Macan power: Artistic rendering of the Porsche Macan, the premium German
carmaker’s newest SUV.
The Macan will start production in 2013 from Leipzig. (Courtesy of Porsche AG)
German premium carmaker Porsche AG announced in a media statement sent to The Jakarta Post on Friday that its
new SUV model will be named the Macan.
Macan is the Indonesian word for tiger and the SUV will combine suppleness, power, fascination and dynamics as
the core characteristics of the new off-road car.
“The Macan combines all the characteristics of a sports car with the benefits of a SUV and is a genuine Porsche”,
Bernhard Maier, executive vice president of sales and marketing at Porsche AG said in the statement.
“The name of a new Porsche has to fit with the brand, sound good in very many languages and dialects and evoke
positive associations.”
As the fifth Porsche model line, the Macan is a central plank of Strategy 2018, by which the sports car manufacturer
will expand its model portfolio. Porsche intends the Macan to emulate the success of the Cayenne.
Cynthia Ratna, spokeswoman for Porsche in Indonesia, told the Post she was pleasantly surprised and proud when
she learned of the choice of name for the new model and that the decision to give the car an Indonesian name had
been made by Porsche’s head office in Germany.
The SUV will be produced at the company’s plant in Leipzig, starting in 2013. The site in the Saxon city is being
expanded into a fully-fledged production plant including body assembly line and paint shop.
With an investment of €500 million (US658.07 million), it is one of the biggest building projects in Porsche’s
corporate history. In the medium-term, the sports car manufacturer expects to create more than 1,000 new jobs.
Model names at Porsche have traditionally had a connection with the characteristics of the cars themselves: the
name Boxster describes the combination of boxer engine and roadster, Cayenne stands for sharpness, the Cayman is
snappy and agile and a Panamera is more than a Gran Tourismo, capable of winning the Carrera Panamericana long-distance
race.
President Obama is expected to announce that federal Export-Import Bank financing will be available to any U.S.
firm competing for either domestic or international sales against foreign companies who are deemed to have received
"non-competitive official financing that fails to observe international disciplines." Such financing
can make the difference between a Boeing sale and no sale in the risky, often money-losing airline business.
By Dominic Gates
Seattle Times aerospace reporter
President Obama, speaking at Boeing's Everett plant Friday, plans to announce a series of measures to promote
U.S. exports, according to an outline of his remarks provided by the White House.
For Boeing, the most significant action may be an expansion of the authority of the federal Export-Import Bank
that could help protect sales of the 737 MAX.
Obama is set to announce that he'll extend Ex-Im Bank financing and loan guarantees to cover not only international
but
also domestic sales of U.S. products, if foreign governments offer such financing for competing products.
Until now, Ex-Im has stayed out of domestic sales. Providing federal financing to, for example, a U.S. airline
interested in buying Boeing's 737 MAX, would be a break with long-standing practice.
The shift may be directed to support the MAX against competition from Bombardier of Canada's new CSeries jet.
The President "will not allow U.S. companies and workers to lose out on valuable business due to unfair export
financing — and will use the Administration's full powers to ensure that they are competing on an even footing,"
according to the advance summary of his remarks.
In addition to the extension of Ex-Im authority to domestic sales, the President's prepared remarks include a call
for Congress to reauthorize the Bank before it hits its $100 billion lending ceiling, which could happen as early
as next month.
He'll also lay out a pilot program for the Ex-Im Bank to help small business exporters with 6-12 month loans of
up to $500,000.
The prepared remarks state that this program will give Boeing suppliers access to more than $700 million in short-term
credit this year.
The underlying theme is creating manufacturing jobs. The Boeing plant is the perfect location to promote the Ex-Im
Bank
as a powerful agency to push that election-year agenda.
The Canadian government is set to provide loan guarantees to Bombardier to help boost CSeries sales, which have
so far been slow.
U.S. diplomatic cables released last year by Wikileaks revealed that the Obama Administration privately told the
Canadian government in 2009 that such financing would put Boeing at an unfair disadvantage under the current rules.
U.S. Treasury officials threatened to match any Canadian government financial backing in a head-to-head sales battle
between Boeing and Bombardier.
Last May, Fred Hochberg, chairman of the Ex-Im Bank, in an interview with The Seattle Times, said that his agency
was actively considering such a move and that if the Canadians proceeded, Boeing "can rely on our backing."
"It's a question of competing for jobs in Washington state or Quebec," Hochberg said then. "I have
a clear preference where I want the jobs to be."
But Hochberg added afterward that to provide such backing to Boeing his agency would need approval from the U.S.
Treasury.
With Obama's announcement in Everett, it appears that the U.S. has pulled the trigger and that Ex-Im will now have
the authority to go ahead and provide financing and loan guarantees for domestic sales.
The federal financing will be available to any U.S. firm competing for either domestic or international sales against
foreign companies who are deemed to have received "non-competitive official financing that fails to observe
international disciplines."
Such financing can make the difference between a Boeing sale and no sale in the risky, often money-losing airline
business.
Many airlines eager to buy Boeing jets simply don't have the cash and also can't afford or wouldn't qualify for
a commercial bank loan.
But the Export-Import Bank can come in and offer the U.S. government's guarantee to back a commercial bank loan,
shifting the risk from the bank to the government. If an airline defaults, the Ex-Im pays off the loan and pursues
the airline for its money back.
Ex-Im backing instantly renders credit-worthy an airline that couldn't otherwise raise the money and enables it
to go ahead and buy Boeing jets.
It's a system that has been pumping up international sales to record levels for the last three years. In 2011,
the Bank provided $32 billion in financing for U.S. exports.
Air India bought its 787 Dreamliners with Ex-Im financing. President Obama will cite Ex-Im support for Boeing jet
sales to Ethiopian Airlines and most recently to Lion Air of Indonesia. Lion Air finalized a record order just this week of 230 Boeing 737s, including 201
of the upcoming MAX model. The deal was originally announced during a state visit by Obama to Indonesia last November.
"The Export-Import Bank played a critical role to support that deal," according to the summary of Obama's
prepared remarks.
Although Airbus sales chief John Leahy complained bitterly about "political interference" in that sales
campaign, the European government banks offer similar financing in overseas competitions.
Since the 1980s, there has been an informal agreement between the U.S. and the four home countries of Airbus in
Europe: The U.S. government's Ex-Im Bank and the corresponding lending institutions in Britain, France, Germany
and Spain don't provide loan guarantees to airlines in each other's home markets.
But while this creates parity between Boeing and Airbus in sales competitions, the balance is potentially upset
if the Canadians offer loan support to either U.S. or European customers.
Obama's prepared remarks do not mention Canada. Instead, China is cited as a competitor that provides "unfair
advantages."
While Chinese jets may possibly be a threat to Boeing eventually, that prospect is realistically at least a decade
away.
In contrast, Bombardier is trying to sell to United and other U.S. airlines this year.
Still, the CSeries jet is considered less of a market threat to Boeing than it was before the MAX was launched.
It will be hardball trade politics if the U.S. government steps in to weaken its sales further.
Dominic Gates: 206-464-2963 or dgates@seattletimes.com
When Jim O’Neill, chairman of Goldman Sachs Asset Management, coined the term BRIC — Brazil, Russia, India
and China — in 2001 to refer to newly developed economies, Indonesia, struggling after the Asian financial crisis
and a tumultuous change in leadership, was left off the list.
More than a decade on, having proved its resiliency in the mortgage-driven global crisis of 2008, Indonesia is
now right up there with the BRICs as an attractive investment destination.
Such sentiment is echoed by Mark Mobius, executive chairman of Templeton Emerging Markets Group, a unit of Franklin
Templeton Investments that manages more than $40 billion in emerging market assets.
“We think Indonesia is one of the markets in Asia with great potential,” Mobius said in an e-mail on Monday.
While economic expansion has been weak in the United States and European countries like Spain face the possibility
of slipping back into recession, Asia has been supporting global growth. Indonesia’s 6.5 percent economic growth
last year was its fastest since 1996, lifting average per capita income to $3,500 from $3,000 in 2010.
Indonesia is also abundant in natural resources. Among shipped commodities, it is the world’s largest producer
of tin, rubber and crude palm oil. It also exports vast amounts of coal, gold, iron ore and natural gas.
The country’s emerging middle class has added to the valuation of some local companies, as their earnings “are
helped by strong economic growth, growing consumer demand and government expenditure on infrastructure development,”
said Mobius, an emerging market maven who used to pitch Templeton’s funds in television ads asking viewers what
was the difference between Slovenia and Slovakia.
“This in turn has led to a positive earnings growth outlook for consumer-related companies,” he said. “Indonesia’s
extensive resources and large population put it in a favorable position to attract investments.”
As of the end of December last year, Mobius’s Templeton Emerging Markets Fund had 11 percent of its $1.1 billion
in Indonesia, making the country its third-largest holding. Tops were Brazil (19.9 percent) and Russia (13.9 percent),
with India (9.5 percent) and China (8.5 percent) at fourth and fifth.
In Templeton’s $15 billion Asian Growth Fund, Indonesia accounted for 13.6 percent of the holdings, after China
(30.1 percent), Thailand (22.3 percent) and India (15.3 percent).
One of Templeton’s biggest holdings here is Astra International, whose businesses include automotive distribution,
logistics, infrastructure, financial services, information technology, mining and energy, and palm oil production.
Astra accounts for 7.1 percent of the Asian Growth Fund and 6.3 percent of the Emerging Markets Fund, making it
the biggest single company holding for either fund.
Astra’s share price has risen more than sevenfold in rupiah terms since 2005. Its profit more than tripled to Rp
14.4 trillion ($1.6 billion) in 2010 from Rp 3.7 trillion in 2006, according to Bloomberg data. In the January-September
period last year, its net income exceeded Rp 13 trillion. Its shares closed at Rp 71,500 on Thursday.
Mobius is also interested in companies that are strong producers of commodities such as oil, iron ore, aluminum,
copper, nickel and platinum. Such commodities, he said, have attractive prospects as emerging countries are busy
developing their infrastructure. As emerging markets continue to grow, demand for soft commodities such as sugar,
cocoa and select grains has also increased, Mobius said.
“Resource-rich countries like Indonesia are benefiting from increasing global demand,” he said.
“We are finding good opportunities in companies involved in transportation equipment as well as producers of palm
oil and mining companies such as coal producers,” he added.
Indonesia’s benchmark stock index rose by 2.2 percent in dollar terms in 2011, while the main measures of the BRIC
nations dropped by more than 17 percent, according to Bloomberg data.
Since the start of the year the Jakarta Composite Index has gained 3.5 percent. In the same period, Brazil’s IBOV
index, Russia’s RTSI index and India’s Sensex have advanced more than 20 percent. China’s Shanghai Composite Index
is up more than 9 percent, Bloomberg data show.
Fauzi Ichsan, an economist with Standard Chartered, agreed with Mobius’s assessment that foreign investors would
be attracted to Indonesia’s commodities and publicly traded companies.
But challenges remain in investing in an emerging market such as Indonesia. Fauzi says the country is likely to
continue experiencing a reversal of overseas investment in the capital markets until the end of the first half
of this year as sovereign debt problems in the euro zone weigh on the global economic outlook.
According to Bank Indonesia deputy governor Halim Alamsyah, portfolio investment — which includes stocks and bonds
— in Indonesia totaled $5.8 billion last year, down 56 percent from $13.2 billion in 2010 due to heightened global
economic risks.
With risk forecast to continue, he said, the central bank estimates portfolio investment will fall to $3.7 billion
this year.
However, 2011’s drop was compensated by more foreign direct investment, which rose 12 percent to $15 billion last
year from a year earlier.
Halim estimated that direct investment this year could reach up to $19.2 billion.
As for Goldman Sachs, its asset management group in 2005 started a focus on 11 countries with the largest populations,
after the BRICs, that it expects to have a meaningful impact on the global economy. It includes Indonesia.
Lion Air Chief Executive Rusdi Kirana, right, speaks Tuesday
as Dinesh Keskar, Boeing's senior vice president of Asia-Pacific and India sales,
looks on during a news conference at the Singapore Airshow. MUNSHI AHMED / BLOOMBERG
By SAMANTHA BOMKAMP
The Associated Press
Originally published February 14, 2012
NEW YORK — Boeing said Tuesday it has finalized its biggest order ever: 230 planes for Indonesian carrier Lion
Air.
The order includes 201 of Boeing's forthcoming redesigned 737s featuring a new engine, called the 737 MAX 9, as
well as 29 of the current extended range 737-900s.
The deal is worth more than $22 billion at list prices. However, after standard discounts, the estimated real value
based on market-pricing data from aircraft valuation firm Avitas is less than $12 billion.
The sale is the largest commercial-airplane order ever for Boeing by both dollar value and number of airplanes,
topping a December order for 208 of the single-aisle jets from Southwest, which had a list price of $19 billion
and an estimated real value of $10.5 billion.
Southwest will be the first customer to get the 737 MAX, which still is in testing. The jet is scheduled for delivery
in 2017.
At the end of last month, Lion Air had taken delivery of just 57 Boeing 737s, with pending unfilled orders for
121 more of the jets.
The newly announced deal expands the order book with an additional 230 jets and gives the airline the right to
buy 50 more at preset pricing.
Lion Air plans to pay for the planes over 12 years with bank financing.
The agreement was first announced in November during a visit by President Obama to Indonesia.
In a teleconference with journalists the next month, Airbus sales chief John Leahy complained that the Lion Air
deal was due to heavy U.S. "political interference."
Leahy said Lion Air Chief Executive Rusdi Kirana — who has been an all-Boeing customer — had come to see him twice
in Toulouse, France, to weigh the option of buying A320neos but "in the end, he told me he had no choice,"
Leahy recalled.
"There is only one superpower in the world and we know it isn't France," Leahy said. "We shouldn't
be talking about a free, open, level playing field if the U.S. pulls stunts like that."
At the Paris Air Show last June, Leahy made a big splash when he announced an order for 200 A320neos from another
startup Asian carrier, AirAsia.
The fact that Lion Air ordered precisely 201 of Boeing's 737 MAX jets seems to be deliberate one-up-manship.
With the Lion Air order, Boeing's new MAX program has won 351 orders from its first two customers.
Boeing shares rose 71 cents to close Tuesday at $75.56 a share.
It has traded between $80.65 and $56.01 a share during the last year.
Senior executives at Ford Motor Company have said
Indonesia could host a production facility for the US automaker
in the near future as the country shows potential to overtake Thailand
as the biggest car market in Southeast Asia. (AFP Photo/File
New Delhi. Senior executives at Ford Motor Company have said Indonesia could host a production facility for the
US automaker in the near future as the country shows potential to overtake Thailand as the biggest car market in
Southeast Asia.
Thailand is currently Ford’s primary production hub in Southeast Asia, producing 425,000 units annually that serve
demand in the region.
“We think Indonesia will be the largest market in Asean. I cannot say exactly when. Thailand is a larger market
today, but we believe Indonesia will pass Thailand eventually,” Joe Hinrichs, Ford’s president of the Asia Pacific
and Africa, said at a dinner with journalists in New Delhi on Wednesday.
“We believe Indonesia’s growth potential is significant, and I am so excited about Ford’s presence there.”
The reporter was in New Delhi at the invitation of Ford, which paid for the trip.
Thailand was the largest car market in Southeast Asia in 2010, with 857,00 units sold, while Indonesia came second
with 764,000 units sold.
Bullish Indonesian automotive executives in December estimated that the nation was on track to sell about 870,000
units in 2011.
Sudirman Maman Rusdi, the chairman of Association of Indonesian Automotive Industries (Gaikindo), has projected
that Indonesia could sell 1 million units by 2013.
Analysts say consumer-related sectors, including automotive, will see stronger demand as rising per capita incomes
and a low-interest environment spur consumption.
Alan Mulally, president and chief executive of Ford, echoed Hinrichs. “Over time, we’ll have our operation there,
too, because the market is great,” he said.
He also did not mention a specific timeframe for the siting of an Indonesian production facility.
Ford introduced a new compact sport utility vehicle, called the Ford EcoSport, at the Auto Expo 2012 in New Delhi.
The company did not indicate when the product would enter the Southeast Asian market, but it said it would be the
third out of eight products the company aims to introduce by mid-decade.
Ford does not manufacture in Indonesia. Rival carmaker General Motors announced last year that it would invest
$150 million to reactivate its assembly plant in Bekasi.
Although a small player in the Indonesian car market compared with Japanese giants such as Toyota and Mitsubishi,
Ford has seen strong growth in its car sales. In the first 10 months of 2011, it sold 13,819 units, a 152 percent
rise from the same period in the previous year.
by Carl Delfeld, Investment U Senior Analyst
Friday, November 25, 2011: Issue #1651
I never thought I would ever say this but (three deep breaths)
Hillary Clinton has done a great job as Secretary of State, shifting American attention and resources from the
Mideast to the booming Asia-Pacific region.
You can profit by following this strategic shift in U.S. diplomacy, so let’s look at some snapshots that highlight
America’s re-engagement with Asia.
During the past week alone, there was some intensive Pacific Rim diplomacy.
•Hosting the Asia-Pacific Economic Community (APEC) meeting in Hawaii last week and the presidential mission to
Australia to deepen commercial and security ties.
•President Obama’s visit to Indonesia last week to promote U.S.-Indonesian commerce and to attend the East Asian
Summit in Bali. There, he met separately with the leaders of India, Indonesia, Malaysia and the Philippines. Indonesia’s
Lion Air inked a deal to buy $22-billion worth of Boeing aircraft.
•Launching the Trans-Pacific Partnership (TTP) – essentially a free trade agreement for the Pacific Rim including
Japan.
•Playing a more active role in pushing for open access and peaceful resolution to disputes in the South China Sea.
What does all this mean for you as an investor?
Pivot to Asia
First, take a look at your portfolio and see if you have enough exposure to Asia, especially beyond China and India.
Perhaps you have less than you think. Merrill Lynch Bank of America recently did a review of its high net worth
clients’ portfolios and found that the average allocation to emerging markets was only three percent.
Second, think about what’s the best strategy to profit from the inevitable and healthy rivalry between America
and China for commercial gain in Asia?
Here’s my take. Look at the below map and you will see a thriving region south of China and east of India – Southeast
Asia. This is a region often overlooked by even the most sophisticated investors and is the cockpit of rising U.S.-China
commercial rivalry in Asia for a number of reasons.
These countries lie along vital sea-lanes and chokepoints, are rich in natural resources, have export-oriented
fast-growing economies and politically balance their relations with both China and America as a hedge against uncertainty.
The free trade pact between the regional grouping for Southeast Asia (ASEAN) and China launched in early 2011 has
supercharged trade and investment flows.
Follow U.S. Diplomacy to the heart of Southeast Asia
To counter rising Chinese influence, many of the American initiatives outlined above are aimed at strengthening
commercial and security ties with Southeast Asia.
My advice is to begin with the iShares Singapore Index Fund (NYSE: EWS). The “Switzerland of Asia” plays a key
role as the financial center for the region. While it’s only one-fifth the size of Rhode Island and three times
the size of Washington, D.C., it’s the most strategically important global trading, finance and service nexus in
Asia. Singapore is the busiest port in Asia, situated next to a vital trading chokepoint, the Straits of Malacca.
Singapore has a well-diversified economy. Seventy percent of its GDP is from finance and services but it has been
able to maintain a robust manufacturing base. A promising trend is that multinational firms are moving their Asia-Pacific
headquarters from China to Singapore due to its infrastructure, logistics and laws protecting intellectual property.
Exxon Mobil, Royal Dutch Shell and Sumitomo are expanding petrochemical facilities. Strong global demand for transportation,
communications and logistics services, increasing information technology spending, rising consumer spending and
property prices, and expanded tourism all point toward continued growth.
Next, add a dash of iShares MSCI Malaysia Index Fun (NYSE: EWM), for a country that offers investors many of the
attributes of neighbor Singapore with the added benefit of natural resources and lower wage levels.
Malaysia is a constitutional monarchy a bit larger than New Mexico. Rich in natural gas and an oil exporter, it
offers investors an economic environment of low inflation and debt. It’s a solidly middle-income country with a
per capita income north of $10,000. Although palm oil, tin, petroleum, copper, iron ore and other commodities are
an important part of the Malaysian story, it’s well diversified with 50 percent of GDP attributed to the services
sector, 40 percent to industry and 10 percent to agriculture. Malaysia’s capital, Kuala Lumpur, is also a rising
regional financial center.
Finally, with U.S. interest rates at record lows and hot money pouring into fast-growing Asian markets, the investing
in the Malaysian ringgit and the Singapore dollar through EWS and EWM offer investors a nice hedge on the U.S.
dollar.
Singapore and Malaysia will continue to fire a region burning on all cylinders. Take a stake today.
November 19, 2011
Obama recorded his weekly address there, saying top U.S. companies such as Boeing and General Electric have struck
trade deals with Indonesia that will support more than 100,000 American jobs.
The president says the Asia-Pacific region already supports five million American jobs,
and the fastest growing region in the world has the potential to increase U.S. job growth.
US President Barack Obama stands alongside Ray Conner, second right,
senior vice president of Boeing, and Rusdy Kirana, president director of Lion Air,
during a signing ceremony for a record $21.7 billion deal.
Hong Kong (CNN) --
The largest single aviation purchase in Boeing's 94-year history was pulled off today by Lion Air.
Lion who?
If you have never heard of Lion Air, you're not alone. Unless you speak Bahasa Indonesia and have traveled around
the vast array of islands that make up the world's most populous Muslim nation, there is no reason why you should
have.
With U.S. President Barack Obama watching on the sidelines of the ASEAN (Association of Southeast Asian Nations)
economic summit in Bali, Lion Air signed a deal for 230 Boeing planes totaling $21.7 billion, with the first delivery
in 2017 -- part of the airline's plan to buy 408 new planes at $37.7 billion, Lion Air CEO Rusdy Kirana told CNN.
"From east to west, Indonesia spans 5,000 miles and we have 230 million (people) and not enough aircraft to
meet the growth of the number of passengers," Kirana said.
Right now, the airline has only a few routes that take it out of Indonesia to Southeast Asian neighbors Singapore,
Malaysia and Vietnam. The airline plans to use the new fleet to both expand routes among the 6,000 inhabited islands
in Indonesia as well as new routes to Japan, South Korea, China and Taiwan.
While the developed world has been pummeled with recession, stagnant growth and rising debt burdens in the wake
of the 2007-2008 Financial Crisis, developing powerhouses like Indonesia have continued to rise.
Indonesia's economic output was $706.6 billion in 2010, up from just $95.4 billion in 1998 when the nation was
embroiled in the Asian Financial Crisis, which led to the end of the longtime dictatorship of Indonesian President
Suharto. His departure led the way for economic and political reform in the world's fourth most populous nation.
The soaring fortunes of Indonesia echoes the number of Indonesians taking to the skies -- this year, the numbers
traveling by air within the country is expected to rise 15%, the Indonesian Transportation Ministry said.
"As Indonesia's middle class increases in number, more and more people will be traveling throughout the archipelago,"
said Indonesian Foreign Minister Marty Natalegawa. "And the easiest way to travel is air transport, and so
that why I think the projection ahead will be quite promising, and offer many opportunities for many."
For Obama, the record deal helped him underline a message he's echoed during his Asian trip: That strong economic
ties with Asia creates jobs at home.
"For the last several days, I've been talking about how we have to make sure that we've got a presence in
this region, that it can result directly in jobs at home," Obama said in a statement. "And what we see
here -- a multibillion-dollar deal between Lion Air -- one of the fastest-growing airlines not just in the region,
but in the world -- and Boeing is going to result in over 100,000 jobs back in the United States of America, over
a long period of time."
When asked why Lion Air chose Boeing over arch rival, French-made Airbus, CEO Kirana told CNN: "There's not
much difference between Airbus and Boeing. It's like a person choosing what to eat. you just prefer one dish over
another."
Executives at Boeing are no doubt pleased the Indonesian airline prefers to supper in Seattle rather than dine
in France. And as fortunes rise on the archipelago, many more western companies will try to find a place at Indonesia's
table.
CNN's Kathy Quiano and Peter Wall contributed to this report
Lion Air Next-Generation 737-900ER (Photo courtesy Boeing)
10:35 a.m. PST, November 17, 2011
NUSA DUA, INDONESIA—
The United States announced a massive order for Boeing jets from Indonesia's largest domestic airline, Lion Air,
to be showcased as U.S. President Barack Obama winds up an Asia-Pacific tour.
The sale of 230 short-haul 737 jets, worth $21.7 billion, is the largest commercial order in Boeing's history,
toppling a previous record set just days ago as the industry taps in to relentless demand in emerging economies.
Obama will attend a signing ceremony on Friday for the order, which the White House said would support more
than 110,000 jobs at Boeing and suppliers across the United States.
The deal includes options for another 150 aircraft valued at $14 billion, bringing its potential total value to
$35 billion.
"This represents one of the largest trade deals between the United States and Indonesia in history,"
the White House said.
The White House is seeking to underline the U.S. jobs potential from Obama's efforts to increase engagement in
the Asia-Pacific region, including trade with emerging powers in Southeast Asia.
Deals announced during the president's trip are expected to total more than $25 billion and could support 127,000
jobs.
NARROWING THE AIRBUS GAP
Under pressure to bring down a 9 percent U.S. unemployment rate, Obama is seeking to increase American exports
to Asia-Pacific to offset weakness in Europe.
The order is a boost for Boeing's efforts to develop a revamped version of its best-selling 737 as it narrows a
gap with a model produced by its European rival Airbus.
The deal includes 201 revamped "737 MAX" aircraft, due to enter service in 2017, and 29 Next-Generation
737-900 extended range planes. The deal also includes purchase rights for an additional 150 aircraft.
Boeing shares rose as much as 1.5 percent on Thursday, but were down 0.6 percent at $65.96 in afternoon trading,
compared with a 1.6 percent fall in the broad S&P 500 Index.
Boeing said the Lion Air order, when finalized, would be its largest ever "by both dollar volume and total
number of airplanes."
Alex Hamilton, managing director with EarlyBirdCapital in New York, said the strong order confirmed that the commercial
aerospace sector was bouncing back despite a skittish global economy. He said he expected more airplane orders
as oil prices top $100 a barrel.
"The pace of the recovery is probably better than most would have expected," Hamilton said. "The
reason (airlines) are ordering these new aircraft is because of the technology and the need for fuel efficiency."
High oil prices are spurring orders worth billions for fuel-efficient aircraft, re-energizing the rivalry between
Boeing and Airbus, the two biggest plane makers.
Oil prices fell on Thursday on worries about the European debt crisis. Brent crude was down $3.50 at $108.38 a
barrel, while U.S. crude was $3.06 lower at $99.53.
BACKBONE
The 737 MAX is an upgraded version of Boeing's best-selling 737 that will include new fuel-efficient engines and
begin delivering in 2017. It is designed to compete with the Airbus A320neo in the narrowbody aircraft segment,
which is expected to produce $2 trillion in sales over 20 years.
Boeing said this week that it had 700 provisional orders for the 737 MAX, which boasts new engines burning less
fuel.
The deal marks the second time in a week that Boeing has broken its company record for commercial airplane deals
after bagging an $18 billion order for 50 wide-body 777 jets from Emirates airline at the Dubai Air Show. [ID:nL5E7MF04C].
The Boeing 737 is the backbone of many airline fleets and helped drive the growth of the low-cost travel industry.
Airbus has been outselling Boeing this year after promising to upgrade its competing A320 family of aircraft, but
is lagging behind Boeing in the market for bigger jets such as the 777.
Middle East and Asian travel demand is helping to prop up demand for aircraft despite concerns over the Western
economy, helping to generate well over $30 billion of deals for Boeing and Airbus in the past week.
In other deals to be announced on the sidelines of an East Asia Summit on the Indonesian island of Bali, the White
House announced Boeing had reached a $2.4 billion deal for Singapore Airlines to buy eight 777-300ER aircraft.
General Electric will sell 50 engines to Indonesia's Garuda Airlines in an agreement worth $1.3 billion.
In a $325 million deal presented as one of the largest defense procurements in Brunei's history, United Technologies
Corp unit Sikorsky will supply 12 Black Hawk helicopters to the Royal Brunei Armed Forces Support Helicopter Project.
By JAYMES SONG Associated Press
HONOLULU November 13, 2011 (AP)
President Barack Obama signed a bill Saturday making it easier for U.S. business travelers to access Asia-Pacific
nations more freely and quickly.
Obama signed the measure just before taking the stage to address the Asia-Pacific Economic Cooperation CEO Summit
in his native Hawaii, referring it to it as an "APEC business gold card."
The APEC Business Travel Card (ABTC) allows pre-screened business travelers easier entry to most of the 21 APEC
member economies. The card removes the hassle of individually applying for visas or entry permits for every visit.
It also allows multiple short-term entries into participating economies during the three years the card is valid.
Card holders also benefit from faster immigration processing via special APEC fast lanes at major airports.
"Everybody here appreciates it because they're not going to have to wait in line as long at the airport,"
Obama told the CEOs. "So that generated a lot of popularity."
Obama said his administration is going to keep pursuing "every avenue that we have to see how we can ease
and smooth the ability of doing business with the United States and U.S. businesses being able to operate overseas."
"And some of that has to do with us changing our own internal operations," he said.
Besides easier access, the program was created in 1997 to help promote new business opportunities, attend meetings
and conduct trade and investment activities.
Monica Whaley, president of the National Center for APEC, said for all the successes that come out of APEC this
year, the card will be one that Americans will be able to hold in their hands. The card, she said, "will help
American business travelers spend less time waiting in lines at the airport, and more time closing deals in the
APEC region."
The participating APEC member economies are: Australia, Brunei, Chile, China, Hong Kong,
Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Singapore, Taiwan,
Thailand and Vietnam.
Russia and Canada are transitional members while Mexico is part operational moving towards full participation in
the program that was created in 1997.
Australia, which was one of the first three to join the program along with South Korea and the Philippines, has
among the highest share of cardholders.
The legislation was unanimously approved by the Senate earlier this month after being introduced this summer by
Sens. Daniel Inouye, D-Hawaii, Daniel Akaka, D-Hawaii and Maria Cantwell, D-Wash.
Akaka earlier said, the program would help Hawaii and the rest of the United States to expand into growing Asian
markets while creating jobs at home.
Besides the National Center for APEC, the legislation was supported by National
Foreign Trade Council, US-ASEAN Business Council, U.S. Chamber of Commerce, U.S.-China Business Council and U.S.
Council for International Business.
APEC Business Travel Card: http://www.businessmobility.org/
MasterCard, a leading payment processing service, plans to develop new retail systems that can be accessed via
mobile phones, the company’s representative for the Asia-Pacific region said last week.
“Indonesia would be one of the leading markets for mobile-enabled payment. It could be beyond the traditional plastic
cards, so we could enable similar services for people without a credit card or debit card today through the mobile
device,” said Phillip Yen, group head of emerging payments for Asia Pacific, Middle East and Africa at MasterCard
Worldwide.
Indonesia’s market offers several potential advantages for MasterCard, he said. The company is interested in the
country’s large number of mobile phone users, which now has 180 million users.
Such services are not new here. Indonesia’s biggest mobile-phone operator, Telkomsel, already has a similar service,
called T-Cash.
Vadyo Munaan, vice president and senior country manager at MasterCard, said the service would help boost e-commerce
in the country.
“MasterCard will make sure the Internet payment system is secure,” he said.
According to research from IT company Sharing Vision, online sales in Indonesia last year reached Rp 43 trillion
($4.9 billion). This year, the figure is expected to jump 28 percent to Rp 55 trillion, thanks to greater use of
online payments.
Yen and Vadyo would not divulge the volume of MasterCard transactions in Indonesia.
Mobile subscriptions grew by 50 percent between 2003 and 2008. By the end of 2009, Indonesia’s mobile subscribers
totaled 143.6 million and grew to around 180 million last year.
The positive growth trend is likely to continue at a 10 percent or more increase this year, and by 2013 Indonesia
will become the fourth-largest mobile market in the world behind China, India and the United States.
Sept. 11 attacks led to a spending spree, but now the US must cut back
Lockheed Martin debuted the F-35 fighter in 2006.
Spending on the jet is in danger of being cut back.
NEW YORK — The wars in Iraq and Afghanistan are winding down, Osama bin Laden is dead, and the federal government
is deeply in debt. This spells the end of what was a golden decade for the defense industry.
In the decade since the Sept. 11 attacks, the annual defense budget has more than doubled to $700 billion and annual
defense industry profits have nearly quadrupled, approaching $25 billion last year.
Now defense spending is poised to retreat, and so are industry profits. "We're about to go into the downhill
side of the roller coaster here," said David Berteau, a defense industry analyst at the Center for Strategic
and International Studies.
Congress agreed last month to cut military spending by $350 billion over the next 10 years. The defense budget
will automatically be cut by another $500 billion over that period if lawmakers fail to reach a deficit-cutting
deal by November.
Story: Defense cuts loom large for 'super committee'
Defense industry stocks have already begun to suffer; they are lagging the S&P 500 in recent months. During
the last defense spending downturn, which lasted from 1985 to 1997, defense stocks underperformed the broader market
by 33 percent, according to an analysis by RBC Capital Markets.
The Sept. 11 attacks forced the world's biggest and best-funded military to quickly retool itself. It needed to
develop technologies, weapons and strategies to find and fight an elusive network of terrorists that seemed more
sophisticated and dangerous than ever imagined.
The U.S. spent $1.3 trillion in the ten years following the attacks chasing al-Qaida and fighting two wars. That
was on top of baseline military spending in excess of $4 trillion.
.
"After 9/11 the floodgates opened," says Eric Hugel, a defense industry analyst at Stephens Inc.
The defense budget grew from $316 billion in 2001 to $708 billion in 2011. Federal spending on homeland security,
which includes everything from airport security to border control, also rose dramatically. Last year dozens of
federal agencies, including the Department of Homeland Security, spent $70 billion on such programs, according
to the Office of Management and Budget. That's up from $37 billion in 2003, the first year after DHS was formed.
All that spending was reflected in the soaring performance of the defense industry, led by the top five defense
contractors: Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon.
In 2001, revenues for U.S.-based defense contractors totaled $217 billion, according to data compiled by the analytics
firm Capital IQ. By 2010 revenues had grown to $386 billion. Profits grew more than twice as fast over the same
time period, from $6.7 billion to $24.8 billion. Contractors based abroad, such as BAE Systems, also flourished.
BAE was the sixth biggest defense contractor in 2010, with $7.2 billion in U.S. military contracts.
Stock prices of defense companies in the S&P 500 index have risen 67 percent since September 11. The index
as a whole climbed 8 percent in that period.
Military spending typically rises during wartime and falls during peacetime. But after Sept. 11, and as the wars
in Iraq and Afghanistan evolved, it became clear the country needed to spend money on very different military technologies
and strategies.
Fighter jets, missile defenses and other Cold War-era systems designed to deal with the perceived threats of nation-states
were less useful. The U.S. military had to increase its ability to find, recognize and track enemies that were
scattered in many countries and dispersed among the civilian population.
During the war in Iraq the military realized that it couldn't protect troops from a low-tech, but potent threat:
jerry-rigged road side bombs. In Afghanistan, commanders needed ways to find and root out insurgents that had tucked
themselves in caves in hard-to-reach mountains.
These challenges led to new hardware. Among the most important:
•Transport trucks that protect troops and supplies from roadside bombs. Mine-resistant, ambush-protected vehicles,
or MRAPs, quickly became crucial equipment for the Army. Oshkosh Corp., a maker of these trucks, was the 9th biggest
military contractor last year. Before 9/11, it wasn't in the top 20.
•Identification tools. Soldiers now carry small portable devices that identify a person by scanning fingerprints,
irises and faces. These devices, made by L-1 Identity Solutions, which was recently acquired by Safran, can weigh
as little as 3 pounds, transmit data by several different wireless methods and remember 1 million identities.
•Unmanned aircraft. General Atomics' Predators, drones that can fire missiles, have killed several al-Qaida commanders.
Lockheed Martin's RQ-170 Sentinel reportedly kept watch on Osama bin Laden's compound as the raid that killed him
was taking place.
Another type of company surged in importance in the last decade: Companies that provide services and support to
military operations.
As of March, the Defense Department had more contractor personnel in Afghanistan in Iraq than uniformed personnel,
according to a study by the Congressional Research Service. Afghanistan has the highest ratio of contractors to
military personnel than any other U.S. war.
This has boosted companies like KBR, once a division of Halliburton. KBR, which builds and maintains military bases
and other facilities, had $4.7 billion in military contracts in 2010, up from $860 million a decade earlier.
. Analysts say the heavy reliance on contractors should allow the military to wind down spending more quickly,
because it is easier to terminate a contract than to reduce uniformed troop levels. Also, the government isn't
responsible for pensions, health care and other benefits for contract workers, which should save money.
Equipment spending is already being scaled back. In 2009, funding for the F-22 fighter jet, a $65 billion program,
was discontinued. Spending on the F-35 fighter jet is in danger of being cut back. An advanced warship called the
DDG1000 has been canceled, and an upgrade to the Bradley tank called the Ground Combat Vehicle may also be scaled
back or canceled.
Over the past six months, defense company stocks in the S&P 500 index have fallen 16 percent. That compares
with an 11 percent decline for the entire index.
During wartime, when dollars are flowing, the new equipment developed to battle new enemies is used together with
the equipment that had been developed for earlier wars. But as budgets shrink this time, some of the technologies
that were developed during the past decade, such as the unmanned aircraft, will have to replace older systems entirely.
"The era of manned airplanes should be seen as over," says Michael O'Hanlon, a defense policy expert
at the Brookings Institution. "The problem is nobody wants to give up the previously agreed on platform."
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten
or redistributed.
Discuss: For defense industry, a golden decade comes to an end
A decade?!?!? Give me a break, way back when Eisenhower was preparing to leave office he warned Americans
of the ever increasing influence of the Military-Industrial Complex and
And what the heck do we have to show for it?... Two lost wars.... and trillions thrown away.... and VA Benefits
in the multi trillions for the next 30years.... great job GOP!!!
Golden age for the military industry = dark age for the US as a whole.
A global internet body has voted to allow the creation of new website domain suffixes, the biggest change for
the online world in years.
The Internet Corporation for Assigned Names and Numbers (Icann) plans to dramatically increase the number of domain
endings from the current 22.
Internet address names will end with almost any word and be in any language.
Icann will begin taking applications next year, with corporations and cities expected to be among the first.
"Icann has opened the internet's addressing system to the limitless possibilities of the human imagination,"
said Rod Beckstrom, president and chief executive officer for Icann.
"No one can predict where this historic decision will take us."
There will be several hundred new generic top-level domain names (gTLDs), which could include such addresses as
.google, .coke, or even .BBC.
There are currently 22 gTLDs, as well as about 250 country-level domain names such as .uk or .de.
Costly process
Advertisement Icann's senior vice-president, Kurt Pritz explains why the new gTLDs are being created
It will cost $185,000 (£114,000) to apply for the suffixes, and companies would need to show they have a
legitimate claim to the name they are buying.
Analysts say it is a price that global giants might be willing to pay - in order to maximise their internet presence.
The money will be used to cover costs incurred by Icann in developing the new gTLDs and employing experts to scrutinise
the many thousands of expected applications.
A portion will be set-aside to deal with potential legal actions, raised by parties who fail to get the domains
they want.
The vote completes a six-year negotiation process and is the biggest change to the system since .com was first
introduced 26 years ago.
Icann said it was beginning a global communications programme to raise awareness of the new domain names.
Existing Generic TLDs
com : companies, now broader
.info : information, but open for general use
edu : educational institutions
museum : museums
gov : government institutions
name : personal names - johnsmith.name
int : international organisations, e.g. Interpol
pro : professionals, e.g. doctors
mil : military organisations
asia: Asian websites
net : networking technologies, now broader
cat : Catalan language
.org : non-profit organisations
jobs : employment websites
arpa : first ever domain, now technical use
mobi : mobile phones
aero : air travel industry
post : postal services
biz : business alternative to .com
.tel : telecoms
coop : co-operatives
.travel : travel
Source: Icann
Applications will start on 12 January.
High standards
Companies and organisations seeking one of the new gTLDs will have to meet high technical standards, according
to Bruce Tonkin, chief strategy officer at Melbourne IT, a domain registry service.
"You need IT robustness and you need intellectual property protections beyond what is available in the dot
com space.
"You have to have 24/7 abuse team. You have to have mechanisms where a trademark holder has first right to
get their name," he said.
The higher standards, said Mr Tonkin, meant the application process would be extremely rigorous.
"Using a real estate analogy, it would be roughly the equivalent of getting approval to build a sky scraper.
"There's roughly 50 questions, roughly 2-3 pages per question. Icann will then use experts in each field to
evaluate them.
"The concern that some people have is that the standards of these buildings will be so high, that they will
never get built. It will be too expensive," he said.
BBC News, Jakarta Jakarta has changed much as the Indonesian economy has surged, creating a city of glass and steel
It is a Wednesday evening and the skyscraper in downtown Jakarta is quiet.
Most of the people who work here have already left for the day - but for the staff at Indonesian internet firm
Koprol, the work continues.
Except that it is not all work. A group of twenty-somethings are mucking about on the Nintendo Wii console, enjoying
a game of virtual tennis.
It could be an office in Silicon Valley - but this is Jakarta. Most of the people who work at Koprol are below
the age of 30, and for many, this is their first job.
They are the new faces of Indonesia's economy.
'Good time'
Koprol itself is an Indonesian success story.
The social media firm, which allows users to find people who are online and have checked in at the same location,
became so popular that it caught the attention of US internet giant Yahoo - who bought Koprol last year.
It was the first Indonesian tech firm to be bought out by a foreign company.
"It's exciting," says Koprol's co-founder Satya Witoelar. "It's a good time to be in Indonesia and
an Indonesian."
Koprol, now owned by Yahoo, tracks your location and helps you find your friends.
Indonesia's economy is now one of the best performing in the region - posting more than 6% growth at a time when
the US and Europe are struggling.
Foreign investors are now looking at Indonesia carefully, eager to capitalise on the strong growth in the country.
Indonesia's stock markets have also been beneficiaries of this new-found confidence, seeing a dramatic rise in
the last year.
Pariah state
Looking around the main boulevard in Jakarta's financial district today, it is hard to believe that at one time
in this country's history soldiers in their tanks stood on these streets and shot at student protesters demanding
democracy.
Today, all you can see are the symbols of Indonesia's success - a gigantic Louis Vuitton sign plastered on one
of Jakarta's sprawling mega-malls, and brand new Mercedes and BMWs parked outside some of the finest hotels in
the country.
But behind this new image, the country is still dealing with age old problems.
It is unrealistic to think that Indonesia can [stamp out corruption] in six months”
Gita Wirjawan - Indonesian official
Just over a decade ago Indonesia's economy virtually collapsed during the Asian financial crisis. The value of
the rupiah plummeted, property prices dropped, and millions of Indonesians saw their wealth erode overnight.
That, and a growing discontent with the former President Suharto's authoritarian regime, led to Indonesia moving
to a democracy from the dictatorship it had been for more than 30 years.
Civil unrest erupted and Indonesia saw a series of terror attacks from Islamic extremist groups. The country was
pretty much written off by foreign investors, and most thought Indonesia would end up as a pariah state.
"When I first started this business with my friends, in order to register the company I had to go through
a lot of steps, a lot of procedures", Mr Witoelar says.
"And, yes, there were times we had to pay money - sometimes they were for legitimate reasons, at other times
they weren't. But I'm Indonesian, and I'm used to it. It's always been this way."
Corruption
Corruption and red tape still affect Indonesia and cost the economy millions every year.
President Susilo Bambang Yudhoyono was first elected on promises to tackle graft - but the latest figures in Transparency
International's Corruption Perception Index are not particularly encouraging about the progress he has made.
The index shows that Indonesia scored 2.8 out of 10 - the same as in 2009 when he was re-elected.
One of the worst affected areas by these twin problems is infrastructure. Indonesia desperately needs more roads,
ports and highways to see its economy reach its full potential.
Work on a bridge to link the Java and Sumatra islands, worth almost $20bn (£12.3bn), is supposed to start
this year - but the plans have been stuck at the feasibility stage for years.
Then there's the failed Jakarta urban monorail system - which was supposed to be built back in 2004, but was abandoned
because of legal issues and funding difficulties. All that's left of the project are cement blocks, standing forlornly
along one of Jakarta's main roads.
'Unrealistic'
The government acknowledges that corruption and red tape make it tough for Indonesia to compete in the region,
but says it's a work in progress.
Car sales, seen as an indicator of consumer demand, were up in 2010
Gita Wirjawan is the man in charge of attracting foreign investment to Indonesia.
"We've increased foreign direct investment in to Indonesia by 60% in the last year alone," he says.
"It took Hong Kong more than 30 years to stamp out corruption. It is unrealistic to think that Indonesia can
do it in three to six months. We have put hundreds of corrupt people behind bars."
But that progress may not be good enough to give millions of young Indonesians a chance to better their lives.
Poverty
Government estimates show that around 13% of Indonesians live under the poverty line but independent economists
say its much more than that.
Many come of the country's rural poor come to Jakarta in the hopes of finding work in a factory, or a construction
site - but there just aren't enough being built to provide employment to Indonesia's youth.
For instance, one of these poor rural workers, called Suparman, came to Jakarta two weeks ago from Central Java,
to find work building roads.
He was rummaging through a dump near train tracks in Jakarta, sifting through plastic bottles and old DVDs, looking
for anything he might be able to sell. He says he wants to start a family but can't provide for them doing this
work.
Indonesia may be one of the region's fastest growing economies but it is still struggling to fix problems with
corruption and red tape from the past.
JAKARTA, KOMPAS.com - It is a great time for investors to take advantage of great investment opportunities in Indonesia
following its enticing financial climate. Located at the crossroad of the Asian and Australian continents and between
the Indian and the Pacific Oceans, Indonesia has many advantages of investment opportunities.
Endowed with fertile soil and abundant natural resources, the country is offering investors wide opportunities
in many sectors. Therefore, director of Quvat Management in Singapore Thomas T. Lembong has called on the government,
business players and investors to optimally utilize the wide investment opportunities in Indonesia.
On the sidelines of World Economic Forum on East Asia (WEF-EA), Lembong said China and India have a great interest
in investment in Asia, including Indonesia, and this trend should be used as best as possible.
"Asia is on the rise. Indonesia at present is a ’darling’ investor. The investors are aware that Indonesia
has a very big potential," Lembong said.
He said as coal, palm oil and consumer goods are now lucrative commodities in Indonesia they need to offer them
to investors. But Lembong cautioned Indonesia not always has the attention of investors.
"Therefore we have to be realistic because the market and investors always have a trend. How much investment
can be sustained, will depend on how we utilize it optimally," said the recipient of World Economic Forum
Young Global Leader.
He said that in terms of investment supporting facilities and infrastructure, Indonesia was not inferior to those
of other developing countries as China and India, but compared with the developed countries, Indonesia was still
lagging far behind.
"As learned from international investors, China and India are not the countries without problems because in
the developing countries there facing many obstacles and difficulties, but Indonesia actually has many good facilities,"
he said.
For that, Lembong said all parties including the government, business players, and investors need to be more patient
because the important thing was not quantity but quality of investment.
"Ideally, all parties should be patient, and not be in a hurry so that the funds do not go to unnecessary
projects," he said, adding that the key to investment success in Indonesia was cooperation of all parties
namely of the government, business players, and investors.
According to Lembong, Indonesia has very big investment opportunities as a developing country. Meanwhile, presidential
special staff for foreign relations Teuku Faizasyah said on the sidelines of the World Economic Forum said on Sunday
that Singapore wished to make investment in development projects in Sumatra, especially in Batam.
"It was said earlier that Singapore can make investments in Sumatra," Faizasya said, explaining that
Singapore’s interest in investment in Sumatra’s projects was disclosed when President Susilo Bambang Yudhoyono
received a courtesy call of Singapore’s Prime Minister Lee Hsien Loong on the sidelines of the WEF-EA.
Faizasyah said Singapore wanted explanations about development schemes in Indonesia, especially after the Indonesian
government launched the Master Plan of Acceleration and Expansion of Indonesian Economic Development (MP3EI).
"Singapore wants Indonesia to explain it in detail the areas where the country can make an investment,"
Faizasyah said.
According to him, President Yudhoyono and Lee Hsien Loong agreed to optimize again the cooperation agreement on
Singapore-Johor-Riau (Sijori).
He said the partnership concept would be harmonized with the MP3EI which has been launched by Indonesia. In the
WEF-EA, Indonesia also offered investment in the infrastructure sector through a public private partnership (PPP)
scheme.
"The ability of the government’s fiscal is in a small balance and therefore we offer the investment in infrastructure
sector to both foreign and private parties," Finance Minister Agus Martowardojo said.
The forum among others discussed the failure in the monetary sector as a result of the impact of economic turmoil
in Asia. Present as the speakers at the meeting were Michael Buchanan, Chief Asia-Pacific Economist at Goldman
Sach; Stuart T Gulliver, Group Chief Executive HSBC Holding UK; Omar Lodhi, Chief Executive Officer Abraaj Capital
Asia Singapore; and Bank Indonesia Deputy Governor Muliaman D Hadad.
Agus Martowardojo on the occasion said the provision of infrastructure was a challenge that Indonesia has to face
in the next five years. The finance minister said around Rp1,400 trillion were needed in the next five years for
infrastructure development in Indonesia.
But he added that the government was only able to provide around 20 to 30 percent of the funds and the rest should
be obtained with the cooperation of private parties through a public private partnership schemes.
"In the past seven years such a scheme did not give a significant result but expected there will soon be a
pilot infrastructure project," Agus said.
He said an infrastructure pilot project with the PPP scheme in East Java would soon be realized and it was expected
to be followed by other projects. Agus admitted that although a capital flight could occur any time, Indonesia
would not implement a capital control policy.
"I am optimistic that there will be no capital control," the finance minister said, adding that fiscal
and monetary conditions in the real sector were good and could support capital inflows.
Investment opportunities in Indonesia help both residents and investors because the country has over 200 million
residents who are actively competing in joining the work force.
Car sales, seen as an indicator of consumer demand, were up in 2010 Indonesia's economy grew at its fastest
annual rate for six years in 2010, driven by consumer spending and investment.
Gross domestic product was 6.1% higher in 2010 than in the previous year, the statistical office said.
Growth was given an unexpected boost in the final three months of the year, figures showed.
Analysts said the speed of growth may lift inflation at a time when high food prices were already hurting consumers.
Last week the central bank raised interest rates for the first time in two years in an attempt to slow price growth.
Indonesia's main cost of borrowing rose a quarter of a percentage point to 6.75%.
Higher rates?
Analysts said that the better-than-expected GDP figures may increase calls for interest rates to rise further in
coming months, not least because they also expect economic growth to continue.
Helping drive growth will be steady consumer spending and companies investing in their businesses to fund expansion.
"Growth in first quarter this year will be positive amid soaring inflation as many companies will spend capital
for investment purposes," said Eric Sugandi, an economist at Standard Chartered Bank.
12 June 2011
Business reporter, BBC News, Singapore
In Asia, accessing the internet through mobile phones has lead to an explosion of internet users Daniel Alegre,
Google's President for Japan and Asia-Pacific, insists that his company is "locally relevant", as it
tries to appeal to the different tastes and internet capabilities of the hugely diverse Asian region.
"We don't see ourselves as a Silicon Valley company, we see ourselves as a Japanese company in Japan, a Singaporean
company in Singapore," he says.
It signals a shift in the centre of gravity of cyberspace, as Asia becomes the biggest and fastest growing region
for the internet.
Led by China, more and more people in the region are coming online each day.
Even in countries like Indonesia, Vietnam and the Philippines where the infrastructure to access the internet from
home is lacking, the mobile phone explosion is facilitating a connection to the online world.
Globally, by 2014 the mobile phone will become the principal means of accessing the internet, according to Morgan
Stanley.
And Google is betting big on mobile.
Its Android operating system, which is used by LG and Samsung's latest smartphone devices, is gaining popularity
fast in these regions, as it hooks people into the Google universe.
"If I'm a Gmail [Google's e-mail service] user, I'm now likely to look at an Android device." says Shivanu
Shukla, associate director of information and communication technology at Frost and Sullivan.
BDA China
"The intent is to keep stickiness. If I use 10 services from Google, it is unlikely I will switch [to another
provider]," he said.
Ethics versus Business
Google's focus in Asia, along with providing applications and advertising on its search engine, is targeting export-based
companies that want access to the rest of the world.
This is something Asian companies are keen to do, especially in China.
"Google benefits from Chinese companies seeking to advertise overseas," says Duncan Clarke, chairman
of BDA China, a Beijing-based investment consultancy.
It's one of the services that have allowed Google to maintain its presence in the world's largest internet market,
unlike its search site, which has pitted it against the Chinese government over censorship issues.
In 2011, China will have twice as many internet users as the US, according to data collected by BDA China.
Internet users in China (millions)
Source: BDA China
2009 - 384
2010 - 470
2011 - 550
2012 - 624
2013 - 700
2014 - 771
This is why Google is focusing on services that are less sensitive for the time being, such as products that
are business-to-business, mobile and export-based.
"They are basically looking to find sustainable businesses that don't put them in ethical conflicts,"
says Mr Clark.
Google has on occasions taken a stand against the government that there should be open access to information.
“ We thrive on that competition because it forces us to be better and it forces them to be better, and in the end
the internet benefits” - Daniel Alegre, President Asia Pacific and Japan, Google
But that ethical stance has been costly for Google and good for mainland China competitor Baidu.
"Baidu has gained from the trouble that Google encountered in China," says Mr Clark.
Although statistics vary, Baidu has about 76% share of the search market, according to figures from research firm
Analysys International. Google comes in at a distant second.
Asian competitors
China is not the only place in Asia where Google faces tough competition.
Google enjoys supremacy in some countries such as Vietnam, New Zealand and India, where there was no established
search player. But in more sophisticated internet markets, such as Japan and South Korea, Google does not dominate.
In Japan, Yahoo Japan, largely owned by web and telecom giant Softbank, fields the majority of web queries, according
to comScore.
"Yahoo was early to market and has the backing of Softbank, which is a large broadband and mobile provider,
so it has an advantage," says Mr Clarke.
Google's problems in China have benefited its local competitors In South Korea, Google fares even worse.
In March 2011, it had just 2% of the standard internet search market, according to Seoul-based research house,
Metrix Corp. The market leader there is Naver, owned by internet content provider NHN.
In Korea, the telecoms sector is vertically integrated - that is, operators are also content and device providers.
And that works against Google in South Korea and Japan, where consumers are focused on domestic content.
"There are barriers to entry, both structurally and language-wise. It's difficult for foreign companies to
penetrate without a local partner," says Mr Clark.
But Google's Mr Alegre doesn't sound worried.
"Here in Asia... we have very strong competitors. And we thrive on that competition, because it forces us
to be better and it forces them to be better and in the end, the internet benefits," he says.
The confidence is understandable. Given its global dominance and the new users that the Android operating system
is drawing in, Google is still well positioned to challenge the Asian incumbents.
The acute phase of the financial crisis has passed and a global economic recovery is under way. Moreover, the
recovery is fragile and expected to slow in the second half of 2010 as the growth impact of fiscal and monetary
measures wane and the current inventory cycle runs its course. Indeed, industrial production growth is already
slowing (albeit from very high rates). As a result, employment growth will remain weak and unemployment is expected
to remain high for many years.
The overall strength of the recovery and its durability will depend on the extent to which household- and business-sector
demand strengthens over the next few quarters. While the baseline scenario projects that global growth will firm
to 2.7 percent in 2010 and 3.2 percent in 2011 after a 2.2 percent decline in 2009, neither a double-dip scenario,
where growth slows appreciably in 2011, or a strengthening recovery can be ruled out.
Financial markets have stabilized and are recovering, but remain weak. Interbank liquidity as measured
by the difference between the interest rates commercial banks charge one another and what they have to pay to central
bankers have declined from an .unprecedented peak of 366 basis points in dollar markets to less than 15 basis points—a
level close to its "normal" pre-crisis range. Currencies, which fell worldwide against the U.S. dollar
in the immediate aftermath of the crisis, have largely recovered their pre-crisis levels. And international
capital flows to developing countries have recovered—with a rapid run-up during the last months of 2009. Also,
borrowing costs for emerging market borrowers have stabilized over the last few quarters, but remain elevated.
However, private sector firms remain shut out from international banking. markets. Moreover, the Dubai World event
and ripple effects to credit downgrades for Greece and Mexico can be expected to raise concerns about sovereign
debt sustamability and. will impact risk assessments, capital flows, and financial markets in 2010.
Global growth
Global Economic Prospects 2010: Global growth
After a deep global recession, economic growth has turned positive, as a wide range of policy interventions has
supported demand and reduced uncertainty and systemic risk in financial markets. However, the recovery is
expected to be slow, as financial markets remain impaired, stimulus measures will need to be withdrawn in the not
too distant future, and households in countries that suffered asset- price busts are forced to rebuild savings
while struggling with high unemployment. Although global growth is expected to return to positive territory in
2010, the pace of the recovery will be slow and subject to uncertainty. After falling by an estimated 2.2
percent in 2009, global output is projected to grow 2.7 and 3.2 percent in 2010 and 2011, respectively (-1.0, 3.5,
and 4.0 percent when aggregated using purchasingpower-parity weights).
The main drag on global growth is coming from the high-income countries, whose economies are expected to
have contracted by 3.3 percent in 2009. Japan, which felt the consequences of the global crisis more severely
than other high-income countries, experienced the sharpest growth contraction (-5.4 percent). Growth rates of 2.5
and 2.9 percent are expected in 2010 for the United States and for high-income countries that are not members of
the Organisation for Economic Co-operation and Development (OECD), respectively.
The global economic crisis affected developing countries first and foremost through a sharp slowdown in global
activity due to a sudden cut in investment programs, consumer durable demand, and a widespread effort to reduce
inventories in the face of uncertain future conditions. Falling export demand, commodity prices, and capital
flows exacerbated and extended the downturn. Overall, growth in developing countries declined to an estimated
1.2 percent in 2009, down from 5.6 percent in 2008.
Among developing-country regions, economies in Europe and Central Asia were hit hardest by the crisis, with
GDP falling 6.2 percent (with the Russian Federation contracting 8.7 percent). The main causes were
lower oil prices (Russia) and difficulties in funding large current account deficits in a risk-adverse environment.
Growth in the East Asia and Pacific region (particularly in China) as well as in South Asia (particularly India)
has been resilient, buoyed by a massive fiscal stimulus package in China and by India's skillful macroeconomic
management. Between 2008 and 2009, growth in the East Asia and Pacific region is estimated to have eased
by only 1.2 percentage points to 6.8 percent, while South Asian growth has remained stable at 5.7 percent.
GDP growth in China is estimated to have slowed from 9 percent in 2008 to 8.4 percent in 2009, but is expected
to recover toward 9 percent over the remainder of the forecast period.
These developments have also been reflected in global industrial production, which declined sharply in the aftermath
of the global financial crisis. In February 2009, world industrial production was falling at a 27 percent
annualized pace, but by the beginning of April/May, production began recovering, initially led by accelerating
growth in China following the implementation of the $575 billion (over five quarters) fiscal stimulus package.
Increased import demand from China quickly spread to other countries, with industrial production registering positive
growth in emerging countries (excluding China) by March 2009 and high-income countries by May 2009. As the benefits
of the stimulus measures and inventory restocking began to wane, industrial production growth rates have
started to moderate. Whether this deceleration signals a transition to slower growth, more in line with underlying
demand patterns or the beginnings of a double-dip growth recession will largely depend on the extent to which consumer
and business demand picks up in the months ahead
This website has been created with intensive use of internet research, linking information as available
on the internet, and various publications and books. I have attempted to give due credit to the sources.
My apologies for the ones I may have missed. I will make corrections as required. Editor
