BBNI was more than just technical assistance. The source said BBNI would take over BBKP’s performing loans in return for liquidity support. The source said BBNI’s entrance into BBKP was almost like saving BBPK, considering that the government owns 8.92 percent of BBKP.

Another source told Kontan that another state-owned bank would enter BBKP through a right issue that would be decided at BBKP’s upcoming general shareholders meeting on June 18. If two state-owned banks enter BBKP, BBKP’s finances would be strengthened.

Samuel Sekuritas Indonesia head of research Suria Dharma said KB Kookmin Bank of South Korea, holding a stake of 22 percent in BBKP, would stand ready to buy rights shares that were not absorbed by other shareholders. That way, KB Kookmin Bank would become the controlling shareholder of BBKP.

Currently, the controlling shareholder of BBKP is PT Bosowa Corporindo with a 23.39 percent share, followed by KB Kookmin Bank and the Indonesian government. The investing public holds 40.21 percent.

Bonds safe investment in volatile market: Experts The Jakarta Post, headlines

While not particularly popular among retail investors, investment in the bond market provides prospects for a safe and steady income, as the government plans to issue more debt papers to fund the nation’s COVID-19 battle, a webinar has concluded.

Handy Yunianto, head of fixed income research at Mandiri Sekuritas, said that low interest rates made it difficult to deliver high rates of return from investing in safer investments, such as time deposits. Meanwhile, the recent volatility in the stock market has stoked fears among individual investors of the prospects of losing their lifetime savings, he added.

“Bonds provide diversification and smooth out the higher volatility connected with equities,” Handy said in his presentation during the webinar “Investing in a high-

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risk environment: Managing fixed-income funds”, part of The Jakarta Post’s webinar series “Jakpost Up Close”.

Over the past year, Indonesian sovereign bond returns have been higher than the sovereign bonds of other emerging markets or the Jakarta Composite Index (JCI), the benchmark stock index, according to total return index figures from Bloomberg and Mandiri Sekuritas.

“Foreign investors have enjoyed the bond rally, [but] unfortunately, retail participation is still low,” said Handy, citing data from the Finance Ministry’s debt management office that show a retail investor participation rate of 3 percent in tradable government bonds. Foreign investors account for 38 percent of ownership, followed by nonbank institutions and banks at 22 percent and 21 percent, respectively.

The JCI has dropped 15 percent overall in the past year and nearly 22 percent so far this year. Meanwhile, one-year rupiah deposit rates at local banks stand at around 4 to 5 percent. The government’s last retail bond issuance came with a fixed 6.8 percent coupon rate per year while the benchmark 10-year yield stood at 7.26 percent on Wednesday.

Local industries ask for protection from imports Kompas, Economic and Business page

Imports of numerous industrial products, such as carpets, kitchen utensils and solar panels, have risen significantly in the first five months of this year despite COVID-19 pandemic, prompting the affected local industries to ask for government protection from the foreign competition in the form of trade safeguards.

The Indonesian Trade Safeguards Commission (KPPI) recorded that at least seven industries had submitted complains about rising imports of industrial products in the first five months of this year. Imports of solar panels, for example, had increased by 59 percent compared to last year; imports of flat glass rose by 52 percent, kitchen and eating utensils by 39 percent, carpets and floor cover products by 25 percent, cigarette paper by 15 percent, tarpaulin by 13 percent and garments by 8 percent.

Flat and Safety Glass Association chairman Yustinus H. Gunawan said his association had submitted a complaint to the KPPI and asked the KPPI to recommend measures to protect local producers.

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Indonesian Solar Energy Association chairman Andhika Prastawa said local producers of solar panels could not compete with imported panels, especially from China. International prices of solar panels stood at 25 US cents to 30 US cents per watt, while Indonesian-produced solar panels cost 30 US cents to 40 US cents per watt. He called on the government to develop the upstream solar panel industry, so that domestic producers of solar panels could compete with imported panels.

Indonesian Chamber of Commerce and Industry (Kadin) deputy chairwoman Sintha Kamdani warned the government not to quickly impose trade measures, because that would be seen as protection for uncompetitive domestic industries.

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