Update COVID-19 in Indonesia: 115,056 confirmed infections, 5,388 deaths (4 August 2020)
Indonesia Investments Report - July 2020 Edition: A Modest Rebound
5 August 2020 (closed)
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Berita Hari Ini Environment
Plastic waste is a huge problem in Indonesia. Over the past few years, various images surfaced on the Internet and media showing how beaches on Bali – the famous island that forms the most popular tourist destination in Indonesia - are swamped by plastic garbage. Another example is the city of Bandung (West Java) where the Indonesian army had to lend a helping hand last year to fish plastic garbage out of local rivers.
On Monday (08/04) Indonesia Investments released the March 2019 edition of its monthly research report. The report aims to inform the reader of the key political, economic and social developments that occurred in Indonesia in the month of March 2019 and also touches upon key international developments that impacted on the Indonesian economy.
As is widely known, especially to those who have visited certain beaches in Bali, Indonesia needs to combat water pollution, and specifically plastic waste. While local authorities on Bali announced earlier this week to enact a ban on single-use plastics, such as shopping bags, styrofoam food packets and straws (while Jakarta may follow suit), Indonesia's Industry Ministry expressed it opposes an earlier plan to impose an excise tax on plastic bags.
Sarana Multi Infrastruktur (SMI), a fully state-owned infrastructure financing company that plays an active role in facilitating infrastructure development across Indonesia, became the first corporate entity to issue green bonds in Indonesia. The green bonds were listed on the Indonesia Stock Exchange on Tuesday morning (10/07).
In local media in Indonesia it is reported that the Indonesian government, in this case the Trade Ministry of Indonesia, claims that Norway is on the brink of provoking a trade war against Indonesia. Indonesian Trade Minister Enggartiasto Lukita threatens Norway with retaliation if the Norwegian government goes ahead with parliament's vote to ban the public procurement and use of palm oil-based biofuel.
Discussions about the regulatory framework - including incentives - for the electric car industry in Indonesia are ongoing. Hence, stakeholders in the country's automotive industry are eagerly awaiting for results of government discussions and a roadmap before investing in manufacturing facilities for the launch of electric cars on the Indonesian market.
The government of Indonesia raised USD $1.25 billion through the issuance of global "green" bonds, hence becoming the first Asian country to issue this type of bond. With the proceeds from the green bond the Indonesian government will fund projects that have positive environmental and/or climate benefits.
So far, an area of 1.9 million hectares of oil palm plantations, which can produce up to 8.2 million tons of crude palm oil (CPO), has been certified under the Indonesia Sustainable Palm Oil (ISPO) scheme. As of August 29, 306 ISPO certificates have been granted to 304 Indonesian oil palm companies, one plasma farming association, and one farmer self-help cooperative. The above-mentioned figure includes the 40 ISPO certificates that were submitted today to local palm oil companies.
There is concern about forest fires on parts of the islands Sumatra and Kalimantan. Sutopo Purwo Nugroho, spokesman for the National Disaster Mitigation Agency, said five Indonesian provinces - Riau, Jambi, South Sumatra, West Kalimantan, and South Kalimantan - declared emergencies as peat-lands are burning and there are risks of fires spreading to nearby regions. Eighteen helicopters have been deployed to combat the fires.
Again the government of Indonesia and the European Union (EU) are on opposite sides when it comes to the palm oil sector. Last week, EU parliament passed the Resolution on Palm Oil and Deforestation of Rainforests. This resolution will make it increasingly difficult for Indonesia to export palm oil to the EU as the bloc wants to gradually reduce the use of vegetable oils, including palm oil, that are not sustainably produced in biodiesel. This is a strategy to combat deforestation as well as human rights violations in this sector (for example child labor).
Artikel Terbaru Environment
The severe oil spill in the Balikpapan Bay (East Kalimantan) could lead to sanctions for Indonesia's state-owned oil and gas company Pertamina. Arcandra Tahar, Deputy Minister of Indonesia's Energy and Mineral Resources Ministry, said his ministry is joining forces with the Ministry of Environment and Forestry to investigate the oil spill case. Five fishermen were killed by toxic smoke, while it is feared that severe damage has been done to marine live and the ecosystem in the area.
Stakeholders in Indonesia's pulp and paper industry are concerned about the future of this industry after Indonesia's Environment and Forestry Ministry suspended the operational activities of Indonesia's second-largest timber company, Riau Andalan Pulp and Paper (RAPP), through a decree. RAPP is a unit of global pulp and paper industry giant Asia Pacific Resources International (APRIL). Meanwhile, APRIL is a unit of Singapore-based Royal Golden Eagle.
The World Wildlife Fund (WWF) unit in Indonesia said efforts to multiply Sumatran tiger populations (panthera tigris sumatrae) are constrained because those forest areas ("pockets of forest") that are the habitat of this endangered species has become increasingly small. Despite the challenges, Aditya Bayunanda, WWF Indonesia's Policy, Sustainability and Transformation Director, said the WWF continues to fight for the tiger. On Friday (28/07) WWF Indonesia launched the "double tiger" program (abbreviated as Tx2) in Jakarta.
Non-governmental environmental organization Greenpeace blocked all import and export channels of crude palm oil (CPO) trader IOI on Tuesday morning (27/09) in the harbor of Rotterdam (the Netherlands), the city that acts as palm oil’s gateway into Europe. Greenpeace activists decided to take action after a Greenpeace International report showed that palm oil from companies that are reportedly involved in forest destruction, peatland fires and child labor is still flowing into Europe and the USA through IOI facilities.
A year ago - between June and October 2015 - severe man-made forest fires on the Indonesian islands of Sumatra and Kalimantan released some 11.3 million tons of carbon per day, caused Indonesia to experience damages estimated at 1.9 percent of GDP (World Bank estimate), and spread toxic haze to other parts of Southeast Asia. Not only its regional neighbors but most of the world directed its anger at Indonesian authorities that failed to combat the fires, and more importantly, failed to uphold laws that forbid the slash-and-burn practice.
Indonesia's Ministry of Energy and Mineral Resources will soon issue a moratorium on new coal mining concessions. This moratorium will be implemented after the issuance of a planned presidential instruction regarding a five-year moratorium on new palm oil plantation concessions. Heriyanto, Head of the Legal Department Directorate General of Minerals and Coal at the Energy Ministry, emphasized that the moratorium in Indonesia's mining industry only involves coal, not the mining of minerals.
Domestic coal consumption in Indonesia rose 34.5 percent (y/y) to 24.5 million tons in the January-April 2016 period, according to data from Indonesia's Energy and Mineral Resources Ministry. This growth is caused by higher domestic coal demand due to Indonesia's ambitious 35,000 MW program (many of the power plants constructed in this program are coal-fired). Meanwhile, Indonesia's coal exports were down 14 percent (y/y) to 68 million metric tons over the same period amid sluggish global demand.
Last week it was announced that the Japan Bank for International Cooperation (JBIC) agreed to a USD $3.4 billion loan for the construction of the controversial Batang power plant in Central Java. This power plant project is controversial as it met fierce resistance from the local community (triggering concerns about human rights violations related to the land acquisition process) as well as criticism from environmental groups, saying this power plant - set to become Indonesia's largest coal-fired power plant - runs counter to Indonesia's earlier commitment to reduce carbon emissions.
Indonesian President Joko Widodo has ordered the nation's Minister of Environment and Forestry Siti Nurbaya to issue a moratorium on new palm oil concessions in a number of provinces. Although Widodo wants Indonesia - the world's top producer and exporter of crude palm oil (CPO) - to raise CPO output, he believes this increase can be achieved by increasing productivity of existing palm oil plantations, not by adding new plantations. Indonesia is often criticized by environmentalist groups for its forestry policies and poor law enforcement (which led to the severe haze that spread through Southeast Asia last year).
Although the palm oil industry of Indonesia is resented by many for the negative impact it has on mother nature (for example the seasonal forest fires that occur on parts of Sumatra and Kalimantan), it also constitutes a vital industry: across the globe crude palm oil (CPO) is used for the production of a wide variety of products from food, cooking oil to cosmetics or biodiesel. Indonesia is the world's largest producer and exporter of CPO. This column is the first installment in a series, written by Senior Consultant William Yang, that discusses Indonesia's palm oil industry, particularly the different business models, the risks, and how to invest safely in this industry.
