DIRECT INDIRECT SPEECH

Nama: Rizka Larashati (17213898)

Kelas: 1EA19

RI advances transportation
ties with Austria

Austria and Indonesia signed a memorandum of understanding (MoU) on Monday to enhance transportation cooperation.

The MoU was signed by visiting Austrian Transport, Innovation and Technology Minister Doris Bures and her counterpart Indonesian Transportation Minister EE Mangindaan at the Transportation Ministry in Central Jakarta.

Bures said Indonesia was an important market for her country.

The MoU will involve sharing experiences, infrastructure and technical cooperation on transportation.

“We have sophisticated technology in the transportation sector. As the Indonesian population grows, the transportation issue will be very significant because Indonesian people need mobility,” she said.

She added that Austria had the expertise in alternative transportation such as cable cars and subways that could be crucial for Indonesia in the coming years.

Meanwhile, Mangindaan agreed that Austria possessed the technology needed by Indonesia to solve its transportation problems.

“Austria is a country with advanced experience in managing transportation, considering its location in the middle of Europe where many roads meet,” he said.

He added that cooperation between both countries in the transportation sector had started since 1987, especially in the railway and air transportation sectors.

Since 1995, Austria has been involved in various train-related work in Indonesia, such as maintaining trains in Sumatra, constructing bridges in Java and Sumatra and advancing the train industry in Madiun.

Mangindaan added that the government would initate a number of working groups to follow up on the MoU.

“The working groups are meant to monitor this cooperation. Austria has shown its eagerness to build serious partnerships by sending a prominent delegation, including those from the private sector,” he said.

The MoU also calls for the establishment of an Austria-Indonesia infrastructure and transportation cooperation forum, to facilitate dialogue between governments and private sectors from both countries. (dhi/yln)

“We have sophisticated technology in the transportation sector. As the Indonesian population grows, the transportation issue will be very significant because Indonesian people need mobility,” she said. Present perf direct

“Austria is a country with advanced experience in managing transportation, considering its location in the middle of Europe where many roads meet,” he said. Simple present direct

VP says economic players 
must anticipate politics 
in 2014

Vice President Boediono has warned economic players in Indonesia to prepare for four risk factors, including domestic politics, in 2014.

“There are four risk factors that, I think, must be anticipated by economic players. They are global liquidity, world oil prices, staple-food prices and domestic political conditions,” said Boediono at the opening of 2014 trading at the Indonesia Stock Exchange (IDX) in Jakarta on Thursday, as quoted by Antara news agency.

The Vice President said that 2014 was a political year which would hopefully run smoothly and safely.

“The 2004 and 2009 elections ran smoothly and safely. This is our dream that democracy can run well. I’m sure that in the second half of 2014, there will be ample room for ‘political capital’ to be established for the benefit of the new government,” said Boediono.

Boediono said that the global liquidity factor was related to the US Federal Reserve’s policy of cutting back on its bond-buying program, known as quantitative easing, although the policy’s implementation was not yet clear enough.

“One thing that needs to be underscored on the liquidity tightening is that this is different from the one we experienced in 1997-1998 and 2008-2009. In the current phenomenon, the triggering factor is not from financial companies but from the improved economies of developed countries,” he said.

Boediono further said that unlike in previous crises, the government had enough time to respond to and anticipate the impact of the global financial tightening.

Financial and fiscal institutions will have been coordinating for a long time so that they will be more ready to face the negative sentiment.

“Our fiscal posture is quite good and the financial sector also shows good indicators as well. It is hoped that the variables of the national macro economic fundamentals can cope with the new liquidity. We are ready to face any changes,” said the Vice President. (ebf)

VP says economic players must anticipate politics in 2014 modals (must) indirect

The Vice President said that 2014 was a political year which would hopefully run smoothly and safely. Present cont indirect

Boediono further said that unlike in previous crises, the government had enough time to respond to and anticipate the impact of the global financial tightening. Past perfect indirect

Dino Patti praises RI’s 
economic progress

Democratic Party presidential convention participant, Dino Patti Djalal, lauded improvements in Indonesia’s economy, which is now ranked 10th in the world, up from 16th, as reported in a global economic outlook recently released by the World Bank (WB).

“With such an achievement, the next government should continue the Middle Way economic policy that has been carried out by President SBY’s [Susilo Bambang Yudhoyono] government,” he said in a statement in Jakarta on Sunday, as quoted by Antara news agency.

He said President Yudhoyono’s government had created and implemented an acceleration and expansion of the Indonesian economy master plan that was aimed at speeding up investments, including foreign investments, based on the Middle Way economic policy it adopted.

Dino said the “Middle Way” economic policy adopted by President Yudhoyono government was suitable for Indonesia given that it had sparked and maintained the economic growth that led to a more even distribution of wealth among Indonesians.

“Economic developments conducted by President Yudhoyono government must be continued so that Indonesia could become one of world’s economic powers within the next 15 to 20 years,” he said.

The former Indonesian ambassador to the US added that currently, many world economic powers were in decline due to economic and political crises.

He cited Thailand an example of one of countries that were in decline due to a prolonged political crisis. “While a number of countries in Asia, Europe and US suffer a growth deficit, Indonesia’s economy has grown by around 6 percent,” he said.

Earlier, President Yudhoyono expressed delight at Indonesia’s improved economic ranking.

“This morning, I’ve been informed by Finance Minister Chatib Basri that WB has just set a new world economic ranking based on GDP purchasing power imparity, and Indonesia is now ranked 10th,” he said in his remarks during the launch of Rajawali Televisi (RTV) at Jakarta Convention Center on Saturday evening.

In the new rankings, Indonesia sits behind US, China, India, Japan, Germany, Russia, Brazil, France and UK. (dhi/ebf)

“With such an achievement, the next government should continue the Middle Way economic policy that has been carried out by President SBY’s [Susilo Bambang Yudhoyono] government,” he said in a statement in Jakarta on Sunday, as quoted by Antara news agency. Modals (should) direct

He said President Yudhoyono’s government had created and implemented an acceleration and expansion of the Indonesian economy master plan that was aimed at speeding up investments, including foreign investments, based on the Middle Way economic policy it adopted. Present perf indirect

Dino said the “Middle Way” economic policy adopted by President Yudhoyono government was suitable for Indonesia given that it had sparked and maintained the economic growth that led to a more even distribution of wealth among Indonesians. Simple present indirect

Major banks to see lingering 
NIM contraction

As lenders saw their profits slump in the first quarter of this year, several bankers said that they were expecting further decline throughout the year as rising costs overshadow their earnings.

According to the latest financial reports published by the top 10 largest banks by assets, a majority of them recorded a lower net interest margin (NIM) and higher expenses during the January to March period.

Private lender PermataBank, for example, posted an 83 basis points (bps) decline in its NIM to 3.37 percent in the first quarter of 2014 from 4.2 percent a year ago. Compared to its 2013 full-year achievement, Permata’s latest NIM figure decreased by a total of 85 bps.

The lender, which is equally owned by Astra International and Standard Chartered Bank, attributed the tight NIM to the narrowing spread between lending and funding interest rates over the past 12 months.

Its March financial report shows that while its interest income surged 36.7 percent year-on-year (y-o-y), its interest expenses rose at a faster rate, up 61 percent. In the end, Permata could only book 3.1 percent growth to Rp 366.83 billion (US$31.83 million) in its bottom line, whereas in the first quarter of 2013, it posted 7.3 percent growth.

Permata’s interim president director, Roy Arman Arfandy, said that he predicted the NIM would continue to fall in 2014, though slightly. “This year is indeed a very challenging time for the national banking industry,” he said.

Bank Indonesia (BI), the central bank, increased its benchmark interest rate by a total of 175 bps to 
7.5 percent during the period of June to November 2013 in an attempt to reduce the country’s current-account deficit and control inflation.

The higher rate triggered lenders to jack up their deposit rates to secure liquidity, but at the expense of their own profits, as costs of funds started to soar. 

To cope with the challenges, Roy said that Permata would be more selective in disbursing its loans and would boost its funding, especially low-cost funds or CASA, which consist of savings and demand deposits.

Bank Internasional Indonesia (BII), part of Malaysia’s Maybank, is among those who were affected and posted a poor performance as well. In the first quarter of 2014, its NIM slumped 59 bps to 4.73 percent from the same period in 2013.

Similar to Permata, BII said that increasing costs of funds and challenging market conditions impacted its NIM and thus, severely affected its bottom line, which was down 38.8 percent to Rp 189.12 billion.

Further NIM contraction is also predicted by CIMB Niaga and Bank Negara Indonesia (BNI), currently the fifth- and fourth-largest bank, respectively.

CIMB Niaga finance director Wan Razly Abdullah said that it expected a 20 bps to 30 bps compression in its margin from what it recorded in 2013. “[In] 2013 our NIM is 5.3 percent, so our guidance for 2014 is 5 percent,” he said in a text message.

During the January-March period, its NIM was actually up by 8 bps y-o-y to 5.22 percent, but fell 12 bps from 5.34 percent at the end of 2013. That resulted in CIMB posting Rp 1.1 trillion in profits in the first quarter, rising slightly by 4.2 percent.

In an effort to address the issue, CIMB plans on adjusting the pricing of its new and current loans and build its CASA with the assistance of its digital strategy, according to Razly.

Meanwhile, Yap Tjay Soen, BNI finance director, said that the state lender was expecting a 75 bps to 100 bps drop in its NIM for the whole year. With that estimate, BNI’s NIM is predicted to hover between 5.1 percent and 5.35 percent, much lower even compared to the 5.9 percent that it achieved in 2012.

“When BI increased its benchmark interest rate last year, we adjusted our deposit rate, but did not immediately do the same for lending. We are planning to make more adjustments, but we cannot raise the lending rate too high out of fear that our debtors will collapse,” he said.

However, contrary to their counterparts, state lender Bank Rakyat Indonesia (BRI) and Bank Mandiri said that they were optimistic that this year they would be able to book higher NIM than what they reported in 2013.

BRI finance director Achmad Baiquni said that it was looking to book 8.81 percent in interest margin, higher than 8.55 percent in 2013, supported by its robust micro loans that generate high yields.

Separately, Mandiri finance director Pahala N. Mansury said that it was convinced that it would be able to post an NIM of 5.7 percent by year-end, up from 5.57 percent in 2013.

He based his conviction on the lender’s low-cost funds that dominated its total deposits and its relatively higher loans disbursement to the retail segment as it carried higher interest rates than the wholesale segment. “We also have around Rp 70 trillion in recap bonds that generate high yields for us,” he said.

“When BI increased its benchmark interest rate last year, we adjusted our deposit rate, but did not immediately do the same for lending. We are planning to make more adjustments, but we cannot raise the lending rate too high out of fear that our debtors will collapse,” he said. Simple past direct

 

Exports unlikely to drive 
economic growth, says economist

A senior economist at Standard Chartered Bank Indonesia, Fauzi Ichsan, has said that it is unlikely that Indonesia’s economic growth in the next year or two will be driven by increases in exports.

He said America’s shale-gas revolution had had a significant impact on the global economy so Indonesia should not expect increases in coal, palm oil or petroleum prices in the next 12 to 18 months.

“As 60 percent of Indonesia’s exports are of commodities, it is hard to foresee economic growth deriving from increases in exports,” said Ichsan as quoted by Antara news agency. He said this would have an effect on the current-account deficit in Indonesia.

“To reduce the current-account deficit, we have to reduce imports by raising interest rates,” said Ichsan. The economist added that the government would probably not increase fuel prices or reduce the importation of oil to reduce the country’s current-account deficit.

“In this election year, it will be difficult for the government to carry out measures that are unpopular. As a result, Indonesia’s economic growth will have problems staying above 6 percent,” said Ichsan.

However, he was optimistic that the 2014 elections would provide a stimulus to Indonesia’s economy, with a contribution of between 0.2 and 0.3 percent to economic growth.

Standard Chartered has projected that Indonesia’s economic growth in 2014 will reach 5.8 percent with an average inflation rate of 6.3 percent. The average rupiah exchange rate is predicted to stand at Rp 12,000 per US dollar and Bank Indonesia (BI) interest rates at 8 percent. (ebf)

 “In this election year, it will be difficult for the government to carry out measures that are unpopular. As a result, Indonesia’s economic growth will have problems staying above 6 percent,” said Ichsan. Future cont direct