Indonesia's economy has been given a real boost by recent promises of financial reform but a controversial ruling that bars foreign investors from the country's struggling power sector could short circuit efforts to pull in vital overseas cash.
The decision by Indonesia's top court to scrap legislation that opened up the electricity industry to international investment has alarmed experts who warn the move will also do little to alleviate chronic power shortages.
Since President Susilo Bambang Yudhoyono took office in October, pledging to stamp out graft and cut red tape to attract the massive capital investment needed to revive his country, the money has started to trickle in.
Then last week a court ruled that a law passed in 2002 to promote efficiency and full competition in the power section violates Indonesia's constitution because electricity is a public commodity that must remain under state control.
The decision was seen by analysts as a setback, not only for Yudhoyono's grand plan, but also for efforts to drastically crank up power output in Indonesia as rising demand leads to more and more blackouts across the country.
Despite vast resources of oil, natural gas and geothermal energy, Indonesia's inefficient and graft-ridden state power company PLN is unable to meet the electricity demands of the huge archipelago's 214 million people.
Earlier this month PLN president Eddie Widiono said the company needed to raise US$30 billion over the next 10 years to increase its generating capacity by another 20,000 megawatts.
Tempo magazine said since 1998 there have been no new electricity supply created on the islands of Java and Bali -- home to more than half the country's people -- to add to the current capacity of 18,000 megawatts.
Peak demand already exceeds 14,000 megawatts, with reserves often below 25 percent, while areas outside Java and Bali have been hit by frequent blackouts.
The court's ruling is "unfortunate and has potentially important consequences, most immediately for the coming infrastructure summit," said a former World Bank expert, who spoke on condition of anonymity.
He referred to a scheduled January meeting in Jakarta to be attended by business executives seeking investment opportunities in the infrastructure sector.
Under the annulled law, PLN would have lost its power distribution monopoly within five years, after which private companies would be able to sell electricity directly to consumers.
The Constitutional Court ruled that competition was not always efficient and may not benefit the people.
"It is not enough for the government to control and supervise, it must also own and manage," the court said, adding that the private sector could help.
Luluk Sumiarso, the secretary general of Indonesia's energy ministry, said he hoped the ruling, which will prompt the drafting of a new electricity law, would not entirely close the sector to overseas interests.
PROVOCATIVE: Chinese Deputy Ambassador to the UN Sun Lei accused Japan of sending military vessels to deliberately provoke tensions in the Taiwan Strait China denounced remarks by Japan and the EU about the South China Sea at a UN Security Council meeting on Monday, and accused Tokyo of provocative behavior in the Taiwan Strait and planning military expansion. Ayano Kunimitsu, a Japanese vice foreign minister, told the Council meeting on maritime security that Tokyo was seriously concerned about the situation in the East China and South China seas, and reiterated Japan’s opposition to any attempt to change the “status quo” by force, and obstruction of freedom of navigation and overflight. Stavros Lambrinidis, head of the EU delegation to the UN, also highlighted South China Sea
The final batch of 28 M1A2T Abrams tanks purchased from the US arrived at Taipei Port last night and were transported to the Armor Training Command in Hsinchu County’s Hukou Township (湖口), completing the military’s multi-year procurement of 108 of the tanks. Starting at 12:10am today, reporters observed more than a dozen civilian flatbed trailers departing from Taipei Port, each carrying an M1A2T tank covered with black waterproof tarps. Escorted by military vehicles, the convoy traveled via the West Coast Expressway to the Armor Training Command, with police implementing traffic control. The army operates about 1,000 tanks, including CM-11 Brave Tiger
China on Wednesday teased in a video an aircraft carrier that could be its fourth, and the first using nuclear power, while making an allusion to Taiwan and vowing to further build up its islands, as it looks to boost maritime power, secure resources and bolster territorial claims. The video, issued on the eve of the 77th founding anniversary of the Chinese People’s Liberation Army Navy, featured fictional officers with names that are homophones of three commissioned aircraft carriers, the Liaoning (遼寧), Shandong (山東) and Fujian (福建). Titled Into the Deep, it showed a 19-year-old named “Hejian” (何劍) joining the group, sparking
BIG YEAR: The company said it would also release its A12 chip the same year to keep a ‘reliable stream of new silicon technologies’ flowing to its customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said its newest A13 chip is to enter volume production in 2029 as the chipmaker seeks to hold onto its tech leadership and demand for next-generation chips used in artificial intelligence (AI), high-performance-computing (HPC) and mobile applications. TSMC, the world’s biggest contract chipmaker, also unveiled its A12 chip at its annual technology symposium in Santa Clara, California. The A12 chip, which features TSMC’s super-power-rail technology to provide backside power delivery for AI and HPC applications, is also to enter volume production in 2029, a year after the scheduled release of the A14 chip. The technology moves
RSS