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Indonesia eyes fintech regulation to avoid ‘loan shark-like’ practices

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March 13, 2018

JAKARTA (Reuters) – Indonesia’s financial regulator said it was considering setting a cap on interest rates and the size of loans offered by fintech firms, in a move aimed at minimizing the risk of defaults.

The emergence of these peer-to-peer (P2P) lending platforms, offering loans ranging from as little as a few hundred dollars to several thousands, has so far been welcomed by Indonesia, Southeast Asia’s biggest economy where tens of millions of people have little or no access to bank credit.

More than 300,000 people have borrowed from these firms, with total loan distribution reaching 3 trillion rupiah ($218 million) as of January, versus 247 billion in December 2016, according to data from the Financial Services Authority (OJK).

Meanwhile, annual growth in bank lending has slowed to under 10 percent, from over 20 percent in the commodity boom years.

‎”We support P2P lending so the people can have an easier access (to financing). But when the access has been easier, the P2P companies feel the need to offer a high rate,” Eko Ariantoro, the director of the financial inclusion development directorate at OJK, told reporters on Tuesday.

“We don’t want these developing fintechs to become loan shark-like businesses‎,” he said.

Ariantoro said the proposed maximum lending rate was still under discussion.

There are 36 registered fintech firms operating in Indonesia and OJK said 42 others were in the process to be approved.

The OJK plans to also issue a new regulation for crowdfunding platforms this year as part of efforts to protect customers’ fund, Ariantoro said.

‎”We are trying to regulate the mechanism to acquire and collect fund. There should be a form of responsibility to the fund owner,” he said.

($1 = 13,750 rupiah)

(Reporting by Tabita Diela; Editing by Himani Sarkar)


S&P cautions on worsening balance sheets at Indonesian state firms

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March 13, 2018

JAKARTA (Reuters) – Standard & Poor’s Global Ratings highlighted on Tuesday a deterioration in the balance sheets at Indonesian state-owned enterprises (SOEs) involved in a government-led infrastructure push in Southeast Asia’s biggest economy.

SOEs, especially those working in power and construction, have extensively borrowed in order to match the government development plans, causing their balance sheets to become “substantially weakened,” Xavier Jean, an analysts with S&P told reporters on Tuesday.

The leveraging level of 20 listed and rated SOEs has increased to around an average of 5 times debt-to-EBITDA, jumping from 1 times in 2011.

“This is a trend that we are keeping a close eye on because we think it’s going to persist, and going to accentuate in 2018 and to the run up to the 2019 election,” Jean said.

Infrastructure development is a core part of President Joko Widodo’s economic agenda and is aimed at slashing high logistics costs, which are often blamed for creating bottlenecks in the economy.

S&P upgraded Indonesia’s sovereign rating to investment grade in May, years after Fitch and Moody’s, on the back of structural improvements and reduced risks to the country’s fiscal position.

The government estimates a total of $450 billion in infrastructure investment is needed between 2014 to 2019, which can only be partially funded by the government.

Taking up most of the projects, SOEs had to borrow to fill the working capital needs, such as for salaries, while projects are often delayed or take times to generate revenue, Jean said.

Meanwhile, the government’s push to develop infrastructure in less populated areas also raised concerns over future income, he added.

“It is not very clear to us today if a lot of the investments that are made by these companies outside of Java, outside of the heavily populated centers, will be profitable projects or not,” Jean said.

If companies continue to raise investments at the current pace, they could be forced to stop all investment in five years to control their finances, renegotiate their debt or ask for recapitalization by the government, Jean added.

The debt that these companies take would also affect ratings of Indonesia’s sovereign debt and the banking system from which they borrow, said Kim Eng Tan, S&P’s senior director for sovereign ratings, although he added that at this point it would not negatively affect government finance.

Last month, the government was forced to suspend and conduct a safety assessment on all elevated infrastructure construction after a string of accidents, which raised questions about the safety of a government drive to upgrade its infrastructure.

(Reporting by Fransiska Nangoy and Gayatri Suroyo; Editing by Ed Davies and Sam Holmes)

Indonesia’s island of Bali to curb internet use over Hindu holiday

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March 15, 2018

JAKARTA (Reuters) – Indonesia has asked telecoms providers to shut down some mobile internet services in its holiday island of Bali on Saturday, to respect the predominantly Hindu island’s New Year “day of silence”.

Most activities on the island, known for its beaches and temples, usually come to a standstill on the day of “Nyepi”, including a temporary closure of the international airport.

But this is the first time internet providers have been asked to restrict cellular data, according to Telkomsel, the country’s largest mobile network.

In a statement, the communications ministry said religious leaders in Bali had appealed for a 24-hour internet blackout from 6 a.m. on Saturday.

“We have asked all telecommunications providers to take steps to support the religious leaders’ appeal,” it said. “They should also take steps to maintain the quality of internet access at vital locations.”

Such spots included hospitals, banks, and certain public places will be running, said Merza Fachys, president director of Smartfren, another service provider.

“We will try as much as possible to fulfill what the religious leaders have asked for,” he added.

It was unclear whether wifi networks at places like hotels or cafes would still operate.

(Reporting by Tabita Diela and Cindy Silviana; Writing by Kanupriya Kapoor; Editing by Clarence Fernandez)

Suspected of graft, Indonesian parliament speaker under guard in hospital

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November 17, 2017

By Fergus Jensen

JAKARTA (Reuters) – Indonesian anti-graft investigators have put the speaker of parliament, who they have identified as a suspect in a $170 million corruption case, under armed guard in hospital after he was involved in a car accident, his lawyer said on Friday.

Officers from the Corruption Eradication Commission (KPK) tried to arrest Setya Novanto, the chairman of Golkar, Indonesia’s second-largest party and partner in the ruling coalition, at his house in Jakarta late on Wednesday.

But the investigators, watched by television cameras, failed to find him, sparking speculation that he had gone into hiding.

The KPK is investigating state losses amounting to about $170 million linked to a national electronic identity card scheme after allegations that sums ranging from $5,000 to $5.5 million – generated by marking up procurement costs – were divided up among politicians in parliament.

Novanto was named a suspect in the case again last week after he had used a controversial legal maneuver, a pre-trial motion, to get earlier charges dropped last month.

He has denied wrongdoing but has repeatedly missed summonses from the KPK for questioning in recent months, saying he was ill and needed to undergo heart surgery.

Late on Thursday, reports emerged that Novanto was involved in a car accident while on his way to turn himself in at KPK headquarters.

Novanto’s lawyer, Fredrich Yunadi, said a journalist was driving the vehicle and interviewing his client at the time of the accident.

“(The driver) was looking back and looking to the side, so he wasn’t concentrating on what was in front of him,” Yunadi said.

Novanto was now “very ill” with head and hand injuries, Yunadi said.

“He can’t even get up yet. He can’t talk yet, it’s just his eyes – when he opens his eyes the ceiling swirls in circles.”

The lawyer said armed KPK officers were guarding Novanto and had ignored requests to leave.

Novanto was taken to a second hospital on Friday for a magnetic resonance imaging (MRI) scan, media reported.

Novanto gained a measure of international fame in September 2015 when then U.S. presidential candidate Donald Trump hailed the Indonesian politician as a “great man” during a news conference.

“Do they like me in Indonesia?” Trump asked after introducing Novanto to reporters at Trump Tower.

“Yes, highly,” Novanto replied.

‘FACE LEGAL PROCESS’

Indonesian newspapers splashed pictures across their front pages of a black sport utility vehicle that Novanto was said to have been traveling in.

It was resting against an electricity pole, and appeared to have suffered only minor damage to the front fender.

Febri Diansyah, a KPK spokesman, said on Thursday the crash happened shortly after the agency had asked the national police chief and Interpol to place Novanto on a wanted list.  

The KPK would liaise with doctors to see if Novanto was “fit to stand trial” and would continue its investigation, Febri told Inews TV.

Yunadi has said a request for another pre-trial motion had been filed on behalf of his client.

President Joko Widodo on Friday urged Novanto, a political ally, to “follow the legal process”. Previously, Widodo has backed the KPK against efforts by some members of parliament to weaken the independent agency’s powers.

Vice President Jusuf Kalla, who is also a Golkar member, told reporters on Thursday Novanto should be ready to face any legal process if called upon.

Indonesians widely perceive parliament as one of their country’s most corrupt institutions, Transparency International says.

(Additional reporting by Augstinus Beo Da Costa and Kartika; Writing by Ed Davies; Editing by Robert Birsel)

Freeport evacuating Indonesian mine worker families after shootings

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November 18, 2017

TIMIKA, Indonesia (Reuters) – U.S. miner Freeport-McMoRan Inc is evacuating spouses and children of workers from its giant Indonesian copper mine after a string of shootings in the area raised security concerns.

The move follows efforts by Indonesian authorities on Friday to evacuate villages near Freeport’s Grasberg mine in the eastern province of Papua that authorities said had been occupied by armed separatists.

Since August at least 12 people have been injured and two police officers have been killed by gunmen with suspected links to separatist rebels.

Freeport has asked family and household members of its employees to prepare over the weekend for a temporary relocation from the mining town of Tembagapura, about 10 km (6.2 miles) from Grasberg, company sources said. Workers have been asked to stay behind and maintain their work schedule, they said.

Details of the evacuation or the number of people impacted were not immediately clear. Shots were fired at a light vehicle and two large mining trucks were set on fire at Grasberg on Saturday, one of the sources said. The sources declined to be named as they were not authorized to talk to the media.

Freeport in a statement on Saturday confirmed the evacuation plan and said it will be carried out immediately.

“We are working closely with government and law enforcement to ensure the safety of our people and those in the communities we support, and to bring about the return of peace and stability as soon as possible,” it said.

Grasberg is the world’s second-largest copper mine by volume.

The separatist West Papua National Liberation Army (TPN-OPM) says it is at war with Indonesian authorities and wants to “destroy” Freeport in an effort to gain sovereignty for the region.

TPN-OPM has claimed responsibility for the shootings but denies police allegations it took civilian hostages.

(Reporting by Sam Wanda in TIMIKA; Writing by Fransiska Nangoy and Fergus Jensen in JAKARTA; Editing by Muralikumar Anantharaman)

Indonesia parliament speaker taken into custody by anti-graft agency

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November 20, 2017

By Fransiska Nangoy and Fergus Jensen

JAKARTA (Reuters) – Indonesia’s parliament speaker, Setya Novanto, has been taken into custody by the anti-corruption agency after being arrested over his alleged role in causing state losses of $170 million linked to a national electronic identity card scheme.

Novanto, clad in an orange vest worn by detainees of the Corruption Eradication Commission (KPK), was transferred from a hospital on Sunday night into a KPK detention facility.

He is one of the most senior politicians to be detained by the agency, popular among ordinary Indonesians for targeting members of the establishment suspected of abuse of power.

Novanto was arrested on Friday night but his detention was postponed while he received treatment for injuries suffered in a car crash the day before.

“Delay of the arrest is no longer needed,” as a medical statement showed Novanto did not need further hospital treatment, Laode Muhammad Syarif, the deputy head of the agency, said in a video on its official Periscope page.

On Sunday night, Novanto told reporters he was still suffering from vertigo after the crash that he said had injured a leg, an arm and his head.

“I thought I would be given time for recovery, but I obey the law,” Novanto was quoted by news website Kumparan.com as saying.

Novanto will be held for 20 days for questioning, said KPK spokesman Febri Diansyah. He will be detained in a sparsely-furnished holding cell with some mattresses and a shared toilet.

Graft agency officials tried to arrest Novanto, the chairman of Golkar, Indonesia’s second-largest party and partner in the ruling coalition, at his house in Jakarta late on Wednesday.

But they failed to find him, sparking speculation that he had gone into hiding.

Later, Novanto was involved in a car accident and his lawyer, Fredrich Yunadi, said a journalist was driving the vehicle and interviewing his client at the time.

The car crash was found to be an accident, media cited Jakarta’s deputy director of traffic police as saying, dismissing speculation that the mishap was staged.

FBI HELPING INVESTIGATION

Novanto has denied wrongdoing but has repeatedly missed summonses for questioning by the agency in recent months, saying he was ill and needed heart surgery.

The agency is investigating state losses of about $170 million after allegations that sums ranging from $5,000 to $5.5 million, generated by marking up procurement costs for the ID cards, were divided up among politicians in parliament.

Novanto was named a suspect on Nov. 10 again after he had used a controversial legal maneuver, a pre-trial motion, to get earlier charges dropped last month.

President Joko Widodo told reporters on Monday that he had asked Novanto to “follow the legal process”.

The KPK has been collaborating with the U.S. Federal Bureau of Investigation on the case, said agency spokesman Diansyah.

The FBI has been investigating the activities of Johannes Marliem, a U.S.-based contractor for the ID card scheme, who later committed suicide in Los Angeles.

The parliament speaker’s legal battle with the graft agency has gripped Indonesia, with newspaper front pages splashing the story and social media circulating memes mocking him.

Novanto gained a measure of international fame in September 2015 when Donald Trump, then a U.S. presidential candidate, hailed him as a “great man” at a news conference.

“Do they like me in Indonesia?” Trump asked after introducing Novanto to reporters at Trump Tower.

“Yes, highly,” Novanto replied.

(Additional reporting by Kartika; Writing by Ed Davies; Editing by Richard Pullin and Clarence Fernandez)

Indonesia court rules against Goldman in Hanson share ownership dispute

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November 21, 2017

By Ed Davies and Cindy Silviana

JAKARTA (Reuters) – An Indonesian court ruled on Tuesday that Goldman Sachs <GS.N> should return shares in property developer PT Hanson International Tbk <MYRX.JK> to tycoon Benny Tjokrosaputro in a legal tussle over ownership.

Judge Achmad Guntur also ordered Goldman to pay 320.88 billion rupiah ($23.71 million) in compensation, a copy of the ruling from the South Jakarta court showed.

Tjokrosaputro, president director of Hanson International <MYRX.JK>, had in a lawsuit sued the U.S. bank for 15 trillion rupiah ($1.11 billion), accusing it of making “unlawful” trades in the shares and claiming ownership of 425 million shares.

Goldman had said that Goldman Sachs International had bought the Hanson shares from New York hedge fund Platinum Partners in a series of “valid” transactions on the Indonesia Stock Exchange (IDX) between February 2015 and December 2015.

Tuesday’s ruling said that Tjokrosaputro was the legal owner of as many as 425 million shares in Hanson International.

“We are surprised and disappointed at this decision and will be appealing it at the earliest opportunity,” said Edward Naylor, a spokesman for Goldman Sachs based in Hong Kong.

The court also rejected a Goldman counter-suit against Tjokrosaputro for at least $1.1 billion, said Harjon Sinaga, a Jakarta-based lawyer representing Goldman Sachs International.

Sinaga said his client had no relationship with the claimant and shares were acquired through the negotiated board of the IDX and the transactions were validly settled.The dispute comes at a time when Southeast Asia’s largest economy is embarking on its biggest drive for foreign investment in a decade.

At stake in the Goldman case is the protection of the rights of foreigners, amid a general lack of transparency in Indonesian court proceedings, legal experts say.

“Well, I actually just wanted my shares back. I am not asking much,” Tjokrosaputro told Reuters.

Tjokrosaputro had pledged Hanson shares to Platinum in return for funding on the basis he could get the shares back upon repayment, according to his lawyers and court documents.

Such a repurchase agreement, or a repo, effectively acts as a loan but the deal involves temporarily transferring legal ownership of the shares.

Goldman Sachs International bought the Hanson shares from Platinum as a hedge for the derivatives it had entered into with the fund, a bank spokesman has said.

In late 2014, New York-based Platinum fell into financial difficulties and had trouble paying back a large number of investors, according to U.S. authorities.

Goldman started selling the Hanson shares last year, but was forced to stop after Tjokrosaputro filed a police complaint, which he followed up with the lawsuit.

Goldman says in its court filings that it “understands” Platinum originally acquired the Hanson shares from an entity named Newrick Holdings Ltd, rather than from Tjokrosaputro.

According to the “Panama Papers” online database as of 2015, which compiled millions of leaked documents from law firm Mossack Fonseca, Newrick is a company registered in the British Virgin Islands in which Tjokrosaputro was a shareholder.

A bank spokesman told Reuters that Goldman Sachs International was not aware of any dealings between Tjokrosaputro or his affiliated entities and Platinum Partners, nor any restrictions on the shares it purchased.

The tycoon’s lawyer have said that Tjokrosaputro was the legal owner of the shares in the repo transaction with Platinum and, since he did not breach any contract with Platinum, only he had the right to sell them.

($1 = 13,532.0000 rupiah)

(Reporting by Ed Davies and Cindy Silviana, Writing by Ed Davies; Editing by Himani Sarkar)

Peru, Indonesia to likely start trade talks in December: minister

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August 29, 2017

LIMA (Reuters) – Peru and Indonesia will likely start negotiating a free trade deal in December as Lima pursues a “very aggressive” trade agenda following Washington’s withdrawal from the Trans-Pacific Partnership (TPP), Peru’s trade minister said on Tuesday.

Peru already has more than 15 free trade deals and this year started negotiations on agreements with Australia and India while preparing to update its accord with China.

Peru is also part of efforts to reduce trade barriers between Australia, New Zealand, Singapore, Canada and the Pacific Alliance bloc made up of Peru, Mexico, Chile and Colombia.

“We’re working on a very aggressive trade agenda, which includes probably in December the start of negotiations on a free trade agreement with Indonesia,” Trade Minister Eduardo Ferreyros told a press conference.

Peru was one of 12 nations that signed onto the TPP for the fast-growing Asia-Pacific region. The TPP has been in limbo since U.S. President Donald Trump withdrew the United States in January.

“That hasn’t stopped us. What we’re doing is promoting bilateral agreements,” Ferreyros said.

Peru is part of talks this week in Sydney aimed at salvaging the TPP, which in its current form cannot be implemented without the United States.

(Reporting By Teresa Cespedes and Mitra Taj; editing by Grant McCool)


Indonesia loses WTO appeal in food fight with New Zealand, U.S.

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November 10, 2017

GENEVA (Reuters) – Indonesia lost an appeal ruling at the World Trade Organization on Thursday in a dispute with the United States and New Zealand over Indonesia’s restrictions on imports of food and animal products including beef and poultry.

Indonesia had argued that its rules were based on health concerns and halal food standards, or aimed to deal with temporary surpluses in the domestic market. In December 2016, a panel of adjudicators faulted Indonesia, which appealed.

An Indonesian trade ministry official said the government would study the ruling before easing any restrictions, which cover products such as apples, grapes, potatoes, onions, flowers, juice, dried fruit, cattle, chicken and beef.

“The Indonesian government will study and conduct internal coordination related to the recently circulated Appellate Body Report, including its implications for current regulations,” Oke Nurwan, Indonesia’s director general of foreign trade, told Reuters.

(Reporting by Tom Miles; Additional reporting by Bernadette Christina Munthe in JAKARTA; Editing by Andrew Roche and Sam Holmes)

Indonesia president pledges to tackle extremism, wealth distribution

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August 16, 2017

By Hidayat Setiaji and Bernadette Christina Munthe

JAKARTA (Reuters) – Indonesia’s president said on Wednesday that the world’s most populous Muslim-majority country needed to pull together to meet the threat of extremism and safeguard a constitution that enshrines religious freedom and diversity.

In an address to parliament ahead of Thursday’s independence day, President Joko Widodo peppered his speeches with references to the need to address inequality in Southeast Asia’s biggest economy and tackle the threat of radicalism.

Indonesian police have tightened security ahead of the independence day holiday and on Tuesday arrested five suspected Islamist militants and seized chemicals they said were being used to make bombs for attacks on the presidential palace.

Religious tension in Indonesia has soared since late last year after Islamist-led rallies saw Jakarta’s then governor, a member of a so-called double minority who is ethnic Chinese and Christian, put on trial during city elections over claims he insulted the Koran.

“We want to work together not only in creating an equitable economy, but also in ideological, political, social and cultural development,” said Widodo.

“In the field of ideology, we have to strengthen our national consensus in safeguarding Pancasila, the 1945 Constitution, the unity of the Republic of Indonesia and “Bhinneka Tunggal Ika” (unity in diversity),” he said.

Pancasila is Indonesia’s state ideology, which includes belief in god, unity, social justice and democracy, and which enshrines religious diversity in an officially secular system.

But there are worries about growing intolerance undermining a tradition of moderate Islam in a country where Muslims form about 85 percent of the population, alongside substantial Buddhist, Christian, Hindu and other minorities.

In April, the then Jakarta governor Basuki Tjahaja Purnama, an ally of Widodo, lost the bitterly fought city election to a Muslim rival and was later jailed for blasphemy, a sentence rights groups and international bodies condemned as unfair and politicized.

CORRUPTION FIGHT

In a second speeches, a state of the nation address, Widodo said his administration’s focus this year was to ensure that the benefits from an average 5 percent economic growth in the last few years should be felt by everybody.

Despite its growing middle class, inequality in Indonesia remains high. Indonesia’s wealthiest 1 percent control 49.3 percent of its wealth, Credit Suisse said in a report issued last November, which placed Indonesia among countries with the most unequal distribution of wealth in the world.

The president touched on efforts to cut red tape and said that moves to certify land would be accelerated. Disputes over land ownership frequently hold up infrastructure projects.

“For 72 years we have been independent, but while other countries are looking at outer space, we in our beloved country have not finished land certification for our people,” he said.

On national security issues, the president said Indonesia needed to “resist the theft of our sea resources” and should not be afraid to keep sinking illegal fishing boats in its waters.

Indonesia has sunk hundreds of illegal fishing boats and its navy and coastguard have had skirmishes with China and countries such as Vietnam over fishing in parts of the South China Sea.

Widodo said graft continued to be a scourge for Indonesia’s competitiveness and pledged to strengthen the country’s corruption eradication commission (KPK).

Indonesia ranked 90th out of 176 in Transparency International’s Corruption Perceptions index in 2016 and in July KPK named parliament’s speaker a suspect over an investigation in the alleged theft of $170 million linked to a national identity card system. Setya Novanto has denied any wrongdoing.

(Reporting by Hidayat Setiaji, Bernadette Christina Munthe, Fransiska Nangoy and Gayatri Suroyo; Writing by Ed Davies; Editing by Michael Perry)

Booming thermal coal price on China demand cheers miners

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August 17, 2017

By Henning Gloystein and Jim Regan (Australia)

SINGAPORE/SYDNEY (Reuters) – Australian thermal coal prices for spot cargoes above $100 a tonne, lifted by reports of strikes and strong Chinese demand, are providing a boost in earnings and share prices for miners like Glencore and Whitehaven Coal.

A crackdown on illegal mining and pollution in China has curbed domestic supplies, just as a heat wave and lower hydro power output have boosted demand for coal for power generation, forcing up prices.

A similar squeeze in 2016 pushed prices to $114 a tonne and miners are again eyeing windfall profits, despite warning that the market is volatile.

“Coal demand remains strong, especially in Asia,” said Paul Flynn, managing director of Whitehaven Coal <WHC.AX>.

“Imports of thermal coal into China have been higher than anticipated, and when combined with weather related constraints on supply from Indonesia and some production issues in Australia, have pushed up the price of seaborne thermal coal.”

Reports of more planned strikes at Australia’s Hunter Valley mine, as well as weather-related supply disruptions in Indonesia, have also been pushing up prices, traders said.

Adding fuel to the already hot market, a huge gas-fired power outage in Taiwan this week has triggered emergency orders from coal-fired power stations scrambling to fill the electricity production gap, traders said.

Australian thermal coal shipments hit a 2017 high in July of over 11 million tonnes, shipping and trading data in Thomson Reuters Eikon shows. Despite a dip in shipments earlier this month, traders say orders for the rest of August and into September are high.

Spot cargo prices for Australian thermal coal cargoes from its Newcastle terminal have jumped by over 40 percent from their 2017 lows. Coal topped $100 in early August and last closed at $101.25 per tonne. <GCLNWCPFBMc1>

The soaring demand and prices are a boon for companies like global miner Glencore <GLEN.L>, the world’s biggest exporter of sea-traded thermal coal, and Australian miners like Whitehaven, which profited from last year’s spike and have seen their stocks rally since June.

Shares in Whitehaven hit their highest since 2013 on Thursday after it reported a near 20-fold full-year profit rise to A$405 million ($322 million).

Glencore this month raised its earnings forecast for 2017, citing higher commodity prices, after it reported a 68 percent surge in first-half earnings.

The key question is whether the current boom will last.

“Chinese coal production continues to fall due to capacity closures … stocking hopes that import demand will remain strong in China in coming months,” ANZ bank said on Thursday.

Last year’s rally caught the market by surprise and this year’s spike has again defied forecasts, given ample coal supplies and a growing raft of alternative energy sources.

“Will prices stay above $100 forever? Certainly not. But given the spikes this year and last, I and many of my colleagues don’t want to be caught short again,” said one trader.

(Reporting by Henning Gloystein; Editing by Richard Pullin and Tom Hogue)

Indonesian woman jailed for suicide bomb plot at Jakarta palace

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August 28, 2017

JAKARTA (Reuters) – A Jakarta court has sentenced a female would-be suicide bomber to seven and a half years in prison, prosecutors and her lawyer said, the first time a woman has been convicted in Indonesia for planning such an attack.

Dian Yulia Novi, 28, was arrested late last year on suspicion of plotting to blow herself up outside Jakarta’s presidential palace during the changing of the guard. She was arrested along with her husband, Muhamad Nur Solikin.

Indonesia, the world’s largest Muslim-majority nation, has seen a surge in homegrown militancy inspired by Islamic State, and has grappled with a series of small-scale attacks in the past two years.

Prosecutors had demanded a 10-year sentence for Novi, whom they said received instructions to carry out the attack from Bahrun Naim, an Indonesian militant believed to be fighting with Islamic State in Syria.

“Her sentence was reduced because she admitted to her actions,” Novi’s lawyer Kamsi told Reuters on Monday. He said the verdict was handed down by East Jakarta District Court on Aug. 25.

Judges delivered the verdict earlier than expected because Novi is pregnant and due to give birth in early September, her lawyer said. She is detained at a Jakarta area facility.

Her husband is on trial for the same plot. His next hearing, at which he is expected to enter a plea, is scheduled for Sept. 6.

Kamsi said Novi, who was believed to be radicalized through social media while employed as a domestic worker in Taiwan, did not intend to appeal her verdict.

Police said they had intercepted a letter that Novi intended to send to her parents stating her intention to carry out jihad. Later an unexploded bomb was found in a room the woman had rented in Bekasi, about an hour outside Jakarta.

Counter-terrorism forces are worried that militants may be using new and more sophisticated tactics to try and carry out attacks – like recruiting female suicide bombers or using dangerous chemicals to make “dirty bombs”.

(Reporting by Stefanno Reinard; Writing by Kanupriya Kapoor; Editing by Richard Borsuk)

A ‘millennials party’ dares to break Indonesia’s political mould

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March 21, 2018

By Kanupriya Kapoor

JAKARTA (Reuters) – In the Jakarta headquarters of the Indonesian Solidarity Party (PSI), workers call each other “bro” and “sis”, and their leader sets the sartorial standard with a pair of ripped jeans.

Dubbed the ‘millennials party’, the PSI is an upstart on the political stage of this Southeast Asian nation that hopes to tap into young voters’ contempt for the entrenched corruption and divisive identity politics of the ruling elite.

The downfall of long-serving autocrat Suharto in 1998 – amid a crisis widely blamed on a culture of nepotism and graft – brought an end to a regime of repression. But two decades later, the 190 million voters of the world’s third-largest democracy are still asked to choose from a crowd of candidates who began their political careers during that period.

The 2019 presidential election looks set to be a repeat of 2014, when current leader Joko Widodo narrowly defeated Prabowo Subianto, an ex-armed forces general who was formerly married to a daughter of Suharto.

The PSI is one of four new parties the General Election Commission is allowing to contest next year’s legislative and presidential elections.

Two of the new parties are fronted by establishment figures. The United Indonesia Party (Perindo) is headed by U.S. President Donald Trump’s business partner in Indonesia, Hary Tanoeseodibjo, while the Berkaya Party is led by Suharto’s youngest son, Tommy, who advocates a return to the “New Order” values of his late father.

PSI leader Grace Natalie, a former television journalist, believes the time has come for a new generation of politicians who would be genuinely accountable to the people.

Her party interviews members seeking nomination for a seat in parliament, and live-streams the discussions on social media platforms. Teachers, corporate lawyers, doctors and bankers are among those whose interviews have aired on Facebook and YouTube.

“No other party is offering what we are in terms of transparency,” she told Reuters at PSI’s headquarters – referred to by party staff as “base camp” – where a wall poster urges “Make Art, Not War”.

CRITICAL DEMOGRAPHIC

Natalie, a 35-year-old mother of two toddlers, set up PSI in 2014, determined to offer an alternative for young voters. It’s a critical demographic with people between the ages of 17 and 25 accounting for about 30 percent of the electorate. Two-thirds of the party’s roughly 400,000 members are under 35.

PSI relies on crowdfunding and donations to run operations across the vast archipelago of Indonesia, and to keep costs down it works from members’ houses and uses donated vehicles.

“This way, no one person can claim that they own the party. Everyone is contributing something,” said Natalie, who was educated in Jakarta and the Netherlands, and speaks proficient English.

So far, PSI has raised 2.6 billion rupiah ($180,000), a tiny sum compared to the coffers of mainstream parties that benefit from poor enforcement of laws limiting political donations.

It will also struggle to get traction with the youth it is targeting.

While the size of the youth vote bank has swelled from 18 percent of total voters in 2004 to 30 percent in 2014, the participation of young voters has dwindled.

Data from the elections commission showed less than half of voters between 17 and 29 years old cast a ballot in 2014 legislative elections compared with around 90 percent among those over 30.

Ella Prihatini, a researcher at the University of Western Australia, in a survey of 253 young voters, found many of them were uninterested in politics.

“On parliament, the dominant answer from respondents was that their MPs are not actually representing them, so why bother voting?” Prihatini said.

POLITICAL ISLAM

Winning support is also likely to be particularly challenging for Natalie, an ethnic-Chinese Indonesian, in a climate of religious and ethnic tensions. Indonesia is a secular country but concerns are growing about the Islamisation of politics in the world’s largest Muslim-majority country.

Jakarta’s former governor, an ethnic-Chinese Christian, was ousted last year after hardline Muslim groups organized massive protests over allegations he insulted Islam. He was later jailed for blasphemy.

The 14 parties contesting next year’s polls include the Indonesian Democratic Party of Struggle (PDI-P), which leads the ruling coalition, several other secular parties as well as rising Islamic-oriented parties.

Natalie, who plans to run for parliament next year, conceded she and PSI need a far bigger budget to win support in rural areas, home to nearly half of Indonesia’s population. Her party will back Widodo – a popular moderate reformer – for re-election as president rather than try to field a candidate of its own.

Ibrahim Irsyad Hasibuan, a 20-year-old journalism student from Tangerang outside Jakarta, said young voters are apathetic because they have no faith in the political system, and so PSI could be a wake-up call for his generation.

“But I can’t relate to PSI,” he said. “It is a new political party and has no track record yet.”

Achmad Sukarsono, a Singapore-based political analyst for Control Risks, was dismissive of the new party, arguing that an anti-corruption stance alone will not be enough to win over voters more interested in local and bread-and-butter issues.

“It is a nice utopian effort that shows desire for change from the educated, Westernized elite,” he said.

(Additional reporting by Jessica Damiana; Editing by John Chalmers and Bill Tarrant)

Indonesia president pledges to tackle extremism, wealth distribution

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August 16, 2017

By Hidayat Setiaji and Bernadette Christina Munthe

JAKARTA (Reuters) – Indonesia’s president said on Wednesday that the world’s most populous Muslim-majority country needed to pull together to meet the threat of extremism and safeguard a constitution that enshrines religious freedom and diversity.

In an address to parliament ahead of Thursday’s independence day, President Joko Widodo peppered his speeches with references to the need to address inequality in Southeast Asia’s biggest economy and tackle the threat of radicalism.

Indonesian police have tightened security ahead of the independence day holiday and on Tuesday arrested five suspected Islamist militants and seized chemicals they said were being used to make bombs for attacks on the presidential palace.

Religious tension in Indonesia has soared since late last year after Islamist-led rallies saw Jakarta’s then governor, a member of a so-called double minority who is ethnic Chinese and Christian, put on trial during city elections over claims he insulted the Koran.

“We want to work together not only in creating an equitable economy, but also in ideological, political, social and cultural development,” said Widodo.

“In the field of ideology, we have to strengthen our national consensus in safeguarding Pancasila, the 1945 Constitution, the unity of the Republic of Indonesia and “Bhinneka Tunggal Ika” (unity in diversity),” he said.

Pancasila is Indonesia’s state ideology, which includes belief in god, unity, social justice and democracy, and which enshrines religious diversity in an officially secular system.

But there are worries about growing intolerance undermining a tradition of moderate Islam in a country where Muslims form about 85 percent of the population, alongside substantial Buddhist, Christian, Hindu and other minorities.

In April, the then Jakarta governor Basuki Tjahaja Purnama, an ally of Widodo, lost the bitterly fought city election to a Muslim rival and was later jailed for blasphemy, a sentence rights groups and international bodies condemned as unfair and politicized.

CORRUPTION FIGHT

In a second speeches, a state of the nation address, Widodo said his administration’s focus this year was to ensure that the benefits from an average 5 percent economic growth in the last few years should be felt by everybody.

Despite its growing middle class, inequality in Indonesia remains high. Indonesia’s wealthiest 1 percent control 49.3 percent of its wealth, Credit Suisse said in a report issued last November, which placed Indonesia among countries with the most unequal distribution of wealth in the world.

The president touched on efforts to cut red tape and said that moves to certify land would be accelerated. Disputes over land ownership frequently hold up infrastructure projects.

“For 72 years we have been independent, but while other countries are looking at outer space, we in our beloved country have not finished land certification for our people,” he said.

On national security issues, the president said Indonesia needed to “resist the theft of our sea resources” and should not be afraid to keep sinking illegal fishing boats in its waters.

Indonesia has sunk hundreds of illegal fishing boats and its navy and coastguard have had skirmishes with China and countries such as Vietnam over fishing in parts of the South China Sea.

Widodo said graft continued to be a scourge for Indonesia’s competitiveness and pledged to strengthen the country’s corruption eradication commission (KPK).

Indonesia ranked 90th out of 176 in Transparency International’s Corruption Perceptions index in 2016 and in July KPK named parliament’s speaker a suspect over an investigation in the alleged theft of $170 million linked to a national identity card system. Setya Novanto has denied any wrongdoing.

(Reporting by Hidayat Setiaji, Bernadette Christina Munthe, Fransiska Nangoy and Gayatri Suroyo; Writing by Ed Davies; Editing by Michael Perry)

Rupee and rupiah seen vulnerable to U.S. rates, tantrums not expected

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March 22, 2018

By Patturaja Murugaboopathy

(Reuters) – Rising U.S. interest rates are considered likely to undermine the high-yielding Indian rupee and Indonesian rupiah, but less this time around than during the U.S. Federal Reserve’s 2013 ‘taper-tantrum’.

Both currencies have fallen sharply since the beginning of the year, alongside a rise in expectations for improved global growth and faster policy tightening by the Fed.

The Fed raised its interest rates by a quarter percent on Wednesday, and forecast two more hikes for 2018, highlighting its growing confidence that tax cuts and government spending will boost the U.S. economy.

The recent falls in the rupee and rupiah are reminiscent of the 2013 selloff when foreign investors fled emerging-Asia markets after the Fed signaled an end to ultra-easy crisis policy.

But analysts now point to higher real yields, healthier balance of payments accounts and expanded currency reserves as reasons to worry less about a recurrence.

“I don’t expect both Indian rupee and Indonesian rupiah to weaken to the extent that we saw in 2013 during the taper tantrum,” said Khoon Goh, head of Asia research at ANZ Banking Group in Singapore.

“The main difference is that the economic fundamentals in both India and Indonesia are much improved compared to 2013. While both countries still run current account deficits, the deficits have improved much in the last four to five years.”

Data from central banks showed the two countries have accumulated large reserves of foreign exchange since 2013, which could cushion them against financial shocks and volatility.

In January, India’s foreign reserves were a record $422 billion, while Indonesia’s hit a record $131 billion.

(GRAPHIC: India and Indonesis FX Reserves – http://reut.rs/2pvIdnO)

Though the yield premiums of Indian and Indonesian bonds over U.S. Treasuries have narrowed this year, their real yields – nominal yields adjusted for inflation – are still among the highest in emerging markets.

These higher real yields are also partly driven by moderate inflation, with the two oil-importing countries aiming to keep inflation under control even in the face of rising crude oil prices.

India’s annual wholesale price inflation eased for the third straight month in February after touching an eight-month high in November, while Indonesia’s headline inflation rate also slowed in the last month.

(GRAPHIC: India and Indonesia real rates – http://reut.rs/2GcKs99)

“It is too early to worry about overheating or a sharp rise in inflation given subdued credit growth in both economies,” HSBC said in a report this month.

Even though the two countries saw sharp foreign outflows in February, some analysts are bullish that money will flow back in coming months.

From June 1 rupiah bonds will be eligible for inclusion in the Bloomberg Barclays Global Aggregate Bond Index, and some market participants expect the foreign investment limit in Indian bonds to be increased because it is nearing exhaustion.

HSBC expects $4 billion of new passive inflows into Indonesian bonds thanks to their inclusion in the global index. The bank also predicts an inflow of $7-8 billion into Indian government bonds if the foreign investment limit is raised by 1 percentage point to 6 percent.

The one sticking point is currency volatility. Foreigners have been reducing their holding of Indonesian bonds since early 2017 because the currency has not appreciated. An appreciating currency multiplies their return on bond holdings.

The rupee has fallen about 2 percent this year and the rupiah 1.3 percent. A further drop or increased volatility could cause more foreign portfolio investors to withdraw.

(GRAPHIC: Foreign flows into India and Indonesian assets – http://reut.rs/2pwOpLs)

ANZ’s Goh expects the rupiah to perform better than rupee this year.

“We are expecting a slight appreciation from current levels. We believe that the selloff seen in the rupiah since late January was little bit overdone and the rupiah is looking undervalued at current levels,” Goh said.

In real effective exchange rate (REER) terms – which is calculated on a trade-weighted basis against a basket of currencies and adjusted for inflation – the rupiah is currently trading 5 percent lower than its 10-year average. On the other hand, the rupee is trading 8 percent above its average.

“The rupee is slightly overvalued. There is further room for the rupee to weaken on the back of a slightly worsening current account and prospects for high inflation,” said Goh.

“But the depreciation will not be to that extent (as during taper-tantrum).”

(Reporting by Patturaja Murugaboopathy; Additional reporting by Gaurav Dogra; Editing by Vidya Ranganathan and Eric Meijer)


Toxic gases from Indonesian volcano send 30 to hospital

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March 22, 2018

JAKARTA (Reuters) – An Indonesian volcano belched thick clouds of sulphuric gas on Wednesday, sending 30 people to hospital and prompting the closure of the popular tourist and mining site.

Nearly 200 people living on the slopes of Mount Ijen in East Java province were forced to evacuate.

“Because of this incident, the public – tourists or miners – are not allowed near the crater until further notice,” said Sutopo Purwo Nugroho, spokesman for the national disaster mitigation agency.

He added that many residents had experienced vomiting and difficulty in breathing.

There was no increase in seismic activity, Nugroho said.

The crater is a popular site for tourists and miners, who dig up hardening yellow sulfur to sell for use in everything from cosmetics to matchsticks.

The volcano regularly puffs out small amounts of noxious gases but the site stays open to the public.

Around five million of Indonesia’s 250 million people live and work near volcanoes, according to authorities, largely because of the fertile farming soil.

(This story has been refiled to correct typo in headline)

(Reporting by Kanupriya Kapoor; Editing by Nick Macfie)

In Indonesia, a shadowy campaign to stoke unrest as elections loom

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March 23, 2018

By Tom Allard, Agustinus Beo Da Costa and Kanupriya Kapoor

BANDUNG, Indonesia (Reuters) – A spate of mysterious attacks on Islamic clerics, schools and mosques in Indonesia in recent weeks has ramped up tensions as the world’s most populous Muslim-majority country heads into provincial elections and a presidential poll next year.

Intelligence and Islamic officials believe that political forces are behind what they describe as a shadowy “black campaign” designed to whip up fear that Islam itself is under siege under the leadership of President Joko Widodo.

In one town near the capital, Jakarta, a mosque manager was stabbed and a religious scholar received an anonymous letter warning that 10 clerics would be killed. Videos of what police say are fake attacks on Muslim clerics and schools have also been distributed on social media, heightening a mood of unease.

The attacks on the heavily populated island of Java have come as hardline Muslim groups press for a more conservative society and decry moderate politicians, posing a threat to Indonesia’s reputation for tolerance and the democracy it won with the downfall of authoritarian President Suharto in 1998.

Indeed, there are echoes today of the panics stirred up by Suharto, which typically involved attacks on religious figures and institutions and sometimes a communist scare to discredit politicians.

Elections are due across the country in June for dozens of governors, district heads and mayors. Analysts see those polls as an opening skirmish before 2019’s battle for the presidency.

Ridwan Kamil, mayor of the city of Bandung and frontrunner to become governor of West Java province, says he has been hounded for months by hoax stories online that questioned the strength of his Islamic faith.

“If you are not a Muslim, they will label you an infidel. If you are Muslim, they will label you not Islamic enough,” Kamil said of his opponents in an interview with Reuters, declining to identify them.

“They’re trying to send a message … that the country is not safe, that the government is failing, that we need to replace the existing government. Who gets the benefit? Whoever challenges Jokowi,” he said, referring to President Widodo, whom he supports for re-election, by his nickname.

A CAMPAIGN TO SOW DISCORD

The potency of religion as a swing factor in elections was graphically illustrated last year when the popular governor of Jakarta, Basuki Tjahaja Purnama, an ethnic-Chinese Christian and close ally of Widodo, lost his bid for re-election after being accused of insulting the Koran.

An online video of him speaking had been edited to make it seem that he was criticizing the Koran when in fact he was sniping at people who use a passage of Islam’s holy book to warn Muslims against voting for non-Muslims.

Purnama’s ouster was spearheaded by the Islamic Defenders Front (FPI), a hardline group that organized huge protests against him in late 2016. He was later jailed for blasphemy.

Reuters investigations into the recent attacks in Java showed that the FPI has been involved in stoking the tensions.

National police chief Tito Karnavian says the wave of violence has not been “massive or systematic”, and he blames online activists for “spicing up” anxiety among Muslims. There have only been three actual assaults and about 42 fake attacks were promoted online, he said.

Even so, intelligence officials, Islamic leaders and politicians say there is a concerted effort to sow discord through vandalism and threats to Islamic leaders, schools and mosques, reinforced through social media. Intelligence agency chief Budi Gunawan described it as a “rampant black campaign”.

A leader of the Islamic Union, a mainstream organization known as Persis, was killed in the early hours of Feb. 1 by a man wielding an iron bar. Senior Persis leaders told Reuters that 22 of the group’s schools, mosques and teachers had been vandalized or received abusive phone calls since that incident.

Someone, said Persis deputy chairman Jeje Zaenudin, is trying to “provoke a reaction”.

Mahmud Syaltout, deputy secretary general of the youth wing of Indonesia’s largest Muslim group, Nahdlatul Ulama (NU), said NU schools and mosques have been targeted.

One man who was caught vandalizing a mosque in East Java appeared to be healthy and feigning madness, he said.

Widodo’s chief of staff, retired military chief Moeldoko, told local media someone was playing “old games”, noting that deploying mentally ill people to create unrest was a tactic that harked back to the Suharto era.

RED SCARE

Pressed by Widodo, the NU and another moderate Islamic group, Muhammadiyah, have stepped up grassroots efforts to combat fundamentalist movements. According to a recent survey, nearly 20 percent of high school and university students support the establishment of an caliphate rather than a secular state.

On social media, much of the blame for the recent attacks has been laid on “communists” who – critics say have been allowed to flourish under Widodo and his left-leaning Indonesia Democratic Party-Struggle.

The government and independent analysts have said there is no credible evidence of a revival of Indonesia’s outlawed communist party (PKI), once the world’s second-largest. The party was decimated after soldiers and Islamic vigilantes slaughtered – according to some estimates – at least 500,000 alleged leftists and their families in 1965.

    Even so, Islamists, ultra-nationalists and elements of the military frequently warn of a resurgence. Analysts see the fomenting of a “red scare” as partly aimed at Widodo, a reformist and moderate who has often been falsely labeled by enemies as a descendant of communists.

Earlier this year, a homeless man, suspected of planning to attack a cleric at an Islamic boarding school in West Java, was beaten and accused of being a communist.

    The man was accosted by students as he paced up and down a lane by their school near the town of Bogor around 3 a.m. on Feb. 10, said Mahmud Mukhlis, one of the students.

    A pin was found inside the vagrant’s bag that a local cadre of the FPI Islamic group declared was “a symbol of the PKI”, Mukhlis said. The pin, viewed by Reuters, was in fact a name tag from a high school emblazoned with an eagle, Indonesia’s national symbol.

    Members of FPI filmed the assault and shared the video on social media, said Mukhlis.

Slamet Maarif, a spokesman for FPI, did not deny his group was behind the video. He said it needed to be proven that the homeless man’s “communist” plot was a hoax, and described the incident as evidence of “an awakening” of the communist party.

“The government should be following up, and not accusing the people of spreading a hoax,” Maarif said.

MUSLIM CYBER ARMY

    Police have arrested about 20 members of a network of online activists for spreading fake news about attacks on religious figures across Java.

Known as the Muslim Cyber Army (MCA), the network was formed after the government shut down some of FPI’s websites and social media accounts following anti-Purnama demonstrations in 2016.

Police say they are investigating who funds and directs the MCA. FPI leaders have frequently praised the network, and have urged police to stop harassing it.

For a decade, West Java province has been ruled by a coalition of nationalist and conservative Islamic parties that support Prabowo Subianto, a former Suharto-era special forces commander who lost the 2014 presidential election to Widodo.

In that contest, Widodo was buffeted by an online smear campaign that he came from a family of communists and had Chinese ancestry. Warnings of a communist comeback are often linked to a surge in Chinese investment and workers in Indonesia, part of Widodo’s drive to revamp the country’s crumbling infrastructure.

    Subianto is expected to again challenge Widodo, a moderate reformer currently riding high in opinion polls, in next year’s election.

    Subianto was buoyed by the victory of a candidate he backed in last year’s Jakarta governor election, but his Gerindra party’s contestant to become governor in West Java is well behind Kamil in opinion surveys.

    Gerindra’s deputy secretary general, Ahmad Reza Patria, said the party had no links to the “vile and extraordinary acts” in Java. Subianto has not commented publicly on the incidents.

Bandung Mayor Kamil said he has stepped up security patrols in his city following the wave of attacks, but he is in no doubt that they are politically motivated.

“In my opinion, it is orchestrated,” he said. “It’s not just a person, but an organization trying to benefit politically through fear.”

(Additional reporting by Jessica Damiana; Editing by Bill Tarrant and John Chalmers)

U.S. DOJ says Malaysian financier Jho Low trying to stop seizure of yacht

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March 28, 2018

KUALA LUMPUR (Reuters) – Malaysian financier Low Taek Jho, accused of links to a plot to siphon billions of dollars from a Malaysian state fund, is trying to stop the United States government from seizing a $250 million yacht in Indonesia, court filings showed.

The Cayman Islands-flagged Equanimity, a 300-foot superyacht allegedly bought by money stolen from 1Malaysia Development Berhad (1MDB), was impounded on behalf of U.S. authorities off the coast of Bali last month, amid a multi-billion dollar corruption investigation launched by the U.S. Department of Justice (DoJ).

The DOJ is seeking to move the yacht to the United States where it can be taken into U.S. government custody and sold, according to a filing at a California court.

The department said Low bought the yacht with funds “stolen and embezzled from 1MDB” and said he is fighting the U.S. seizure through four companies, named as claimants in the case.

The claimants kept the yacht “in a series of foreign locations and frustrated the government’s efforts to bring this asset to the United States”, the DOJ filing said.

“There was significant evidence that Low instructed claimants to keep the Equanimity outside the government’s hands and outside the United States,” it said.

It said Low, also known as Jho Low, had instructed crew members to turn off the yacht’s Automatic Identification System and avoid sailing into certain jurisdictions such as Singapore and Australia in order to evade detection.

Lawyers for the claimants had also filed a lawsuit in Indonesia intended to stop the seizure, the department said.

A total of $4.5 billion was misappropriated from 1MDB by high-level officials of the fund and their associates, according to civil lawsuits filed by the department under a kleptocracy asset recovery initiative.

Malaysian Prime Minister Najib Razak set up 1MDB in 2009 and previously served as chairman of its advisory board. He and the fund have denied any wrongdoing.

Low’s whereabouts are unknown and a spokesman at a U.S.-based public relations firm that has represented him did not respond to requests for comment.

Low had previously denied wrongdoing, saying it was “disappointing that, rather than reflecting on the deeply flawed and politically motivated allegations, the DOJ is continuing with its pattern of global overreach”.

In a separate filing on Monday, the claimants’ lawyers also applied for an emergency order to keep the Equanimity in Indonesia for 30 days, saying that moving it to the United States would endanger the lives of the crew and lower the value of the yacht.

The claimants also said the government intended to sell the vessel in a way that would “wholly fail to maximize its value”.

The DOJ filed a response on Tuesday saying keeping the yacht in Indonesia could risk interfering with sovereign rights.

Other Low assets sought by the department include a private jet, a hotel and real estate in New York, and a $107 million interest in EMI Music Publishing.

(Reporting by Rozanna Latiff; editing by Praveen Menon and Neil Fullick)

Chicken rendang snub stirs heated Southeast Asian recipe debate

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April 4, 2018

KUALA LUMPUR (Reuters) – A British cooking show has sparked a lively debate across Southeast Asian over whether the widely popular chicken rendang dish should ever be crispy and where it originates from.

Malaysian-born Zaleha Kadir Olpin served the spicy chicken alongside her nasi lemak, a traditional Malaysian dish, in the quarter-final of the BBC’s MasterChef UK.

But judges John Torode and Gregg Wallace turned down the chicken accompaniment, saying the skin was not crispy, stirring fury on social media and a heated debate in Malaysia, Indonesia, Singapore and Brunei.

“Saying chicken rendang should be crispy is like saying that hamburgers should be boiled,” KF Seetoh, founder of Makansutra and an Asian street food expert based in Singapore, said.

Torode and Wallace defended their comments, saying “crispy” was the wrong word for the dish, which is traditionally made with chicken or beef that is slow cooked with Asian herbs and coconut milk, but that they had reached the right verdict.

“What I meant was it wasn’t cooked. It simply wasn’t cooked. It was white and flabby,” Wallace told Good Morning Britain.

“She (Zaleha Kadir Olpin) didn’t go out because her (chicken) skin wasn’t crispy. She went out because the other cooks were better.”

Haikal Johari, 41, executive chef of Michelin-star restaurant Alma by Juan Amador in Singapore, said he had never heard of chicken rendang being crispy, echoing comments by Malaysian Prime Minister Najib Razak and veteran politician Mahathir Mohamad, who for once agreed with his arch rival.

While hashtags “gastrodiplomacy” and “rendanggate” cropped up online, Wallace and Torode defended their judgement.

“I did a whole series on Malaysia. Malaysian food is fantastic,” Australian-born Torode said. “But I said to her, it wasn’t cooked enough.”

However, Torode riled Malaysians by suggesting on Twitter that chicken rendang was from Indonesia. He later deleted the tweet, which ended with “namaste”, an Indian greeting.

However, the jury is still out on which country owns the dish, with neighboring Indonesia already claiming it. Some suggest the first version of rendang was cooked in Padang, West Sumatra, Indonesia, some 600 years ago.

Haikal from Alma said there were different versions.

“It is made by different people including Singaporeans, Malaysians, Indonesians, and even in Thailand, there is a dish called massaman, which actually tastes really similar to the chicken rendang too,” he said.

(Reporting by Fergus Jensen in JAKARTA, John Geddie and Dewey Sim in SINGAPORE and Stephen Addison in LONDON, writing by Praveen Menon and Alistair Smout, editing by Nick Macfie and Alexander Smith)

Indonesia’s salt spat gives industry a shake

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April 6, 2018

By Bernadette Christina Munthe and Cindy Silviana

JAKARTA (Reuters) – Indonesia’s efforts to protect farmers from imports have sometimes gone spectacularly wrong, creating shortages of staples such as rice and beef, and playing havoc with markets.

Its latest misfire has come over salt, with supplies so desperately low that one of the world’s biggest producers of instant noodles warned recently it could run out of the vital ingredient in a matter of weeks.

President Joko Widodo has stepped in to end a squabble between two ministries over salt import quotas.

“I think no one will have to stop operating because the government is trying to solve the problem,” said Fransiscus Welirang, director of PT Indofood Sukses Makmur <INDF.JK>, which makes the hugely popular Indomie brand of noodles.

Still, Indofood scrambled to find ways to cut its salt usage and the Indonesia Food & Beverage Association – which represents a sector with billions of dollars in revenue – said biscuit and snack makers also faced shortages.

With more than 50,000 km (31,000 miles) of coastline Indonesia is surrounded by salt water, and yet it spends tens of millions of dollars every year on imports of salt.

The problem is that Indonesia is not producing enough high-grade salt. The local salt industry could take years to increase output and quality to levels needed, and there is currently no comprehensive plan to that effect.

POLICY FLAWS

Indonesia’s ambition for food self-sufficiency is partly driven by concern about a growing food import bill. The Southeast Asian nation is on track to become the world’s biggest importer of wheat this year, according to the U.S. Department of Agriculture, and is a major buyer of corn and beef.

Food security is also politically sensitive in Indonesia where more than 160 million people, around 60 percent of the population, live on $5.50 a day or less, according to recent World Bank data, leaving them vulnerable to price swings.

However, economists say policies such as subsidies and stockpiling aimed at controlling markets cost billions of dollars and often keep prices artificially high.

Indonesia’s domestic rice prices were 60 percent higher than international prices due to policy interventions, the Organisation for Economic Co-operation and Development said in a 2015 report.

After Widodo won the presidency in 2014, he curbed or delayed imports of beef and cattle mainly from Australia as well as other foods to stimulate domestic production.

But when prices shot up in 2016, his government scrambled to find beef from different sources, including buffalo meat from India.

The OECD has urged Indonesia to “develop a portfolio of policies that can respond to a diversity of food insecurity scenarios, rather than focusing policy attention on domestic production of staple foods.”

CRISIS

Most salt production in Indonesia is low-tech, involving the evaporation of seawater in coastal ponds during the dry season. The current shortage is partly due to unusually heavy rains last year tied to the La Nina weather pattern.

Indonesia was forced to import 75,000 tonnes of household salt from Australia last year, and there were media reports that a vessel attempting to smuggle 15 tonnes of salt from Malaysia was intercepted by the authorities.

The shortage became a crisis this year because of bickering within the government over how much salt could be imported without contravening legal requirements to give priority to local producers.

The Fisheries Ministry recommended imports of about 2.2 million tonnes, while the Coordinating Economy Ministry called for 3.7 million tonnes.

President Widodo intervened to resolve the impasse by taking away the Fisheries Ministry’s authority over industrial salt imports and handing it to the Industry Ministry.

The move angered local salt farmers who said the government was failing to develop domestic salt refining capacity.

“We need to be realistic. Industry certainly needs salt of a different quality to that produced by salt farmers,” Widodo said on Wednesday. “If we do not import industrial salt, industry could stop.”

The Industry Ministry immediately recommended allowing 676,000 tonnes of industrial salt imports for 27 companies in “critical condition”, Achmad Sigit Dwiwahjono, an official at the ministry told reporters.

He cited a company that makes contact lenses on the island of Batam that had sent home nearly half of its 3,000 workers due to the salt shortage.

SODIUM CHLORIDE

Indonesia’s salt industry users association says local suppliers have struggled to expand output because of limited land on densely populated Java island and now account for only about half of the 3.9 million tonne total annual consumption.

“The Indonesian salt industry mostly comprises tens of thousands of small-scale producers on plots of one or two acres,” said David McNeil, a London-based salt specialist at commodity research group Roskill.

“This makes it extremely difficult to raise productivity to levels seen in countries such as Australia where leading highly mechanized producers have operations covering thousands of acres.”

There is also a quality challenge. Food companies need salt with a maximum water content of 0.5 percent and sodium chloride above 97 percent, levels many domestic suppliers cannot meet.

The government has plans for 40,000 hectares of new salt farms in eastern Indonesia and more investment in salt processing to achieve self-sufficiency in the next few years.

But the cost of development and shipping salt from East Nusa Tenggara to Java, where most industries operate, could impede this plan.

Tony Tanduk, chairman of the association of Indonesian Salt-Using Industries, said locally produced salt already costs 2,000-3,000 rupiah (15-22 U.S. cents) per kg, more than three times the cost of imported salt.

(Writing by Fergus Jensen and Ed Davies; Editing by John Chalmers and Lincoln Feast)

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