Late next month, President Barack Obama will return to Indonesia for the first time in more than two decades. It will be a homecoming of sorts for the president, who lived in Jakarta for several years as a kid. Foreign investors aren’t waiting for the presidential visit. They have been pouring into Jakarta stocks and bonds all year.

More than $11.5 billion of net new foreign cash has flooded into Indonesian capital markets so far this year—about $9 billion into the local rupiah bond market and $2.5 billion in local stocks. That’s on top of $8 billion in foreign direct investments and billions more in infrastructure and real estate.

Indonesia Stock Exchange (IDX) Building, building confidence.

“Indonesia is the next big growth story in Asia, after China and India,” says Fauzi Ichsan, an economist for Standard Chartered Bank in Jakarta. With 240 million people, a relatively young demographic and strong economic growth, “Indonesia is this year’s story,” just as China, India and Brazil were the big stories in recent years, he says.

Standard Chartered is projecting 6.2% growth in gross domestic product this year, and 6.5% next year. Jakarta is targeting 7% to 8% medium-term growth as infrastructure bottlenecks are removed and the economy gets back to the high growth track it was on before the 1997-98 Asian financial crisis.

Investors like what they see. The benchmark Jakarta Composite Index is up 42% year-to-date in local-currency terms and 51.1% in dollar terms. “This is the third year running that Jakarta has been the best-performing market in Asia,” says Mark Mathews, regional strategist for Macquarie Securities in Hong Kong.

Last week, two initial public offerings—noodle maker CBP Indofood and coal miner Harum Energy—raised more than $1 billion.

A stronger currency and huge interest-rate differentials with developed markets make Indonesia all the more attractive. The rupiah two weeks ago touched 8,900 to a dollar—the strongest it has been in years, despite central-bank intervention to keep the currency from appreciating further and eroding competitiveness.

Newly opened toll road in East Java.

As central banks have opened their taps with quantitative easing, $2 billion a day has been pouring from the U.S., Europe and Japan into Asian emerging markets since April last year, notes David Carbon, an economist with DBS Bank in Singapore. Foreign reserves in Asia have risen by $962 billion, or 13% of Asia’s GDP since then.

Stocks are clearly getting richer. “Yes, multiples are high at over 13.5 times next year’s earnings, but that’s not so expensive when you consider a forecast of 25% earnings growth next year,” says Nick Cashmore, head of research for CLSA in Jakarta.

Surabaya-Mojokerto toll road, ready in 2012.

A good way to play Indonesia is through NYSE-listed ETFs like Market Vectors Indonesia Index ETF (IDX) or iShares MSCI Indonesia Investable Market Index Fund (EIDO). Cashmore says as the stocks have surged this year, investors are rotating from consumer stocks to raw materials. He likes palm-oil- plantation company London Sumatra (LSIP.Indonesia), a beneficiary of higher palm-oil prices; cement maker Holcim Indonesia (SMCB.Indonesia), which is benefitting from the huge local infrastructure boom; and the largest financial institution, Bank Mandiri (BMRT.Indonesia). •

Assif Shameen covers Asian capital markets from Singapore.

Article: BARRON’s Why Indonesia is the next China?

Pictures: The Jakarta Press , Iwan Maket

Popularity: 7% [?]

A number of cultures in Indonesia have practiced war rituals passed down from generation to generation. The blood spilt onto the soil was seen as natural fertilisers and casualties were considered as offerings for the power that be. Fadil Aziz recounts watching four sacred wars in eastern Indonesia.

Erich Fromm, the influential researcher in the field of violence, argues that there are two types of aggression in human beings: defensive aggression and offensive aggression. But in Indonesia, we discover a third type: sacred aggression. A number of cultures in the archipelago have strong traditions of war, which, uniquely, are noble-aimed and guarded by sacred values. Victims may fall, but ties of friendship are still maintained and vendettas are highly taboo. What looks primitive to foreigners is actually a holy ritual for the participants.

 Pajura

In the dark of the night, after a 40-kilometre trek through Sumba’s wild, I finally reached the end of the road. Asphalt now turned to soil. About an hour later, the road completely vanished. I had to leave my motorcycle behind and continued on foot, relying on flashlight. Not all the regions in Sumba enjoy the flow of electricity.

 I came to see the Pajura, a boxing custom typical of Sumba and a tradition that is rarely seen by outsiders. By midnight, people began arriving, walking distances of dozens of kilometres with bare feet. The flow of people pouring into the arena, a small area on the beach flanked by cliffs, never seemed to cease. Within minutes, the makeshift arena filled up with people numbering in the hundreds, the majority of which are men. Precisely how so many people from different villages were able to figure out where the arena was, in the dark of the night, without the use of some kind of electronic communication device or navigational system, remains a mystery to me.

The spectators settled anxiously, their collective impatience for the impending show emanated a droning buzz. The fight atmosphere was starting to thicken. From amongst the crowd, 26 mighty men appeared and came forward, and were subsequently divided into two groups. Their fists were wrapped in weeds, which functions like boxing gloves. Referee and police checked their hands to make sure no sharp objects were secretly inserted. Spectators pushed and elbowed each other, fighting to get the best spot.

And then, without warning, it started. Under the dim light of the moon, the fighters began hitting each other. The audience howled. Pajura is not a sporting event; there is no winner or loser. This brutal tradition is also not a mindless brawl between villages or groups. Although split into two groups, participants within the same group may hit at each other. It was unclear which was friend and which was foe.

 A boxer got in a good punch. The loud crack emitted from the opponent’s face made me cringe, but everyone else in the audience howled cheerfully. Another boxer ate the sand, hard. The audience laughed merrily while jeering on the collapsed boxer. The referee was busy holding the audience back to keep them from coming into the arena.

Although seemingly barbarian, the Pajura in its purest form is a sacred tradition. To the local community, any spilt blood is considered as an offering to the earth, a sort of nutritious fertilizer to enrich the soil. After the fight, the fighters shook hands with each other. Faces may be bruised, but the heart must stay pure. There must be no revenge. If a desire to return the favour occurs, then they must wait for next year’s Pajura.

 Pasola

The story goes that once upon a time, three brothers from Waiwuang set sail to look for rice for the starving village. But after a long time gone, the three brothers were never heard of anymore. The anxious villagers tried to track them down, but their effort was in vain.

Unable to cope with her husband’s apparent demise, one of the victim’s wives then remarried. But at that exact moment, her husband, thought to be lost forever, suddenly returned. The entire village was caught in a furore. After a lengthy deliberation, the village council decided that the marriage that the widow had already performed with the new husband was indubitably legal. To console the lost husband’s heart, the villagers held Pasola, a spear-throwing game.

Pasola is derived from the word “sola” or “hola”, meaning “wood that is shaped like a spear”. In Pasola, the main weapon is a two-metre spear made of lamtoro wood, in which the end should not be sharpened. But because villagers use machetes to cut the lamtoro wood and not the saw, the tip of the wood inadvertently becomes rather sharp.

Participants in the Pasola are split into two groups. Each participant rides a horse and carries a spear. After the cue is given, the action begins. In the vast prairie, each man throws a spear from the saddle. This is a difficult thing to do. Participants need to control their horses running at full speed with one hand, while the other hand throws the spear. When an attack comes, a Pasola warrior must duck down to avoid the oncoming missile or dodge away by hanging on to the side of the horse’s body, much like the Indian American way. Not infrequently, the spears flew toward the crowd of spectators. This is one truly “interactive” show.

According to customary rules, everything that occurs within the arena must be accepted with gallantry and sportsmanship. Families cannot demand retribution if one of their members is injured or possibly killed, and police are forbidden to interfere. Like Pajura, any blood spilled in Pasola is also considered as fertilizer for the soil so that harvest will be more abundant in the future. But that does not mean that Pasola is a barbaric tradition. There are many rules that must be obeyed by the participants. One is to never attack a participant who had fallen from their horse.

Pasola is a very popular cultural attraction in Indonesia. Tourists from around the world come to watch the event every year. A number of anthropologists claimed that Pasola is rooted in the riding culture and Marapu religion adopted by the Sumba community. This tradition is usually held at the beginning of the year, although no one knows the exact date. Only the Rato (a sort of preacher in Marapu) has the right to decide the date of Pasola on a particular year. According to custom, Pasola is held only if nyale (green sea worms) had crept down to the beach. The Rato will usually sit on a large rock as he cast a spell to find out when the worms will appear.

Perang Pandan

 War tradition in Bali? Sounds strange indeed. We know the island as a place where beautiful smiles always readily grace the faces of its residents. It is rather unimaginable to think that this peaceful heaven holds a bloody war ritual in its arsenal.

 The Perang Pandan (Pandan War), held in the Village of Tenganan on Fifth Sasih which falls around June-July, is intended as a tribute to the god Indra who is regarded as a god of war. Traditionally, the Pandan War (or Mekare-kare in local language) is practised as a ceremonial war game to keep one’s warrior spirit ablaze in the body.

 The primary weapon used here is a sharp, thorny pandan (pandanus or wild screwpine) leaves bunched into a club, about 40-centimetres long. These are plucked from the woods around the village. A peresai or woven bamboo shield is also used to parry the blow, but in the actual game the peresai is largely abandoned by the majority of participants—they just let the pandan club hit their bare bodies hard until blood flows freely from their bodies.

Anyone may participate in this war game; parents, teenagers or children of primary school age come all. Even foreign tourists frequently participate in the rite. Balinese geguron music reverberates before the war begins. This specialised music composition is considered sacred and only played on certain days. A melodious gamelan tune then follows and, to add courage, participants drink tuak (palm wine) on leaf glasses before the cue is given to start attacking each other.

 Once the cue is given, the fighters without fear or hesitation jump at each other, whipping the pandan club as hard as they could toward each other. A vigorous battle ensues. Sometimes the warriors wrestle on the ground, the pandan club squeezed in between their bodies and the ground as they roll around. Blood begins to sprout here and there and the audience subconsciously wince, imagining the intense stings the participants must have been feeling. But strangely, these brave warriors instead laughed ecstatically as they keep hugging and rubbing each other’s backs with the pandan club. Mekare-kare is really not quite a fencing match; no one wins or loses. It is rather a point of certain pride for the participant who manages to collect the most wounds. Clearly, this is not a spectacle for the weak of hearts.

After the fight, thorns that were stuck to the bodies were removed and wounds treated with a herbal mixture that makes the pain even worse, i.e. turmeric, vinegar and ginger. After, the warriors sit together to eat a variety of Balinese snacks. They all look happy, sharing jokes and laughter, just as if they had finished a jovial party. And this may have well just been the case, as in their minds, the god Indra, watching them from above, was smiling looking at his loyal “warriors”.

Presean

 Presean or stick fighting has no fixed schedule. Like a firecracker show in the culture of the Betawi people, the Presean is held in every big event. I came in as the community was celebrating one of Lombok’s grandest rituals, Bau Nyale, or the worm festival.

Bau Nyale, for the people of Lombok, means “to catch the worms”. The festival usually takes place at the beginning of the year with thousands of people gathering on the southern beaches to celebrate the event. The festival commemorates the legend of Princess Mandalika, an extremely beautiful princess of a large kingdom who committed suicide by jumping off a cliff to prevent all-out war. The colourful worms are said to be the reincarnation of the princess.

Participants in the Presean are bare-chested, wearing only sarongs wrapped around their waists. Their right hands hold the stick and left hold the shield. Anyone may participate, even the audience, although one condition applies: bravery. The swift, forceful strike of the rattan on the body will positively leave it battered and bruised for days on end.
Typical Lombok gamelan accompany the dynamics of two men hitting and parrying each other with rattan sticks and shields as hard as they could, but their movements were no less graceful. Sometimes, in the midst of battle, the participants danced. The atmosphere was nothing less than lively.

 Presean, unlike other war games however, is not a loose free-for-all smack down event. There are strict rules to follow, such as fallen fighters should not be attacked and the lower bodies should not be stroked. It also recognises a clear winner and loser. The winners are those who got in the most successful hits into the opponents’ bodies—much like boxing. But the prize does not amount to much. In the event that I watched, the winner only got a sarong. Not quite comparable with the stinging pain from the rattan strikes, but perhaps the materialistic reward is nothing compared to the satisfaction from bravely undertaking such rite of passage.

Source: Garuda Indonesia Inflight Magazine

Popularity: 5% [?]

When a tiny country like Brunei Darussalam or Luxemburg got wealthier, the impact wasnt felt by farmers in Vietnam or a carpenter in Russia. But when a big country like Indonesia with huge a population got richer, the impact can be seen across the globe. Indonesia, is on the very way to reach Gross Domestic Product (GDP) percapita of US$ 3,000, and it will display a new economic wave that raises the rise of middle-class economy.

In 2002, China set a target of reaching GDP percapita of US$ 3,000 in 2020. In 2008, the target was brought forward to 2010. In fact, it turns out to be in 2009 when China’s GDP percapita had exceeded US$3,000.

Photo:Illustrationsource.com

The rise of middle-class economy will bring new wave of demands.  Household products such as televisions, refrigerators, washing machines, air conditioners, cars, motorcycles and others will experience a fantastic jump.

Indonesia, however, never set such target, even the world believes that the Indonesian economy per capita is set to exceed US$ 3,000 this year.

Then, when will Indonesia’s GDP percapita reach US$ 3000 level? Nominal GDP in the first half of 2010 was recorded Rp 3.068 trillion or US$ 336 billion (converted at the exchange rate US$ 1 = Rp 9120). Well, referring to the annual pattern of Indonesia’s GDP, estimate at Q2 in 2010 will be obtained by GDP per capita of Rp 3350 billion, equivalent to US$ 372 billion (assuming exchange rate of U.S. $ 1 = Rp 9000). This means that in 2010,GDP will reach US$ 708 billion. With a population of 235 million , the GDP per capita of Indonesia is likely to exceed U.S. $ 3,000 in 2010.

It is no longer important when and how we’re gonna achieve that point, the process to lead to it and after that is more important. In the 1st half of  2011, GDP per capita is very likely to be at the level of U.S. $ 3,300. With such income, the purchasing power of Indonesians would be soaring. People will start buying things, including new cars, homes, etc. FYI, goverment predicts that the car sale will reach a new record high of 800,000 units!!! This is a clear sign of the NEXT WAVE society.

Credit: SWA Magazine

Popularity: 5% [?]

New Book Traces The History of Indonesian Textiles

by Deidre Woollard

Mary Hunt Kahlenberg is a women with a passion for textiles. She formerly served as Curator of Textiles and Costumes at the Los Angeles County Museum of Art and the Textile Museum in Washington, D.C. and is one of the top authorities on the subject. her latest book, Five Centuries of Indonesian Textiles, introduces readers to the intoxicating and complex beauty of Indonesian cloth. The book looks at five centuries of ceremonial garments and sacred textiles from throughout Indonesia’s chain of tropical islands. The book is a compilation of the work of a select group of experts sharing their cumulative knowledge and scholarship. The book also represents a visual tour de force of a very personal collection of over 350 Indonesian ceremonial garments and sacred textiles assembled over a thirty year period by Mary Hunt Kahlenberg.

Two young men from Yogyakarta 1890

It was much more than a “labor of love” for her when it came time to writing about and editing a book on her own collection of Indonesian Textiles. These textiles have consistently fascinated her before her first visit to Indonesia and grew as she traveled and studied more about Indonesian culture. The book and essays reveal the experts’ extensive knowledge of Indonesia’s history, culture, geography and religious evolution. DelMonico Books – Prestel has published the book with 300 color illustrations in 408 pages in a hard cover slip case that creates a beautiful showcase for the wide range of textile innovations in Sumatra, Java, Bali, Sulawesi, Nusa Tenggara and Maluku.

A young lady in Denpasar

“We are very fortunate to have received a generous grant that allowed us to create the kind of book that few art historians ever have the opportunity to offer for under $100. The book delves into the aesthetic experience, both tactile and visual, as well as its historic, anthropological and spiritual qualities. “For me, the pleasure of the information between the fingers is one of my great joys in studying textiles,” Kahlenberg says. “The other connection I feel is very important is knowing that this textile was made by someone and used by someone…..it communicates the sense of the individual and their life.” The book sells for $95.

Source : LUXIST

Popularity: 4% [?]

It is really a fantastic turnaround for our national flag carrier, Garuda Indonesia, to have been ranked by an independent research center as the best carrier in terms of service quality in Southeast Asia, beating even one of the world’s best and largest carriers, Singapore Airlines.

Not only has its performance achieved an all-time historical record, Garuda excelled in the most important factor in the airline industry.

An airline is not simply a transportation company but, most importantly, a travel service business.

Hence, overall service quality such as passenger comfort, food, on-board and ground services and customer perception of the carrier — key indicators assessed by the Centre for Asia Pacific Aviation (CAPA) for its service quality ranking — is key to a successful airline.

Garuda Indonesia Airbus A330

Over the past five years, under the leadership of its CEO Emirsyah (Emir) Satar, Garuda has steadily made dramatic improvements, turning its negative cash slows into high profits, modernizing its fleet, improving on-time performance, increasing load factor and aircraft utilization rates.

Yet even more important is the overhaul he made of Garuda’s staff business and service mentality and the great improvement in its safety record, as validated by its International Air Transport Association Operational Safety Audit certification and the European Union lifting last year of its ban on Indonesia airline flights to Europe.

Emir has also been greatly successful in restructuring Garuda’s financial and operational restructuring, which will make it possible for the carrier to go public later this year.

True, several external factors such as its big domestic market and Indonesia’s excellent economic performance despite the 2008 global financial crisis and economic recession, have also contributed to Garuda’s financial performance. That is different from Singapore Airlines, Thai Airways and the Malaysia Airline System.

But even these positive factors would not mean much if Garuda had not sharply improved the quality of its service, its overall image and the market perception of its service reliability, because the competition in the domestic market has become much fiercer due to the emergence of many low-cost carriers.

Garuda’s cooperation with the government in providing immigration service on board flights from Amsterdam, Seoul and Japan shows how creative Emir has been in creating new services to improve the overall comfort of passengers.

Such service creativity not only contributes greatly to Garuda’s performance but also Indonesia’s tourism industry as a whole. (The Jakarta Globe)

Garuda came as something of a surprise, ranking better than any airline tallied thus far. There were repeated comments that the airline provides excellent value and exceeds some of its competition. “Better value than Jetstar”, being one example.

Garuda Indonesia's on-board meal

It was also clear, almost from the outset, that most passengers had low expectations and were pleasantly surprised by the reality. Garuda has had a rocky history of late and is just beginning to re-enter the European market.

Travellers were genuinely impressed by the “new” Garuda. These statements sum up the gist of many comments: “Overall Garuda is improving” and “Garuda has changed into a better airline”.

The carrier also operates a large domestic network and many of the comments were based on very short flights. Yet they did not disappoint: “Short 50 minutes flight … managed to deliver prompt and courteousservice.”

The friendliness and service-minded attitude of cabin staff received repeated mention.

The airline appears to be rebuilding itself on a firm foundation. It’s fleet is quite new and there is a sizeable order for more equipment. The challenge will come in maintaining its excellent start as it grows and becomes a more common inclusion in traveller itineraries.

The final ranking and total score:

1. Garuda Indonesia (8.48)

2. Bangkok Airways (8.4)

3. Singapore Airline (7.68)

4. Thai Airways (7.32)

5. Cathay Pacific (7.12)

6. Malaysia Airlines (7)

(CAPA website)

Source: The Jakarta Globe, CAPA website

Popularity: 5% [?]

Representatives of 157 countries which have lakes will visit Paniai Lake in Papua Province which they consider to be the world’s most beautiful and preserved lake, a local official said.

The interest to visit Paniai Lake was expressed during the 12th World Lake Conference in India last November 2007, Paniai District Head Naftali Yogi, who attended the conference.

Sunset over Lake Paniai

The conference’s participants considered Paniai Lake in Papua to be the world’s most beautiful and best preserved lake. Situated 7,500 meters above sea-level, Paniai Lake still had pristine natural beauty and its water was still unpolluted.

Therefore, the conference’s participants were interested in visiting the lake and agreed to jointly help preserve Paniai Lake as the world’s best and beautiful lake, he said without mentioning when they would make the visit.
The Paniai administration was currently constructing roads surrounding the lake and a number of inns as part of preparations to receive the foreign visitors, he said.
In addition to infrastructure development, the local administration had also been making efforts to preserve the traditional culture and arts of the Mee and Moni tribes which constitute Paniai region’s indigenous population, Yogi said.

Source: Indonesian Embassy in Bucharest website

Popularity: 3% [?]

Tidewater Inc.  announced today that it has entered into a contract with Drydocks World for the construction of four 265-foot deepwater platform supply vessels at its shipyard in Batam, Indonesia. The delivery of these high-performance, high-capacity, 3,200 metric ton deadweight platform supply vessels is estimated to begin in April 2012 and conclude in late 2012.

Supply Vessel (Ship-technology.com)

The contract price of the four vessels totals approximately $100 million, exclusive of some owner-furnished equipment. The agreement with Drydocks World also provides options, at Tidewater’s discretion, for the construction of up to four additional vessels of similar specifications and at similar pricing.

Jeff Platt, Chief Operations Officer of Tidewater Inc., commented, “We are very pleased to announce the construction of these UT 755CDL-designed vessels as part of our continued effort to provide our customers with the latest technology in offshore marine assets capable of operating on a worldwide basis. Including this new construction commitment at Drydocks World, Tidewater has committed approximately $500 million to its on-going fleet renewal program in recent quarters. While we will continue to evaluate the relative attractiveness of vessel acquisitions and new construction commitments, we expect that investment levels will remain elevated in the coming quarters as Tidewater continues to grow both its modern fleet and its earnings capacity.”

Tidewater Inc. owns 396 vessels, the world’s largest fleet of vessels serving the global offshore energy industry.

SOURCE: Tidewater Inc.

Popularity: 2% [?]

When it comes to emerging market investing, there’s no doubt that the BRIC nations – Brazil, Russia, India and China – dominate the headlines.

Sure, they’re big, important countries. And together, they make up roughly 50% of the iShares MSCI Emerging Market Index ,which is obviously a significant chunk of the ETF.

But what about the other 17 countries in the fund?

For some time now, I’ve been monitoring a country that is well off the radar screens of even the most sophisticated investors – one that I think represents a bigger prize than the BRIC nations.

So pack your bags and let’s investigate…

Emerging Market Investing… Consider These Statistics

See if you can guess which emerging market investment I’m talking about. Take a look at these statistics – and feel free to sound smart at your next dinner party, too!

1. It’s a member of the global economic leaders club – better known as the G-20.
2. With 240 million people, it boasts the world’s fourth-largest population.
3. Its land mass is three times the size of Texas.
4. Its 10-year government bond interest rate is less than Spain’s.
5. And most importantly, it was the best-performing market in 2009 and continues to chug forward in 2010.

Simply put, it’s time for investors to move from ignorance to Indonesia.

The Driving Force Behind Indonesia’s Downturn-Defying Performance

Since the global economic crisis crushed the capital markets in early 2009, Indonesia has just shrugged off the adversity and been a stellar performer.

And while many continue to laud the BRIC nations, Indonesia’s economy quietly notched up 4.2% GDP growth in 2009 and is projected to top 6.3% this year. That puts the country in the same league as Brazil, India and China as one of the world’s top emerging markets.

The driving force behind Indonesia’s success? Private consumption, which accounts for about two-thirds of Indonesia’s economy and has carried it through the recent financial turbulence. Consumption kicked 5% higher during the second quarter, while investments jumped by 8%. The country has attracted billions of dollars in foreign capital into stocks and bonds.

A Triple-Digit Sprint for Indonesian Stocks

It’s no surprise to learn that the Jakarta Stock Exchange has fed off the positive flow of economic news. Over the past year, it’s gained more than 100%.

And its emerging market country etfs have tagged along for the ride. From its low in November 2008, the Aberdeen Indonesia Fund is up 372%. And having hit bottom in March 2009, the Market Vectors Indonesia Index ETF  has catapulted 313% higher.

The Indonesian rupiah has also strengthened by 24% against the U.S. dollar.

And that’s laid the foundation for even more progress…

Asia’s Big Boys Have Indonesia in the Crosshairs

There’s no doubt that Indonesia is growing rapidly. But in order to maintain its growth, the country needs to attract more than $200 billion in new infrastructure investment, so it can develop manufacturing industries and create jobs for tens of millions of unemployed people.

And two of Asia’s biggest players have identified Indonesia as a major target. Both South Korean and Japanese businesses are expanding their operations there in order to ride the Indonesian growth wave.

Korea's giant steelmaker, investing big in Indonesia

As Gita Wirjawan, chairman of Indonesia’s Investment Coordination Board, told the Financial Times recently: “When I was in Seoul, there was a queue of manufacturing giants showing a thirst to relocate, or move their manufacturing hub for south-east Asia to Indonesia.”

• In one of the largest deals to date, Posco, South Korea’s biggest steelmaker, recently signed a $6 billion agreement to build a plant in Indonesia with PT Krakatau Steel. And that’s not all…
• Hankook Tire, the world’s seventh-largest tire maker, plans to build a $500 million plant in Indonesia next year.
• LG Electronics is considering making Indonesia a regional manufacturing hub, according to those close to the investments.
• Korea Electric Power Corporation, South Korea’s state electricity producer, is acquiring a 20% stake in Indonesian coal company Bayan Resources.
• In July, Samchully, a South Korean gas supplier, said one of its units would form a joint venture with Indonesian state energy firm, Pertamina, to build a liquefied petroleum gas plant in southern Sumatra. It will invest $190 million to achieve an annual production capacity of 240,000 ton by 2012.

And with regard to Japan, construction has started on a $1.2 billion thermal power plant that will supply electricity to some of the most densely populated islands.

Paiton Energi, expanding power in Indonesia

PT Paiton Energy (partly owned by Mitsui & Co) and the Tokyo Electric Power Company are building the 815-megawatt expansion in East Java, with funding from the Japan Bank for International Cooperation and a consortium of Japanese lenders.

The deal adds to already solid Japanese-Indonesian import-export ties. Trade between Japan and Indonesia reached $28.4 billion last year, making Japan a larger trading partner than China, where the number totals $25.5 billion, or the United States, with trade worth $17.9 billion.

In addition, Japan sources most of its coal and liquefied natural gas from Indonesia, while Indonesia imports large quantities of Japanese electronics. And there are currently more than 1,000 Japanese projects under way, worth more than $30 billion.

So where does this leave the United States in the equation?

Is America Falling Behind These Emerging Markets?

Think strategically about U.S. security issues and you’ll realize that Indonesia’s importance to the United States goes far beyond economics, as it borders several key sea lanes.

America needs to build a much broader and deeper relationship with Indonesia by growing through investment, trade and partnerships like Japan has done. The Financial Times reports that the Japan-Indonesia partnership is just one of several trade agreements that Japan has. It’s also sealed bilateral free trade agreements with Brunei, Chile, Malaysia, Mexico, Singapore, the Philippines, Thailand, Vietnam, Switzerland and the Association of Southeast Asian Nations (ASEAN).

So for big potential gains, I highly recommend that you look beyond the BRICs to countries such as Indonesia, as well as Malaysia, Turkey, Poland, Peru and Columbia.

Source: seekingalpha.com (Carl Delfeld)

Popularity: 6% [?]

Besides the gigantic Lion Air, Indonesia is host to many other privately-owned airlines, Batavia Air, Mandala Air, and Sriwijaya Air are 3 major airlines carry millions of passenger every year and fly both domestically and internationally.

GNFI has many times posted about Lion Air, Mandala, and Batavia Air. It’s now Sriwijaya Air’s turn. Sriwijaya’s name is for sure derived from Southeast Asia’s largest and most influental kingdom in th2 7th to 13th century. So big that it ruled as far as places like Srilanka and Indochina.

Sriwijaya Air flied 5.9 million passengers in 2009 and is gearing up to load in 7 million passenger this year, serving 32 domestic routes and 2 international routes, with 34 Boeing 737 fleet. It’s really huge achievement considering that Sriwijaya Air is a relatively-new airline in a crowded market.

Boeing 737-800 NG

It will soon acquire 10 Boeing 737-800 Next Generation and the delivery will start in 2012, it costs $81 million per unit. Sriwijaya is also considering to purchase 60 commuter aircraft by 2012 but has not decided between competing offers from ATR, Avro RJ, Bombardier and Embraer.

Avro RJ, targeted by Sriwijaya Airlines

Bombardier, eyed by Sriwijaya Air

Yeah, it’s going to be BIG! Indonesian aviation grows exponentially during the last 10 years and is now one of world’s fastest growing region in aviation biz.

Popularity: 5% [?]

As requested, GNFI is posting pictures from Indonesian National Armed Forces (TNI)’s anniversary celebration, Oct 5 2010. It was their 65th anniversary, and what i’d been expecting was…pictures of the defile and parades of the soldiers and the war machines.

They bring me confidence. How about you?

(Photos from Kaskus, Detikcom, )

The Sukhois

Are they the hawks?

The rocket launchers

The Marines

The Garuda Contingent

Mixed fighters and bombers

Popularity: 6% [?]