Go Jek, Uber, Grab and other ride-hailing services is a KPPU issue

The demonstration by taxi and the public transport rivers yesterday received much criticism from the Netcitizenship, who naturally gravitate to things Webby, disruptive and saves them money.

The transport drivers are apparently disgruntled over dwindling income caused by their ride-hailing services and the ostensible reason for objecting to the latter’s presence are claims that they do not pay tax, do not have proper permits and may be foreign companies invading Indonesian turf.

 

These are wrong reasons to demonstrate, even though a demonstration is justified. It is justified because the ride-hailing services are engaging in unfair trade practices. It is unfair to the taxi and other public transport drivers because they cannot compete against heavily subsidised prices of Go Jek and the other ride hailers. The ride hailers aren’t making money at this stage but trying to win market share through heavily discounted prices. They can sustain their discounts because they have investors who are willing to pump money into them in the gamble that they would turn out to be the Next Big Thing.25d067bf-a9b8-4276-b8a9-53df94733391_169

How long will these subsidies last? As long as investors are willing to inject capital into the ride hailers. It may be six months ayear or beyond but what’s interesting are the repercussions they cause in the meantime.

Never mind the fly-by-night and dubious taxi companies who provide shoddy and unreliable service. They deserve to perish. But a company such as Blue Bird that has won the trust of many Indonesians because they had relative clean and serviceable cars and reliable drivers when the market was full of bad ones are affected too.

So a scenario could develop where the taxi companies, even Blue Bird, all start to fold or deteriorate because of reduced revenues. This situation, however, is no guarantee that the ride hailers would succeed or become a viable replacement. What if most of them fold because the investors got bored or dismayed by the continual financial losses? Where would we be then? Bereft of quality traditional public  transport as well as affordable ride hailers?

This issue also raises a question of how much and how long it is fair to provide discounts to win market share. Most products hold promotions and provide discounts to do just that but they are usually short-lived ones as the real economic pressures assert themselves. But with ride hailers the only economic hidden hand is that of the investor, often with access to huge funds.

So is this unfair business practices, that should be looked at by the KPPU? Or is this the new world of disruption that will herald new business models for public transport?

 

The JFCC, two Ministers and a lot to wonder about this week

Perhaps as part of the pre-Ramadan rush, the Jakarta Foreign Correspondents Club has been very busy this week with its media luncheons, where it invites a prominent speaker to address the crowd and field questions.

On Monday it hosted Franky Sibarani, is the Chairman of Indonesia Investment Coordinating Board (BKPM) and today it hosted Trade Minister Rahman Gobel. What they had to say was meant to e interesting but Unspun found the side chatter among members of the audience to be even more interesting.

Monday was the first time that Sibarani addressed the JFCC and he did a decent enough, though not impressive, job delivering his powerpoint presentation on how the BKPM was going to attract more investments.

But when it came question time, his performance dropped several notches. He was tossed a softball question to start off with. The Wall Street Journal wanted to know how he was going to increase foreign direct investments into Indonesia. The answer was already in his powerpoint presentation and you’d expect him to answer it with ease: De-bottlenecking the business approvals process, cutting down on red tape, prioritising job-creating businesses etc.

But Sibarani instead looked troubled and gestured for his adjutant to hand him his man-bag where he’s stored his notes. With furrowed brow he kept the audience waiting while he looked through them and, seemingly not being able to find the relevant section, began muttering an unintelligible answer.

The foreign journalist next to Unspun wickedly remarked: “Franky doesn’t seem to be on top of his job.”. A bit unkind but not unjustified.The rest of Question Time went by with little change, questions met with hardly coherent answers.

In discussions afterwards among themselves, some members of the audience said that it may be a language thing. Maybe he was having difficulty expressing himself in English. Others said that while that may be forgivable, what was not forgivable was the fact that he had no command of the information concerning the agency in the first place.

The unforgiving ones also said that Sibarani was effectively the nation’s chief salesperson to foreign investors and as such it was unfathomable why the President would choose someone who has to struggle with his English to sell his country. They pointed out that past BKPM chairmen like Chatib Basri were all very savvy Indonesians who had no problems at all conversing and persuading others in English.

Trade Minister Rahman Gobel, on the other hand, approached today’s talk with much more confidence. He brought along a translator because he felt safer speaking in Indonesian to prevent misquotes. he also brought with him a sweet young translator who proceeded to fumble her translations due to lack of inexperience.

Her performance was so poor that midway through a former expert staff of the former trade minister Gita Wirjawan had to volunteer to translate to save the day. She was very clear and professional, although she had to work off from what the Minister said.

Gobel stressed in his talk that he slapped a bank on beer sales at convenience stalls because youths were buying beer from these outlets and getting drunk. So to save the future of Indonesia that lies with its youth he’s had to impose a ban on beer sales.

Asked during Question Time why he chose a regulatory ban as a solution to juvenile drinking, rather than enforcement of existing laws, he said lone convenience store attendants were often intimidated by four or five underage youths who wanted to buy beer. So a regulatory ban was the only way to protect them.

He also said that many of these store attendants were thankful to him for protecting them from intimidation. He knew that because of the many text messages that he’s received from them. Wow! Unseen thought: This Minister is a man of the people, even shop attendants know his mobile number and can text him.

Asked if he resorted to regulatory bans because he has written off the police and other enforcement agencies to do their jobs and prevent intimidation or manipulation vis a vis beer sales, chilli imports and rice imports, the Minister gave an answer that the members of the audience, including Unspun, was able to unspin.

The Minister also said something that must have chilled Big Tobacco to the bone. Asked why he clamped down only on beer when cigarettes caused more harm yet were freely sold at convenience stores, he replied that they would come around to putting it in order (he used the word tertipkan). Asked if that meant that he would ban the sales of cigarettes he stopped short of saying yes but that they would come round to regulating it.

The side chatter was also very interesting. One member of the audience complained that he did not understand the minister at all as the answers were rather confusing. A foreign diplomat looked very troubled and disturbed: “all this talk of saving the youth, protecting the nation and no apparent understanding of trade regimes and agreements…” she gasped.

There will be those that understand but Unspun thinks that sessions like these are extremely very useful as they give more people the opportunity to understand the thinking quality of of our Ministers, the strengths and shortcoming. By doing this the Ministers are giving us all a great opportunity to size up first hand the calibre of the Jokowi government.Isn’t democracy and open ministers a wonderful thing?

Who let the dogs out?

The phrase “dog in the manger” comes to mind. Rp 64 trillion investment could have helped cushion the Rupiah’s fall and checked some capital flight, reassuring investors that Indonesia is a good place to do business. And what for? Sabre rattling? National pride?

 

Bank Mandiri Says Indonesia Attractive as DBS Takeover Scuttled – The Jakarta Globe

People pass by a Bank Mandiri branch in Jakarta, Friday, August 2. (JG Photo/Jurnasyanto Sukarno)

People pass by a Bank Mandiri branch in Jakarta, Friday, August 2. (JG Photo/Jurnasyanto Sukarno)

Budi Gunadi Sadikin, the head of Indonesia’s largest bank, said his home market is more attractive than Singapore less than a month after Indonesian efforts to get access to the city state scuttled what would have been Southeast Asia’s biggest banking takeover.

“It is more important for the Singaporean banks to get into Indonesia” rather than the other way round, said Sadikin, president director of Bank Mandiri, referring to his country’s underpenetrated banking sector and Singapore’s smaller economy and population. “Singapore to us is a small opportunity,” he said in an interview last week.

Indonesia’s central bank has been seeking reciprocity in Singapore for the nation’s biggest banks, including Mandiri, the largest by assets. At the same time, Indonesia last year imposed foreign ownership limits that prompted Singapore’s DBS Group Holdings to drop its 66.4 trillion rupiah ($6 billion) acquisition of Bank Danamon Indonesia.

If the Monetary Authority of Singapore showed a “positive gesture” in granting greater access to Indonesian banks, “then the transaction would have gone smoothly,” Sadikin said.

He would still be “very happy” for Jakarta-based Mandiri to receive a full banking license in Singapore.

“I won’t open 25 branches in one year,” Sadikin said. “But at least I have the flexibility.”

Bloomberg

Appalling malls

Interesting article but isn’t an important question being left out in this article here? What sort of spatial planning does the city have or implements to allow that many malls? If only journalists would ask the right questions, we can hope to have a better city.

Jakarta’s Mall Boom Driven by Foreign Retailers | The Jakarta Globe

Just when you thought Jakarta may sink beneath the combined mass of the city’s 130-plus malls, a further 313,500 square meters of retail space has been announced, with just three large malls contributing 83 percent of the increase.

The largest of them is St. Moritz in West Jakarta with 129,200 square meters, followed by Ciputra World in South Jakarta and Green Bay Mall in West Jakarta, with 78,000 and 52,000 square meters respectively. St. Moritz is being built by Lippo Karawaci, while Agung Podomoro is the developer of Green Bay Mall.

Ferry Salanto, the director of research at Colliers International Indonesia, said that the developers of those three malls have strategies in place to secure tenants for their malls.

“If they hadn’t secured tenants they would not build the malls,” Ferry said last week.

Local developers have their own flagship tenants when opening up new malls, such as Lippo’s deal with Debenhams and Parkson, and Ciputra’s with Lotte.

Artadinata Djangkar, a director at Ciputra Property, which is responsible for Ciputra World, said the entrance of foreign retailers has increased demand for more retailing space in Jakarta.

In the past two years alone, several international retailers have set sail for Indonesia. Besides South Korea’s Lotte, there is Parkson from Malaysia, Japan’s Aeon and Thailand’s Sentral Group.

The presence of these chains creates lucrative business opportunities for local developers. Ciputra World 1 will cost its developer Ciputra $130 million, while Lippo’s St. Moritz mall is a part of the $1.2 billion mixed-use St. Mortiz Penthouses & Residences project.

Setyo Maharso, the chairman of Indonesian Real Estate Association (REI), said that the strong demand for retailing space is tracking a steadily growing property market. “It is because [malls] are the supporting facilities of neighborhoods and cities,” he added.

With strong economic growth and rising purchasing power, Setyo predicted that the property market will grow between 10 percent and 15 percent this year.

Colliers’ Ferry said that property developers still needed to advance their understanding of mall management in order to generate more revenue.

He said that there are two types of mall in operation in Jakarta, the first being “community malls,” whose visitors are mostly people from the surrounding area, and “destination malls,” which hope to attract visitors from distant areas.

Ferry said that mall construction will slow next year, due to the Jakarta government’s ongoing moratorium on mall construction, introduced in 2011.

He added the policy would encourage more malls to be constructed in regions surrounding Jakarta.

Ferry said that the four regions surrounding Jakarta tended to take turns to host new malls.

“This year, there are more new malls in Bekasi [then the other three regions]. We predict that in 2014, there will be more new malls in Tangerang,” Ferry said.

 

Sandiaga Uno and his defense of the Bakries

They say there is a very thin line between bravery and folly.

Today we saw something extraordinary when investor/business man/poster-boy-for-the-next-generation-of-business leaders, Sandiaga Uno pinned his flag to the Bakrie/Bumi Plc mast with his opinion piece in The Jakarta Globe.

In doing so Sandiaga has gone where most people concerned about image making – their own and others’ – fear to thread. The reason is that the Bakrie empire seem to be one of the most unlikeable business entities, if casual anecdotes are anything to go by. At any rate Unspun’s not met any business person not beholden to the Bakries for a living to like them or extol their virtues.

Defending such a hugely unpopular business entity takes guts, or great folly. Sandiaga has done it and the reaction in Twitter has not been very favorable. But that may only be the gripes of the chattering class, so rather than pass judgement if Sandiaga Uno’s brave act is one of great judgement or misjudgment, its best to let the readers of this blog judge for themselves with the survey below:

 

 

 

Sandiaga Uno Says Bakries Are ‘Unfairly Portrayed’ | The Jakarta Globe.

A leading Indonesian businessman has come to the defense of the Bakrie family’s companies in their bitter corporate governance feud with British businessman Nathaniel Rothschild.

In a scathing opinion piece published exclusively in the Jakarta Globe today, Sandiaga S. Uno said the Bakrie-controlled companies had been treated unfairly by a slew of parties, including the media, corporate analysts and international rating agencies.

The colorful intervention by Sandiaga threatens to escalate the year-long feud.

The conflict dates back to the 2010 move by Rothschild and his London-listed energy company, now called Bumi Plc, to embrace two Indonesian units — Bumi Resources and Berau Coal Energy — controlled by the Bakrie family.

But relations had been fraying for a year and worsened last month when Bumi Plc announced it was conducting a probe into operations at the Indonesian companies, hinting at impropriety.

While no evidence of wrongdoing has been made public, the case has attracted international attention and put the spotlight on the gulf between corporate governance in Asia and in the West.

In his article, Sandiaga claims much of the coverage has been slanted against the Bakrie companies. “Many media outlets portray the Bakrie family as being on the defensive. As part-owners of Bumi Plc, the Bakrie family is unfairly portrayed almost as a bully who violates governance standards and regulations,” he wrote.

“I say ‘unfairly’ because this is not the first negative rumor surrounding the family. It is undeniable that the endless public allegations against the Bakries have never proved to be correct, but even so, the accusers have never apologized.”

He went on to attack market sources who made critical statements about the companies to the media but hid behind anonymity.

“It is sickening because those unnamed sources act as though they want to stay neutral and professional. Yet what they have added to this saga is at best speculation and at worst further confusion.”

He later attacked rating agency Moody’s, which downgraded its assessment of Bumi Resources in the midst of the conflict.

Sandiaga’s company Saratoga Capital has investments across the Indonesian economy, including stake in coal producer Adaro Energy, telecommunications company Tower Bersama and avaiation company Mandala Airlines.

In 1997, Sandiaga co-founded Recapital Advisors with high school friend Rosan Perkasa Roeslani. Rosan is a non-executive director at Bumi Plc and Recapital Advisors is affiliated with Bumi Resources, Berau and Bumi Plc.

On Tuesday, shares in Bumi Resources fell 1.5 percent to Rp 670, while shares in Berau fell 2.6 percent to Rp 147, lagging the 0.3 percent gain in the main stock gauge on the Indonesia Stock Exchange.

Jakarta second from last in location branding survey of Asian cities

How well does Jakarta do when it comes to location branding (a fancy modern word to substitute for reputation of a place)?

According to a study by Public Affairs Asia and Ogilvy PR called Location Branding 2012, not that well at all. Out of 16 cities Jakarta came 14, just above Manila.

Another dubious distinction for this city. perhaps it is time for its residents to sport more checked shirts to get the city going.

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Bringing the efficiencies of the Bumi boardroom to the government

Would how a man run his business be an indication of how he would run the country if he were president?

Assume this is true and we would have an interesting thought exercise of how Bakrie would run Indonesia.

Imagine Indonesia in 2015. An anti corruption group, headed by a prominent Indonesian whose credibility and integrity is well established and who has a stature in international forums, calls a press conference to say that the Government is corrupt and needs a radical clean up. They then detail specific areas where it needs to get its act together. We can assume that they have tried working within the system and failed miserably. Out of sheer frustration they turn to the Press, hoping that some publicity would shame the Government into acting.

The Government spokesperson reacts, and instead of addressing the problems brought up or being open minded enough to say they’ll investigate, decides to chide the Anti-corruption group for not following protocol; if they are unhappy with the Government.

“The Anti-Corruption Group hasn’t addressed these issues with us,” the spokesman said, referring to at the petition by the group where they outlined their grievances with the Government.

“If they want to raise any issues, as a citizens, we would expect them to follow accepted procedures and raise concerns at the proper forums (such as KPK, the House Commissions and the Police that would be functioning as business units of Government Inc. by then) and at the appropriate time.”

Did a chill just go up you spine? One went up mine when I read the story below from The Jakarta Globe:

 

Rothschild Calls for Clean-Up at Bakrie’s Bumi Resources

Rothschild in happier times

 

British financier Nathaniel Rothschild has criticized the management and corporate governance at Bumi Resources, the Indonesian coal company he is trying to transform into a top-tier global miner, the Financial Times reported on Thursday.

The newspaper said it has seen a letter written by Rothschild calling for a “radical cleaning up” of Bumi, the Jakarta-based affiliate of London-listed Bumi Plc.

Rothschild is co-chairman of the London-listed firm, his joint venture with Indonesia’s politically connected Bakrie family that holds a 29 percent stake in Bumi Resources.

Aburizal Bakrie is the chairman of the Golkar Party.

“Both myself and the Bakries need an immediate transformation of the way you are choosing to manage PT Bumi Resources,” Rothschild wrote in his letter to Ari Hudaya, a long-time Bakrie family lieutenant who is chief executive of both PT Bumi Resources and Bumi.

It was the first public sign of strains in the relationship between the two business dynasties, who investors applauded a year ago for creating the world’s biggest thermal coal company.

In an interview with the FT, Rothschild said his relationship with the Bakries, major shareholders of Bumi, “is just fine,” adding that they would be “thrilled when they read a copy of this letter.”

Chris Fong, a spokesman for the Bakrie family, whose financial difficulties forced them to sell half of their Bumi stake this month, said the letter had taken them by surprise.

“Nat Rothschild hasn’t addressed these issues with us,” Fong said, referring to a passage in the letter in which Rothschild said that the Bakries wanted a transformation in Bumi Resources.

“If he wants to raise any issues, as a shareholder and board member, we would expect him to follow accepted corporate governance procedures and raise concerns at the board level and at the appropriate time.”

According to two sources close to the group, the letter was the result of a boardroom battle between the Bakries and Rothschild, in which Rothschild had demanded Ari Hudaya’s replacement as CEO.

Reuters was unable to contact Rothschild to seek comment.