AmCham Update Vol. 4 #32

IMF Warning, PLN & Energy Transition, Used Clothes Bad for Business, Labor Party Seeks Job Creation Judicial Review, Call for Early Holiday Allowances

Mar 27, 2023

IMF Warns of Increased Risks to Financial Stability

The International Monetary Fund (IMF) is to release an updated outlook on global economic growth as the risk of financial stability has increased, IMF Managing Director Kristalina Georgieva said on March 26. She said 2023 will be a challenging year, so all countries must remain vigilant, despite the effective measures of advanced economies to calm the markets following the Silicon Valley Bank collapse. Global growth will remain well below its historic average of 3.8 percent and the overall outlook remained weak.

On a positive note, she said China has shown signs of recovery, and its recently reopened economy would expand by 5.2 percent this year, in line with Beijing’s official target of 5 percent. The IMF also increased Indonesia’s economic growth projection to 5 percent year-on-year (YoY), from the previous 4.8 percent. The expected growth is lower than last year as commodity prices start to normalize and monetary tightening weakens Indonesia’s trade surplus.

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PLN Steps Up Support of Energy Transition

State electricity company PLN plans to boost its power capacity using clean technologies to help the government achieve its target of Net-Zero Emissions (NZE) by 2060. The growth of renewable energy sources, de-dieselization projects, the retirement of coal-fired power stations and biomass co-firing are among the company’s short-term targets, while its long-term objectives include energy transformation efforts such as carbon capture, utilization, and storage (CCUS) as well as hydrogen co-firing.

The project will require a total investment of more than $700 billion. PLN will also need to reevaluate its long-term electricity procurement plan (RUPTL) due to the rising demand for renewable energy, Director of Transmission and System Planning Evy Haryadi said.

PLN has so far procured 1.2 gigawatts (GW) of renewable energy generators, and will continue to purchase more this year from hydro, wind, and solar power plant. The strategy is in accordance with the company’s 2021-2030 RUPTL.

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AmCham Cares: Siloam Hospitals Group

Siloam Hospitals Group has been implementing the Close the Care Gap program, which is the theme of World Cancer Day, since 2022, particularly in reducing gaps in cancer knowledge and care. As one of the largest healthcare providers in Indonesia, Siloam supports healthcare transformation.

Breast cancer screening is crucial to enable early cancer detection and treatment. This year Siloam will enhance its service commitment by providing free breast cancer screening services. In line with the Close the Care Gap theme Siloam has initiated the SELANGKAH (SEmangat LAwan KANker) or Spirit to Fight Cancer campaign, and will hold a free breast cancer screening program through mammography examination for 25,000 women throughout Indonesia, targeting women aged 35 years and over.

For more information on SELANGKAH and how to participate, please visit: siloamhospitals.com/selangkah.

Business vs Gov't on Thrifting: Pros and Cons

President Joko Widodo has said that the illegal importing of second hand clothing business, also known as thrifting, disrupts the local textile industry.

The government reinforcing the ban on imported secondhand clothing and the Ministry of Trade’s recent destroying of Rp 10 billion worth of secondhand apparel, has triggered both praise and criticism. Minister of Trade Zulkifli Hasan said thrifting is not only detrimental to domestic products, but also that used clothes pose a risk of transmitting dangerous diseases to the wearer.

But many businesses disagree. They say the secondhand clothing business cannot be compared to numerous imitation goods and counterfeit traders that are present here, and that it is environmentally profitable as it helps reduce clothing waste.

This move has resulted in a number of secondhand clothing merchants temporarily closing. In response, the Ministry of Cooperatives and SMEs started a program to support merchants who can no longer sell imported used clothes to divert to selling local products. Interested merchants can register through WhatsApp at 0811-1451-587.

Minister of Trade Regulation 40/2022 concerning Changes to the Minister of Trade Regulation 18/2021 on Export Banned Products and Import Prohibited Goods contains the restriction on the import of secondhand apparel.

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Labor Party to Submit Judicial Review on Job Creation Perppu

The small Labor Party is planning to submit a judicial review to Government Regulation in Lieu of Law 2/2022 on Job Creation, which was passed into law last week. A nationwide protest and international campaign against the law are also in the pipeline.

The private sector has broadly welcomed the passing of the law, as it provides certainty to investors and businesses, and it met with only minor opposition in the House of Representatives.

Indonesian Chamber of Commerce and Industry (KADIN) Chair Arsjad Rasjid welcomed the law, saying it is important in bringing more jobs to Indonesia. Taking a more cautious approach, the Indonesian Employers Association (APINDO) also welcomed the law, but said it contained some burdensome provisions to businesses.

One major improvement with the law is a change to make halal certificates valid indefinitely as long as there is no change in the composition of products and/or the manufacturing process. The process of obtaining halal certification for micro, small, and medium-sized enterprises (MSMSEs) has also been accelerated to 10 working days, while previously there was no maximum time limit for the certification process.

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Jokowi Encourages Early Payment of Holiday Allowances

President Joko Widodo has called on private sector businesses to award employees their holiday allowances (THR) at the latest by April 18, Minister of Transportation Budi Karya Sumadi said. The decision was made to adjust to changes in cuti bersama and national holiday dates that have been moved forward by the government to April 19-25.

This is also anticipation of higher mudik movements this year, compared to the past two years, due to the winding down of the pandemic. This may encourage some workers to travel sooner rather than later. However, no formal announcement has been made. Secretary General of the Ministry of Manpower Anwar Sanusi said the Ministry hopes to release a circular soon with formal guidelines on the 2023 Lebaran THR. But based on Ministry of Manpower Regulation 16/2016, employers are obligated to give holiday allowances at least seven days before the national holiday.

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AmCham Update is AmCham's regular newsletter on developments related to the pandemic crisis and other issues in Indonesia. It is edited by AmCham Managing Director A Lin Neumann and written by the AmCham Staff. Paul L Goddard

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