US Elections, Patimban to Open, Vaccine Plans, Data Center Investment
Nov 20, 2020 | AmCham Indonesia
AmCham & HSBC Host Market Update Webinar
AmCham Indonesia, in partnership with HSBC Indonesia, hosted a live webinar today, Nov 19, focused on the recently passed Omnibus Job Creation Law and the impact of the US presidential election on Indonesia. More than 100 business leaders and AmCham members attended the event under the theme Looking Beyond COVID-19.
The event began with remarks from Francois de Maricourt, President Director of HSBC Indonesia, who spoke of how COVID-19 is compelling companies, individuals and governments to rethink their strategies and business models in order to survive. He also spoke about the importance of leadership and adaptability in Indonesia’s public and private sectors during this time.
Next up was Ali Setiawan, Head of Global Markets at HSBC Indonesia, who gave attendees an in-depth briefing on how COVID-19 has affected Indonesia’s economy, including a detailed quarter by quarter breakdown on the financial and tourism sectors, as well as current and future challenges faced by the Indonesian economy.
During a panel discussion on the US elections, Steven Okun, a senior advisor at McLarty and Associates Singapore, and Ernest Z Bower, President and CEO of Bower Group Asia in Washington, DC, joined the discussion. Both Okun and Bower focused on the US election aftermath and what is happening on the ground in Washington, DC. They also shared their views on what a Joe Biden presidency will mean for Indonesia, Southeast Asia and China with regard to foreign policy, trade and the economy. The key takeaway: Biden is likely to pursue a more “values” driven foreign policy as opposed to the “transactional” approach of President Donald Trump.
The Q&A session touched on topics ranging from multilateral alliances to the substance of the Omnibus Law and the shape of Indonesia’s economic recovery. The freewheeling session concluded with closing remarks from Eri Budiono, Head of Commercial Banking at HSBC Indonesia.
Government Outlines Vaccination Plan
The government is targeting vaccinating 67 percent of the 160 million Indonesians aged 18-59, once designated vaccines are available.
Minister of Health Terawan Putranto announced two vaccination schemes: a vaccine program for 32 million people, including Armed Forces and Police, and independent vaccines for 75 million additional people. The procurement of independent vaccines will be carried out by state-owned enterprises.
The immunization service flow will have four stages:
Background check to determine whether individuals can receive the vaccine
Observation by name and address.
Terawan said he would use the same distribution facilities as the established routine immunization service for other vaccines. The provision of vaccines will be done by the central government and distributed to vaccine warehouses at provincial health offices before being forwarded to community health clinics.
Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan met with US President Donald Trump at the White House yesterday, Nov 18, to strengthen bilateral cooperation on trade and investment between Indonesia and the US. During the meeting, he expressed gratitude for the recent US Trade Representative (USTR) decision to retain Indonesia as a beneficiary under the generalized system of preferences (GSP) tariff exemption facility.
The meeting provided an opportunity for Luhut to speak on the growing economic relations between the US and Indonesia, and how he expects cooperation with the US to continue to improve. He emphasized that the US and Indonesia will always be friends, regardless of who the president is.
Luhut also discussed cooperation between US and Indonesian companies in vaccine production for COVID-19 in a meeting with US Vice President Mike Pence.
The massive potential of the data center industry in Indonesia is being tapped by tech giants such as Amazon, Google and Alibaba. At the 2020 West Java Investment Summit, West Java Governor Ridwan Kamil said Amazon’s data center would be completed by the end of 2021.
The exact project location remains unclear, but Amazon Web Service (AWS) Indonesia Country Leader Gunawan Susanto said Jakarta was one of the new AWS areas in the Asia Pacific. AWS serves digital companies throughout ASEAN.
Google launched a cloud computing data center in Jakarta at the end of June 2020. In addition to services provided to private companies, Google also offers data processing solutions to government agencies to store encrypted data. Alibaba launched its first data center in Indonesia in 2018, and its third data center will be established here in early 2021. Microsoft also recently expressed an interest in building a data center in Indonesia.
On the front lines in the fight against COVID19, Sanofi and GlaxoSmithKline (GSK) are committed to making an approved and licensed vaccine available globally.
Sanofi has signed a statement of intent with the COVAX facility co-led by the World Health Organization; Gavi, the Vaccine Alliance; and the Coalition for Epidemic Preparedness Innovations (CEPI) to secure the distribution of its COVID19 vaccine worldwide. Through the COVAX facility’s efforts, the vaccine will be accessible to those most at risk.
In addition to the recombinant protein-based vaccine in collaboration with GSK, Sanofi is also developing a messenger RNA vaccine in partnership with Translate Bio.
Sanofi expects the Phase 1/2 study to start in the fourth quarter of 2020, with earliest potential approval in the second half of 2021. Translate Bio has established manufacturing capacity and Sanofi expects to supply annual capacity of 90 to 360 million doses.
Trade Surplus Hits $3.6 Billion for October
Central Statistics Agency (BPS) data shows Indonesia recorded a trade surplus of $3.6 billion in October 2020, from $14.39 billion of exports and $10.78 billion of imports. BPS Deputy Head Setianto said this was a significant increase from September due to a 6.79 percent fall in imports. Exports in October increased by 3.09 percent.
Indonesia's exports from January-October 2020 reached $131.54 billion and imports $114.46 billion, showing a surplus of $17.07 billion during the period.
Bank Indonesia has cut its benchmark interest rate, the 7-day Reverse Repo Rate, by 25 basis points to 3.75 percent, for the first time since July. The decision was made today, Nov 19, during its November Board of Governors meeting, much to the surprise of pundits, with CNBC Indonesia and Reuters previously predicting the rate would remain at 4 percent. BI Governor Perry Warjiyo said the decision was made due to predicted low inflation, and external stability and recovery measures. The deposit facility rate was also cut to 3 percent and the lending facility rate to 4.5 percent.
Regional Officers Can Be Removed for Not Complying with COVID-19 Protocols
Regional Officials can be ousted if they flout COVID-19 health protocols after Minister of Home Affairs Tito Karnavian issued Instruction No. 6/2020 concerning Enforcement of Health Protocols to Control the Spread of COVID-19.
The Instruction is a guide to procedures for subordinate officials regarding implementation of a policy based on or originating from higher level legislation. It reminds regional governments there are consequences if they do not comply with existing regulations or legislation, as stated in Article 78 of the Regional Government Law (Law No. 23/2014), in particular regarding the COVID-19 pandemic.
It was triggered by recent events attracting large crowds, contrary to COVID-19 health protocols, such as last week’s massive crowds for the return of Islamist firebrand Rizieq Shihab to Indonesia. The Ministry emphasized that regional officials can be removed from office if they neglect health protocols and allow large crowds to gather.
Minister of Transportation Budi Karya said Patimban Port in Subang, West Java, will begin operating in December. It will be an alternative to Tanjung Priok Port and is expected to increase Indonesia's automotive exports. He said he hoped the port will be used as a terminal immediately for exporting and importing cars.
West Java Governor Ridwan Kamil said the port would be one of the attractions for investment in West Java, alongside other infrastructure such as the Jakarta-Bandung Fast Train, the Cileunyi-Sumedang-Dawuan (Cisumdawu) Toll Road, and the Rebana Metropolitan Area, consisting of Sumedang, Majalengka, Cirebon, Subang, Indramayu and Kuningan with a population of 9.28 million. Ridwan has asked the respective regional governments of those cities to prepare skilled human resources.
Support Independent Journalism: Subscribe to The Jakarta Post
In these difficult times, our hometown English language newspaper, The Jakarta Post, is more important than ever. Given the difficulties of physical circulation and the economic slump, the Post needs to boost its online subscribers – a goal we heartily support at AmCham Indonesia. Quality English language news is vital for our businesses, our home offices and the flow of information out of Indonesia. It is for this reason, that we are urging all of our members and readers to subscribe to JP! Information is what will help get us through this crisis. Below is information about how to sign up.
We Still Need Your Support to Shelter the Front Line
AmCham Indonesia and Habitat for Humanity have joined forces in an initiative called Sheltering Those Who Care for Us, a program to provide temporary quarters in hotels for Indonesian medical workers during the COVID-19 pandemic. Our program has helped not only medical workers in Jakarta, but also Tangerang and Surabaya; we are now planning to expand to Sulawesi.
With the COVID-19 pandemic still spreading, medical workers are working a lot harder than before. In these difficult times, they often cannot go back home for fear of infecting family members or being rejected by their local communities. As a result, they are forced to sleep in hospitals without a proper bed, also increasing the possibility of getting infected.
By donating, we will increase the overall capability of Indonesia to treat COVID-19. Habitat will match individual hospitals with hotels on an as-needed basis.
We are continuing with a full slate of meetings, events and information offered to our community online. But we can only do this through the support of our members. If you are not yet an AmCham member, please join now!
AmCham Indonesia is open to all companies with an interest in US business relations and we have many non-American members. We are a community and we welcome you!
The AmCham Office is on work from home status and all face-to-face meetings and events have been postponed. We are having a number of meetings online using the Zoom platform. You will be notified of virtual meetings as they are scheduled.
What is Your Company Doing on COVID-19?
Please let us know what measures your company may be taking in the form of donations and other assistance to help Indonesia during this time of confusion and concern. Contact [email protected] with your news. We would like to publicize the ways that our AmCham companies are pitching in.
Stay safe, call a doctor if you have a high fever, cough, or difficulty breathing. Stay healthy above all else.
COVID Update is AmCham’s regular newsletter on developments related to the pandemic crisis in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard is the Managing Editor